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Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: April 11, 2000 (Volume 65, Number 70)]
[Notices]
[Page 19617-19627]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ap00-152]
[[Page 19617]]
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Part VII
Environmental Protection Agency
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Incentives for Self-Policing: Discovery, Disclosure, Correction and
Prevention of Violations; Notice
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-6576-3]
Incentives for Self-Policing: Discovery, Disclosure, Correction
and Prevention of Violations
AGENCY: Environmental Protection Agency (EPA, or Agency).
ACTION: Final Policy Statement.
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SUMMARY: EPA today issues its revised final policy on ``Incentives for
Self-Policing: Discovery, Disclosure, Correction and Prevention of
Violations,'' commonly referred to as the ``Audit Policy.'' The purpose
of this Policy is to enhance protection of human health and the
environment by encouraging regulated entities to voluntarily discover,
promptly disclose and expeditiously correct violations of Federal
environmental requirements. Incentives that EPA makes available for
those who meet the terms of the Audit Policy include the elimination or
substantial reduction of the gravity component of civil penalties and a
determination not to recommend criminal prosecution of the disclosing
entity. The Policy also restates EPA's long-standing practice of not
requesting copies of regulated entities' voluntary audit reports to
trigger Federal enforcement investigations. Today's revised Audit
Policy replaces the 1995 Audit Policy (60 FR 66706), which was issued
on December 22, 1995, and took effect on January 22, 1996. Today's
revisions maintain the basic structure and terms of the 1995 Audit
Policy while clarifying some of its language, broadening its
availability, and conforming the provisions of the Policy to actual
Agency practice. The revisions being released today lengthen the prompt
disclosure period to 21 days, clarify that the independent discovery
condition does not automatically preclude penalty mitigation for multi-
facility entities, and clarify how the prompt disclosure and repeat
violation conditions apply to newly acquired companies. The revised
Policy was developed in close consultation with the U.S. Department of
Justice (DOJ), States, public interest groups and the regulated
community. The revisions also reflect EPA's experience implementing the
Policy over the past five years.
DATES: This revised Policy is effective May 11, 2000.
FOR FURTHER INFORMATION CONTACT: Catherine Malinin Dunn (202) 564-2629
or Leslie Jones (202) 564-5123. Documentation relating to the
development of this Policy is contained in the environmental auditing
public docket (#C-94-01). An index to the docket may be obtained by
contacting the Enforcement and Compliance Docket and Information Center
(ECDIC) by telephone at (202) 564-2614 or (202) 564-2119, by fax at
(202) 501-1011, or by email at docket.oeca@epa.gov. ECDIC office hours
are 8:00 am to 4:00 pm Monday through Friday except for Federal
holidays. An index to the docket is available on the Internet at
www.epa.gov/oeca/polguid/enfdock.html. Additional guidance regarding
interpretation and application of the Policy is also available on the
Internet at www.epa.gov/oeca/ore/apolguid.html.
SUPPLEMENTARY INFORMATION: This Notice is organized as follows:
I. Explanation of Policy
A. Introduction
B. Background and History
C. Purpose
D. Incentives for Self-Policing
1. Eliminating Gravity-Based Penalties
2. 75% Reduction of Gravity-Based Penalties
3. No Recommendations for Criminal Prosecution
4. No Routine Requests for Audit Reports
E. Conditions
1. Systematic Discovery of the Violation Through an
Environmental Audit or a Compliance Management System
2. Voluntary Discovery
3. Prompt Disclosure
4. Discovery and Disclosure Independent of Government or Third-
Party Plaintiff
5. Correction and Remediation
6. Prevent Recurrence
7. No Repeat Violations
8. Other Violations Excluded
9. Cooperation
F. Opposition to Audit Privilege and Immunity
G. Effect on States
H. Scope of Policy
I. Implementation of Policy
1. Civil Violations
2. Criminal Violations
3. Release of Information to the Public
II. Statement of Policy--Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention
A. Purpose
B. Definitions
C. Incentives for Self-Policing
1. No Gravity-Based Penalties
2. Reduction of Gravity-Based Penalties by 75%
3. No Recommendation for Criminal Prosecution
4. No Routine Request for Environmental Audit Reports
D. Conditions
1. Systematic Discovery
2. Voluntary Discovery
3. Prompt Disclosure
4. Discovery and Disclosure Independent of Government or Third-
Party Plaintiff
5. Correction and Remediation
6. Prevent Recurrence
7. No Repeat Violations
8. Other Violations Excluded
9. Cooperation
E. Economic Benefit
F. Effect on State Law, Regulation or Policy
G. Applicability
H. Public Accountability
I. Effective Date
I. Explanation of Policy
A. Introduction
On December 22, 1995, EPA issued its final policy on ``Incentives
for Self-Policing: Discovery, Disclosure, Correction and Prevention of
Violations'' (60 FR 66706) (Audit Policy, or Policy). The purpose of
the Policy is to enhance protection of human health and the environment
by encouraging regulated entities to voluntarily discover, disclose,
correct and prevent violations of Federal environmental law. Benefits
available to entities that make disclosures under the terms of the
Policy include reductions in the amount of civil penalties and a
determination not to recommend criminal prosecution of disclosing
entities.
Today, EPA issues revisions to the 1995 Audit Policy. The revised
Policy reflects EPA's continuing commitment to encouraging voluntary
self-policing while preserving fair and effective enforcement. It
lengthens the prompt disclosure period to 21 days, clarifies that the
independent discovery condition does not automatically preclude Audit
Policy credit in the multi-facility context, and clarifies how the
prompt disclosure and repeat violations conditions apply in the
acquisitions context. The revised final Policy takes effect May 11,
2000.
B. Background and History
The Audit Policy provides incentives for regulated entities to
detect, promptly disclose, and expeditiously correct violations of
Federal environmental requirements. The Policy contains nine
conditions, and entities that meet all of them are eligible for 100%
mitigation of any gravity-based penalties that otherwise could be
assessed. (``Gravity-based'' refers to that portion of the penalty over
and above the portion that represents the entity's economic gain from
noncompliance, known as the ``economic benefit.'') Regulated entities
that do not meet the first condition--systematic discovery of
violations--but meet the other eight conditions are eligible for 75%
mitigation of any gravity-based civil penalties. On the criminal side,
EPA will generally elect not to recommend criminal prosecution
[[Page 19619]]
by DOJ or any other prosecuting authority for a disclosing entity that
meets at least conditions two through nine--regardless of whether it
meets the systematic discovery requirement--as long as its self-
policing, discovery and disclosure were conducted in good faith and the
entity adopts a systematic approach to preventing recurrence of the
violation.
The Policy includes important safeguards to deter violations and
protect public health and the environment. For example, the Policy
requires entities to act to prevent recurrence of violations and to
remedy any environmental harm that may have occurred. Repeat
violations, those that result in actual harm to the environment, and
those that may present an imminent and substantial endangerment are not
eligible for relief under this Policy. Companies will not be allowed to
gain an economic advantage over their competitors by delaying their
investment in compliance. And entities remain criminally liable for
violations that result from conscious disregard of or willful blindness
to their obligations under the law, and individuals remain liable for
their criminal misconduct.
When EPA issued the 1995 Audit Policy, the Agency committed to
evaluate the Policy after three years. The Agency initiated this
evaluation in the Spring of 1998 and published its preliminary results
in the Federal Register on May 17, 1999 (64 FR 26745). The evaluation
consisted of the following components:
An internal survey of EPA staff who process disclosures
and handle enforcement cases under the 1995 Audit Policy;
A survey of regulated entities that used the 1995 Policy
to disclose violations;
A series of meetings and conference calls with
representatives from industry, environmental organizations, and States;
Focused stakeholder discussions on the Audit Policy at two
public conferences co-sponsored by EPA's Office of Enforcement and
Compliance Assurance (OECA) and the Vice President's National
Partnership for Reinventing Government, entitled ``Protecting Public
Health and the Environment through Innovative Approaches to
Compliance'';
A Federal Register notice on March 2, 1999, soliciting
comments on how EPA can further protect and improve public health and
the environment through new compliance and enforcement approaches (64
FR 10144); and
An analysis of data on Audit Policy usage to date and
discussions amongst EPA officials who handle Audit Policy disclosures.
The same May 17, 1999, Federal Register notice that published the
evaluation's preliminary results also proposed revisions to the 1995
Policy and requested public comment. During the 60-day public comment
period, the Agency received 29 comment letters, copies of which are
available through the Enforcement and Compliance Docket and Information
Center. (See contact information at the beginning of this notice.)
Analysis of these comment letters together with additional data on
Audit Policy usage has constituted the final stage of the Audit Policy
evaluation. EPA has prepared a detailed response to the comments
received; a copy of that document will also be available through the
Docket and Information Center as well on the Internet at www.epa.gov/
oeca/ore/apolguid.html.
Overall, the Audit Policy evaluation revealed very positive
results. The Policy has encouraged voluntary self-policing while
preserving fair and effective enforcement. Thus, the revisions issued
today do not signal any intention to shift course regarding the
Agency's position on self-policing and voluntary disclosures but
instead represent an attempt to fine-tune a Policy that is already
working well.
Use of the Audit Policy has been widespread. As of October 1, 1999,
approximately 670 organizations had disclosed actual or potential
violations at more than 2700 facilities. The number of disclosures has
increased each of the four years the Policy has been in effect.
Results of the Audit Policy User's Survey revealed very high
satisfaction rates among users, with 88% of respondents stating that
they would use the Policy again and 84% stating that they would
recommend the Policy to clients and/or their counterparts. No
respondents stated an unwillingness to use the Policy again or to
recommend its use to others.
The Audit Policy and related documents, including Agency
interpretive guidance and general interest newsletters, are available
on the Internet at www.epa.gov/oeca/ore/apolguid. Additional guidance
for implementing the Policy in the context of criminal violations can
be found at www.epa.gov/oeca/oceft/audpol2.html.
In addition to the Audit Policy, the Agency's revised Small
Business Compliance Policy (``Small Business Policy'') is also
available for small entities that employ 100 or fewer individuals. The
Small Business Policy provides penalty mitigation, subject to certain
conditions, for small businesses that make a good faith effort to
comply with environmental requirements by discovering, disclosing and
correcting violations. EPA has revised the Small Business Policy at the
same time it revised the Audit Policy. The revised Small Business
Policy will be available on the Internet at www.epa.gov/oeca/
smbusi.html.
C. Purpose
The revised Policy being announced today is designed to encourage
greater compliance with Federal laws and regulations that protect human
health and the environment. It promotes a higher standard of self-
policing by waiving gravity-based penalties for violations that are
promptly disclosed and corrected, and which were discovered
systematically--that is, through voluntary audits or compliance
management systems. To provide an incentive for entities to disclose
and correct violations regardless of how they were detected, the Policy
reduces gravity-based penalties by 75% for violations that are
voluntarily discovered and promptly disclosed and corrected, even if
not discovered systematically.
EPA's enforcement program provides a strong incentive for
compliance by imposing stiff sanctions for noncompliance. Enforcement
has contributed to the dramatic expansion of environmental auditing as
measured in numerous recent surveys. For example, in a 1995 survey by
Price Waterhouse LLP, more than 90% of corporate respondents who
conduct audits identified one of the reasons for doing so as the desire
to find and correct violations before government inspectors discover
them. (A copy of the survey is contained in the Docket as document
VIII-A-76.)
At the same time, because government resources are limited,
universal compliance cannot be achieved without active efforts by the
regulated community to police themselves. More than half of the
respondents to the same 1995 Price Waterhouse survey said that they
would expand environmental auditing in exchange for reduced penalties
for violations discovered and corrected. While many companies already
audit or have compliance management programs in place, EPA believes
that the incentives offered in this Policy will improve the frequency
and quality of these self-policing efforts.
D. Incentives for Self-Policing
Section C of the Audit Policy identifies the major incentives that
EPA
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provides to encourage self-policing, self-disclosure, and prompt self-
correction. For entities that meet the conditions of the Policy, the
available incentives include waiving or reducing gravity-based civil
penalties, declining to recommend criminal prosecution for regulated
entities that self-police, and refraining from routine requests for
audits. (As noted in Section C of the Policy, EPA has refrained from
making routine requests for audit reports since issuance of its 1986
policy on environmental auditing.)
1. Eliminating Gravity-Based Penalties
In general, civil penalties that EPA assesses are comprised of two
elements: the economic benefit component and the gravity-based
component. The economic benefit component reflects the economic gain
derived from a violator's illegal competitive advantage. Gravity-based
penalties are that portion of the penalty over and above the economic
benefit. They reflect the egregiousness of the violator's behavior and
constitute the punitive portion of the penalty. For further discussion
of these issues, see ``Calculation of the Economic Benefit of
Noncompliance in EPA's Civil Penalty Enforcement Cases,'' 64 FR 32948
(June 18, 1999) and ``A Framework for Statute-Specific Approaches to
Penalty Assessments,'' #GM-22 (1984), U.S. EPA General Enforcement
Policy Compendium.
Under the Audit Policy, EPA will not seek gravity-based penalties
for disclosing entities that meet all nine Policy conditions, including
systematic discovery. (``Systematic discovery'' means the detection of
a potential violation through an environmental audit or a compliance
management system that reflects the entity's due diligence in
preventing, detecting and correcting violations.) EPA has elected to
waive gravity-based penalties for violations discovered systematically,
recognizing that environmental auditing and compliance management
systems play a critical role in protecting human health and the
environment by identifying, correcting and ultimately preventing
violations.
However, EPA reserves the right to collect any economic benefit
that may have been realized as a result of noncompliance, even where
the entity meets all other Policy conditions. Where the Agency
determines that the economic benefit is insignificant, the Agency also
may waive this component of the penalty.
EPA's decision to retain its discretion to recover economic benefit
is based on two reasons. First, facing the risk that the Agency will
recoup economic benefit provides an incentive for regulated entities to
comply on time. Taxpayers whose payments are late expect to pay
interest or a penalty; the same principle should apply to corporations
and other regulated entities that have delayed their investment in
compliance. Second, collecting economic benefit is fair because it
protects law-abiding companies from being undercut by their
noncomplying competitors, thereby preserving a level playing field.
2. 75% Reduction of Gravity-based Penalties
Gravity-based penalties will be reduced by 75% where the disclosing
entity does not detect the violation through systematic discovery but
otherwise meets all other Policy conditions. The Policy appropriately
limits the complete waiver of gravity-based civil penalties to
companies that conduct environmental auditing or have in place a
compliance management system. However, to encourage disclosure and
correction of violations even in the absence of systematic discovery,
EPA will reduce gravity-based penalties by 75% for entities that meet
conditions D(2) through D(9) of the Policy. EPA expects that a
disclosure under this provision will encourage the entity to work with
the Agency to resolve environmental problems and begin to develop an
effective auditing program or compliance management system.
3. No Recommendations for Criminal Prosecution
In accordance with EPA's Investigative Discretion Memo dated
January 12, 1994, EPA generally does not focus its criminal enforcement
resources on entities that voluntarily discover, promptly disclose and
expeditiously correct violations, unless there is potentially culpable
behavior that merits criminal investigation. When a disclosure that
meets the terms and conditions of this Policy results in a criminal
investigation, EPA will generally not recommend criminal prosecution
for the disclosing entity, although the Agency may recommend
prosecution for culpable individuals and other entities. The 1994
Investigative Discretion Memo is available on the Internet at http://
www.epa.gov/oeca/ore/ aed/comp/acomp/a11.html.
The ``no recommendation for criminal prosecution'' incentive is
available for entities that meet conditions D(2) through D(9) of the
Policy. Condition D(1) ``systematic discovery'' is not required to be
eligible for this incentive, although the entity must be acting in good
faith and must adopt a systematic approach to preventing recurring
violations. Important limitations to the incentive apply. It will not
be available, for example, where corporate officials are consciously
involved in or willfully blind to violations, or conceal or condone
noncompliance. Since the regulated entity must satisfy conditions D(2)
through D(9) of the Policy, violations that cause serious harm or which
may pose imminent and substantial endangerment to human health or the
environment are not eligible. Finally, EPA reserves the right to
recommend prosecution for the criminal conduct of any culpable
individual or subsidiary organization.
While EPA may decide not to recommend criminal prosecution for
disclosing entities, ultimate prosecutorial discretion resides with the
U.S. Department of Justice, which will be guided by its own policy on
voluntary disclosures (``Factors in Decisions on Criminal Prosecutions
for Environmental Violations in the Context of Significant Voluntary
Compliance or Disclosure Efforts by the Violator,'' July 1, 1991) and
by its 1999 Guidance on Federal Prosecutions of Corporations. In
addition, where a disclosing entity has met the conditions for avoiding
a recommendation for criminal prosecution under this Policy, it will
also be eligible for either 75% or 100% mitigation of gravity-based
civil penalties, depending on whether the systematic discovery
condition was met.
4. No Routine Requests for Audit Reports
EPA reaffirms its Policy, in effect since 1986, to refrain from
routine requests for audit reports. That is, EPA has not and will not
routinely request copies of audit reports to trigger enforcement
investigations. Implementation of the 1995 Policy has produced no
evidence that the Agency has deviated, or should deviate, from this
Policy. In general, an audit that results in expeditious correction
will reduce liability, not expand it. However, if the Agency has
independent evidence of a violation, it may seek the information it
needs to establish the extent and nature of the violation and the
degree of culpability.
For discussion of the circumstances in which EPA might request an
audit report to determine Policy eligibility, see the explanatory text
on cooperation, section I.E.9.
E. Conditions
Section D describes the nine conditions that a regulated entity
must
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meet in order for the Agency to decline to seek (or to reduce) gravity-
based penalties under the Policy. As explained in section I.D.1 above,
regulated entities that meet all nine conditions will not face gravity-
based civil penalties. If the regulated entity meets all of the
conditions except for D(1)--systematic discovery--EPA will reduce
gravity-based penalties by 75%. In general, EPA will not recommend
criminal prosecution for disclosing entities that meet at least
conditions D(2) through D(9).
1. Systematic Discovery of the Violation Through an Environmental Audit
or a Compliance Management System
Under Section D(1), the violation must have been discovered through
either (a) an environmental audit, or (b) a compliance management
system that reflects due diligence in preventing, detecting and
correcting violations. Both ``environmental audit'' and ``compliance
management system'' are defined in Section B of the Policy.
The revised Policy uses the term ``compliance management system''
instead of ``due diligence,'' which was used in the 1995 Policy. This
change in nomenclature is intended solely to conform the Policy
language to terminology more commonly in use by industry and by
regulators to refer to a systematic management plan or systematic
efforts to achieve and maintain compliance. No substantive difference
is intended by substituting the term ``compliance management system''
for ``due diligence,'' as the Policy clearly indicates that the
compliance management system must reflect the regulated entity's due
diligence in preventing, detecting and correcting violations.
Compliance management programs that train and motivate employees to
prevent, detect and correct violations on a daily basis are a valuable
complement to periodic auditing. Where the violation is discovered
through a compliance management system and not through an audit, the
disclosing entity should be prepared to document how its program
reflects the due diligence criteria defined in Section B of the Policy
statement. These criteria, which are adapted from existing codes of
practice--such as Chapter Eight of the U.S. Sentencing Guidelines for
organizational defendants, effective since 1991--are flexible enough to
accommodate different types and sizes of businesses and other regulated
entities. The Agency recognizes that a variety of compliance management
programs are feasible, and it will determine whether basic due
diligence criteria have been met in deciding whether to grant Audit
Policy credit.
As a condition of penalty mitigation, EPA may require that a
description of the regulated entity's compliance management system be
made publicly available. The Agency believes that the availability of
such information will allow the public to judge the adequacy of
compliance management systems, lead to enhanced compliance, and foster
greater public trust in the integrity of compliance management systems.
2. Voluntary Discovery
Under Section D(2), the violation must have been identified
voluntarily, and not through a monitoring, sampling, or auditing
procedure that is required by statute, regulation, permit, judicial or
administrative order, or consent agreement. The Policy provides three
specific examples of discovery that would not be voluntary, and
therefore would not be eligible for penalty mitigation: emissions
violations detected through a required continuous emissions monitor,
violations of NPDES discharge limits found through prescribed
monitoring, and violations discovered through a compliance audit
required to be performed by the terms of a consent order or settlement
agreement. The exclusion does not apply to violations that are
discovered pursuant to audits that are conducted as part of a
comprehensive environmental management system (EMS) required under a
settlement agreement. In general, EPA supports the implementation of
EMSs that promote compliance, prevent pollution and improve overall
environmental performance. Precluding the availability of the Audit
Policy for discoveries made through a comprehensive EMS that has been
implemented pursuant to a settlement agreement might discourage
entities from agreeing to implement such a system.
In some instances, certain Clean Air Act violations discovered,
disclosed and corrected by a company prior to issuance of a Title V
permit are eligible for penalty mitigation under the Policy. For
further guidance in this area, see ``Reduced Penalties for Disclosures
of Certain Clean Air Act Violations,'' Memorandum from Eric Schaeffer,
Director of the EPA Office of Regulatory Enforcement, dated September
30, 1999. This document is available on the Internet at www.epa.gov/
oeca/ore/apolguid.html.
The voluntary requirement applies to discovery only, not reporting.
That is, any violation that is voluntarily discovered is generally
eligible for Audit Policy credit, regardless of whether reporting of
the violation was required after it was found.
3. Prompt Disclosure
Section D(3) requires that the entity disclose the violation in
writing to EPA within 21 calendar days after discovery. If the 21st day
after discovery falls on a weekend or Federal holiday, the disclosure
period will be extended to the first business day following the 21st
day after discovery. If a statute or regulation requires the entity to
report the violation in fewer than 21 days, disclosure must be made
within the time limit established by law. (For example, unpermitted
releases of hazardous substances must be reported immediately under 42
U.S.C. 9603.) Disclosures under this Policy should be made to the
appropriate EPA Regional office or, where multiple Regions are
involved, to EPA Headquarters. The Agency will work closely with States
as needed to ensure fair and efficient implementation of the Policy.
For additional guidance on making disclosures, contact the Audit Policy
National Coordinator at EPA Headquarters at 202-564-5123.
The 21-day disclosure period begins when the entity discovers that
a violation has, or may have, occurred. The trigger for discovery is
when any officer, director, employee or agent of the facility has an
objectively reasonable basis for believing that a violation has, or may
have, occurred. The ``objectively reasonable basis'' standard is
measured against what a prudent person, having the same information as
was available to the individual in question, would have believed. It is
not measured against what the individual in question thought was
reasonable at the time the situation was encountered. If an entity has
some doubt as to the existence of a violation, the recommended course
is for the entity to proceed with the disclosure and allow the
regulatory authorities to make a definitive determination. Contract
personnel who provide on-site services at the facility may be treated
as employees or agents for purposes of the Policy.
If the 21-day period has not yet expired and an entity suspects
that it will be unable to meet the deadline, the entity should contact
the appropriate EPA office in advance to develop disclosure terms
acceptable to EPA. For situations in which the 21-day period already
has expired, the Agency may accept a late disclosure in the exceptional
case, such as where there are complex circumstances, including where
EPA determines the violation could not be identified and disclosed
within 21 calendar days after discovery.
[[Page 19622]]
EPA also may extend the disclosure period when multiple facilities
or acquisitions are involved.
In the multi-facility context, EPA will ordinarily extend the 21-
day period to allow reasonable time for completion and review of multi-
facility audits where: (a) EPA and the entity agree on the timing and
scope of the audits prior to their commencement; and (b) the facilities
to be audited are identified in advance. In the acquisitions context,
EPA will consider extending the prompt disclosure period on a case-by-
case basis. The 21-day disclosure period will begin on the date of
discovery by the acquiring entity, but in no case will the period begin
earlier than the date of acquisition.
In summary, Section D(3) recognizes that it is critical for EPA to
receive timely reporting of violations in order to have clear notice of
the violations and the opportunity to respond if necessary. Prompt
disclosure is also evidence of the regulated entity's good faith in
wanting to achieve or return to compliance as soon as possible. The
integrity of Federal environmental law depends upon timely and accurate
reporting. The public relies on timely and accurate reports from the
regulated community, not only to measure compliance but to evaluate
health or environmental risk and gauge progress in reducing pollutant
loadings. EPA expects the Policy to encourage the kind of vigorous
self-policing that will serve these objectives and does not intend that
it justify delayed reporting. When violations of reporting requirements
are voluntarily discovered, they must be promptly reported. When a
failure to report results in imminent and substantial endangerment or
serious harm to the environment, Audit Policy credit is precluded under
condition D(8).
4. Discovery and Disclosure Independent of Government or Third Party
Plaintiff
Under Section D(4), the entity must discover the violation
independently. That is, the violation must be discovered and identified
before EPA or another government agency likely would have identified
the problem either through its own investigative work or from
information received through a third party. This condition requires
regulated entities to take the initiative to find violations on their
own and disclose them promptly instead of waiting for an indication of
a pending enforcement action or third-party complaint.
Section D(4)(a) lists the circumstances under which discovery and
disclosure will not be considered independent. For example, a
disclosure will not be independent where EPA is already investigating
the facility in question. However, under subsection (a), where the
entity does not know that EPA has commenced a civil investigation and
proceeds in good faith to make a disclosure under the Audit Policy, EPA
may, in its discretion, provide penalty mitigation under the Audit
Policy. The subsection (a) exception applies only to civil
investigations; it does not apply in the criminal context. Other
examples of situations in which a discovery is not considered
independent are where a citizens' group has provided notice of its
intent to sue, where a third party has already filed a complaint, where
a whistleblower has reported the potential violation to government
authorities, or where discovery of the violation by the government was
imminent. Condition D(4)(c)--the filing of a complaint by a third
party--covers formal judicial and administrative complaints as well as
informal complaints, such as a letter from a citizens' group alerting
EPA to a potential environmental violation.
Regulated entities that own or operate multiple facilities are
subject to section D(4)(b) in addition to D(4)(a). EPA encourages
multi-facility auditing and does not intend for the ``independent
discovery'' condition to preclude availability of the Audit Policy when
multiple facilities are involved. Thus, if a regulated entity owns or
operates multiple facilities, the fact that one of its facilities is
the subject of an investigation, inspection, information request or
third-party complaint does not automatically preclude the Agency from
granting Audit Policy credit for disclosures of violations self-
discovered at the other facilities, assuming all other Audit Policy
conditions are met. However, just as in the single-facility context,
where a facility is already the subject of a government inspection,
investigation or information request (including a broad information
request that covers multiple facilities), it will generally not be
eligible for Audit Policy credit. The Audit Policy is designed to
encourage regulated entities to disclose violations before any of their
facilities are under investigation, not after EPA discovers violations
at one facility. Nevertheless, the Agency retains its full discretion
under the Audit Policy to grant penalty waivers or reductions for good-
faith disclosures made in the multi-facility context. EPA has worked
closely with a number of entities that have received Audit Policy
credit for multi-facility disclosures, and entities contemplating
multi-facility auditing are encouraged to contact the Agency with any
questions concerning Audit Policy availability.
5. Correction and Remediation
Under Section D(5), the entity must remedy any harm caused by the
violation and expeditiously certify in writing to appropriate Federal,
State, and local authorities that it has corrected the violation.
Correction and remediation in this context include responding to spills
and carrying out any removal or remedial actions required by law. The
certification requirement enables EPA to ensure that the regulated
entity will be publicly accountable for its commitments through binding
written agreements, orders or consent decrees where necessary.
Under the Policy, the entity must correct the violation within 60
calendar days from the date of discovery, or as expeditiously as
possible. EPA recognizes that some violations can and should be
corrected immediately, while others may take longer than 60 days to
correct. For example, more time may be required if capital expenditures
are involved or if technological issues are a factor. If more than 60
days will be required, the disclosing entity must so notify the Agency
in writing prior to the conclusion of the 60-day period. In all cases,
the regulated entity will be expected to do its utmost to achieve or
return to compliance as expeditiously as possible.
If correction of the violation depends upon issuance of a permit
that has been applied for but not issued by Federal or State
authorities, the Agency will, where appropriate, make reasonable
efforts to secure timely review of the permit.
6. Prevent Recurrence
Under Section D(6), the regulated entity must agree to take steps
to prevent a recurrence of the violation after it has been disclosed.
Preventive steps may include, but are not limited to, improvements to
the entity's environmental auditing efforts or compliance management
system.
7. No Repeat Violations
Condition D(7) bars repeat offenders from receiving Audit Policy
credit. Under the repeat violations exclusion, the same or a closely-
related violation must not have occurred at the same facility within
the past 3 years. The 3-year period begins to run when the government
or a third party has given the violator notice of a specific violation,
without regard to when the original violation cited in the notice
[[Page 19623]]
actually occurred. Examples of notice include a complaint, consent
order, notice of violation, receipt of an inspection report, citizen
suit, or receipt of penalty mitigation through a compliance assistance
or incentive project.
When the facility is part of a multi-facility organization, Audit
Policy relief is not available if the same or a closely-related
violation occurred as part of a pattern of violations at one or more of
these facilities within the past 5 years. If a facility has been newly
acquired, the existence of a violation prior to acquisition does not
trigger the repeat violations exclusion.
The term ``violation'' includes any violation subject to a Federal,
State or local civil judicial or administrative order, consent
agreement, conviction or plea agreement. Recognizing that minor
violations sometimes are settled without a formal action in court, the
term also covers any act or omission for which the regulated entity has
received a penalty reduction in the past. This condition covers
situations in which the regulated entity has had clear notice of its
noncompliance and an opportunity to correct the problem.
The repeat violation exclusion benefits both the public and law-
abiding entities by ensuring that penalties are not waived for those
entities that have previously been notified of violations and fail to
prevent repeat violations. The 3-year and 5-year ``bright lines'' in
the exclusion are designed to provide regulated entities with clear
notice about when the Policy will be available.
8. Other Violations Excluded
Section D(8) provides that Policy benefits are not available for
certain types of violations. Subsection D(8)(a) excludes violations
that result in serious actual harm to the environment or which may have
presented an imminent and substantial endangerment to public health or
the environment. When events of such a consequential nature occur,
violators are ineligible for penalty relief and other incentives under
the Audit Policy. However, this condition does not bar an entity from
qualifying for Audit Policy relief solely because the violation
involves release of a pollutant to the environment, as such releases do
not necessarily result in serious actual harm or an imminent and
substantial endangerment. To date, EPA has not invoked the serious
actual harm or the imminent and substantial endangerment clauses to
deny Audit Policy credit for any disclosure.
Subsection D(8)(b) excludes violations of the specific terms of any
order, consent agreement, or plea agreement. Once a consent agreement
has been negotiated, there is little incentive to comply if there are
no sanctions for violating its specific requirements. The exclusion in
this section also applies to violations of the terms of any response,
removal or remedial action covered by a written agreement.
9. Cooperation
Under Section D(9), the regulated entity must cooperate as required
by EPA and provide the Agency with the information it needs to
determine Policy applicability. The entity must not hide, destroy or
tamper with possible evidence following discovery of potential
environmental violations. In order for the Agency to apply the Policy
fairly, it must have sufficient information to determine whether its
conditions are satisfied in each individual case. In general, EPA
requests audit reports to determine the applicability of this Policy
only where the information contained in the audit report is not readily
available elsewhere and where EPA decides that the information is
necessary to determine whether the terms and conditions of the Policy
have been met. In the rare instance where an EPA Regional office seeks
to obtain an audit report because it is otherwise unable to determine
whether Policy conditions have been met, the Regional office will
notify the Office of Regulatory Enforcement at EPA headquarters.
Entities that disclose potential criminal violations may expect a
more thorough review by the Agency. In criminal cases, entities will be
expected to provide, at a minimum, the following: access to all
requested documents; access to all employees of the disclosing entity;
assistance in investigating the violation, any noncompliance problems
related to the disclosure, and any environmental consequences related
to the violations; access to all information relevant to the violations
disclosed, including that portion of the environmental audit report or
documentation from the compliance management system that revealed the
violation; and access to the individuals who conducted the audit or
review.
F. Opposition to Audit Privilege and Immunity
The Agency believes that the Audit Policy provides effective
incentives for self-policing without impairing law enforcement, putting
the environment at risk or hiding environmental compliance information
from the public. Although EPA encourages environmental auditing, it
must do so without compromising the integrity and enforceability of
environmental laws. It is important to distinguish between EPA's Audit
Policy and the audit privilege and immunity laws that exist in some
States. The Agency remains firmly opposed to statutory and regulatory
audit privileges and immunity. Privilege laws shield evidence of
wrongdoing and prevent States from investigating even the most serious
environmental violations. Immunity laws prevent States from obtaining
penalties that are appropriate to the seriousness of the violation, as
they are required to do under Federal law. Audit privilege and immunity
laws are unnecessary, undermine law enforcement, impair protection of
human health and the environment, and interfere with the public's right
to know of potential and existing environmental hazards.
Statutory audit privilege and immunity run counter to encouraging
the kind of openness that builds trust between regulators, the
regulated community and the public. For example, privileged information
on compliance contained in an audit report may include information on
the cause of violations, the extent of environmental harm, and what is
necessary to correct the violations and prevent their recurrence.
Privileged information is unavailable to law enforcers and to members
of the public who have suffered harm as a result of environmental
violations. The Agency opposes statutory immunity because it diminishes
law enforcement's ability to discourage wrongful behavior and
interferes with a regulator's ability to punish individuals who
disregard the law and place others in danger. The Agency believes that
its Audit Policy provides adequate incentives for self-policing but
without secrecy and without abdicating its discretion to act in cases
of serious environmental violations.
Privilege, by definition, invites secrecy, instead of the openness
needed to build public trust in industry's ability to self-police.
American law reflects the high value that the public places on fair
access to the facts. The Supreme Court, for example, has said of
privileges that, `` [w]hatever their origins, these exceptions to the
demand for every man's evidence are not lightly created nor expansively
construed, for they are in derogation of the search for truth.'' United
States v. Nixon, 418 U.S. 683, 710 (1974). Federal courts have
unanimously refused to recognize a privilege for environmental audits
in the context of government investigations. See, e.g., United States
v. Dexter Corp., 132 F.R.D. 8, 10 (D.Conn. 1990)
[[Page 19624]]
(application of a privilege ``would effectively impede [EPA's] ability
to enforce the Clean Water Act, and would be contrary to stated public
policy.'') Cf. In re Grand Jury Proceedings, 861 F. Supp. 386 (D. Md.
1994) (company must comply with a subpoena under Food, Drug and
Cosmetics Act for self-evaluative documents).
G. Effect on States
The revised final Policy reflects EPA's desire to provide fair and
effective incentives for self-policing that have practical value to
States. To that end, the Agency has consulted closely with State
officials in developing this Policy. As a result, EPA believes its
revised final Policy is grounded in commonsense principles that should
prove useful in the development and implementation of State programs
and policies.
EPA recognizes that States are partners in implementing the
enforcement and compliance assurance program. When consistent with
EPA's policies on protecting confidential and sensitive information,
the Agency will share with State agencies information on disclosures of
violations of Federally-authorized, approved or delegated programs. In
addition, for States that have adopted their own audit policies in
Federally-authorized, approved or delegated programs, EPA will
generally defer to State penalty mitigation for self-disclosures as
long as the State policy meets minimum requirements for Federal
delegation. Whenever a State provides a penalty waiver or mitigation
for a violation of a requirement contained in a Federally-authorized,
approved or delegated program to an entity that discloses those
violations in conformity with a State audit policy, the State should
notify the EPA Region in which it is located. This notification will
ensure that Federal and State enforcement responses are coordinated
properly.
For further information about minimum delegation requirements and
the effect of State audit privilege and immunity laws on enforcement
authority, see ``Statement of Principles: Effect of State Audit/
Immunity Privilege Laws on Enforcement Authority for Federal
Programs,'' Memorandum from Steven A. Herman et al, dated February 14,
1997, to be posted on the Internet under www.epa.gov/oeca/oppa.
As always, States are encouraged to experiment with different
approaches to assuring compliance as long as such approaches do not
jeopardize public health or the environment, or make it profitable not
to comply with Federal environmental requirements. The Agency remains
opposed to State legislation that does not include these basic
protections, and reserves its right to bring independent action against
regulated entities for violations of Federal law that threaten human
health or the environment, reflect criminal conduct or repeated
noncompliance, or allow one company to profit at the expense of its
law-abiding competitors.
H. Scope of Policy
EPA has developed this Policy to guide settlement actions. It is
the Agency's practice to make public all compliance agreements reached
under this Policy in order to provide the regulated community with fair
notice of decisions and to provide affected communities and the public
with information regarding Agency action. Some in the regulated
community have suggested that the Agency should convert the Policy into
a regulation because they feel doing so would ensure greater
consistency and predictability. Following its three-year evaluation of
the Policy, however, the Agency believes that there is ample evidence
that the Policy has worked well and that there is no need for a formal
rulemaking. Furthermore, as the Agency seeks to respond to lessons
learned from its increasing experience handling self-disclosures, a
policy is much easier to amend than a regulation. Nothing in today's
release of the revised final Policy is intended to change the status of
the Policy as guidance.
I. Implementation of Policy
1. Civil Violations
Pursuant to the Audit Policy, disclosures of civil environmental
violations should be made to the EPA Region in which the entity or
facility is located or, where the violations to be disclosed involve
more than one EPA Region, to EPA Headquarters. The Regional or
Headquarters offices decide whether application of the Audit Policy in
a specific case is appropriate. Obviously, once a matter has been
referred for civil judicial prosecution, DOJ becomes involved as well.
Where there is evidence of a potential criminal violation, the civil
offices coordinate with criminal enforcement offices at EPA and DOJ.
To resolve issues of national significance and ensure that the
Policy is applied fairly and consistently across EPA Regions and at
Headquarters, the Agency in 1995 created the Audit Policy Quick
Response Team (QRT). The QRT is comprised of representatives from the
Regions, Headquarters, and DOJ. It meets on a regular basis to address
issues of interpretation and to coordinate self-disclosure initiatives.
In addition, in 1999 EPA established a National Coordinator position to
handle Audit Policy issues and implementation. The National Coordinator
chairs the QRT and, along with the Regional Audit Policy coordinators,
serves as a point of contact on Audit Policy issues in the civil
context.
2. Criminal Violations
Criminal disclosures are handled by the Voluntary Disclosure Board
(VDB), which was established by EPA in 1997. The VDB ensures consistent
application of the Audit Policy in the criminal context by centralizing
Policy interpretation and application within the Agency.
Disclosures of potential criminal violations may be made directly
to the VDB, to an EPA regional criminal investigation division or to
DOJ. In all cases, the VDB coordinates with the investigative team and
the appropriate prosecuting authority. During the course of the
investigation, the VDB routinely monitors the progress of the
investigation as necessary to ensure that sufficient facts have been
established to determine whether to recommend that relief under the
Policy be granted.
At the conclusion of the criminal investigation, the Board makes a
recommendation to the Director of EPA's Office of Criminal Enforcement,
Forensics, and Training, who serves as the Deciding Official. Upon
receiving the Board's recommendation, the Deciding Official makes his
or her final recommendation to the appropriate United States Attorney's
Office and/or DOJ. The recommendation of the Deciding Official,
however, is only that--a recommendation. The United States Attorney's
Office and/or DOJ retain full authority to exercise prosecutorial
discretion.
3. Release of Information to the Public
Upon formal settlement, EPA places copies of settlements in the
Audit Policy Docket. EPA also makes other documents related to self-
disclosures publicly available, unless the disclosing entity claims
them as Confidential Business Information (and that claim is validated
by U.S. EPA), unless another exemption under the Freedom of Information
Act is asserted and/or applies, or the Privacy Act or any other law
would preclude such release. Presumptively releasable documents include
compliance agreements reached under the Policy (see Section H ) and
descriptions of compliance management systems submitted under Section
D(1).
[[Page 19625]]
Any material claimed to be Confidential Business Information will be
treated in accordance with EPA regulations at 40 CFR Part 2. In
determining what documents to release, EPA is guided by the Memorandum
from Assistant Administrator Steven A. Herman entitled
``Confidentiality of Information Received Under Agency's Self-
Disclosure Policy,'' available on the Internet at www.epa.gov/oeca/
sahmemo.html.
II. Statement of Policy--Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of Violations
A. Purpose
This Policy is designed to enhance protection of human health and
the environment by encouraging regulated entities to voluntarily
discover, disclose, correct and prevent violations of Federal
environmental requirements.
B. Definitions
For purposes of this Policy, the following definitions apply:
``Environmental Audit'' is a systematic, documented, periodic and
objective review by regulated entities of facility operations and
practices related to meeting environmental requirements.
``Compliance Management System'' encompasses the regulated entity's
documented systematic efforts, appropriate to the size and nature of
its business, to prevent, detect and correct violations through all of
the following:
(a) Compliance policies, standards and procedures that identify how
employees and agents are to meet the requirements of laws, regulations,
permits, enforceable agreements and other sources of authority for
environmental requirements;
(b) Assignment of overall responsibility for overseeing compliance
with policies, standards, and procedures, and assignment of specific
responsibility for assuring compliance at each facility or operation;
(c) Mechanisms for systematically assuring that compliance
policies, standards and procedures are being carried out, including
monitoring and auditing systems reasonably designed to detect and
correct violations, periodic evaluation of the overall performance of
the compliance management system, and a means for employees or agents
to report violations of environmental requirements without fear of
retaliation;
(d) Efforts to communicate effectively the regulated entity's
standards and procedures to all employees and other agents;
(e) Appropriate incentives to managers and employees to perform in
accordance with the compliance policies, standards and procedures,
including consistent enforcement through appropriate disciplinary
mechanisms; and
(f) Procedures for the prompt and appropriate correction of any
violations, and any necessary modifications to the regulated entity's
compliance management system to prevent future violations.
``Environmental audit report'' means the documented analysis,
conclusions, and recommendations resulting from an environmental audit,
but does not include data obtained in, or testimonial evidence
concerning, the environmental audit.
``Gravity-based penalties'' are that portion of a penalty over and
above the economic benefit, i.e., the punitive portion of the penalty,
rather than that portion representing a defendant's economic gain from
noncompliance.
``Regulated entity'' means any entity, including a Federal, State
or municipal agency or facility, regulated under Federal environmental
laws.
C. Incentives for Self-Policing
1. No Gravity-Based Penalties
If a regulated entity establishes that it satisfies all of the
conditions of Section D of this Policy, EPA will not seek gravity-based
penalties for violations of Federal environmental requirements
discovered and disclosed by the entity.
2. Reduction of Gravity-Based Penalties by 75%
If a regulated entity establishes that it satisfies all of the
conditions of Section D of this Policy except for D(1)--systematic
discovery--EPA will reduce by 75% gravity-based penalties for
violations of Federal environmental requirements discovered and
disclosed by the entity.
3. No Recommendation for Criminal Prosecution
(a) If a regulated entity establishes that it satisfies at least
conditions D(2) through D(9) of this Policy, EPA will not recommend to
the U.S. Department of Justice or other prosecuting authority that
criminal charges be brought against the disclosing entity, as long as
EPA determines that the violation is not part of a pattern or practice
that demonstrates or involves:
(i) A prevalent management philosophy or practice that conceals or
condones environmental violations; or
(ii) High-level corporate officials' or managers' conscious
involvement in, or willful blindness to, violations of Federal
environmental law;
(b) Whether or not EPA recommends the regulated entity for criminal
prosecution under this section, the Agency may recommend for
prosecution the criminal acts of individual managers or employees under
existing policies guiding the exercise of enforcement discretion.
4. No Routine Request for Environmental Audit Reports
EPA will neither request nor use an environmental audit report to
initiate a civil or criminal investigation of an entity. For example,
EPA will not request an environmental audit report in routine
inspections. If the Agency has independent reason to believe that a
violation has occurred, however, EPA may seek any information relevant
to identifying violations or determining liability or extent of harm.
D. Conditions
1. Systematic Discovery
The violation was discovered through:
(a) An environmental audit; or
(b) A compliance management system reflecting the regulated
entity's due diligence in preventing, detecting, and correcting
violations. The regulated entity must provide accurate and complete
documentation to the Agency as to how its compliance management system
meets the criteria for due diligence outlined in Section B and how the
regulated entity discovered the violation through its compliance
management system. EPA may require the regulated entity to make
publicly available a description of its compliance management system.
2. Voluntary Discovery
The violation was discovered voluntarily and not through a legally
mandated monitoring or sampling requirement prescribed by statute,
regulation, permit, judicial or administrative order, or consent
agreement. For example, the Policy does not apply to:
(a) Emissions violations detected through a continuous emissions
monitor (or alternative monitor established in a permit) where any such
monitoring is required;
(b) Violations of National Pollutant Discharge Elimination System
(NPDES) discharge limits detected through required sampling or
monitoring; or
(c) Violations discovered through a compliance audit required to be
performed by the terms of a consent order or settlement agreement,
unless the audit is a component of agreement terms to implement a
comprehensive environmental management system.
[[Page 19626]]
3. Prompt Disclosure
The regulated entity fully discloses the specific violation in
writing to EPA within 21 days (or within such shorter time as may be
required by law) after the entity discovered that the violation has, or
may have, occurred. The time at which the entity discovers that a
violation has, or may have, occurred begins when any officer, director,
employee or agent of the facility has an objectively reasonable basis
for believing that a violation has, or may have, occurred.
4. Discovery and Disclosure Independent of Government or Third-Party
Plaintiff
(a) The regulated entity discovers and discloses the potential
violation to EPA prior to:
(i) The commencement of a Federal, State or local agency inspection
or investigation, or the issuance by such agency of an information
request to the regulated entity (where EPA determines that the facility
did not know that it was under civil investigation, and EPA determines
that the entity is otherwise acting in good faith, the Agency may
exercise its discretion to reduce or waive civil penalties in
accordance with this Policy);
(ii) Notice of a citizen suit;
(iii) The filing of a complaint by a third party;
(iv) The reporting of the violation to EPA (or other government
agency) by a ``whistleblower'' employee, rather than by one authorized
to speak on behalf of the regulated entity; or
(v) imminent discovery of the violation by a regulatory agency.
(b) For entities that own or operate multiple facilities, the fact
that one facility is already the subject of an investigation,
inspection, information request or third-party complaint does not
preclude the Agency from exercising its discretion to make the Audit
Policy available for violations self-discovered at other facilities
owned or operated by the same regulated entity.
5. Correction and Remediation
The regulated entity corrects the violation within 60 calendar days
from the date of discovery, certifies in writing that the violation has
been corrected, and takes appropriate measures as determined by EPA to
remedy any environmental or human harm due to the violation. EPA
retains the authority to order an entity to correct a violation within
a specific time period shorter than 60 days whenever correction in such
shorter period of time is feasible and necessary to protect public
health and the environment adequately. If more than 60 days will be
needed to correct the violation, the regulated entity must so notify
EPA in writing before the 60-day period has passed. Where appropriate,
to satisfy conditions D(5) and D(6), EPA may require a regulated entity
to enter into a publicly available written agreement, administrative
consent order or judicial consent decree as a condition of obtaining
relief under the Audit Policy, particularly where compliance or
remedial measures are complex or a lengthy schedule for attaining and
maintaining compliance or remediating harm is required.
6. Prevent Recurrence
The regulated entity agrees in writing to take steps to prevent a
recurrence of the violation. Such steps may include improvements to its
environmental auditing or compliance management system.
7. No Repeat Violations
The specific violation (or a closely related violation) has not
occurred previously within the past three years at the same facility,
and has not occurred within the past five years as part of a pattern at
multiple facilities owned or operated by the same entity. For the
purposes of this section, a violation is:
(a) Any violation of Federal, State or local environmental law
identified in a judicial or administrative order, consent agreement or
order, complaint, or notice of violation, conviction or plea agreement;
or
(b) Any act or omission for which the regulated entity has
previously received penalty mitigation from EPA or a State or local
agency.
8. Other Violations Excluded
The violation is not one which (a) resulted in serious actual harm,
or may have presented an imminent and substantial endangerment, to
human health or the environment, or (b) violates the specific terms of
any judicial or administrative order, or consent agreement.
9. Cooperation
The regulated entity cooperates as requested by EPA and provides
such information as is necessary and requested by EPA to determine
applicability of this Policy.
E. Economic Benefit
EPA retains its full discretion to recover any economic benefit
gained as a result of noncompliance to preserve a ``level playing
field'' in which violators do not gain a competitive advantage over
regulated entities that do comply. EPA may forgive the entire penalty
for violations that meet conditions D(1) through D(9) and, in the
Agency's opinion, do not merit any penalty due to the insignificant
amount of any economic benefit.
F. Effect on State Law, Regulation or Policy
EPA will work closely with States to encourage their adoption and
implementation of policies that reflect the incentives and conditions
outlined in this Policy. EPA remains firmly opposed to statutory
environmental audit privileges that shield evidence of environmental
violations and undermine the public's right to know, as well as to
blanket immunities, particularly immunities for violations that reflect
criminal conduct, present serious threats or actual harm to health and
the environment, allow noncomplying companies to gain an economic
advantage over their competitors, or reflect a repeated failure to
comply with Federal law. EPA will work with States to address any
provisions of State audit privilege or immunity laws that are
inconsistent with this Policy and that may prevent a timely and
appropriate response to significant environmental violations. The
Agency reserves its right to take necessary actions to protect public
health or the environment by enforcing against any violations of
Federal law.
G. Applicability
(1) This Policy applies to settlement of claims for civil penalties
for any violations under all of the Federal environmental statutes that
EPA administers, and supersedes any inconsistent provisions in media-
specific penalty or enforcement policies and EPA's 1995 Policy on
``Incentives for Self-Policing: Discovery, Disclosure, Correction and
Prevention of Violations.''
(2) To the extent that existing EPA enforcement policies are not
inconsistent, they will continue to apply in conjunction with this
Policy. However, a regulated entity that has received penalty
mitigation for satisfying specific conditions under this Policy may not
receive additional penalty mitigation for satisfying the same or
similar conditions under other policies for the same violation, nor
will this Policy apply to any violation that has received penalty
mitigation under other policies. Where an entity has failed to meet any
of conditions D(2) through D(9) and is therefore not eligible for
penalty relief under this Policy, it may still be eligible for penalty
[[Page 19627]]
relief under other EPA media-specific enforcement policies in
recognition of good faith efforts, even where, for example, the
violation may have presented an imminent and substantial endangerment
or resulted in serious actual harm.
(3) This Policy sets forth factors for consideration that will
guide the Agency in the exercise of its enforcement discretion. It
states the Agency's views as to the proper allocation of its
enforcement resources. The Policy is not final agency action and is
intended as guidance. This Policy is not intended, nor can it be relied
upon, to create any rights enforceable by any party in litigation with
the United States. As with the 1995 Audit Policy, EPA may decide to
follow guidance provided in this document or to act at variance with it
based on its analysis of the specific facts presented. This Policy may
be revised without public notice to reflect changes in EPA's approach
to providing incentives for self-policing by regulated entities, or to
clarify and update text.
(4) This Policy should be used whenever applicable in settlement
negotiations for both administrative and civil judicial enforcement
actions. It is not intended for use in pleading, at hearing or at
trial. The Policy may be applied at EPA's discretion to the settlement
of administrative and judicial enforcement actions instituted prior to,
but not yet resolved, as of the effective date of this Policy.
(5) For purposes of this Policy, violations discovered pursuant to
an environmental audit or compliance management system may be
considered voluntary even if required under an Agency ``partnership''
program in which the entity participates, such as regulatory
flexibility pilot projects like Project XL. EPA will consider
application of the Audit Policy to such partnership program projects on
a project-by-project basis.
(6) EPA has issued interpretive guidance addressing several
applicability issues pertaining to the Audit Policy. Entities
considering whether to take advantage of the Audit Policy should review
that guidance to see if it addresses any relevant questions. The
guidance can be found on the Internet at www.epa.gov/oeca/ore/
apolguid.html.
H. Public Accountability
EPA will make publicly available the terms and conditions of any
compliance agreement reached under this Policy, including the nature of
the violation, the remedy, and the schedule for returning to
compliance.
I. Effective Date
This revised Policy is effective May 11, 2000.
Dated: March 30, 2000.
Steven A. Herman,
Assistant Administrator for Enforcement and Compliance Assurance.
[FR Doc. 00-8954 Filed 4-10-00; 8:45 am]
BILLING CODE 6560-50-P