



As more and more companies take their corporate social, environmental, and economic responsibilities seriously they find themselves looking inward at their operations and practices, and carefully evaluating their environmental, health and safety (EHS) audit compliance programs, to the extent they may exist. Such self-auditing is widely regarded as beneficial to the owners as well as employees and neighbors.
Before undertaking a compliance audit, however, a company must consider the consequences of identifying a non-compliance issue. What would the company do if a non-compliance issue is identified? Is management prepared to correct non-compliance? To enforcement authorities, having no knowledge of your non-compliance prior to an agency inspection is…well…bad. But having awareness of a non-compliance issue and taking no action to correct is worse. The EPA has long encouraged firms to undertake voluntary audits, disclose violations, and work with the agency, or a corresponding state agency, to resolve the violation. EPA created a web-based reporting portal, “eDisclosure,” in 2015, to simplify and expedite the process. Independent consultants, such as the partners at Integrity Environmental Strategies, can provide su=ignificant support by designing effective programs, performing audits, carefully crafting findings for potential disclosure, and preparing corrective action programs.
On May 15, 2018 the EPA announced its renewed emphasis on self-disclosed violations [i] , taking specific steps to enhance and promote: “(a) its already highly successful online ‘eDisclosure’ program; (b) the additional flexibility available to new owners who self-disclose violations; and (c) opportunities to increase compliance through use of existing self-disclosure policies or tailored audit programs.”
The emphasis takes the shape of several actions:
Many state environmental agencies have picked up on this and have implemented similar policies.
Nevertheless, this renewed emphasis does not change the care that must be exercised by companies implementing audit programs. The audit program must ensure that nine conditions set by the EPA are met to be eligible for audit policy benefits:
Measurable benefits have been observed at firms that report under the audit privilege. Toffel and Short [ii] , reviewing empirical data, reported that firms that voluntarily disclosed regulatory violations of the Clean Air Act and committed to self-policing, improved their regulatory compliance and environmental performance. The firms had fewer violations and fewer accidental releases of toxic chemicals than a corresponding group of non-disclosers.
An experienced audit team, such as the consultants at Integrity Environmental Strategies, must not only have skills needed to identify non-compliance issues, but, in consultation with management and legal advisors, quickly determine whether to disclose the violation and the information needed for disclosure. Then, if disclosed, a corrective action plan must be expedited so the facility can return to compliance within the prescribed 60-day period.
[i] https://www.epa.gov/sites/production/files/2018-05/documents/refreshannouncementfordisclosures.pdf , EPA Announces Renewed Emphasis on Self-Disclosed Violation Policies
[ii] Toffel and Short. 2011. Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self- Policing? Journal of Law & Economics 54(3): 609-64, at 611.