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Has EPA Stopped Using Its Voluntary Self-Disclosure Policy?

Last year, EPA Senior Management determined that EPA would no longer use agency resources to address disclosures made by private parties under EPA’s policy on “Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations” otherwise also known as the “Audit Policy.” This decision on disinvestment of resources is reflected in current EPA guidance for EPA regional managers. At a time of dwindling government resources, EPA seems to have decided to abandon its highly touted Audit Policy because disclosures under the Audit Policy have not, from EPA’s perspective, produced the biggest bang for EPA’s buck. In fact, EPA has been disappointed by the reluctance of private parties to disclose major violations.

Under the Audit Policy, EPA may reduce or forgive civil penalties if businesses voluntarily and promptly disclose and expeditiously correct environmental violations. For penalty mitigation, the Audit Policy requires that certain conditions must be satisfied. These conditions include:

  • systematic discovery;
  • voluntary discovery;
  • prompt disclosure;
  • independent discovery and disclosure;
  • correction and remediation; and
  • cooperation

Certain types of violations and repeat violations are ineligible.

In spite of EPA’s statements that it was disinvesting resources in the use of the Audit Policy, recent evidence suggests that at EPA has decided that EPA regions may use discretion in certain situations and apply the Audit Policy. If private parties can satisfy the requirements of the Audit Policy, EPA may reduce or potentially forgive all gravity-based penalties. It is more difficult to convince EPA not to assess penalties based on the economic benefit allegedly derived from avoided or delayed compliance costs. But in some circumstances EPA has been willing to also forego economic benefit-based penalties. Regardless, forgiveness of any civil penalties is contingent upon prompt disclosure, expeditious correction and prevention of the recurrence of violations by the disclosing party. Whether a private party can meet the conditions of the EPA Policy must be carefully reviewed with legal counsel based on fact-specific circumstances.