The audit advantage

Environmental management systems (EMSs) are generally classified into four categories:

Reactive. Activities are completed only in response to problems or violations.

Compliant. Activities are completed to achieve compliance with government regulations only.

Proactive. Activities are completed to go beyond compliance with regulations.

Strategic. Activities are integrated into all business functions.

These four categories also represent a description of the level of maturity or sophistication of an EMS, as it progresses from reactive to strategic. While not all EMSs will achieve the highest level of sophistication, most companies are striving to move in the strategic direction.

Although many companies with EMSs that could be classified as proactive or strategic conduct compliance audits, these audits are often viewed by company personnel as a reactive or compliant activity. This view is a result of auditing's traditional focus on the identification and correction of past or existing practices that are out of compliance, in order to avoid fines and other negative impacts.

However, compliance auditing can also be used as a tool to help proactively manage environmental compliance. Proactive management includes taking action to prevent noncompliance situations before they occur. The benefits of proactive environmental management include reduced regulatory exposure, lower compliance and production costs and a reduction in potential environmental impacts.

Auditing as an environmental management tool

The U.S. Environmental Protection Agency (EPA) defines an environmental audit as "a systematic, documented, periodic and objective review by regulated entities of facility operations and practices related to meeting environmental requirements." (51 Federal Register 25004, July 9, 1986)

While not required by federal regulations (except for a few specific programs), compliance audits are a very common tool for managing environmental compliance. Some companies have been very cautious about auditing, however, fearful that their audit reports would be requested by government regulators and used as a "road map" of potential violations. EPA, seeing the value of voluntary audits, responded with a policy designed to encourage self-audits, titled Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations (60 FR 66706, Dec. 22, 1995).

This policy provides incentives for self-auditing, including elimination or reduction of certain penalties, not recommending cases for criminal prosecution and not requesting voluntary audit reports in enforcement investigations. Several conditions must be met to receive these benefits, however, including prompt self-disclosure, expeditious correction, prevention of recurrence and cooperation with EPA. Many states have created similar and more generous audit privilege policies of their own.

While EPA and state audit policies make auditing more attractive to some companies, numerous companies still focus on the reactive approach of identifying and correcting problems. Ideally, proactive management, which is designed to prevent the noncompliance problems from occurring in the first place, would make these audit privilege policies irrelevant. Partly for this reason, some companies have avoided compliance auditing and instead focused on proactive activities such as implementing management systems programs.

In addition, some companies with mature compliance auditing programs find fewer and fewer violations over time, and have therefore shifted the focus of their audits from compliance to creating more proactive EMSs.

Compliance audits as a proactive tool

Compliance audits consist of a rigorous review of technical and regulatory details to uncover evidence of noncompliance. This type of review can also provide valuable data for proactively managing environmental compliance.

Environmental auditing involves two levels of evaluation. First, facility operations are evaluated in comparison to specific thresholds to determine if regulatory programs apply to the facility. Second, facility operations are reviewed to determine if they are in compliance with specific regulations.

When determining regulatory applicability, it is important to determine not only if the facility's operations exceed a regulatory threshold, but also how close they are to the threshold. For example, a facility classified as a large quantity generator (LQG) of hazardous waste has more regulatory requirements than a small quantity generator (SQG). Because generator classification depends on monthly waste generation rates, operational changes that reduce waste generation can reclassify the generator to a less regulated category. Rather than focusing on compliance with the more stringent LQG regulations, efforts can be directed toward minimizing waste and reducing regulatory requirements.

Opting out of regulatory programs

Similarly, spill prevention control and countermeasure (SPCC) regulations under the Clean Water Act are triggered by thresholds related to quantities of oil stored on site and storage tank capacities. The requirements for preparing, maintaining and updating SPCC plans, as well as the physical (dikes, drains, spill control equipment) and administrative (training, inspection, record keeping) requirements are significant and can prove costly. Removing unused tanks or reducing quantities of oil stored on site, and thus opting out of the program entirely, is often the least expensive method of avoiding violations.

Often, however, regulated activities crucial to a company's operations cannot be eliminated. For example, the use of a single chemical in sufficient quantities can trigger requirements under the Emergency Planning and Community Right-to-Know Act (EPCRA), risk management planning (RMP) under the Clean Air Act Amendments and the Occupational Safety and Health Administration's Process Safety Management (PSM) program. Although it may not be possible to totally eliminate the use of the chemical throughout the company, consolidation of affected operations from numerous locations to a few, or even one location, can decrease the regulatory burden (and risk) from several locations. Facility audits can provide the necessary information for making these types of decisions.

Avoiding regulatory programs

An even more proactive approach than changing operations to opt out of applicable regulatory programs is to make operational changes before a threshold is exceeded, thereby avoiding the program altogether. For example, a compliance audit might determine that a facility is not required to comply with prevention of significant deterioration (PSD) or new source review (NSR) requirements under the Clean Air Act because its air pollutant emissions are less than the major source thresholds. At this point in the audit, evaluation of the emission levels and program requirements would generally not be given any more attention, since the program is not applicable. However, if the emissions are very close to the threshold, and the situation is not monitored, the next compliance audit may determine that the threshold has been exceeded, and that the facility is out of compliance. A proactive approach would be to track facility emissions over time and determine the effect of operational changes on emission levels in rel ation to the regulatory thresholds.

This type of information can assist management with decisions on new production locations. New facilities, or production increases at existing facilities, may not be placed in locations that are out of attainment with air pollution standards, if doing so would trigger significant regulatory requirements under programs like PSD or NSR. If production increases in this area are necessary, management will have the tool to make an informed decision, taking into account all potential environmental impacts of their decisions.

Other proactive approaches

Although compliance audits typically focus on the negative aspects of environmental performance, they can also be used for identifying good management practices, as well as other positive information about a facility. This information can be shared and applied to similar situations at other facilities.

For example, two facilities with similar operations and wastewater characteristics can share results of wastewater treatment studies. This could save considerable amounts of effort and cost associated with treatability studies, feasibility studies and equipment design. Facilities could also avoid reinventing the wheel by sharing something as simple as an effective emergency response plan, or a successful training program.


Companies seeking to make their environmental programs more proactive should not neglect compliance audits simply because they are viewed as a reactive activity, or because the number of noncompliance issues have decreased significantly over time. By shifting the focus from noncompliant activities in the past to future practices that can minimize regulatory or enforcement exposure, compliance audits can be a valuable tool to proactively manage all types of environmental issues.

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Software options

Choosing the right software can help ease the management burden. Does your software meet all your needs? Consider the following options when making your purchase:

Audit software

  • Systemizes your approach to audit multiple facilities in different states
  • Extends compliance awareness and responsibilities to minimize non-compliance risks
  • Serves as a comprehensive environmental health and safety training tool
  • Focuses only on the applicable regulations that apply to your facility
  • Continually updates you and your checklists with the latest or changed regulations
  • Easily assembles customized checklists
  • Provides immediate, on-site regulatory information to eliminate any contention about audit findings
  • Identifies areas where regulatory exposure can be reduced or eliminated

Tracking software

  • Ensures that findings and corrective actions are closed out and communicated to all levels of an organization
  • Maintains a running history journal of all activity associated with each action item through its entire lifecycle
  • Interchanges with corporate groupware systems
  • Fosters real-time communication between users at any level of an organization
  • Connects each action item to the original audit finding and to all web resources

Examples of Auditing and Tracking software from Dakota Software Corp. in Pittsford, New York include Dakota¨ Auditor and Tracer.

This article appeared in the March 2000 issue of Environmental Protection magazine, Vol. 11, No. 3, p. 34.

This article originally appeared in the 03/01/2000 issue of Environmental Protection.

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