Inside Cops

These gumshoes don't need search warrants or wire taps. They openly do their detective work inside facilities every day tracking down environmental violations and reporting them to the proper authorities. They pore tirelessly over reams of monitoring data and inspect facilities from top to bottom looking for incriminating evidence of failure to obey federal and state environmental laws.

Who are these overeager compliance cops? They are the growing number of environmental managers who have taken on the additional role of self-policing their facilities under the U.S. Environmental Protection Agency's (EPA) new self-audit policy. Called "Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations," the policy took effect in May 2000 and is a revision to EPA's 1995 Audit Policy.

One of the most important parts of the new policy is that it extends the amount of time companies have to voluntarily disclose a violation from 10 business days to 21 calendar days from the discovery of the violation. In addition, the guidance document states that a facility may qualify for audit policy credit even if another facility owned or operated by the same company is already the subject of an inspection, investigation or information request for a similar violation. Under this policy, businesses will have at least 21 days to disclose violations discovered at newly acquired facilities and will not be subject to sanctions against repeat violations for problems discovered at these facilities.

The policy contains nine conditions for regulated entities: systematic discovery of the violation through an environmental audit or a compliance management system; voluntary discovery; prompt disclosure; discovery and disclosure independent of actions by the government or a third-party plaintiff; correction and remediation; measures taken to prevent recurrences; no repeat violations; other violations are excluded; and cooperation with governmental agencies. Companies that meet all of them are eligible for 100 percent mitigation of any gravity based penalties that otherwise would be assessed. Gravity-based refers to that portion of the penalty over and above the portion that represents the company's actual 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 percent mitigation of any gravity-based penalties.

In May 2000, EPA also implemented another policy for small businesses giving them more options to qualify for reduced or eliminated penalties for voluntarily disclosed violations. The guidelines include lengthening the amount of time that entities have to disclose a violation from 10 to 21 days after discovery. In addition, the policy broadens its application to violations uncovered by small businesses through any means of voluntary discovery, such as using a checklist or another tool obtained from a Compliance Assistance Center.

In an example of EPA's more flexible approach to audits, the agency recently entered into a voluntary agreement with a large manufacturer under which the company will audit, disclose and correct any violation of Clean Air Act New Source review (NSR) standards at 40 facilities. Without this agreement, such errors in applicability determinations would potentially make the new owner liable for the extensive and unpredictable costs associated with an enforcement action. This agreement establishes a three-year commitment by the manufacturer to audit its facilities at a cost of more that $2 million, and shows the value of corporate-wide agreements in the context of acquisitions.

In another move to use incentives to spur improved facility performance, EPA is launching a new program known as the National Environmental Achievement Track (NEAT). The program is designed to recognize and encourage top environmental performers. Some of the inducements offered to businesses that sign up include low priority for inspection-targeting purposes, EPA's promise in instances of assessing penalties to consider a facility's good faith participation in the program as an indication of its good faith efforts to comply with environmental regulations and listing on EPA's Achievement Track Web site and in other marketing efforts by EPA to promote companies' environmental accomplishments.

Applications for the NEAT program will be accepted from February 1 through April 30, and August 1 through October 31. To find out more about NEAT, visit or call (888) 339-PTRK.

For more information about the self-audit policy, go to The small business policy Web site is located at If you have questions about these policies, call EPA's Catherine Malinin Dunn at 202-564-2629.

With EPA offering all these incentives, now is a good time for you environmental managers to consider sharpening your sleuthing skills by implementing self-policing at your facilities.

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This article originally appeared in the March 2001 issue of Environmental Protection, Vol. 12, No. 3, p. 8.

This article originally appeared in the 03/01/2001 issue of Environmental Protection.