EPA Compliance Audit Guidance: New Owner, Voluntary Disclosure, Admission of Liability, Penalty Mitigation

Description

Environmental audits allow companies to proactively identify and address environmental problems before civil litigation or enforcement actions arise. The EPA and many states have established policies to offer companies incentives to encourage compliance, including the potential for reduced or eliminated gravity-based civil or administrative penalties.

Whether a newly acquired or long-standing business, companies and their counsel must take measures to ensure ongoing environmental compliance and environmental audits provide an avenue for detecting and correcting potential problems. Regular self-auditing can help reduce penalties and limit injunctive relief faced in enforcement actions, apart from voluntary disclosure of noncompliance to regulatory agencies.

There are potential risks associated with voluntarily uncovering and documenting violations and the disclosure of violations. Audit findings can be evidence of compliance gaps and a company's knowledge of those holes. Audit disclosures may not always lead to a clean resolution of disclosed violations with the regulatory agency, particularly under the Biden administration. This risk is especially acute where audit policies impose deadlines for corrective action to address any identified noncompliance. Disclosed information could lead to enforcement action and may provide unfortunate ammunition in private actions against the disclosing party. Some policies provide privilege protections to help mitigate risks associated with citizen enforcement.

Listen as our panel of environmental attorneys examines the current environmental enforcement policies and auditing programs. The panel will discuss privilege and its exceptions and the pros and cons of voluntary disclosure. The panel will also offer strategies for responding to enforcement actions.