Environmental Compliance Audits and Voluntary Disclosure: EPA Audit Policy, Privilege, and Enforcement Risk

The CLE course will address the EPA's current Audit Policy and recently updated guidance for environmental counsel. The panel will provide an overview of the EPA's incentives for companies that voluntarily discover their own violations and disclose those violations to the federal government. The panel will also address how EPA exercises its enforcement discretion and how the audit policy may dramatically impact enforcement outcomes and businesses subject to these environmental regulations.

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. 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 as well as the pros and cons of voluntary disclosure. The panel will also offer strategies for responding to enforcement actions and navigating EPA's current Audit Policy and disclosure process.