United States: EPA Policy On Self-Policing And Disclosure Expanded

With the purpose of further encouraging voluntary self- policing, disclosure, and cor- rection of violations to environmental laws, the United States Environmental Protection Agency has revised its 1995 Policy Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations to provide additional disclosure benefits and gen- erally clarify and/or fine tune certain aspects of the Policy.

Under the 1995 Policy, the major incentives for voluntary disclosure of environmental violations to EPA were the discretionary reduction or elimination of the punitive ( gravity based ) component (portion of penalty over and above economic benefit gained from non- compliance) of civil penalties, the elimination of any criminal penalties, and generally lower penalties than would otherwise have been imposed.

The EPA retained discretion to recover strictly the economic benefits realized by a company from violations of environmental laws.

To be afforded the protection of the Policy, the disclosing entity had to comply with the following nine conditions: systematic discovery of the violations through a voluntary environmental audit; voluntarily discovery of violation; disclosure of violation in writing to EPA; discovery and disclosure independent of government or third party; prompt correction and remediation of violation; take steps to prevent recurrence of the violation; not be a repeat offender, same or similar violation must not have occurred within the past three years; violation must not result in serious actual harm to the environment or presented an imminent and substantial endangerment to public health or the environment; and regulated entity must cooperate with EPA. Under the revised Policy, EPA will completely eliminate the punitive or gravity based component of civil penalties for disclosing entities that comply with all the referenced conditions. The punitive component of the penalties will be reduced by 75% where the disclosing entity complies with all the conditions of the Policy, except for the requirement that the violation be discovered through a systematic compliance management system. EPA will generally not recommend criminal prosecution of disclosing entities that meet at least conditions two through nine.

EPA continues to retain discretion to recover the economic benefit gained by the disclosing entities by non-compliance, although where the economic gain is insignificant and the entity has met all the conditions, the entire penalty may be waived by EPA.