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EPA Announces Plans to Modernize Audit Policy
On June 10, 2015, and June 15, 2015, the U.S. Environmental Protection Agency (EPA) held a webinar entitled “eDisclosure: EPA's Plan to Modernize the Implementation of the Audit Policy and the Small Business Compliance Policy.” During the webinar, EPA set forth its plans to release in fall 2015 a centralized online portal called eDisclosure to allow companies to submit self-disclosures electronically under EPA’s Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations (Audit Policy) and Small Business Compliance Policy. EPA stated that it is developing eDisclosure in an effort to continue to promote the benefits of self-disclosures, while also saving time and resources by modernizing and streamlining the disclosure procedure.
Companies with potential Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) violations that can satisfy all nine conditions of self-disclosure under the Audit Policy (i.e., systematic discovery; voluntary discovery; prompt disclosure; independent discovery and disclosure; correction and remediation; prevent recurrence; repeat violations are ineligible; certain types of violations are ineligible; and cooperation) are eligible for 100 percent penalty mitigation, while companies that satisfy conditions 2-9 (i.e., all except systematic discovery) are eligible for 75 percent penalty mitigation. A related policy for small businesses (those with 100 or fewer employees) modifies the conditions as further incentives (e.g., 100 percent penalty mitigation even if the discovery is not systematic, with longer compliance timeframes).
FIFRA self-disclosures will fall into Tier 2, under which the eDisclosure system will automatically issue an electronic Acknowledgement Letter (AL) confirming EPA’s receipt of the disclosure, and promising that EPA will make a determination as to eligibility for penalty mitigation if and when it considers taking an enforcement action for environmental violations. There are timeframes set for the submission, and/or potential extension, of compliance reports certifying violations have been corrected.
If an extension is sought for more than 60 days (or within 90 days of submitting an online Small Business Compliance Policy disclosure) past the date of discovery of such violation(s), EPA states that eDisclosure will automatically grant the request, but that EPA could later determine, if and when it considers taking an enforcement action, that the correction was not made promptly and thus this Audit Policy condition is not satisfied.
Companies with potential FIFRA violations can benefit from EPA’s development of eDisclosure, as this is a positive step indicating EPA’s support for and interest in encouraging continued use of its Audit Policy There are several issues that companies will need to review carefully, including Central Data Exchange (CDX) registration, protection of confidential business information, special issues for “new” owners disclosing violations of recently acquired companies, and changing EPA policies regarding its potential disclosure of settled and unsettled Audit Policy cases.
EPA will issue in fall 2015 a Federal Register notice simultaneously with its launch of e-Disclosure to describe the new portal and how EPA plans to implement the Audit Policy and Small Business Compliance Policy. Although there is no formal comment period, stakeholders should consider providing input now while EPA is in the midst of developing eDisclosure.