Draft Cal/EPA Policy Would Encourage Environmental Audits

For Immediate Release (C-08-96)
Contact: Communications Office (916) 324-9670
February 16, 1996

555 Capitol Mall, Suite 525
Sacramento, CA 95814
(916) 324-9670
FAX (916) 445-5563

SACRAMENTO - An innovative proposal to encourage employers to perform their own environmental assessments was today released for a 30-day public comment by California Environmental Protection Agency (Cal/EPA).  The document - General Policy on Incentives for Self-Evaluation - has also been provided to key environmental groups and law enforcement officials.

"Our policy draws a carefully-crafted line, encouraging employers to carefully audit their own operations--but retaining full enforcement authority to severely punish those who intentionally violate environmental laws.  The new guidelines are intended to provide a level of comfort for good companies that want to do better, but provide no shelter for bad actors seeking legal loopholes," Cal/EPA Assistant Secretary for Enforcement and Counsel Gerald Johnson said.

Under the new policy, companies that detect, correct and voluntarily report environmental violations found through audits or systematic due diligence can qualify for total penalty waivers or significant reductions.  The policy's mission is to encourage greater compliance with environmental laws and to promote self-policing by the regulated community.

Consistency with U.S. EPA Policy.  Cal/EPA's policy is more comprehensive than United States Environmental Protection Agency's (U.S. EPA) current self-auditing policy which became effective on January 22, 1996.  60 Fed. Reg. 66706-12 (Dec. 22, 1995).   However, to the greatest possible extent, Cal/EPA's policy is consistent with U.S. EPA's policy, to provide simplicity, predictability and accountability.  For example, Cal/EPA's policy will provide benefit to companies which voluntarily discover violations through environmental audits or due diligence programs.

As with EPA's policy, nine conditions must be met for a company to gain reduction or elimination of state gravity based penalties:

1. the violation is discovered through an environmental audit or an objective, documented, systematic procedure or practice reflecting the company's due diligence;
2. the violation is identified voluntarily, and  not through a legally mandated monitoring or sampling requirement;
3. the violation is promptly disclosed after discovery;
4. the discovery and disclosure occur prior to and independently of government or third party action;
5. the violation is corrected as expeditiously as possible;
6. the company agrees in writing to take steps to prevent a recurrence;
7. the specific violation (or closely related violation) has not occurred previously within the past three years at the same facility, or is not part of a pattern of  violations at other facilities operated by the company;
8. no actual, serious harm has resulted from the violation, and it did not violate the specific terms of any judicial or administrative order, variance or consent agreement;   and
9. the company cooperates as requested by Cal/EPA.

Cal/EPA's policy is more comprehensive than federal policy in three major areas:

Penalty Reduction.  Successfully fulfilling all nine conditions excuses all gravity based  penalties.  If a company meets all conditions except the first, gravity based penalties will  be reduced 75% and may be further reduced by up to 90%.   U.S. EPA only allows for a 75% reduction.  Cal/EPA's policy permits an extra reduction of up to 15% to companies which
invest in pollution prevention programs.

Criminal Referrals.  Cal/EPA will not recommend criminal prosecution where all nine conditions are met, provided the violation does not involve a management philosophy or practice that concealed or condoned the violation, or the conscious and knowing involvement in, or willful blindness to violations of high level corporate officials or managers.  U.S. EPA retains the right to refer violations for criminal prosecution against companies where "high- level corporate officials or managers were consciously involved or willfully blind to the violations."

Fee for Service Certification.  Although U.S. EPA encourages business to initiate self-audit or due diligence programs, their policy provides minimal guidance as to what type of procedures and conduct will qualify for consideration under the policy.   Cal/EPA's policy attempts to provide industry with greater certainty by offering a fee-for-service audit/due diligence review.  Entities which have established an audit/due diligence program will be able to receive certification from Cal/EPA of the adequacy of their program prior to any reporting of a violation discovered through the audit/due diligence.

While such certification is not a guarantee of immunity from an enforcement action, businesses would know that as long as they follow the procedures specified in their certified program they are likely to receive the full benefit of the provisions of this policy.

A copy of the complete policy can be obtained from Cal/EPA's World Wide Web homepage (www.cahwnet.gov/epa) or by calling (916) 327-2064.

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