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EPA Audit Policy Update – Scrutiny of Voluntary Self-Disclosures Set to Increase
Thursday, July 21, 2022

The EPA intends to increase its review of voluntary self-disclosures of violations submitted electronically under EPA’s Audit Policy. The EPA Office of Inspector General (OIG) recently issued a report detailing the results of an evaluation of EPA’s process for screening self-reported environmental violations made through its eDisclosure system. The OIG’s report concluded that EPA currently lacks the necessary internal controls to ensure that violations disclosed through the eDisclosure system are screened for significant concerns, such as criminal conduct and potential imminent hazards.

The Audit Policy provides reduced penalties and mitigation incentives to a regulated company if the company conducts voluntary audits, promptly discloses violations discovered to the EPA, and takes timely corrective action. The company must comply with additional criteria to get the full benefit of the Audit Policy. The Audit Policy was updated in 2015 to require electronic reporting using the newly established eDisclosure portal. The eDisclosure portal receives and processes submissions under the Audit Policy into two categories:

Category 1: EPCRA violations that meet all nine of the Audit Policy’s conditions.

Category 2: Non-EPCRA violations and violations of EPCRA that do not meet the criteria for category 1.

The findings of the OIG’s report were primarily focused on Category 2. EPA previously stated that it would screen Category 2 disclosures for significant concerns. The OIG’s report calls into question EPA’s current ability to conduct such screenings effectively. For starters, EPA lacks any national guidance directly personnel on how to screen submissions or any training specific to the eDisclosure system. As a result, the OIG found that screening efforts were inconsistent across EPA regions. According to the OIG’s report, some EPA regions believed that the Office of Enforcement and Compliance Assurance (OECA) was responsible for screening, some did not have access to the eDisclosure system, and others just did not have the resources for adequate screening.

The OIG’s report recommended that OECA take several steps to more effectively screen Category 2 disclosures, including:

  1. Developing national guidance detailing a process for screening the eDisclosure submissions for significant concerns.

  2. Providing eDisclosure-specific training to EPA headquarters and EPA regions on eDisclosure.

  3. Developing performance measures for the eDisclosure system.

  4. Assessing eDisclosure’s functionality to identify and implement improvements.

The OECA already released a statement that it agreed with all of the OIG’s recommendations and proposed September 30, 2022, for completion of recommendation 2 and September 30, 2023, for the other three recommendations.

These changes will likely cause an increase in the amount and thoroughness of Category 2 disclosure screenings. As a result, going forward, companies seeking to utilize the Audit Policy and submit a Category 2 voluntary self-disclosure will be subject to closer scrutiny as to whether they qualify under the Audit Policy and more frequent follow-up inspections.

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