By Steven M. Siros

Under U.S. EPA's current audit policy, companies that self-disclose environmental violations may be entitled to the elimination or reduction of penalties for non-compliance.  However, U.S. EPA recently announced that it is considering limiting the benefits that companies can receive for voluntarily self-disclosing environmental violations. 

According to U.S. EPA, in fiscal year 2011, self-disclosures only resulted in the reduction of 3,000 pounds of pollutants as compared to 1.8 billion pounds in pollutant reduction achieved through other enforcement mechanisms.  U.S. EPA also commented that these self-disclosures are not being made in high-priority enforcement areas.  For example, 54 percent of the disclosures made from fiscal year 1999 through 2011 were made under the Emergency Planning and Community Right to Know Act.   U.S. EPA's recently issued draft National Program Manager Guidance provides that U.S. EPA intends to focus its enforcement priorities on pollution that poses the greatest threats to public health and the environment, such as emissions from coal fired power plants.  The draft guidance questions whether U.S. EPA's self-disclosure program has been effective in reducing high-threat pollutants.

Notwithstanding U.S. EPA's skepticism, it should be noted that the volume of pollution reduced through self-disclosures in 2011 may be an anomaly.  For example, in 2009, 22.9 million pounds of pollutants were reduced through self-disclosures out of a total pollutant reduction of 580 million pounds.  Moreover, even U.S. EPA has acknowledged that it continues to receive large numbers of self-disclosures each year which should enable U.S. EPA to better focus its enforcement priorities on what it deems high-threat pollution. 

 U.S. EPA has not provided specific details concerning what changes it might be contemplating with respect to the audit policy's self-disclosure incentives but we will continue to track this issue.