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Compliance and Enforcement Annual Results FY2008:
Compliance Incentives

FY2008 Annual Results Topics

EPA is committed to a strong enforcement program to achieve environmental protection by deterring violators, bringing violators into compliance, correcting damage to the environment and ensuring that those who fail to comply do not put those who follow the law at an economic disadvantage.  EPA uses its compliance incentive policies to promote self-policing, improvement in environmental management practices, and reduction of pollution in the environment.  In fiscal year 2008, EPA resolved disclosed violations that, when corrected, will ensure over 5 million pounds of pollutant reductions annually.

EPA’s leading compliance incentive tool is EPA’s Audit Policy, "Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations.”  In effect since 1995 and revised in 2000, the Audit Policy reflects input from industry, trade associations, state environmental programs, and public interest groups.  The Audit Policy is designed to encourage regulated entities to voluntarily discover, promptly disclose, expeditiously correct, and ultimately prevent the recurrence of environmental violations.  In turn, EPA offers incentives to violators, such as penalty mitigation.  The Audit Policy, together with the Small Business Compliance Policy, EPA’s compliance incentive tool designed for small businesses, has yielded great results.  Between 1995 and October 2008, over 5,000 entities disclosed violations at more than 14,600 facilities.  Building on its success, EPA is taking the Audit Policy in new directions, to help increase the number of self-disclosures and maximize environmental outcomes from their resolution.

Tailored Incentives: Interim Approach to Applying the Audit Policy to New Owners

To encourage audits and disclosures with the potential to yield significant environmental and human health benefits, in 2008, EPA launched the “Interim Approach to Applying the Audit Policy to New Owners,” 73 Fed. Reg. 44991 (2008). This approach is tailored for new owners who want to make a “clean start” at their recently acquired facilities by addressing environmental noncompliance that began prior to acquisition.  For those who come forward and promptly correct violations that began prior to ownership, EPA will mitigate some portion of the economic benefit component of the penalty and will allow gravity-based penalty mitigation for a greater range of violations.

Electronic Audit Policy Self-Disclosure System (eDisclosure)

In order to streamline the processing and resolution of self-disclosures EPA began piloting a Web-based system to allow companies to electronically self-disclose violations under EPA’s Audit Policy. eDisclosure makes it easier and faster to self-report environmental violations and speeds up EPA’s processing of self-disclosures by ensuring that each disclosure contains complete information. eDisclosure is also part of a larger movement across government to use new technologies to provide citizens with greater access to government. Facilities nationwide can use eDisclosure to disclose violations of the Emergency Planning and Community Right-to-Know Act, and facilities located in EPA Region 6 states -- Arkansas, Louisiana, New Mexico, Oklahoma and Texas -- can also use eDisclosure to disclose violations of other environmental laws. Once EPA has gained experience with electronic self-disclosures, EPA will refine the system, as necessary, and decide whether to expand it nationwide to cover the self-disclosure of other environmental violations.

EPA entered into the following Audit Policy settlements, agreements and initiatives in Fiscal Year 2008.

American Air Liquide Inc.

American Air Liquide Inc. (Air Liquide) made a “clean start” by disclosing and correcting dozens of violations of federal environmental regulations at 29 newly acquired facilities in 17 states. The multimedia violations were discovered as part of due diligence associated with the acquisition of these facilities by Air Liquide. As required by the Audit Policy, the violations were promptly disclosed and corrected. Specifically, the company developed spill prevention, control, and countermeasure plans, installed appropriate secondary containment at 24 facilities, obtained federal permits for storm water discharges and implemented storm water pollution prevention plans at 15 facilities. In addition, the company notified state and local emergency planning and response organizations regarding the presence of hazardous substances. The company spent more than $1 million to bring these newly acquired facilities into compliance. Air Liquide paid a $383,500 civil penalty for these self-disclosed violations.

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Self-Audit Agreements with Maryland Transportation Agency

EPA Region 3 entered into the first ever audit agreements encompassing the transportation agency for an entire state. EPA Region 3 signed six multimedia self-audit agreements with the Maryland State Highway Administration, Maryland Port Authority, Maryland Aviation Administration, Maryland Motor Vehicle Administration, Maryland Transportation Authority and Maryland Department of Transportation (MDOT) Secretary’s Office. These agreements provide for multimedia audits to be completed in the next 3 years. These agreements followed a settlement with the Maryland Transit Administration (MTA Baltimore Bus & Light Rail) that resolved alleged multimedia violations. MDOT, the agency responsible for all of Maryland’s transportation agencies including MTA, approached EPA Region 3 to enter into an agreement to audit all of its transportation facilities in an effort to return to compliance. [More Information]

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College and University Compliance Incentive Initiatives

Under the EPA Region 4 Colleges and Universities Compliance Incentive Initiative, over 400 four-year public and private colleges were invited to join with the region in utilizing the EPA Audit Policy to voluntarily discover, promptly disclose and expeditiously correct violations. Ultimately, 192 colleges agreed to participate, including 4 which chose to include their university hospital systems. Many participating colleges entered into audit agreements with the region. The first audit agreement was signed on June 25, 2007, at a ceremony co-hosted by one of the participating universities, and the last agreement covering 16 private colleges in South Carolina was signed in September, 2008. In total, seven audit agreements covering 161 colleges were signed by the region. The first college disclosure was delivered in early FY 2008, with the number picking up dramatically in the latter half of the fiscal year. The last college disclosure is expected in early FY 2012.

EPA Region 5 signed an agreement with 16 independent Wisconsin colleges and universities that allows the schools to perform their own multimedia compliance audits. Under the audit agreement, the participating institution will correct the violations within 60 days of its receipt of the Final Audit Report. The performance of the compliance audits by the participating institutions will implement the purpose of the Audit Policy to enhance the protection of human health and the environment by encouraging regulated entities to voluntarily discover, disclose, correct and prevent violations of federal environmental law.

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