Best practices for conducting voluntary environmental audits

Conducting a voluntary environmental audit enables businesses and organizations to systematically uncover wasteful and inefficient activities and minimize or, under the EPA’s Audit Policy, eliminate exposure to regulatory penalties when potential violations are discovered. The EPA’s Audit Policy defines environmental auditing as “a systematic, periodic, objective, and documented assessment of an organization’s operations and practices compared to regulatory requirements.”

EPA’s Audit Policy incentives

The EPA’s Audit Policy offers several major incentives for regulated entities to voluntarily discover and resolve violations of federal environmental laws and regulations. Incentives include significant reductions of gravity-based penalties, no recommendations for criminal prosecution, and no routine requests by the Agency for audit reports.

Best practices for conducting voluntary environmental audits

If your business is considering conducting a voluntary environmental audit, follow these best practices:

1. Determine the scope. Determining the scope is critical for conducting an effective environmental audit. You’ll need to decide exactly what you’re auditing, such as certain locations of your facility, emissions, waste management, or other environmental aspects of your organization. Be sure you know the EPA and/or your state’s compliance obligations regarding the areas you choose to audit.
2. Hire a third-party or build your audit team. Hiring a third-party auditor is often viewed as more credible because the individual will have specialized knowledge and certifications, and can provide an unbiased evaluation. If you choose to create an internal audit team, the employees must be trained and have in-depth knowledge of the areas being audited and the applicable environmental regulations. This could include a cross-functional team from operations, facilities management, and compliance departments.
3. Gather compliance documents and review protocols. Before conducting the audit, you need to gather all applicable EPA and state compliance documentation, including your company’s environmental compliance policies and internal audit protocols.
4. Conduct the audit and follow EPA protocols. The auditor or audit team conducting the audit will assess the target area(s), collect data, and evaluate compliance. Depending on what areas you’re auditing, be sure to follow the applicable EPA Audit Protocols.
5. Correct or remediate. Once an audit is completed and reviewed, violations must be corrected or remediated. The steps for correction or remediation will vary depending on the type of violation. Failing to take appropriate action promptly–within 60 days in most cases–can increase your risk of facing EPA enforcement.
6. Disclose. Your facility has 21 days from the time of discovery to disclose a violation to the EPA through writing or by using the eDisclosure system.
7. Review and update. Periodically review your audit process and update accordingly with regulation changes and updates to facility procedures.

Benefits of an audit

There are many benefits of performing an audit and self-disclosing noncompliance, including:

• Returning to compliance without concern of enforcement. Audits can provide a company with the ability to proactively address compliance issues. Companies won’t have to worry about inspections or large penalties if noncompliance is discovered because of an environmental audit.
• Civil penalty forgiveness. The audit policy provides between 75% and 100% of forgiveness of gravity-based civil penalties if a company performs an audit and meets the required policy conditions.
• Management tool. Rather than being motivated by fear of noncompliance and resulting penalties, audits should be viewed as positive and beneficial tools that allow management to provide information on environment, health, and safety standards to ensure a safer workplace.
• Limiting likelihood of criminal prosecution. Companies that voluntarily disclose violations have the potential to avoid criminal prosecution if the companies meet the audit conditions.
• Benefits for new owners. The EPA’s new owner audit policy  gives the company an opportunity to fix any environmental problems it finds at its acquired facility and make a “clean start.”

Risks of an audit

However, there are also risks of performing an audit and self-disclosing noncompliance, including:

• Exposing noncompliance. The primary risk is that an audit may uncover an area of noncompliance with environmental laws and regulations, but the company does nothing to correct the deficiency.
• Lack of follow-up. If violations are known but not corrected for whatever reason, the company could be subject to greater penalties than if the violations had never been identified.
• Not a “shield” from enforcement. The audit policy is guidance, not the law. Therefore, the EPA may elect not to provide penalty forgiveness.
• Violations become public. Even if the company qualifies for state or federal civil penalty reductions or avoids a penalty altogether, the violations still become public once disclosed to regulators.
• Inspection post-disclosure. The EPA may perform an inspection of the facility following voluntary disclosure. Be sure that facility records and operations are in compliance in advance of any inspection.

Although an environmental audit may have inherent risks, these risks can be mitigated by doing the following:

• Involving legal counsel during an audit to review the potential liabilities that must be considered during the audit;
• Paying careful attention to the information contained in e-mail correspondence related to issues raised in an audit; and
• Having a plan in place before conducting the compliance audit for the diligent follow-up of the issues identified in the audit report, thereby ensuring that corrective action occurs in a timely manner.

Decision to conduct an audit

If you are considering conducting an environmental audit, carefully consider the benefits and risks, and be sure to take the time to develop an effective audit program. BLR’s EHS Hero® offers a comprehensive audit and inspection management tool to simplify your auditing procedures, ensure compliance with regulatory standards, and protect the health and safety of your employees.