1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
      f                 WASHINGTON, D.C. 20460
                                                          OFFICE OF
                                                        ENFORCEMENT AND
                                                       COMPLIANCE MONITORING
       Advantages and Disadvantages of  Environmental  Auditing


     Attached is a list of the advantages  and  disadvantages  of
environmental auditing.  The first two  sections  are essentially
the "traditional" advantages and disadvantages.   The  third  section
covers the advantages and disadvantages derived  from  auditing
that was agreed to in settling enforcement  actions.   These
reasons were taken from a draft report  that  was  done  by  PP&E,
Jas Singh's firm.  I thought you might  find  this third section
useful as it contains some profound advantages that many have
not considered.  It certainly may help  convince  corporate manage-
ment to engage in auditing.  Please feel free  to contact me
if you have any questions about this  list.

                       Jonathan D. Libber,  Acting Chief
                       Legal Enforcement Policy  Branch
                       (202) 475-8777

-------
Advantages and Disadvantages of Environmental Auditing

Traditional Advantages of Environmental Auditing

A.  Better Compliance

B.  Fewer Surprises (better to know compliance status
    now than when it's too late).

    1.  Chemical Waste Management - $900 million loss in
        stock price following closure of landfill.

    2.  Union Carbide - $700 million loss in stock
        price following Bhopal.

    3.  Rollins $70 million loss in stock price
        following closure of incinerator.

C.  Fewer penalties and suits.

    1.  federal or state enforcement

    2.  private citizen enforcement

    3.  private damage suits

D.  Better public image with the local community and
    regulators.

    1.  better chance of getting what you want in zoning
        or building permits.

    2.  more likely to obtain financial breaks from your
        state or local government

    3.  fare better with community notification require-
        ments under SARA.

    4.  bounty of $10,000 for criminal prosecutions under
        SARA.

E. f^otential Cost Savings.

F. ,, Increased Information Transfer.
     . *,*> -

G.  Manage Regulatory Overload (259 sets of EPA Regs just
    under review, development or revision).

H.  Bolster role of corporate Headquarters environmental
    management.  Director of compliance certifies, reviews
    data,  issues reports etc.).

-------
-2-
II.
Traditional Disadvantages
A.
Commitment of Resources to Run the Program.
B.
Temporary Disruptions of Plant operations.
C.
Increased Anmunition for Regulators and Nongovern-
mental Litigants
D.
Increased Liability When You Fail to Respond to the
Audit Recommendations.
III. Advantages of Environmental Auditing in Settlements
A.
Benefits to Companies
1 .
2.
Improvements in Environmental Management Systems
in Corporations.
a.
I
env. policies - allows corporation to make
changes in policy manuals, & training.
b.
organization & staffing - changes allow a
corporation to better track wastes, prepare
permit applications, communicate environ-
mental policies programs and objectives to
the facilities.
c.
staff management and training - not only
achieved better compliance but greater
awareness of regulatory requirements. Also
helps bolster role of corporate headquarters
env. management.
d.
env. planning - improved ability to antici-
pate and implement future env. requirements
and respond quickly to env. hazards.
Business Benefits of Settlements
a.
raising capital in financial markets - demon-
strate to potential investors that you are
minimizing your environmental liabilities.
b.
improved public image - calm nervous public
and demonstrates that you are a responsible
corporate citizen.
c.
increased ability to divest properties -
ability to assure prosective buyers of the
absence of environmental liabilities.

-------