United States
Environmental Protection
Agency
Office of
Enforcement
and Compliance Assurance
(2261 A)
EPA 300-B-96-011
Spring 1997
Environmental Audit
Program Design Guidelines
For Federal Agencies
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NOTICE
The Environmental Audit Program Design Guidelines for Federal Agencies on-line
document does not contain any appendices. These are available in the hard copies
only. For more information about this document, please contact Andrew Cherry at
202/564-5011. To obtain a hard copy, call, fax, or write Priscilla Harrington at:
U.S. Environmental Protection Agency
401 M Street, S.W., MC: 2261A
Washington, D.C. 20460
Phone: 202/564-2461
Fax: 202/501-0069
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ACKNOWLEDGMENT
This guidance was prepared by the Federal Facilities Enforcement Office (FFEO), U.S.
Environmental Protection Agency (EPA) for federal facilities to use as guidance in
establishing and implementing environmental audit programs. Much of the work of
creating the publication was performed under Contract No. 68-W4-0005.
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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION 1-1
1.1 Overview 1-1
1.2 How to Use This Document 1-2
1.3 EPA's 1986 and 1995 Environmental Audit Policies 1-2
1.4 History of Environmental Auditing 1-6
1.5 Federal Facilities and Environmental Auditing 1-7
1.6 Trends in Environmental Auditing 1-8
1. 6 .1 Management Audits 1-8
1. 6 . 2 Pollution Prevention Opportunity Assessments 1-10
1. 6 . 3 Auditing Standards 1-10
1. 6 . 4 Professional Recognition 1-11
1.7 Relationship of Auditing to Effective Environmental Program
Management 1-11
PART I. AUDIT PROGRAM DEVELOPMENT AND MANAGEMENT
CHAPTER 2: UNIQUE ASPECTS OF FEDERAL FACILITY AUDITING 2-1
2.1 Overview 2-1
2.2 Agency Mission vs. Environmental Compliance 2-2
2.3 National Security Concerns 2-4
2.4 The Federal Budget Cycle 2-5
2.5 Federal Agency Budget Process 2-6
2.6 Contractor and Tenant Activities 2-8
2.7 Waiver of Sovereign Immunity 2-10
2 . 7 .1 Resource Conservation and Recovery Act (RCRA) .... 2-11
2 . 7 . 2 Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) 2-11
2 . 7 . 3 Emergency Planning and Community Right-to-Know Act
(EPCRA) 2-12
2 . 7 .4 Pollution Prevention Act of 1992 (PPA) 2-12
2.7.5 Clean Air Act (CAA) 2-13
2.7.6 Clean Water Act (CWA) 2-13
2.8 Freedom of Information Act Requests 2-14
2.9 Status of Environmental Auditing at Federal Facilities. 2-15
2.9.1 GAO Report 1995 2-16
2.10 Status of Environmental Management at Federal Facilities
(Benchmark
Report) 2-17
2.11 The Role of EPA's Federal Facility Office 2-18
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TABLE OF CONTENTS (CONTINUED)
CHAPTER 3: LEGAL CONSIDERATIONS 3-1
3.1 Overview 3-1
3.2 Document Protection/Freedom of Information Act Requests. 3-2
3 . 2 .1 Litigation/Discovery 3-4
3.3 EPA Requests for Audit Reports 3-6
3.4 EPA's 1995 Audit Policy 3-7
3.5 EPA/DOJ Policy Letter on State Audit Privilege Laws and
Policies 3-13
3.6 EPA Policy Regarding the Use of Auditing in Legal
Settlements 3-14
CHAPTER 4: AUDITING FEDERAL FACILITIES IN FOREIGN COUNTRIES/0VERSEAS4-1
4.1 Overview 4-1
4.2 Role of Facility Management 4-1
4.3 Designing an Overseas Environmental Audit Program 4-3
4.4 Conducting an Overseas Audit Program 4-4
4.5 Summary of Key Elements 4-6
4.6 Sources of Information 4-7
CHAPTER 5: DESIGNING AN AGENCY-WIDE AUDIT PROGRAM 5-1
5.1 Overview 5-1
5.2 Factors Affecting Program Design 5-1
5.3 Identifying Audit Program Goals 5-3
5.4 Identifying Audit Program Objectives 5-5
5.5 Selecting the Type and Scope of an Environmental Audit.. 5-6
5 . 5 .1 Compliance Audits 5-7
5 . 5 . 2 Property Transfer Assessments 5-7
5 . 5 . 3 Management Audits 5-9
5.5.4 Waste Contractor/Vendor Audits 5-9
5 . 5 . 5 Pollution Prevention Opportunity Assessments 5-10
5.6 Targeting Facilities 5-11
CHAPTER 6: PROGRAM ADMINISTRATION 6-1
6.1 Overview 6-1
6.2 Program Initiation (Genesis of the Program) 6-1
6.2.1 Develop An Environmental Audit Policy 6-1
6 . 2 . 2 Internal Versus External Audits 6-2
6.2.3 Use Of Contractors Versus Agency Staff 6-3
6.3 Program Management Issues and Activities 6-3
6 .3 .1 Securing Upper Management Support and Resources ... 6-3
6.3.2 Support From Field Offices 6-4
6 . 3 . 3 Obtaining Qualified Personnel 6-5
6.3.4 Medical Monitoring 6-7
6.3.5 Quality Assurance and Audit Program Performance
Measurement 6-7
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TABLE OF CONTENTS (CONTINUED)
6 . 3 . 6 Reporting Responsibilities 6-8
6 . 3 . 7 Post-Audit Activities and Corrective Measures 6-8
6 . 3 . 8 Budget Coordination and FEDPLAN 6-8
6.4 Legal Issues 6-9
6.4.1 Written V. Oral Reports 6-9
6.4.2 Exit Interview 6-10
6 . 4 . 3 Document Protection and Retention 6-11
6 .4 .4 Involvement Of General Counsel 6-11
6.4.5 Report Distribution 6-12
CHAPTER 7: RESOURCES AND TOOLS FOR AUDITORS 7-1
7.1 Overview 7-1
7.2 Pre-Visit Questionnaire (PVQ) 7-1
7.3 Protocols/Checklists 7-2
7.4 Legal Issues 7-5
7.5 Photography Equipment 7-6
7.6 Field Assessment Equipment 7-6
7.7 Protective Clothing 7-7
7.8 Computer Capabilities for Tracking and Reporting 7-7
7.9 Access to Technical References 7-8
7.10 Chain of Title Reports 7-8
7.11 Aerial Photographs 7-9
PART II. THE AUDIT PROCESS
CHAPTER 8: PRE-AUDIT ACTIVITIES 8-1
8.1 Overview 8-1
8.2 Setting the Objectives and Scope of the Audit 8-3
8.3 Planning and Preparing the Audit Team for the Site Visit 8-4
8.3.1 Review Relevant Regulations 8-5
8.3.2 Review and Refine Audit Protocols 8-6
8.4 Preparing Facility Management for the Audit 8-7
CHAPTER 9: ON-SITE ACTIVITIES 9-1
9.1 Overview 9-1
9.2 Introductions with Facility Management 9-1
9.3 Site Interview with Pertinent Facility Staff 9-1
9.4 Site Walk-Through 9-2
9.5 Record/Documentation Review 9-4
9.6 Exit Interviews 9-5
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TABLE OF CONTENTS (CONTINUED)
CHAPTER 10: POST SITE ACTIVITIES 10-1
10.1 Overview 10-1
10.2 Audit Team Debriefing 10-1
10.2.1 Preliminary Issues 10-1
10.2.2 Develop List of Significant Findings 10-1
10.2.3 Prioritize Audit Findings 10-2
10.2.4 Clarify Assignments for Audit Team Members 10-4
10.3 Substantiation of Significant Findings 10-5
10.3.1 Regulatory Reviews 10-5
10.3.2 Phone Calls/FOIA Requests to Regulators 10-6
10.3.3 Vendors 10-7
10.4 Identify and Gather Additional Data 10-7
CHAPTER 11: REPORT WRITING AND FOLLOW-UP 11-1
11.1 Overview 11-1
11.2 Field Preparation 11-1
11.3 Report Preparation 11-2
11.4 Sample Report Format 11-3
11.5 Report Follow-Up (Courtesy Draft to Facility Management 11-4
11.6 Develop Action Plans and Corrective Measures 11-4
11.7 Communications with Senior Agency Officials on Significant
Reports
Findings 11-4
11.8 Enter Audit Findings and Recommendations Into a Formalized
Tracking System 11-5
11.9 Budget for Corrective Actions and Coordinate with Federal
Budget
Cycle 11-6
11.10 Follow-Up Audits and Verification that Corrective Measures
Have
Been Implemented 11-6
LIST OF APPENDICES
APPENDIX A 1986 EPA AUDIT POLICY A-1
APPENDIX B EPA POLICY REGARDING INCENTIVES FOR SELF-POLICING:
DISCOVERY, DISCLOSURE, CORRECTION AND PREVENTION OF
VIOLATIONS B-l
APPENDIX C DOJ POLICY - FACTORS IN DECISIONS OF CRIMINAL PROSECUTIONS
FOR ENVIRONMENTAL VIOLATIONS IN THE CONTEXT OF SIGNIFICANT
VOLUNTARY COMPLIANCE OR DISCLOSURE EFFORTS BY THE
VIOLATOR C-l
APPENDIX D UNITED STATES SENTENCING COMMISSION GUIDELINES -
DEFINITION OF EFFECTIVE ^ DUE DILIGENCE PROGRAM" D-l
APPENDIX E EPA POLICY CONCERNING THE ROLE OF CORPORATE ATTITUDE
IN CRIMINAL DELISTING E-l
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APPENDIX F JOINT EPA-DOJ POLICY LETTER TO FEDERAL AGENCIES REGARDING
STATE AUDIT PRIVILEGE AND IMMUNITY LAWS F-l
APPENDIX G CODE OF ENVIRONMENTAL MANAGEMENT PRINCIPLES (CEMP)
FOR FEDERAL AGENCIES G-l
APPENDIX H SAMPLE PRE-VISIT QUESTIONNAIRE - U.S. ARMY H-l
LIST OF FIGURES
Figure 1 EPA Definition of Environmental Auditing 1-4
Figure 2 Pyramid of Audit Types 1-9
Figure 3 The Expanded Corrective Action Process 1-12
Figure 4 Sample Checklist and Worksheet from EPA's Generic Audit
Protocol 7-4
Figure 5 Schematic Overview of the Audit Process 8-2
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CHAPTER 1: INTRODUCTION
1.1 OVERVIEW
Environmental regulations are becoming increasingly complex and costly for both
private and public sector regulated entities. Federal agencies, however, differ from the private
sector in how they must comply with those regulations. The goal of reducing the national debt
has led to a simultaneous decrease in available Federal agency budgets for environmental and
other program areas. Thus, Federal agencies are being asked to do more with less - comply
with all applicable environmental regulations while utilizing fewer resources to accomplish the
goal of full compliance. An environmental audit is one tool that Federal agencies can use to
comply with the regulations, as well as to improve the efficiency of operations and conserve
limited fiscal and labor resources.
A number of factors must be considered when designing and implementing a Federal
agency environmental audit program. In developing an effective audit program, an agency
environmental manager must always remain aware that: (1) the audit program should
complement and contribute to the agency mission; (2) securing funding for the audit program
and the implementation of audit findings must be an integral part of the agency budgeting
process; (3) national security issues may impact the nature of the audit program; (4) federal
facilities may be owned and operated by different public and private entities; and (5) the
missions and operations of federal facilities vary widely and, as a result, the audit program must
be flexible enough to be applicable to all agency facilities, while still allowing for the comparison
of audit results between facilities.
This document is not a "how to" manual for conducting environmental audits. A detailed
discussion of environmental auditing protocols, i.e., the "how to" of environmental auditing is
contained in EPA's Generic Protocol for Conducting Environmental Audits of Federal Facilities,
("Protocol") (EPA # 300-B-95-002). The Protocol provides specific information on the various
media and statutes implicated in environmental auditing, and provides detailed descriptions of
how to conduct a facility audit and establish an audit program. Careful review and adherence to
the Protocol should allow one to develop a sound audit program. In short, the Protocol is an
environmental auditing instruction manual as well as a design manual for establishing an
environmental auditing program.
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This document describes the components of a thorough environmental management
program and informs the reader about the kinds of issues that arise and require addressing in
environmental audits. It addresses programmatic issues in that it identifies the elements of a
sound environmental auditing program, including management elements, resources, both
human and capital that are typically required in establishing an auditing system, and provides
general guidance on what is required of a thorough environmental auditing program. However,
this document does not provide detailed descriptions of how to actually conduct an audit nor
does it tell the reader the precise and detailed steps to follow in creating an environmental
management program. This document is intended to be informative not instructional, and
should be used in conjunction with the Protocols in order to create and undertake an
environmental auditing program.
1.2 HOW TO USE THIS DOCUMENT
This guide is organized in two parts: Part I highlights some of the unique issues and
legal considerations related to conducting environmental audits at both domestic and overseas
federal facilities. Part II contains a detailed discussion regarding the design and administration
of effective environmental auditing programs, along with a summary of resources and tools for
environmental auditors. Part II also addresses the specific steps to conducting an
environmental audit, from pre-audit activities through to on-site activities and post-site activities,
including report writing and follow-up. The guide also contains several appendices which
contain text of relevant EPA and Department of Justice (DOJ) policies in this area, U.S.
Sentencing Commission Guidelines governing the definition of effective "Due Diligence," and a
sample audit pre-visit questionnaire.
1.3 EPA'S 1986 AND 1995 ENVIRONMENTAL AUDIT POLICIES
The U.S. Environmental Protection Agency (EPA) recognizes that environmental
auditing - and sound environmental management generally ~ can provide potentially powerful
tools toward protection of public health and the environment. In encouraging the use of these
tools, EPA has announced the "Environmental Auditing Policy Statement" on July 9, 1986 (51
FR 25004) (1986 audit policy) and the "Incentives for Self-Policing: Discovery, Disclosure,
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Correction and Prevention of Violations" on December 22, 1995 (60 FR 66706) (1995 or final
audit or self-policing policy).
The 1986 audit policy states that "it is EPA policy to encourage the use of
environmental auditing by regulated industries to help achieve and maintain compliance with
environmental laws and regulation, as well as to help identify and correct unregulated
environmental hazards." The policy also specifically endorses environmental auditing at federal
facilities. The 1986 EPA policy is presented in Appendix A of this guide.
The 1995 audit policy offers major incentives for entities (including federal facilities) to
discover, disclose and correct environmental violations. Under the 1995 policy, EPA will not
seek gravity-based penalties or recommend that criminal charges be brought for violations that
are discovered through an "environmental audit" (as defined in the 1986 audit policy) or a
management system reflecting "due diligence" and that are promptly disclosed and corrected,
provided that other important safeguards are met. These safeguards protect health and the
environment by precluding policy relief for violations that cause serious environmental harm or
may have presented an imminent and substantial endangerment, for example. The effective
date of the policy is January 22, 1996. More discussion regarding EPA's 1995 Audit Policy is
provided in Chapter 3, Section 3.4 of this document. The 1995 EPA audit policy is presented in
Appendix B of this document.
In the 1986 policy, EPA defines environmental auditing as "a systematic, documented,
periodic, and objective review of facility operations and practices related to meeting
environmental requirements." Figure 1 depicts EPA's definition of environmental auditing. The
policy identifies several objectives for environmental audits:
• Verifying compliance with environmental requirements;
• Evaluating the effectiveness of in-place environmental management systems; and
• Assessing risks from regulated and unregulated materials and practices.
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Figure 1
EPA Definition of Environmentd Auclting
A REVIEW
Periodic
Systematic
Documented
Objective
By
Regulated
Entities
Facility
Operations
and
Practices
I o Assure
Meeting
Environmental
Requirements
The EPA policy encouraged all Federal agencies subject to environmental laws and
regulations to develop environmental auditing programs to help ensure the adequacy of internal
systems to achieve, maintain, and monitor compliance with environmental requirements. The
policy also notes that Federal agency auditing programs should be designed to identify
environmental problems and develop schedules for remedial actions for audit findings.
Subsequent to the development of EPA's 1986 policy, the Department of Justice
("DOJ") issued a memo explaining DOJ policy on environmental auditing in the
context of criminal prosecutions. This memo1, issued in 1991 (see Appendix C), includes
factors that DOJ considers important in evaluating whether to prosecute environmental
violations. These factors include voluntary disclosure of the violation, cooperation,
preventative measures and compliance programs, persuasiveness of non-compliance,
internal disciplinary action, and subsequent compliance efforts. It was the intent of
DOJ to encourage self-auditing, self-policing, and voluntary disclosure of environmental
violations stating that these activities are considered mitigating factors in the
Department's environmental enforcement activities. The necessity of having a
1 "Factors in Decisions on Criminal Prosecutions for Environmental Violations in the Context of
Significant Voluntary Compliance or Disclosure Efforts by the Violator."
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thorough environmental auditing program cannot be overemphasized. The priority
that DOJ assigns to auditing and self-disclosure as critical mitigating factors in
environmental criminal prosecutions is an indication of how important it is for federal
facilities to develop and implement sound and thorough auditing programs.
On December 12, 1991, EPA published in the Federal Register (56 FR 64785), a
clarification on its policy concerning the role of corporate attitude, policies, practices
and procedures in determining whether a regulated entity has properly corrected
conditions giving rise to a criminal conviction (See Appendix D). The notice indicates
that if the entity has properly corrected these conditions, the agency may consider
removing the facility from the EPA list of violating facilities. Section IV of this notice
specifies the criteria the entity in consideration must demonstrate as proof of a change
in corporate attitude. These criteria were adapted from the proposed U.S. Sentencing
Guidelines for organizational defendants and were later reflected in the final version of
the Guidelines issued by the Department of Justice in 1994. One of the factors stated in
the 1991 federal register notice as "proof of a corporate change in attitude" included
evidence that the regulated entity has put in place an effective program to prevent
and detect violations of the law and that the entity exercises due diligence by taking
several steps that represent the "hallmark" of an effective environmental
management program. One step outlined as an indicator of due diligence was "..the
establishment of an effective program for enforcing its standards (e.g., environmental
auditing system designed to prevent or detect non-compliance)". Therefore, as a
follow-up to its 1986 audit policy, EPA and the Justice Department again recognized
the value of environmental auditing as an integral part of a sound environmental
management system.
In November 1994, the United States Sentencing Commission issued
amendments to its sentencing guidelines which include mitigating factors to be
applied when handling down criminal sentences. These factors include a definition of
what the Commission considers to be necessary elements of an effective program of
due diligence to prevent and remedy violations of the law and urges the establishment
of self-evaluative programs to prevent and remedy criminal violations. A copy of the
definition "an effective program to prevent and detect violations of law," taken from
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the 1994 Guidelines Manual is provided in Appendix E. Though broadly applicable to
many types of activities, the guidelines specify the kind of programmatic elements
necessary for auditing and self-evaluation that this audit document is emphasizing. It is
the position of the Sentencing Commission that if an organization which has been
implicated in criminal activities, including gratuitous and unsanctioned criminal
activities of its employees, follows the outlined procedures, a court will consider the
implementation of the self-evaluative program to be a mitigating factor when handing
down a sentence. It is clear that there is a broad based effort on the part of federal
enforcement agencies to encourage and in selected cases compel the development
and implementation of environmental audit programs, especially in situations of
environmental deficiency.
By Executive Order 12088, EPA has committed to provide technical assistance to
Federal agencies to facilitate federal agency compliance with environmental laws.
This guidance manual is one form of that assistance. This guide addresses a number of issues
related to environmental auditing, including: the purpose of environmental audits; unique
aspects of environmental auditing at federal facilities; legal considerations in environmental
auditing; as well as audit program design, administration, implementation, and available
resources.
1.4 HISTORY OF ENVIRONMENTAL AUDITING
In the early 1970s, a number of private industry managers recognized the benefits of
internal auditing and established company programs to conduct these audits. By the late 1970s
and early 1980s, governments, consultants, and lawyers had begun to recognize the benefits of
well-designed audit programs as well. Cahill and Kane (1989) trace the beginning of the use of
environmental auditing as a management tool to actions taken by the Securities and Exchange
Commission (SEC) that required three public companies (U.S. Steel, Allied Chemical, and
Occidental Petroleum) to perform internal environmental audits to determine the nature and
extent of the companies' environmental liabilities for presentation to stockholders in corporate
annual reports.
Later, the promulgation of new and complex Federal regulations regarding hazardous
materials and wastes, such as the Resource Conservation and Recovery Act (RCRA) in 1976
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and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
in 1980, highlighted the need for private sector companies to initiate internal environmental
auditing programs. Many company environmental managers developed and implemented audit
programs as a means of avoiding costs and liabilities associated with non-compliance with
these new environmental requirements.
Recently, with the passage of the Federal Facilities Compliance Act and several
Presidential Executive Orders, federal facilities are now being subject to the same stringent
environmental requirements and liabilities as their private sector counterparts. As a result,
Federal agency managers are coming to recognize the benefits of environmental auditing as
well.
1.5 FEDERAL FACILITIES AND ENVIRONMENTAL AUDITING
Following the passage of RCRA in 1976, and the Supreme Court's decision in Hancock
v. Train, 426 U.S. 167 (1976) which required that Federal agencies must comply with the law,
President Carter issued Executive Order (EO) 12088, Federal Compliance with Pollution
Control Standards (1978). This Order required Federal agencies to comply with all substantive
and procedural requirements of Federal, state, and local environmental regulations. The EO
was a landmark event because for the first time head of agencies were responsible for
environmental compliance, and environmental compliance became a measure of agency
performance. The EO also stipulates that EPA must aid this effort by providing Federal
agencies with technical guidance and assistance to achieve compliance. One way in which
EPA complied with this directive was by issuing the Federal Facility Compliance Strategy in
1984 and a revised version of the Strategy in 1988. These documents, commonly referred to
as the Yellow Books, describe the usefulness and importance of audits, stressing the benefits
of developing a proactive approach to achieving environmental compliance. EPA's
Environmental Auditing Policy Statement of 1986 (described above) is another example of
EPA's resolve to use environmental audits as tools for attaining high rates of compliance.
1.6 TRENDS IN ENVIRONMENTAL AUDITING
The chemical industry was the first to embrace the environmental audit concept in the
1970s. As regulations became more complex, non-compliance costs increased, and EPA
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stressed the importance of conducting environmental audits to reduce compliance costs,
environmental managers of several Federal agencies began to incorporate audits as essential
tools in their operations. As environmental auditing has continued to gain acceptance in both
the private and public sectors, new trends in auditing have emerged. Some of the recent
national and international developments in the field of environmental auditing include
management audits, pollution prevention opportunity assessments, auditing standards, and
professional registration.
Figure 2 depicts the variety of audits typically conducted at facilities. Ascending up the
pyramid the audit type selected becomes less common but more comprehensive in scope. For
example, more compliance audits and property conveyance audits are selected as
environmental management tools than audits assessing "Green" practices (recycling and
procurement of environmentally preferable products) or "Total Risk" where the auditors assess
unregulated risks in addition to regulatory requirements. Also, by ascending up the pyramid,
the audit scope also becomes more complex and issues such as non-compliance with
regulatory requirements are used as indicators for the findings reported in environmental
management systems audits."
1.6.1 Management Audits
Management audits are used to look at the strengths and weaknesses of facility
environmental management systems (EMSs). Management audits differ from compliance
audits in that management audits evaluate the overall effectiveness of an environmental
management program. EPA has developed a comprehensive guidance document which
outlines procedures for conducting management audits. The Generic Protocol For Conducting
Environmental Audits of Federal Facilities, (EPA #300-B-95-002) includes the concept of
conducting EMS audits and is designed to help federal agency environmental managers
determine the overall effectiveness of their EMS programs. The procedures recommended in
"Phase 3" of the EPA Protocol include an assessment of (1) organizational structure, (2)
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Figure 2
Pyramid of AucSt T ypes
/ T otd ^
Environmentd
Risk
ivicncgemenT systems
Regulatory Comdicnoe
Property Conveycnoe
environmental commitment, (3) formality of environmental programs, (4) internal and external
communication program, (5) staff, resources, training and development, (6) program evaluation,
reporting and corrective action, (7) environmental planning and risk management, and (8)
environmental protection program. In addition, an environmental management audit should
assess the organizations ability to assure that the right mix of resources, organization, policies,
and procedures are in place.
Management audits are a critical tool in uncovering the "root causes" of environmental
management deficiencies and are a more effective method to implement thorough and
permanent corrections. For example, a compliance audit observation that waste drums are not
properly labeled results in a deficiency report. This problem could turn up repeatedly. A
management audit may uncover that due to an insufficient training budget, personnel are not
familiar with proper labeling procedures. In this case the "root cause" of an environmental
deficiency is not mislabeling but rather budgetary problems. A management audit is intended to
identify the problem at a systemic level and recommend corrective action such as increasing
the training budget.
1.6.2 Pollution Prevention Opportunity Assessments
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Pollution prevention opportunity assessments (or PPOAs) are used by environmental
managers to identify opportunities to change facility operations to save money, increase worker
safety and morale, and decrease regulatory liability through source reduction techniques.
Source reduction techniques include process efficiency improvement, material substitution,
improved inventory control, housekeeping, and preventive maintenance. EPA has developed a
Pollution Prevention Opportunity Assessment manual, Facility Pollution Prevention Guide,
EPA/600/R-92/008, 1992, that describes a procedure for identifying pollution prevention
opportunities through a formal audit process and continues to conduct training workshops
throughout the country to assist federal facilities in conducting the assessments.
1.6.3 Auditing Standards
Many industry organizations have established auditing standards as a means of
providing guidelines regarding the conduct and content of thorough environmental audits. In
1993, the International Organization for Standardization (ISO) began work on the ISO 14001,
Standards for Environmental Management Systems (EMSs). Incorporated within these
standards are guidelines for environmental audit tools and procedures. ISO 14001 is expected
to be available in final form on or about the summer of 1996.
The International Organization for Standards (ISO) has recently published specific
auditing standards that address General Principles for Environmental Auditing (ISO 14010);
Auditing of Environmental Management Systems (ISO 14011); and Qualification Criteria for
Environmental Auditors (ISO 14012). General Principles include such information as definitions
of basic terms, and the principles that should be adhered to in order to undertake a proper
audit. An example of what is required by the principles includes the need to establish
objectives and scope for an audit; maintaining objectivity, independence and competence of the
audit team; use of due professional care and the use of systematic procedures. These are
some of the general principles that are recommended in setting up an audit program.
These ISO 14000 standards are the basic framework around which an auditing program
may be developed. They are not audit protocols; they provide the standards necessary for
establishing specific elements of audit programs and as such are the foundational elements for
developing environmental audit programs. The ISO standards are of particular importance
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because they represent a formal international standard, accepted by many nations, rather than
an ad hoc auditing standard.
1.6.4 Professional Recognition
The trend toward reducing environmental regulatory costs and liabilities through auditing
procedures has led to the formation of organizations that focus on the concept of environmental
audits. The Environmental Auditing Roundtable (EAR), the Institute for Environmental Auditing
(IEA), and the American Society for Testing Materials (ASTM) are a few of the groups that have
greatly influenced the field of environmental auditing.
An ASTM technical subcommittee on environmental compliance auditing recently
approved (September 10, 1995) two provisional standards regarding environmental compliance
audits and evaluations of Environmental Management Systems (PS 11 and PS 12,
respectively). PS 11 is designed to explain to all regulated entities the definition and description
of accepted practices, procedures, and policies associated with environmental regulatory
compliance audits (ASTM, Standard Provisional Practice for Environmental Regulatory
Compliance Audits, working document, Jan. 1995). Agency and federal facility environmental
managers should keep apprised of the new standards being set by the various organizations to
ensure that their audit programs reflect the latest environmental auditing developments.
1.7 RELATIONSHIP OF AUDITING TO EFFECTIVE ENVIRONMENTAL PROGRAM
MANAGEMENT
An environmental audit is only one part of an agency's environmental management
system. Each agency EMS should be designed to create an organizational culture that strives
toward continuous environmental improvement. With the world marketplace becoming more
competitive, budgets being reduced, federal facilities increasingly needing to comply with state
and local environmental requirements, and citizens demanding more accountability for the
activities of facilities in their communities, managers are becoming increasingly aware of the
importance of developing an agency-wide philosophy of environmental stewardship. This
means not only improving on how a facility achieves environmental compliance, but moving
beyond compliance to include issues of environmental management and organization, public
satisfaction, worker safety and productivity.
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To successfully correct problems, keep problems corrected, and head off finding the
same problems at other facilities, the audit process needs to be expanded (see Figure 3).
When the audit process is expanded, the agency's corrective action part of its environmental
management system becomes more effective. As Figure 3 shows, audit findings are evaluated
for underlying or "root" causes, and corrective actions involve developing management
solutions to resolve root causes. When the focus of corrective actions is on correcting common
root causes, the effectiveness of the audit is increased tremendously. The expanded audit
process can be applied at any level (i.e., facility, field division, or bureau or overall agency).
Rarely does the root cause for facility problems stop at the facility gate; it usually extends
upward into the division or parent agency.
Figure 3
T he Expended Corrective Action Process
Andyze
Exceptions for
Cause/Effect
Group Findngs
for Oommon
Gauses
Fix Problems
Identify
Prod ems
Audit
Devdop Actions
to Gorrect
Underlying
Gauses
Examine Each
Group for
Underlying
Causes
Improve
Environmentd
Mcncgement
System
Effectiveness
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To set goals and measure environmental progress, agency managers must determine
their starting point for environmental improvements. Environmental auditing can help to provide
a benchmark against which environmental programs can be measured (Environmental Auditing,
Banff Centre for Management). Audit findings also can be used by agency and facility
managers to aid in effective and efficient decision-making on environmental and other agency
issues.
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CHAPTER 2: UNIQUE ASPECTS OF FEDERAL FACILITY AUDITING
2.1 OVERVIEW
The private sector has realized significant benefits from conducting environmental audits
for many years. Many of these same benefits can be obtained by Federal agencies, however,
several factors that are unique to Federal agencies must also be considered when developing
and implementing agency-wide audit programs. One example of these additional
considerations is funding. For Federal agencies, unlike the private sector, the allocation of
resources is determined in large part by government policy and regulations that are beyond
agency control. For example, the President and Congress, through the Federal budget setting
process, have a significant influence on the amount of resources that are available to pursue
audit programs and address audit findings. In addition, the process of obtaining funding for
environmental programs is time and resource intensive, and follows a complex process
predefined by authorities outside the control of the agency, such as the Office of Management
and Budget (OMB).
This chapter describes some of the unique issues that Federal agencies may encounter
when designing or upgrading agency-wide environmental audit programs. Issues considered in
this chapter include:
• Agency mission vs. environmental compliance;
• National security concerns;
• The Federal budget cycle;
• The Federal agency FEDPLAN process;
• Contractor and tenant activities;
• Waiver of sovereign immunity;
• Freedom of Information Act requests;
• Status of environmental auditing at federal facilities; and
• The role of EPA's Federal Facility Enforcement Office.
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2.2 AGENCY MISSION VS. ENVIRONMENTAL COMPLIANCE
Private sector business operations are driven by the economics of production, with the
costs associated with environmental compliance factored into the overall profit-loss equation. In
an effort to maximize profits, the private sector has begun to recognize the value of
environmental audits and pollution prevention programs. The unnecessary use of raw materials
in production processes and the increased costs associated with waste and emissions
management are significant factors in motivating the private sector to establish proactive
environmental programs that encourage auditing and pollution prevention. Additionally, liability
risks and costs have increased dramatically due to government and third party lawsuits.
Federal agencies, on the other hand, are driven by statutorily-defined missions. These
missions are established in the statutes that created each agency, and are further clarified by
each agency's mission statement. Environmental compliance has only begun to be "factored"
into the agency's bottom line within the last 20 years. Many Federal agencies have now
adopted their own formal environmental policy statement.
In addition to internal agency policy statements, other specific statutes and Executive
Orders (EOs) require Federal agencies to abide by applicable environmental regulations and
policies. For example, the Federal Facilities Compliance Act of 1990 (FFCA) requires Federal
compliance with all of the hazardous waste requirements to which private industry is held under
the Resource Conservation and Recovery Act (RCRA). Further, EO 12856 requires that federal
facilities comply with the provisions of the Emergency Planning and Community Right-to-Know
Act (EPCRA), including Toxics Release Inventory (TRI) program reporting requirements. The
Executive Order also requires that Federal agencies comply with the Pollution Prevention Act of
1990 (PPA) and prepare pollution prevention strategies and plans to reduce releases of toxic
chemicals by specified levels.
Several Department of Defense (DoD) agencies, as well as the Department of Energy,
are developing progressive environmental programs that go beyond compliance with Federal
requirements by emphasizing environmental audits, pollution prevention, and other proactive
programs such as the Total Quality Environmental Management (TQEM) concept created by
the Global Environmental Management Institute (GEMI).
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Political considerations, changes in agency budget authority and mission, and the
current efforts to "reinvent government," have all placed tremendous pressure on Federal
agencies to downsize while simultaneously improving delivery of services. In such an
atmosphere, agency environmental officials and programs may be caught between the
necessity to maintain a sufficiently responsive environmental program and reduced resources.
In some cases, agency environmental managers must be able to justify a considerable upfront
expense associated with a new program or technology that will prevent future environmental
problems and explain how it will yield a long-term payback in reduced costs and liabilities.
When dealing with hazardous materials, the expression an ounce of prevention is worth a
pound of cure might best be rephrased as, an ounce of pollution prevention is worth millions of
dollars in avoided liability and clean up costs. Unfortunately, justifying this to senior
management in a period of tight budgets is not easy.
Federal environmental managers are tasked with the responsibility to monitor and
evaluate an agency's environmental compliance status and must be conscientious about
assessing the degree of regulated and unregulated environmental risk associated with agency
activities. This requires an ongoing environmental audit program and a parallel effort to
evaluate audit results. The results of this effort will assist agency management and legal staff
in their determination of how environmental issues pose a risk to the successful conduct of an
agency's mission, and serve as an aid in planning to address such risks.
Finally, environmental audit program objectives must reflect the agency's primary
mission and internal environmental policies, while remaining relevant and responsive to an
agency's needs. Thus, the manager of an environmental audit program must understand the
program objectives for all elements of the agency's primary mission to ensure that the audit
program complements, and does not interfere with, the agency's main mission goals. The
primary goal of a Federal agency audit program should be to increase understanding of
environmental requirements to allow the agency to accomplish its mission in an environmentally
sound manner. At a minimum, Federal agencies should use an audit program to improve
compliance with Federal, state, and local regulations while carrying out their main mission.
Ideally, agencies also should use audit findings to identify and address management,
organizational, and operational issues that create inefficiency and allow compliance violations to
occur. Chapter 5 of this report provides a more detailed discussion of designing an agency-
wide environmental audit program.
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2.3 NATIONAL SECURITY CONCERNS
Federal facilities frequently encompass military, intelligence, nuclear-related, and law
enforcement functions which present unique security concerns with respect to environmental
audit programs. In these cases, managers with audit oversight responsibility must address
issues such as facility security regulations and audit team access to associated documents.
This may require advanced planning to ensure that necessary security clearances to conduct
audits can be obtained. Audit program planners must consider national security issues during
the audit design phase to ensure that such issues do not cause delays when the audit is being
performed. Ideally, an internal audit program should be designed to provide an adequate
number of auditors with the necessary security clearances to expedite the auditing process. If
contractor personnel are to perform the audit, clearance status should be one factor in
contractor selection. In certain cases, audit planners can design the audit process such that
secure areas and documents are not accessed by contractors. With adequate planning, an
audit can proceed without compromising national security. In accordance with good audit
practices, the audit report should identify any areas or materials that were not inspected or
evaluated during the audit. This will prevent inaccurate conclusions to be drawn based upon
missing data.
An additional considerations associated with performing audits of facilities or operations
with national security missions is the degree to which audit results become publicly available.
Section 2.8 of this guide includes discussions relating to the release of audit documents to the
public via the Freedom of Information Act (FOIA). This statute exempts documents with
national security concerns from the FOIA process. Case law supports the concept that if there
is a reasonable danger that disclosure would expose military or state secrets, the materials in
question will be protected, even when there is "the most compelling necessity" to disclose the
materials (United States v Reynolds, 345 U.S. 1 (1953); Northrop Corp. v McDonnell Douglas
Corp., 751 F.2d 395 (DC Cir. 1984)).
2.4 THE FEDERAL BUDGET CYCLE
Assuring funding for environmental auditing programs and addressing audit findings
requires a thorough understanding of the Federal budget and appropriations process.
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Responsibility for Federal agency budget planning and appropriation rests with Congress and
the Executive branch. Within the Executive branch, OMB and the White House play crucial
roles, while congressional committees handle this responsibility for the legislative branch.
Agency budgets are the result of an extensive deliberative process that includes the input from
an agency's budget officers, the chief financial officer, and administrators at all levels of the
agency, including federal facilities.
Agency managers must understand the process and timing of the budget process to
ensure that funds required to address compliance violations or for critical environmental
projects are available. Typically, capital expenditures are line items in an agency's budget.
Funding requests for environmental projects generally will arise at the facility level and work
their way through the agency hierarchy before eventually being forwarded to the Executive
Branch for approval. Where environmental auditing programs have uncovered compliance
problems or unregulated risk, it is the responsibility of the facility environmental manager to
quantify and submit a budget request in a timely fashion.
Environmental managers must communicate to top management the need to include
funding for environmental compliance and control of unregulated risk into the facility or agency
budget process. To accomplish this objective, environmental managers must assure that their
requests are adequately justified and prioritized. Proper conduct of this task will ensure that
budget reviewers understand the implications of rejecting such requests. As part of this
process, it is important to distinguish the particular facility need and not hide the request within
other budget categories such as operations and maintenance budgets. Because budget
planning is a long-term process and can extend over many years, it is critical for agency
managers to prioritize projects on both a short and long-term time line and place requests into
the appropriate budgetary period.
2.5 FEDERAL AGENCY BUDGET PROCESS1
1 Much of the information for this section was obtained from an EPA guidance document entitled
Federal Agency Environmental Management Program Planning Guidance (EPA 300-B-95-001, October
1994). This document provides a more detailed discussion of the FEDPLAN process as well as guidance
on getting through the regional review process.
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EO 12088 (October 13, 1978) directs the head of each Executive agency to ensure that
sufficient funds for compliance with applicable Federal, state, and local environmental
requirements are requested in the agency budget. Each agency must submit an annual
FEDPLAN report to OMB, through the EPA, which describes the agency's plan for the control of
environmental pollution.
To help Federal agencies comply with the Executive Order requirements, EPA has
offered guidance in the form of a process known as the Federal Agency Environmental
Management Program Plan (FEDPLAN). FEDPLAN is a reporting mechanism defined by EPA
consisting of a combination of written guidance and a PC-based desktop management
information system known as FEDPLAN-PC. The guidance for using the FEDPLAN system is
contained in a recently issued EPA guidance document, Federal Agency Environmental
Management Program Planning Guidance (EPA Publication 300-B-95-001).
The FEDPLAN guidance suggests that Federal agency compliance officers requesting
funds for environmental projects should do so by including program management costs in their
environmental plans. The program cost definition includes inventories, assessments, surveys,
studies, plans, and environmental audits. EPA proposes to make this category a subject of
special analysis during agency reviews of individual federal facilities by EPA Regional offices.
However, overall Federal agency funding in this area will be reviewed and monitored by EPA
Headquarters personnel.
The FEDPLAN planning process is used to develop cost estimates for complying with
environmental requirements, and thus is a crucial tool for developing agency budgets for
submittal to Congress. The FEDPLAN system tracks environmental requirements from the time
they are first identified until they are executed. The process also provides a methodology for
analysis of both current and projected funding requirements. It should be understood that,
although this system by itself is not the budget request, it is a significant budget support
document to the request. FEDPLAN provides the data necessary to verify that Federal
agencies are adequately planning and programming for environmental compliance, and to
ensure that agencies are requesting funding for all their environmental requirements. It is also
used to assess progress in implementing environmental programs at all levels of the
organization.
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The information generated by the process is used for different purposes, depending on
the time periods in the budget cycle that are being addressed. For projects scheduled for
implementation during the current fiscal year, the data in the system is used to ensure that the
projects for which monies have been budgeted actually get funded. For the budget year, the
purpose of FEDPLAN is primarily to reprioritize and reprogram projects consistent with funding
levels provided by OMB and/or expected to be received from Congressional appropriations.
It is important to understand that once the current fiscal year begins, normally no "new"
money is available. This means that funds for new environmental requirements that develop
during the current year must come from other uncommitted environmental funds, or from some
other non-environmental program. This is why it is very important to carefully budget estimated
costs for audits as well as costs for possible responses to audit findings (e.g., disposal costs,
PCB transformer removal, asbestos abatement).
The review process followed by EPA in reviewing Federal Agency Plans has several
steps, involving both EPA Headquarters and Regional offices. EPA Headquarters ensures that
the required information is submitted by each Federal agency in a timely manner, and also
performs a quality control check on the data. Federal agencies submit their Plan to EPA by
September 1st, the same date that the agencies normally submit their budgets to OMB. This
helps to ensure that the information in FEDPLAN correlates as closely as possible with the
information in the agency budget submitted to OMB. EPA Headquarters then conducts an
analysis of each agency's environmental plan focusing on each of the media programs and
environmental categories. Concurrently, EPA Regions begin their review of projects and
programs at the installation or facility level. Using the information provided by the Federal
agencies, the EPA Administrator prepares several reports for OMB, each with a different but
explicit purpose.
The following is a schedule of the various components of the FEDPLAN review cycle:
Date
Milestone
September 1
September 1
Most Federal agencies submit their total/entire agency budget request to
OMB
Federal agencies submit both their new and updated FEDPLAN project data
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to EPA HQ for review
September 7
Federal agency FEDPLAN plans are forwarded to EPA Regions for review.
Regions schedule meetings with individual federal facilities to discuss key
aspects of plans, as appropriate
October 1
Selected analysis of Federal agencies previous fiscal year funding profile is
forwarded to OMB
November 15
Completed reviews of Federal agency plans are forwarded by EPA Regions to
EPA HQ
January 15
Summary of detailed EPA FEDPI_AN comments and suggestions forwarded
to Federal agencies for consideration
2.6 CONTRACTOR AND TENANT ACTIVITIES
Most environmental statutes assign responsibility for compliance to "owners or
operators." Since the terms owner/operator may include both the landlord and the
tenant/contractor, confusion may result when attempting to determine who is ultimately
responsible for environmental compliance or who bears responsibility for remediation. For
Federally-owned facilities that are operated by government personnel, the U.S. government is
the owner/operator (such facilities are referred to as "GOGO" facilities - "government
owned/government operated"). However, many federal facilities have tenant relationships with
private parties, local or state governments, or other Federal agencies. The following are typical
contractor/tenant relationships found at federal facilities:
• Government owned/contractor operated (GOCO)- a facility owned by a Federal
agency but operated by private contractors for government services;
• Government owned/privately operated (GOPO)- a facility or lands leased by the
Federal government to private operators for their own operation and profit; and
• Privately owned/government operated (POGO)- a facility owned by a private entity
where the government leases buildings or space for Federal agency activities.
In a criminal prosecution for violation of an environmental law, the person who
committed the crime is the person that is held responsible, regardless of who employs them.
However, for administrative and civil actions, responsibility for environmental compliance in
landlord/tenant situations often is not clear. The tenant may be held liable (either through direct
action or by a previous written agreement) for the consequences of their activities.
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Alternatively, the facility owner/operator may be ultimately held responsible by regulators if the
owner/operator knew or should have known of the non-compliance, or if the violation or
contamination is discovered after the tenant is gone. Prior to conducting an environmental
audit at a joint tenant/owner or multiple tenant facility, the following questions should be
answered:
• Who owns the property and how many tenants are involved with onsite activities that
will be evaluated during the audit?
• Whom does the statute hold responsible for noncompliance? If liability attaches to
the owner/operator, both the agency and the other party to the agreement may be
held responsible.
• Are there any instruments, including permits, contract provisions or indemnification
agreements, lease provisions, operating agreements, etc. that specify or assign
responsibility for environmental compliance?
Landlord/tenant and contractor activities typically are bound by the terms of a
host/tenant agreement. Contracts for M&O (Management and Operating) contractors at GOCO
facilities often define the environmental compliance responsibilities of the contractor and
contain other agreements such as a Federal government commitment to reimburse the
contractor operator for cleanup charges if the operation is in compliance with the contract, or
environmental compliance is in whole or in part an award-fee item. In some instances, Federal
agencies should consider conducting environmental audits of the contractor or requiring the
contractor to conduct self audits and apprise the agency of the results. This is especially
important because the degree of non-compliance could be a factor in assessing liability. If a
tenant/contractor commits gross environmental violations, the Federal agency could be held
legally responsible if it is determined the agency was "willfully blind" to the non-compliance
activities of the tenant/contractor. Likewise, if a tenant/contractor enters bankruptcy, the
agency may be held financially responsible for any clean up costs resulting from the
tenant's/contractor's acts.
If a Federal agency occupies a private facility (e.g., a GSA-leased facility), it is still
responsible for a complying with environmental laws and auditing for environmental compliance.
Whatever the landlord/tenant situation, the audit should not proceed until the applicable
agreements are carefully reviewed and responsibilities for environmental compliance are
assigned to the appropriate party or parties.
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2.7 WAIVER OF SOVEREIGN IMMUNITY
Sovereign immunity is a long standing, judicially created legal doctrine which prohibits
the bringing of a suit against the government. In the United States, the doctrine of sovereign
immunity is based upon the Supremacy Clause of the Constitution which provides that the acts
of the Federal government are operative as the supreme law of the land. However, Congress
may, by legislative action, waive sovereign immunity and permit suits against the Federal
government. In those instances where Congress waives sovereign immunity, EPA, States,
localities, or private citizens (based upon the specific terms of the waiver) may bring suit against
the government for improper activities, including those associated with environmental releases.
The Westfall Act (28 U.S.C. Sec. 2679 et seq.) grants sovereign immunity protection to
the decisions and conduct of Federal employees acting in the course and scope of their
employment. However, sovereign immunity does not act to protect Federal employees who
commit criminal acts such as knowing violations of environmental laws. Further, injured parties
are not necessarily precluded from bringing actions against Federal employees. In cases
where there is a finding that the individual acted outside the scope of their authority, the Justice
Department may withdraw certification that the Federal employee was acting within the scope of
employment (28 U.S.C. Sec. 2679(d)(2)). For example, if a third party is injured as a result of
an environmental excursion incident at a Federal facility, and a Federal employee is found to be
responsible and to have acted outside the scope of their employment, the employee may be
personally liable.
The following is a discussion of the doctrine of sovereign immunity as it is embodied in
major Federal environmental statutes and applied to Federal agencies.
2.7.1 Resource Conservation and Recovery Act (RCRA)
The waiver of sovereign immunity found in the Resource Conservation and Recovery
Act (RCRA), as amended by the Federal Facilities Compliance Act (FFCA) of 1992, constitutes
a complete waiver of sovereign immunity with respect to both EPA and states authorized by
EPA to administer and enforce their hazardous waste management program. Prior to passage
of the FFCA, EPA could not enforce directly against other Federal agencies; and instead could
only negotiate Federal Facility Compliance Agreements to bring other Federal agencies into
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compliance with RCRA. With passage of the FFCA, Congress gave EPA and authorized state
enforcement agencies the power to "initiate an administrative enforcement action against such
a department ... in the same manner and under the same circumstances as an action
would be initiated against any other person" (42 U.S.C. 6961(b)(2) (1995)).
2.7.2 Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA)
The CERCLA waiver of sovereign immunity, contained in 42 USC §962, requires each
department, agency, and instrumentality of the United States (including the executive,
legislative, and judicial branches of government) to comply with CERCLA in the same manner
and to the same extent, both procedurally and substantively, as any nongovernmental entity. In
addition, all guidelines, rules, regulations, and criteria which are applicable to: (1) standards of
liability (2) assessments; (3) evaluations of facilities under the National Contingency Plan; (4)
inclusion on the National Priorities List and (5) remedial actions are applicable to the Federal
government.
CERCLA also requires Federal agencies to comply with state laws concerning removal
and remedial actions, including laws pertaining to enforcement, for removal and remedial action
at facilities owned or operated by a government agency when such facilities are not included on
the National Priorities List. However, federal facilities are not subject to state authority where a
state law or regulation applies a standard or requirement that is more stringent than the
standards and requirements applicable to nongovernment facilities.
2.7.3 Emergency Planning and Community Right-to-Know Act (EPCRA)
Executive Order 12856 requires that all federal facilities comply with the EPCRA
emergency planning requirements, including emergency planning notification to local
emergency planning committees (LEPCs), provision of information to LEPCs for preparation of
comprehensive emergency response plans, emergency notification of releases of extremely
hazardous substances, collection and submission of Material Safety Data Sheets (MSDSs), and
submission of Toxic Release Inventory Forms (commonly referred to as the "Form R"). The
TRI reporting requirements apply to all federal facilities with ten or more full-time employees
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that exceed the threshold for manufacture, processing, or use for listed toxic chemicals,
regardless of Standard Industrial Classification (SIC) code. In implementing Executive Order
12856, each Federal agency is responsible for identifying all facilities (GOCO and GOGO)
subject to TRI reporting, preparing yearly progress reports, and self-monitoring for compliance
with the order.
Executive Order 12856 also gives EPA the responsibility for conducting inspections and
monitoring agency compliance with the Order, and preparing an annual report to the President
on Federal agency compliance. However, section 7-701 of Executive Order 12856 expressly
states that the Order does not create any right or benefit, substantial or procedural, that is
enforceable against the United states or any federal agency. So, while EPA has the authority to
monitor federal agency compliance with the Order, there is no waiver of sovereign immunity as
to compliance enforcement.
2.7.4 Pollution Prevention Act of 1992 (PPA)
Section 3-304 of Executive Order 12856 requires federal facilities to comply with Section
6607 of the Pollution Prevention Act. This section requires that federal facilities submit a toxic
chemical source reduction and recycling report for each chemical release form (Form R)
submitted pursuant to EPCRA Section 313. As with EPCRA, Executive Order 12856 requires
compliance by Federal agencies, but specifically does not provide for direct enforcement.
2.7.5 Clean Air Act (CAA)
The Clean Air Act requires "[e]ach department, agency and instrumentality of the
executive, legislative, and judicial branches of the Federal government (1) having jurisdiction
over any property of facility, or (2) engaged in any activity resulting, or which may result, in the
discharge of air pollutants, and each officer, agent, or employee thereof, shall be subject to,
and comply with, all Federal, state, interstate, and local requirements, administrative authority,
and process and sanctions respecting the control and abatement of air pollution in the same
manner, and to the same extent as any nongovernmental entity" (42 U.S.C. §7418(a) (1995)).
All Federal agencies also must comply with all applicable provisions of a valid motor vehicle
inspection and maintenance program established under the CAA except for vehicles that are
designated as tactical military vehicles (42 U.S.C. §7418(c) and (d) (1995)). This section also
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waives sovereign immunity with respect to federal facilities' obligation to pay air pollution
regulatory fees imposed pursuant to local air pollution district's rules and regulations.
2.7.6 Clean Water Act (CWA)
The Clean Water Act contains a comprehensive and explicit waiver of sovereign
immunity as to all departments, agencies, or instrumentalities of the executive, legislative, and
judicial branches of the federal government (1) having jurisdiction over any property or facility,
or (2) engaged in any activity resulting, or which may result, in the discharge or runoff of
pollutants. This waiver subjects Federal agencies to compliance with all "Federal, state,
interstate, and local requirements, administrative authority, and process and sanctions
respecting the control and abatement of water pollution in the same manner, and to the same
extent as any nongovernmental entity including the payment of reasonable service charge" (33
U.S.C. §1323 (Supp.1995)).
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2.8 FREEDOM OF INFORMATION ACT REQUESTS
The Freedom of Information Act, or FOIA (5 USC: par. 552), applies to all Federal
agencies and governs the disclosure of Federal agency documents to the public. For this
reason, careful consideration must be given by agency employees in determining how audit
reports and audit-generated information will be filed and distributed within the agency.
Generally, draft audit reports, preliminary information and auditor notes that contain the
auditor's thoughts and observations recorded during an audit site visit may be exempt from
FOIA requests. Federal agencies are allowed under the statute to write their own policies and
regulations that influence the agency FOIA officer in his or her decision as to whether the
information is releasable when it is requested by the public.
To the extent that draft copies of audit reports are pre-decisional and it can be shown
that they reflect the agency's deliberative process, they may be exempt from release for
reasonable limited periods of time. However, if factual material (e.g., observations made on
site during the audit) is requested under FOIA, the agency may have to extract this material
from the draft audit report and release it to the requesting party. To protect draft copies within
the deliberative process, all reports and related paper should be clearly marked "pre-decisional,
FOIA Exempt" or "draft" and circulation should be limited to those offices or audited facilities
reviewing the report before producing a final version.
Legal advice from an agency's general counsel may provide additional help when
processing FOIA requests for audit-related information. In addition, the effect of FOIA on audit-
related information should be considered when designing an audit program or creating a scope
of work for Federal agency audits. A more detailed discussion of legal considerations of
document protection and FOIA requests is presented in Chapter 3 of this guide.
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2.9 STATUS OF ENVIRONMENTAL AUDITING AT FEDERAL FACILITIES
Purpose
As the estimated cost of cleaning up contamination on federal lands rise to hundreds of billions of dollars,
environmental auditing is increasingly viewed as a way to foster better environmental practices in
operating federal facilities. Environmental audits are comprehensive and systematic reviews of
environmental performance used to improve compliance with environmental laws and minimize future
environmental damage and cleanup costs.
The Ranking Minority Member of the Senate Committee on Governmental Affairs asked GAO to examine
the potential for increasing the use of environmental auditing in the management of federal agencies'
operations. Specifically, he requested that GAO (1) examine the experience of organizations that
distinguish their programs, (2) determine the extent to which federal agencies use environmental auditing
and the benefits that could accrue from its wider use, and (3) identify obstacles and disincentives to the
more effective use of environmental auditing by these agencies.
Environmental auditing and EPA's policy providing encouragement and assistance on
this matter is relatively new. On July 9, 1986, EPA publicly addressed environmental auditing
for the first time when the agency published it's environmental audit policy in the Federal
Register (51 FR 25004). At that time, EPA encouraged regulated entities to initiate
environmental audit programs to achieve and maintain compliance with environmental
regulations. In the 1986 Policy Statement, EPA also encouraged Federal agencies to develop
audit programs and stated that EPA would provide assistance to help Federal agencies
establish such programs.
Since then, EPA has accelerated it's efforts at encouraging and assisting Federal
agencies to design and initiate environmental audit programs. These efforts have included:
Conducting a survey of Audit Activities at Federal Facilities (1987);
Sponsoring a nationwide Environmental Auditing Conference for Federal agencies
(1988, 1995);
Issuing guidelines to assist Federal agencies in establishing audit programs
("Environmental Audit Program Design Guidelines for Federal Agencies," EPA
#130/4-89-001) (1989); and
Issuing generic environmental audit protocols as guidance for Federal agencies and
encouraging further audit program development ("Generic Protocol for
Environmental Audits of Federal Facilities," EPA 130/4-89/002 (1989) and "Generic
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Protocol for Conducting Environmental Audits of Federal Facilities," EPA #300-B-95-
002 (1995)).
Background
During a typical environmental audit, a team of qualified inspectors, either employees of the organization
being audited or contractor personnel, conducts a compliance examination of a plant or other facility to
determine whether it is complying with environmental laws and regulations. Using checklists and audit
protocols and relying on professional judgment and evaluations of site-specific conditions, the team
systematically verifies compliance with applicable requirements. The team may also evaluate the
effectiveness of systems in place to manage compliance and assess the environmental risks associated
with the facility's operations.
No laws currently require environmental auditing. Environmental auditing has been and remains largely a
voluntary activity. Companies and public agencies that have adopted the practice have done so for
sound business reasons. The adoption of environmental auditing by these organizations represents a
management decision to seek compliance proactively, instead of simply reacting to crises. The
Environmental Protection Agency's (EPA) 1986 policy of environmental auditing encouraged federal
agencies subject to environmental laws to adopt environmental auditing to achieve and maintain
compliance. The agency also acknowledged its own responsibility to provide technical assistance to help
federal agencies design and initiate audit programs.
2.9.1 GAO Report 1995
The most recent and comprehensive report regarding the status of environmental
auditing at federal facilities was released in April 1995 by the Government Accounting Office
(GAO). The report, entitled Environmental Auditing; A Useful Tool That Can Improve
Environmental Performance and Reduce Costs; GAO/RCED-95-37) is the result of an 18-
month study. The report details the experiences of both private organizations and Federal
agencies in reducing liabilities by performing environmental audits. The report also addresses
the extent to which environmental auditing is practiced among Federal agencies and discusses
the potential benefit from more extensive use of environmental auditing. The GAO report made
a number of findings, including:
• Environmental auditing is rare at most Federal agencies;
• Environmental auditing is least developed at smaller Civilian Federal Agencies
(CFAs), which lack the expertise and resources of DoD and DOE;
• EPA's 1986 Audit Policy and the lack of inspections by EPA act as disincentives with
respect to CFA senior management attitudes toward implementing audit programs;
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• CFA's lack of interest in implementing audit programs has resulted in funding
shortfalls for training and developing audit expertise; and
• Federal agencies have been discouraged from auditing due to several incidents in
which EPA Regions requested audit reports for reasons other than those allowed
under EPA's audit policy.
The GAO report also made a number of recommendations for furthering audit program
development at CFAs, including:
• Enforcing EPA's current stated policy of limiting requests of audit reports by
personnel in EPA Regions;
• Changing EPA's existing audit and enforcement policies to encourage
regulated entities to perform more environmental audits;
• Providing sustained technical assistance to CFAs; and
• Providing a greater show of enforcement at CFA facilities throughout the
EPA Regions
2.10 STATUS OF ENVIRONMENTAL MANAGEMENT AT FEDERAL AGENCIES
(BENCHMARK REPORT)
In December of 1994, EPA published a report entitled Environmental Management
System Benchmark Report: A Review of Federal Agencies and Selected Private Corporations
(EPA-300R-94-009). This report set forth a benchmark representing ideal organizations,
managerial, and operational attributes that Federal agencies should employ as they work to
fulfill their environmental responsibilities. Six benchmark elements were identified:
Organizational Structure; Management Commitment; Implementation; Information Collection,
Communication, Management, and Follow-up; Internal and External Communication; and
Personnel Practices. The report detailed characteristics that make up each benchmark element
and provided a list of organizational activities and attributes (key indicators) that demonstrate
adherence to each benchmark element.
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Benchmarking Federal Agencies
An EPA study compared the environmental management systems of CFAs, the Department of Energy,
the Army, Navy, and Air Force, and three private sector corporations (Chevron, Xerox, and 3M). As part
of the study, a series of detailed "Best in Class" descriptors were established in six key areas of
environmental performance: organizational structure; management commitment; implementation of
programs; information collection, use, and follow-up; internal and external communications; and
personnel management. The overall "Best in Class" benchmark elements are as follows:
• Organizational Structure: Best in Class organizations have an organizational structure that gives
authority, input, and voice to environmental performance.
• Management Commitment: Best in Class organizations possess and demonstrate a commitment to
environmental excellence at each and every stage of the management hierarchy, and insist on
integration of environmental awareness and concerns into all relevant business operations.
• Implementation: Best in Class organizations carry out their daily business operations in ways that
integrate environmental protection into their business conduct.
• Information Collection/Management/Follow-Up: Best in Class organizations continually monitor
environmental performance through the use of formal tracking and reporting mechanisms.
Information acquired through these mechanisms is evaluated, disseminated, and used to
continually improve environmental performance.
• Internal and External Communication: Best in Class organizations foster and use formal and informal
channels to communicate environmental commitment and performance information. Employee
communications is encouraged to develop cooperation and commitment, including bringing
together employees from different disciplines.
• Personnel: Best in Class organizations ensure that employees are capable of developing and
implementing environmental initiatives. Employees are hired, trained, and deployed in ways that
ensure that staff understand their environmental responsibilities and receive the training and support
necessary to achieve environmental excellence.
Source: U.S. EPA, Environmental Management System Benchmark Report: A Review of Federal
Agencies and Selected Private Corporations (EPA 300R-94-009), December 1994.
The report provides information that can help agencies use audits in ways that move
beyond the simple identification of compliance violations. Agencies and facilities that include
the review of organizational, managerial, and performance elements into audits can often
identify opportunities to improve organizations in ways that reduce the potential for future
violations.
2.11 THE ROLE OF EPA'S FEDERAL FACILITY OFFICE
The environmental performance expectations that have been placed on Federal
agencies in recent years have required EPA to focus on monitoring federal facility activities and
assisting agencies in developing and improving their compliance programs. The relationship
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between EPA and other Federal agencies was first prescribed by Presidential Executive Order
No. 12088. Signed by President Carter in 1978, the Order directs all departments and agencies
of the Federal government to comply with Federal, state, and local environmental laws and
regulations. In addition, EPA is directed by the Order to provide technical assistance and
guidance to Federal agencies to assist them in complying with these environmental
requirements.
To ensure that federal facilities receive the appropriate level of monitoring and guidance,
EPA established a separate office reporting directly to the Administrator Assistant for
Enforcement and Compliance Assurance (OECA). This office is the Federal Facility
Enforcement Office (FFEO). FFEO is responsible for ensuring that federal facilities take all
necessary actions to prevent, control, and abate environmental pollution. FFEO coordinates
OECA's federal facility enforcement, compliance assurance, and assistance efforts. It also has
the lead role for communicating with Congress, other Federal agencies, states, and other
stakeholders (e.g., the public) on federal facility matters.
The design of EPA's FFEO embodies many of the principles embraced by EPA's
Common Sense Initiative (CSI). It has a sector-orientation, uses strong enforcement combined
with compliance assistance, and promotes proactive technical programs such as pollution
prevention and environmental auditing. FFEO continually seeks new and innovative ways of
working with Federal agencies by offering technical assistance within a partnership setting to
other Federal agencies, states, and localities to foster a more collegial approach to
environmental problem solving.
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CHAPTER 3: LEGAL CONSIDERATIONS
3.1 OVERVIEW
Designing and implementing an environmental audit program requires consideration of a
number of legal issues. Chief among these is the protection of audit findings from premature
disclosure. A comprehensive environmental audit typically accomplishes three objectives: (1)
verify compliance/noncompliance with environmental regulations; (2) evaluate the effectiveness
of environmental control systems; and (3) assess potential environmental liabilities from
regulated and unregulated materials and practices. To achieve these objectives, the audit
findings must be candid, detailed, and accurate. As such, environmental audits often describe
actual or potential violations of law, unfavorable situations such as management deficiencies or
inadequate staffing, or situations that do not constitute violations per se, but that nevertheless
gives rise to potential environmental liabilities. This kind of information can be used to the
detriment of a facility or agency, and should be protected to the extent allowed by law.
Public access to Federal agency documents and information in non-litigation situations
is controlled by the Freedom of Information Act (FOIA) (5 USC §552 et seq.). Once an agency
audit report becomes final, it is an agency record and subject to disclosure through a FOIA
request. As a result, the amount of time that an agency has to handle an environmental audit
as an internal matter, free from outside scrutiny, is limited to that time between the conduct of
the audit and the delivery of the audit final report. Typically, a comprehensive environmental
audit will contain information adverse to the audited facility. It is therefore important that the
audit program be designed to provide for the protection of the audit findings from premature
disclosure. Facility and agency personnel should have the opportunity to review and comment
on audit findings, and develop a corrective action plan free from public scrutiny so that they can
engage in free and frank discussions of regulatory opinion, interpretation and applicability. An
understanding of privilege, as it pertains to audit reports, the FOIA law and process, and other
legal considerations surrounding audit report handling and preparation will help in designing
such a program.
Please note that this discussion does not discuss document requests or subpoenas that
arise from civil litigation. Such requests must be handled through agency legal counsel on a
case-by-case basis.
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3.2 DOCUMENT PROTECTION/FREEDOM OF INFORMATION ACT REQUESTS
Subject to specific exceptions, any person can have access to government factual and
investigatory reports, data, and surveys pursuant to the FOIA. A final environmental audit
report from a Federal agency does not fall into any of the enumerated exceptions, and the
courts uniformly interpret the FOIA exceptions very narrowly1. Although there is a
governmental official information privilege that protects the suggestions, advice,
recommendations, and opinions of government officials, factual and investigatory reports, data
and surveys are not protected. Unless exempted by FOIA or some other statute, all Federal
agency records are available to the public upon request. There are nine exceptions to this
general rule contained in FOIA that are listed at 5 USC §552(b). Subsection (5) exempts "inter-
agency or intra-agency memorandums or letters which would not be available by law to a party
other than an agency in litigation with another agency." From this exemption, the courts have
created categories of agency documents that are exempt under FOIA, that is they are not
available to the public. These documents are referred to as "predecisional" and "deliberative"
and must satisfy both criteria to qualify for the exemption and be justified.
Predecisional documents include recommendations, draft documents, proposals,
suggestions, and other subjective documents which reflect the personal opinions of the writer
rather than the policy of the agency. A predecisional document is deemed a part of the
deliberative process if the disclosure of the materials would expose an agency's decision
making process in such a way as to discourage candid discussion within the agency, thereby
undermining the agency's ability to perform its functions.
The deliberative process is exemplified in a situation where an employee writes a draft
document and the agency uses the consultative process, by circulating the draft for comments,
or having the draft reviewed up the supervisory or organizational chain to determine what the
final version will include. Courts have ruled that when the final document is released, the draft
is exempt from disclosure under the FOIA exemption for intra-agency memoranda2. Courts
have characterized draft reports as predecisional if they are written before the agency decides
what the final version will include, and have characterized the process as deliberative if the draft
1 Sea Nadlerv. U.S. Dept. of Justice, 955 F.2d 1479 (11th Cir. 1992), dealing with what constitutes
the "deliberative" process; Assembly of the State of California v. U.S. Dept. Of Commerce, 968
F.2d 016 (9th Cir. 1992) addressing what is "predecisional."
2 Marzen v. Dept. of Health and Human Services, 632 F.Supp 785, aff'd 825 F.2d 1148 (7th Cir.
1987).
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was submitted to others as the author's input to the decision-making process (the comment and
clearance process).
Ultimately, each Federal agency's Freedom of Information Act Officer is responsible for
determining whether or not materials are FOIA exempt. Generally, in the context of an
environmental audit, the draft audit report, preliminary information and auditor notes concerning
his or her thoughts and observations recorded during an audit will be considered predecisional.
There is a question, however, as to what extent factual material contained in a predecisional
draft is also protected. The U.S. Supreme Court has held that information that is purely factual,
even though it may have been used by decision makers in their deliberations, is usually not
protected from disclosure under FOIA (EPA v Mink, 410 U.S. 73 (1973)). In cases where
deliberative process material and unprotected factual material are commingled in a single
document, the agency normally must still produce the factual material by producing a document
containing only the factual material. If the factual material can not reasonably be separated
from material in documents that would reveal the opinions of agency personnel in the
deliberative process, it may be exempt from disclosure under FOIA. However, this should not
be attempted in order to avoid disclosure as courts take a dim view of such efforts3.
An environmental audit program should be designed so the audit report is circulated for
predecisional review and comment between the audit team and facility personnel, and then
forwarded to senior agency personnel for predecisional review and comment, prior to becoming
final. The draft report should be segmented and circulated to those personnel appropriate to
each section. For example, personnel responsible for hazardous waste management should
review that section. If those individuals are not responsible for air issues, they should not
review the section dealing with air quality. Given these limitations, the report should be
circulated from the bottom-up, with any input or comment clearly marked as "Draft" or "Pre-
decisional," and the deliberative process clearly defined within the context of the environmental
audit program (i.e., the process is standardized and written into or as an agency policy).
Circulation of the draft should be limited. If a document which an agency claims exemption
from a FOIA request has been released or disseminated to personnel outside the agency, or if
a document otherwise subject to the attorney client privilege is widely disseminated within the
agency, then the agency may be precluded from asserting the exemption. The use of
consultants, however, does not necessarily constitute release to an outside party so long as the
3 United States v. Nixon, 418 U.S. 683 (1974).
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consultant has a "need to know" (e.g., the consultant is conducting or taking part in the audit),
and agrees not to further disclose information.
Some aspects of an environmental audit also may be protected from disclosure under
the attorney-client, or the attorney work-product privileges. The attorney work-product and the
attorney-client privileges should not be looked at as a means for comprehensive document
protection, because to routinely conduct an environmental audit program so that is falls under
the rubric of the attorney privileges would be a cumbersome and inefficient use of agency
attorneys and is not likely to be successful (see discussion of Litigation/Discovery below). In
any event, situations that invoke attorney-client and attorney-work product privileges must be
approached on a case-by-case basis with full involvement by agency counsel.
In the final analysis, the government carries the burden of proving that audit
documentation in draft form falls within an exemption under FOIA . This essentially entails
showing that the record is oriented toward the agency's ongoing development of its position on
a specific issue. The case law pertaining to FOIA requests and exemptions offers enough
guidance to design and implement information gathering and report drafting procedures to
provide protection for audit materials prior to the issuance of the final report. However, as with
any case law, the courts are continually refining the law of FOIA. Therefore, the agency
Freedom of Information Act Officer and legal counsel should be consulted as to the most
current case law and legal precedents in this area.
3.2.1 Litigation/Discovery
In addition to FOIA requests, audit materials may be subject to disclosure as a result of
litigation undertaken by an agency or by third parties against an agency. Should an agency
become involved in a civil action over an environmental issue, all audit materials that involve
observations of facility practices or matters subject to statutory or regulatory reporting
requirements (e.g., spill incidents, waste handling or discharge practices, emissions reports) will
be discoverable through requests for production of documents, or subpoenas.
There are a number of privileges which, to a limited extent, may be available to protect
audit materials. However, agencies should conduct their audits with the understanding that all
materials are potentially discoverable. The three legal doctrines that may provide limited
protections for audit materials are:
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(i) the attorney-client privilege;
(ii) the attorney work-product rule; and
(iii) the self-evaluation privilege.
It is necessary to consult with agency legal counsel to determine appropriate procedures
for employing any of the above confidentiality doctrines.
The use of attorneys in conducting audits, or the communication of audit results solely to
attorneys, will not protect underlying facts, or matters subject to legal reporting requirements, from
discovery. Court pronouncements on this matter have been unequivocal.
While courts may be willing to protect the attorney's notes and memoranda, as well as
related communications with non-lawyers, these protection have limits. Wide dissemination of
audit results undermines the privilege doctrines. For example, dissemination of the air
monitoring section of an audit to the wastewater treatment personnel for review and comment
might be grounds for waiver of a confidentiality privilege with respect to the air monitoring
results.
When developing and carrying out an audit program, agency management should
anticipate that any underlying facts, observations, or data regarding facility environmental
practices, will be fully discoverable. Therefore, it is in the best interest of the agency to
thoroughly investigate, document, and remedy any problems uncovered in an audit. This
appropriately devotes limited resources to corrective action rather than to attempting to protect
audit findings from discovery. In addition, attempts to shield audit materials from discovery may
be interpreted as bad faith and sour relationships with regulatory agencies.
EPA has developed internal policy regarding the release of environmental audit
reports originating at other federal agencies. The policy developed by EPA's Office of
General Counsel requires EPA personnel to respond to the FOIA request by either
consulting with and obtaining written permission from the agency which originated the
document or EPA will transfer the responsibility for responding to the request for records
back to the originating agency. Therefore, EPA will not forward audit reports originating
from other federal agencies without explicit permission from the affected agency.
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3.3 EPA REQUESTS FOR AUDIT REPORTS
In the 1995 audit policy, EPA reaffirms and clarifies its policy outlined in the 1986 audit
policy to refrain from routine requests for audits. Eighteen months of public testimony and
debate have produced no evidence that the Agency has deviated, or should deviate, from this
policy. In general, an audit which results in prompt correction clearly will reduce liability, not
expand it. In addition, a review of the criminal did not reveal a single criminal prosecution for
violations discovered as a result of an audit self-disclosed to the government.
The 1995 policy states:
"EPA will not request or use an environmental audit report to initiate a civil or criminal
investigations of the entity. For example, EPA will not request an environmental audit
report in routine inspections. If the Agency has independent reason to believe that a
violation has occurred, however, EPA may seek any information relevant to identifying
violations or determining liability or extent of harm."
The EPA's authority to request some or all of an audit report will be exercised on a
case-by-case basis where the agency determines that the information is necessary to
"accomplish a statutory mission, or where the Government deems it to be material to a criminal
investigation" (59 FR 38455 (July 28, 1994)). Examples of this include situations where: (1)
audits are conducted pursuant to a consent decree or other settlement agreement; (2) a
company has placed its management practices at issue by raising them as a defense in an
enforcement action; or (3) where state of mind or intent is at issue as during a criminal
investigation or prosecution.
With respect to inspections of self-audited facilities and requests for audit reports, EPA
generally will respond to environmental audits conducted by federal facilities in the same
manner as it does for any other regulated entity.
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3.4 EPA's 1995 AUDIT POLICY
On December 22, 1995, EPA announced the "Incentives for Self-Policing:
Discovery, Disclosure, Correction and Prevention of Violations," (final audit or self-
policing policy).4 Under the new policy, the Agency will greatly reduce civil penalties
and limit liability for criminal prosecution for regulated entities that meet the policy's
conditions for discovery, disclosure and correction.6 The final audit policy represents a
refinement of the "Voluntary Environmental Self-Policing and Self-Disclosure Interim
Policy Statement" (interim auditing policy) announced on April 3, 1995.6
Policy Incentives: Full and 75% Gravity Mitigation of Civil Penalties; No Criminal Referral
to DOJ
Under the policy, EPA will not seek gravity-based7 civil penalties for violations that
are discovered through an environmental audit or through a management system
reflecting due diligence, and that are promptly disclosed and expeditiously corrected,
provided the other policy conditions are met. Where violations are discovered by
means other than an audit or due diligence system, but are promptly disclosed and
expeditiously corrected, EPA will reduce gravity-based penalties by 75% provided the
other policy conditions are met. The Agency will generally not recommend to the
Department of Justice (DOJ) that criminal charges be brought against entities that
meet all of the policy conditions.
Safeguards
While the fingl self-policing policy contoins significgnt incentives for encouraging
discovery, disclosure ond correction of violations, it also contains very important
safeguards to deter irresponsible behavior and protect the public and the
environment. For example, the policy requires entities to take steps to prevent
recurrence of the violation and to remediate any harm caused by the violation. In
4 The policy appeared in the Federal Register on December 22, 1995 (60 FR 66706).
5 A copy of the policy and its comprehensive preamble appears as Appendix B.
6 60 FR 16875, April 3, 1995.
7 The "gravity" component of a penalty represents the "seriousness" or "punitive" portion of
penalties. The other major part of a penalty, the economic benefit component, represents the
economic advantage a violator gains through its non-compliance.
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addition, the policy does not apply to violations which resulted in serious actual harm or
may have presented an imminent and substantial endangerment to human health or
the environment. Moreover, entities are not eligible for relief under the policy for
repeated violations. The policy acts arising from conscious disregard or full will blindness
to violations. Finally, EPA retains its discretion to collect any economic benefit gained
from non-compliance in order to preserve a "level playing field" for entities that invest
in timely compliance.8
Incentives and Behavior
The final self-policing policy provides additional incentives for entities to utilize the
critical compliance tools of environmental auditing and compliance management
systems. These incentives add to the many existing reasons for entities to develop and
maintain environmental auditing and compliance management systems. A 1995 Price
Waterhouse survey on environmental auditing practices showed that 90% of the
corporate respondents that conduct audits did so to find and correct violations before
they were found by government inspectors.
In 1986, EPA announced that it was the Agency's policy to encourage
environmental auditing as a means to help achieve and maintain regulatory
compliance.9 Toward that end, the 1986 policy sets forth the basic elements of
effective environmental auditing programs.
As memorialized in the 1995 final self-policing policy, EPA's policy toward
encouraging the use of compliance tools such as auditing and management systems
8 Under the final self-policing policy, EPA may waive the entire penalty for violations which, in
EPA's opinion, do not merit any penalty due to the insignificant amount of any economic
benefit.
Some environmental statutes require EPA, in assessing penalties, to consider the economic
benefit a violator gains from non-compliance. See, e.g., CWA 309(g), CAA 113(e), and SDWA
1423(c). EPA's longstanding policy has been to collect significant economic benefit gained
from non-compliance. See A Framework for Statute-Specific Approaches to (Civil) Penalty
Assessments, EPA General Enforcement Policy #GM-22, February 16, 1984; see also the
approximately 24 EPA media and program-specific penalty and enforcement response policies.
The reason for collecting economic benefit is to preserve a level playing field for entities that
make the timely investment in compliance. Recovery of economic benefit can be likened to
the IRS requirement of paying interest or fees on taxes paid late.
9 Environmental Auditing Policy Statement, July 9, 1986 (51 FR 25004).
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had evolved into providing penalty incentives and a safe harbor from criminal
prosecution. It is important to recognize that this evolution is likely to continue as
organizations develop more effective tools to manage the environmental aspects and
impacts of their activities, services and products. Environmental management system
(EMS) standards such as ISO 14001 and supporting standards hold promise as a means
of improving environmental performance. EPA is exploring possible incentives for
encouraging the use of such standards insofar as the incentives do not jeopardize
protection of human health and the environment.
Policy Conditions
1. Entity Must Discover the Violation through an Environmental Audit or Due
Diligence System to Obtain Full Gravity Penalty Mitigation and Criminal
Sgfe Hgrbor
The fingl self-policing policy provides full mitigotion of grovity-bgsed civil
penglties gnd g crimingl sgfe hgrbor for entities thot discover violotions through on
environmentol gudit or system reflecting due diligence, provided the other policy
conditions ore met. Note thot entities thgt do not discover the violotions through an
audit or due diligence, Le^ "random discovery," would still obtain 75% gravity
mitigation as long as the other conditions are met.
The final policy defines an "environmental audit" the same as it is defined in the
1986 auditing policy: "a systematic, documented, periodic and objective review by
regulated entities of facility operations and practices related to meeting environmental
requirements." Note that this definition covers several types of environmental audits
including risk audits and EMS audits as well as compliance audits.
With respect the due diligence systems, the final self-policing policy provides
relief to entities that discover violations through an "objective, documented systematic
procedure or practice reflecting the regulated entity's due diligence in preventing,
detecting, and correcting violations," provided the other conditions are met. "Due
diligence" is defined as systematic efforts meeting criteria based on the 1991 U.S.
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Sentencing Commission Sentencing Guidelines.10 The Sentencing Guidelines have had
an enormous impact in encouraging the development and implementation of due
diligence systems in the U.S.
The "due diligence" criteria in the self-policing policy include the following:
. the development of compliance policies, standards and procedures to meet
regulatory requirements;
• allocation of responsibility to oversee conformance with these policies,
standards and procedures;
. mechanisms including monitoring and auditing of compliance and the
establishment of a compliance management system (CMS) to assure the
policies, standards and procedures are being carried out;
. training to communicate the standards and procedures;
• employee incentives to perform in accordance with the compliance policies,
standards and procedures; and
• procedures for the prompt and appropriate correction of violations including
program modifications needed to prevent future violations.
The inclusion of "due diligence" systems in the final policy represents a very
positive and significant revision to the interim auditing policy. Stakeholder written and
oral comments indicated that ongoing, comprehensive, and systematic efforts to
prevent, detect, and correction violations should be rewarded at least as much as
environmental auditing. The difference between a compliance audit and a CMS can
be likened to the difference between a "snapshot" and a "video."
It is also very significant that EPA may require as a condition for penalty
mitigation that a description of the entity's due diligence system be made publicly
available. This may entail submission of the system to a national electronic docket. This
type of public disclosure has the potential to push the state-of-the-art in management
systems development and encourage benchmarking. The public availability of systems
10 United States Sentencing Commission Guidelines Manual Chapter 8 - Sentencing of
Organizations, Part A - General Application Principles (effective November 1, 1991).
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descriptions can also provide valuable information for insurers, financial markets,
investors and lenders - providing the basis for "quasi" market-based incentives.
2. Policy Applies to All Violations Except Those Discovered Through
Mandated Monitoring or Sampling Requirements, (e.g., CEM, DMRs)
In order to provide moximum opportunity to encourage complionce, gnd to do
so without socrificing the integrity of criticol reporting systems, the policy provides relief
on oil violations except those discovered through mandated monitoring or sampling
requirements, provided the other policy conditions are met. Examples of violations not
covered by the policy include emissions violations detected through continuous
emissions monitor, violations of NPDES discharge permits detected through required
monitoring or sampling, or violations discovered through a compliance audit required
to be performed by the terms of a consent order or settlement agreement.
3. Entity Promptly Discloses the Violation in Writing to EPA
Under the policy, the entity must fully disclose in writing to EPA thot a violation
has occurred or may have occurred, within 10 days after discovery. The inclusion of the
"may have occurred" language recognizes that in situations where the entity is unsure
whether a violation had occurred it is best for the entity to disclose the potential
violation to EPA for a definitive determination. EPA may accept disclosures more than
10 days after discovery if more time is needed to make a compliance determination of
a complex violation and circumstances do not present a serious threat.
4. Entity Must Disclose the Violation Prior to Imminent Discovery bv the
Government
The entity must identify and disclose the violation before the regulatory agency
has discovered or will discover the violation. Thus, the entity must disclose the violation
prior to: commencement of a government inspection or investigation, issuance of an
information request, notice of citizen suit, filing of a third-party compliant, or reporting
by a "whistle-blower."
5. Entity Must Expeditiously Correct the Violation and Remedy Harm
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The entity must correct the violation expeditiously and within 60 days, certify
correction, and take appropriate measures to remedy any harm caused by the
violation. If more than 60 days is needed to correct the violation, the entity must notify
EPA before the 60-day period has passed. Where appropriate, EPA may require a
written agreement, order or decree to satisfy requirements for correction, remediation
or prevention measures especially where such measures are complex or lengthy.
6. Entity Must Agree to Take Steps to Prevent Recurrence of the Violation
The entity's efforts to prevent recurrence of the violation may involve modifying
its environmental auditing program or compliance management system.
7. The Violation Had Not Occurred at the Same Facility Within the Past Three
Years and Was Not Part of a Pattern of Violations at the Parent Company
Within the Past Five Years
The policy does not apply to repeat violators. EPA has established "bright lines"
to determine when repeat violators should not be eligible for relief under the policy.
Under the policy, the same or closely-related violation had not occurred at the same
facility within the past three years or is not part of a pattern of violations at the facility's
parent organization within the past five years. This policy exclusion provides entities with
continuing incentives to prevent violations and avoids the unfairness of granting policy
relief repeatedly for the same or similar violation.
8. The Violation Is Not One Which Resulted in Serious Actual Harm or May
Have Presented an Imminent and Substantial Endanaerment, or Does Not
Violate the Specific Terms of an Order or Agreement
The policy does not opply to violations which resulted in serious actual harm or
may have presented an imminent and substantial endangerment to human health or
the environment. Coverage of the policy to such violations would undermine
deterrence and reward entities for delinquent management of its environmental
activities. The policy also does not apply to violations of the specific terms of any
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administrative or judicial order or consent or plea agreement. This is necessary to
preserve incentives to comply with the orders or agreements.
9. The Entity Must Cooperate with EPA
At a minimum, the entity must provide information that is necessary and
requested by EPA to investigate the violation and any non-compliance problems and
environmental consequences related to the violation.
3.5 EPA/DO J POLICY LETTER ON STATE AUDIT PRIVILEGE LAWS AND POLICIES
EPA will work with states to encourage adoption of policies that reflect the
incentives and conditions outlined in the 1995 audit policy described above. In an
effort to address some of the perceived concerns regarding government and third
party use of audit information, some in the regulated community have turned to state
and federal legislation. Since October 1993, twenty states have enacted legislation to
create audit privileges and/or penalty amnesty provisions.
As the 1995 audit policy indicates, EPA opposes environmental audit privileges
that provide a cloak of secrecy over evidence of environmental violations and that
contradict the public's right to know. EPA also opposes blanket immunities or amnesty
for violations that reflect criminal conduct, present serious threats or actual harm to
health or the environment, allow noncomplying entities to gain an economic
advantage over their competitors, or reflect a repeated failure to comply with federal
law. Both EPA and DOJ have testified before Congress opposing proposed federal
audit privilege legislation and existing state audit privilege and immunity laws. Vice
President Gore has also written to Congress opposing the pending House and Senate
audit privilege bills. In February, 1997, EPA and DOJ issued a joint policy letter to the
General Counsels of Federal departments and agencies stating the administration's
position and clarifying that Federal facilities in Executive Branch agencies and
contractor operators should not claim that information acquired through self audits is
privileged under any state audit privilege laws. In addition, this policy letter points out
that no privilege exists between and among EPA and other agencies. The policy letter
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encourages Federal facilities to utilize the 1995 EPA audit policy and similar state laws
and policies. This policy letter is contained in Appendix F.
In the 1995 policy, EPA restates its pledge to work with states to address any
provisions of state audit privilege or penalty immunity laws that are inconsistent with the
policy and which may prevent a timely and appropriate response to significant
environmental violations. Six states have passed privilege/immunity statutes since the
Agency issued its final audit policy in December 1995.
3.6 EPA POLICY REGARDING THE USE OF AUDITING IN LEGAL
SETTLEMENTS
Although not explicitly addressed in the final audit policy, EPA will not forgo inspections,
reduce enforcement responses, or offer other such incentives in exchange for the
implementation of an environmental auditing program.11 EPA will, however, take into account a
facility's efforts at self-auditing for environmental management and compliance in setting
inspection priorities and crafting enforcement responses to violations. Specifically, it is the
EPA's stated policy to take into account, on a case-by-case basis, the honest and genuine
efforts of regulated entities to avoid and promptly correct violations and underlying
environmental problems.
Similarly, although not explicitly addressed in the final policy, EPA should not limit its
non-penalty enforcement authorities as a provision of settlement. While EPA may consider
such a facility to be a lower inspection priority than a facility that is not known to be auditing,
whether and when to conduct an inspection should remain a matter of Agency discretion. If the
Agency's inspection or other enforcement authorities were limited, this could compromise the
Agency's ability to respond to citizen complaints or site conditions posing a potentially serious
threat to human health or the environment.
EPA's 1995 audit policy requires discovery of violations to be voluntary in order to obtain
any penalty mitigation, and it defines such voluntariness so as to exclude situations where the
violations are "discovered through a compliance audit required to be performed by the terms of
a consent order or settlement agreement." 60 Fed. Reg. 66706, 66708 (Dec. 22, 1995). This
11 As stated in the 1986 Policy, and reiterated in the 1994 Clarification on Policies Related to
Environmental Auditing.
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language, however, should not be read in isolation, because doing so would unduly preclude
penalty mitigation under the policy and create a significant disincentive for future settling parties
to bind themselves in settlement documents to doing compliance audits. In the same section of
the final policy, two key goals are expressed: (1) to encourage the conduct of audits; and (2) to
"reward those discoveries that the regulated entity can legitimately attribute to its own voluntary
efforts." Id. at 66708.
Where a violator, without any legal obligation to do so, commits to conducting a
compliance audit prior to any formal or informal enforcement response (e.g., complaint filing or
other circumstance described in Section II.D.4 of this policy), such actions can be considered
by EPA to be voluntary and EPA will not automatically disqualify them from obtaining penalty
mitigation under the "voluntary discovery" requirement of the final policy, even though the
violator later agreed to include such an auditing obligation as an enforceable settlement
provision (e.g., in a consent decree or consent order). In such cases, EPA should describe the
voluntary nature of the audit provisions that are not eligible for penalty mitigation under the
policy. By allowing audit provisions in settlements to be considered voluntary in these limited
circumstances, EPA is able to shape the content and timing of audits, ensure their performance
through enforceable terms, and more effectively achieve the goals of the final policy.
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CHAPTER 4: AUDITING FEDERAL FACILITIES IN FOREIGN
COUNTRIES/OVERSEAS
4.1 OVERVIEW
The most important component in designing an environmental audit program for
overseas federal Facilities is determining the standards against which compliance is to be
evaluated. Such standards may include particular provisions of U.S. law, applicable multilateral
or bilateral treaty provisions, regional or community requirements (e.g., European Union), or
host-country specific substantive provisions which typically include technical limitations on
discharges, emissions, production processes, products, or specific management practices.
Ultimately, overseas facilities must comply with the most stringent requirements; these
standards, referred to by the Department of Defense (DoD) as "Final Governing
Standards" or "FSG," implement DoD Directive 6050.16 (DoD Policy for Establishing and
Implementing Environmental Standards at Overseas Installations, September 1991) and
DoD Directive 6050.7 (Environmental Effects of Major Department of Defense Actions,
March 1979) and supplement Executive Order 12088 (October 13, 1978). For the
purposes of this guide, the term "final governing standards" refers to the country-specific
requirements with which a facility must comply. In cases where a host country has not enacted
environmental regulations for a particular media, the applicable U.S. requirements are the final
governing standards. Although the role of non-governmental organizations (NGOs) is not
delineated in the FSG, such organizations can be valuable sources of information in
conducting overseas audits.
4.2 ROLE OF FACILITY MANAGEMENT
Each DoD installation commander must establish an Environmental Protection
Council (EPC) (or equivalent) that is responsible for establishing and implementing the
installation auditing program. Agency senior management and facility management
personnel are ultimately responsible for the environmental compliance of their facility.
However, if compliance with the applicable FSG would seriously impair a facility's
operations, adversely affect relations with the host country or require immediate,
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substantial expenditure of funds not available for such purposes, facility management
may request a waiver or authorization to deviate from the particular standards or
guidelines.
Administrative procedures at all levels of command should be designed to
expedite implementation of the most current directives on environmental matters.
Adequate management controls must be in place and in operation to ensure sound
environmental performance and avoid potential liability. These controls may include:
. Drafting environmental policies and procedures to ensure compliance with
the FSG;
. Following procedures for implementing federal agency overseas
environmental policy;
. Developing and implementing employee training programs;
• Incorporating installation environmental compliance auditing into their
inspection programs;
. Providing oversight of contractors, subcontractors, and suppliers operations;
. Including provisions requiring the contractor to comply with the FSG in
contracts for services or construction, where performance takes place on the
installation, and in contracts for the disposal of hazardous waste;
Purchasing, operating, and maintaining environmental control equipment;
Developing, budgeting and planning systems for environmental compliance;
Implementing, monitoring, record keeping, and reporting systems;
Establishing emergency response plans; and,
Maintaining internal and external communications and control systems.
These controls must be tailored to fit within the framework of overseas environmental
requirements specific to the facility. Thus, facility management must be cognizant of all final
governing standards that pertain to that facility. Facility management also must be aware of a
host country's national, regional, and local environmental laws and regulations which are not
covered in the final governing standards. In cases where the final governing standards are
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entirely based on the environmental requirements of the host country, facility management
personnel should be familiar with the host country's institutional structure for the implementation
and enforcement of environmental requirements. Some countries operate their environmental
protection programs on the national level, while others delegate most environmental authority to
regional and local offices. In federalist countries, different hierarchies of environmental offices
may exist on both the Federal and state levels. An understanding of the environmental
regulatory structure of the host nation is necessary for facility management to stay current on
environmental regulations, to report situations such as spills and releases that migrate offsite,
to request assistance when appropriate, and to be aware of sensitive local environmental
concerns.
In some cases, overseas facilities are located in countries that are members of regional,
integrated political organizations (such as the European Union). The environmental regulations
and requirements of such supranational organizations always must be taken into account when
developing an overseas compliance and audit program. Most supranational organizations have
an entity solely responsible for environmental protection issues, and often develop
environmental requirements that set minimum standards, or are themselves binding on member
states. Member nations also may be obligated to adopt or respond to legislation adopted by
supranational organizations, causing the member states to modify their environmental
regulations. Personnel responsible for an overseas compliance and auditing program will
benefit by keeping abreast of legal developments at both the supranational and national levels.
4.3 DESIGNING AN OVERSEAS ENVIRONMENTAL AUDIT PROGRAM
Determining and keeping abreast of the final governing standards for a particular
country is a time consuming and labor intensive process. There is no single source of up-to-
date information pertaining to overseas regulatory compliance. However, some Federal
agencies are farther along in developing overseas environmental programs due to the large
number of facilities located overseas. Most notable is DoD, which developed the Overseas
Environmental Baseline Guidance Document (OEBGD) October 1992 and is in the process of
developing final governing standards for all locations where U.S. military installations are
located. The OEBGD is one example of how a Federal agency with extensive overseas
operations determines the environmental compliance baseline for its facilities.
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Ultimately, each federal agency is responsible for developing auditing and
environmental criteria and standards for its own overseas operations. The OEBGD sets
out interpretive guidance and criteria for environmental compliance at DoD
installations outside the United States, and contains specific DoD environmental criteria
that are used to develop the FSG to be implemented by overseas DoD installations.
The actual auditing process is then developed by the responsible personnel for each
facility. For DoD installations, the Environmental Protection Council (EPC) (or
equivalent) is responsible for establishing and implementing the installation auditing
program.
A variety of sources of information exist on procedures for conducting
environmental audits. EPA's Environmental Auditing Policy Statement (51 FR 25004)
defines elements of an effective environmental auditing program. EPA's Federal
Facility Enforcement Offices (FFEO) is co-chairing an inter-agency workgroup to revise
auditing guidelines and protocols for federal agencies. Several departments within
DoD, including the Department of the Army and the Department of the Air Force, have
written procedures for conducting audits. The International Standards Organization
(ISO) has developed environmental management standards (ISO 14000) that include
auditing procedures. The National Sanitation Foundation in Ann Arbor, Michigan is
working on auditing schemes that are intended to be compatible with and augment
the ISO standards. In addition, EPA maintains an extensive and current bibliography of
environmental auditing publications.
4.4 CONDUCTING AN OVERSEAS AUDIT PROGRAM
Conducting environmental audits of overseas facilities raises a host of logistical and
budgetary issues that do not typically pertain to domestic environmental audit programs. Early
resolution of these issues will help to prevent problems and delays from occurring before and
during the audit process. Some of the issues that should be addressed before the audit
process are:
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• Who will conduct the audit?
Choices include domestic personnel to be sent overseas, personnel already
stationed at the overseas facility, as well as outside consultants. The agency also
should consider whether or not it is cost-effective to have personnel stationed
permanently or temporarily at overseas locations to conduct audits in regions with a
high concentration of agency facilities. Costs to consider include travel, lodging and
per diem, communications, and if necessary, visas and temporary work permits. If
foreign nationals are used, costs associated with payroll taxes, insurance, and
benefits also must be considered. It is often cost-effective to contract with a
consulting firm to conduct or assist in some aspects of overseas environmental
audits. Many consulting firms have offices around the world, and thus have
proximity to facilities as well as knowledge of the legal and institutional framework of
the host country. This can be particularly useful in countries experiencing frequent
and unexpected changes in legislation and institutional arrangements.
• How are auditors trained?
Personnel conducting audits must be trained on the final governing standards of the
nation(s) where they will be conducting the audits. Special training, such as health
and safety, radiological health, and security, must also be considered for some
facilities.
• What are the applicable standards?
The most important component in designing an overseas environmental
auditing program is determining the standards against which compliance is
evaluated. The audit team will need to evaluate and determine the
applicable criteria and standards and clearly define those criteria and
standards in their audit report. In cases where a FSG or other baseline
guidance document has not been adopted, facility management will need
to determine the appropriate point of contact in the host country (e.g.,
officials in the host country's Ministry of Foreign Affairs, Ministry of Defense,
and Ministry of Environment) to keep the audit team abreast of
environmental requirements. In working with facility management, the audit
team will need to examine the host country's laws (national, regional and
local), applicable international agreements as well as the applicable base
rights agreement and Status of Forces Agreement.
. How will communications be handled?
The audit team will need to consult with facility management well in
advance of the audit in making arrangements for handling communications
during the audit. Computer-based forms of communication will often be the
most reliable and easily implemented. However, the audit team may require
special approval for the use of portable electronic equipment from facility
management. Special documentation for the portable electronic
equipment may also be needed for bringing the equipment into the host
country.
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• What is the schedule for pre-audit preparations?
Preparations for overseas audits will be more complicated and time-
consuming than for domestic audits. The audit team will need to be in
contact with facility management as soon as possible after the audit team
has been selected and a date set for the audit. By not allowing sufficient
time for the obtaining of visas and immunizations, the audit team may be
precluded from conducting the audit on schedule. A schedule for sending
the necessary information to the overseas federal facility should be
developed to ensure that facility management is well prepared for the audit
team and that all required documentation has been obtained well in
advance of the scheduled audit.
• What languages, customs, or traditions may affect the audit team or process?
Facility management should take into account the host country's language, religious
observances, and national or local holidays. The audit team should be briefed on
local customs and common courtesies to avoid embarrassment or
misunderstanding. Care also should be taken to avoid placing audit team members
of a specific gender, or religious or ethnic group in uncomfortable or inhospitable
surroundings. Advise team members of the possibility of such situations during the
audit team planning process.
• Will the audit program be subject to regional instability or conflict?
Prior to sending a team overseas to conduct audits, the agency should consult with
facility management personnel stationed overseas to determine regional stability.
This is not an issue with most Western countries, but may arise when conducting
audits of facilities in non-western and third world nations. The Department of State
issues advisories that contain information about potential "hot spots" for U.S.
citizens.
4.5 SUMMARY OF KEY ELEMENTS
Facility management will encounter a range of issues in conducting audits of overseas
facilities which are not generally applicable to domestic auditing programs. Some special
factors to consider include:
Early and thorough preparation is important to ensure an effective overseas
compliance and audit program. Environmental management and control practices
must be adapted to conform to applicable final governing standards. Such
standards may differ for each facility, particularly in cases of facilities located in
federated countries with environmental structures and requirements varying between
the federal and state levels. Sufficient time must be allocated for not only identifying
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the applicable final governing standards but also staying abreast of relevant legal
developments.
Budgetary constraints and logistical issues must be considered to determine the
ideal means for developing an understanding of the host country's legal, institutional,
and regulatory structure, as well as any supranational environmental organizations
and requirements. International consulting firms may provide the in-depth
knowledge necessary for conducting overseas audits and may prove useful in
conducting the actual audit as well.
Logistical issues should be resolved well in advance of commencing the audit.
Failure to take into account such matters as the host nation's political stability, work
permit and visa requirements, and local customs can delay and unnecessarily
complicate an overseas audit program.
4.6 SOURCES OF INFORMATION
There are a wide array of documents, governmental, private, and non-governmental
organizations (NGOs) which can assist or provide useful information on a host country's
environmental management and protection requirements. Some of these sources are
described below.
Organization for Economic Cooperation and Development (OECD): An organization
comprising approximately 30 countries, the OECD has an Environment Committee
which adopts both binding "Decisions of the Council" and non-binding
"Recommendations and Declarations." Both types of instruments serve as guidelines
for the development of environmental laws and policies of member nations. Both the
OECD's Headquarters office and the Environment Committee are located in Paris,
France.
International Chamber of Commerce (ICC): The ICC, which represents a number of
countries world-wide, has become more active in promoting voluntary environmental
auditing. The ICC, headquartered in Paris, maintains information on the problems
encountered by U.S. companies which have conducted audits of their overseas
subsidiaries. The ICC published a Position Paper on Environmental Auditing, which was
adopted by the ICC Executive Board on this 56th Session in November 1988. In 1991,
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the ICC developed and presented The Business Charter for Sustainable Development to
serve as a guideline for world wide corporate environmental management.
U.S. Agency for International Development (USAID): USAID is headquartered in
Washington, D.C. and has local offices in almost every country in the world. USAID
personnel typically are placed in-country on a long-term basis and have substantial
contacts with host government officials. Often, host country nationals are employed by
local USAID offices to handle day-to-day activities in specific sectors, including
environmental protection matters.
U.S. Department of Defense: DoD has developed the Overseas Environmental
Baseline Guidance Document (OEBGD) (October 1992) and is in the process of
developing final governing standards for all locations where U.S. military installations are
located. The OEBGD sets out interpretive guidance, procedures and criteria for
environmental compliances at DoD installations outside the United States, and contains
specific DoD environmental criteria which are used to develop the final governing
standards to be implemented by overseas DoD installations.
United Nations (UN): With over 150 member nations, the UN is headquartered in New
York City but is comprised of various organizations and institutions around the world.
The United Nations Center on Transnational Corporations, also in New York City,
examines corporate environmental practice and develops international codes of
conduct. Headquartered in Nairobi, the United Nations Environment Programme
develops international environmental policies and assists countries in the development
of their environmental protection schemes. The UNEP's Industry and Environment
Office, located in Paris, promotes sound environmental management practices. In
1990, UNEP joined the ICC and over 20 major U.S. corporations to form the Global
Environmental Management Initiative (GEMI). GEMI develops guidelines for
environmental management and sustainable development, promotes the exchange of
information on environmental auditing techniques and concerns, and encourages public
access to information.
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U.S. Environmental Protection Agency, Federal Facility Enforcement Office
(FFEO): Under the authority of EPA's Office of Enforcement and Compliance
Assurance, FFEO manages the program for monitoring compliance by federal facilities
with their environmental obligations. FFEO, located in Washington, D.C., also offers
technical assistance and policy guidance on environmental compliance matters at
federal facilities.
U.S. Diplomatic Missions: The U.S. embassy or consulate in the host nation can assist
facility management and audit team members with logistical matters associated with the
overseas audit. Local U.S. embassies and consulates maintain contacts with
governmental officials of host countries, including national and local environmental
authorities, and often have libraries containing information on a host country's legal
requirements. Local embassies and consulates can also assist with the obtaining of
temporary work permits, visas, and translation services.
International Standards Organization (ISO): Based in Geneva, the ISO formed the
Technical 207 Committee to develop standards for a voluntary international
environmental management system. The Committee has prepared two drafts; ISO
14001 covers certification and registration, while ISO 14000 provides practical advice on
implementing or improving an Environmental Management System (EMS). ISO member
organizations are in the process of voting on the drafts. Subcommittees are continuing
to work on drafting standards for Environmental Auditing (14010-12), Environmental
Performance Evaluation (14031), and Life Cycle Assessment (14040), among others.
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CHAPTER 5:
DESIGNING AN AGENDY-WIDE AUDIT PROGRAM
5.1 OVERVIEW
As previously discussed, the environmental audit is an important tool that agency
managers can use in building and maintaining effective environmental management programs.
However, in designing these programs, environmental program managers must ensure that
scope and goals of the program reflect and complement the agency's overall mission and
environmental priorities. A well-designed audit program will allow program managers to use
audit findings as a means of evaluating progress toward agency environmental program goals.
In contrast to the 1980s, when auditing was narrowly defined as a check-list based
approach for evaluating compliance, auditing now includes the review of environmental
management programs as a whole. As this section describes in greater detail, the audit
program can serve both to identify barriers to meeting environmental goals as well as solutions
for resolving problems. In addition, through the incorporation of environmental management
strategies, the emphasis in environmental auditing has shifted away from a reactive approach in
favor of a preventive approach to environmental problem-solving.
5.2 FACTORS AFFECTING PROGRAM DESIGN
Proper design of an environmental audit program requires careful consideration of
desired program goals and objectives, as well as development of a strategy for conducting pre-
audit on-site and follow-up activities. A well-designed environmental audit program should meet
the needs of the facility or agency environmental management program. Thus, the specified
goals and objectives of these programs should be complementary.
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Design factors that should be considered when developing an environmental audit
program include:
Scope of audits;
Frequency of audits;
Level of effort required;
• Type(s) of audits; and
Relationships with other inspection agencies.
Considerations that influence these audit design factors are similar to those affecting the
overall environmental program. These considerations fall into five general categories: (1)
resources available for carrying out the program; (2) the nature of the agency's facility
operations and associated environmental issues; (3) the scope of the environmental
management program; (4) agency support for environmental programs; and (5) perception of
agency environmental commitment. Each of these factors is described in greater detail below.
• Available resources - The audit program is subject to the same financial
constraints that apply to all government programs. Resources needed to effectively
operate an audit program include labor, equipment, and supplies -- with labor
comprising the majority of the necessary resources. In considering costs, an agency
must evaluate how much auditing it can afford, i.e., whether it can afford both
compliance audits and management audits. In addition, agencies must consider if it
is necessary to plan their audit activities to coincide with federal budget cycles.
• Nature of agency operations and environmental issues - The design of the audit
program depends to a great extent on the types of operations carried out by an
agency's facilities and their associated environmental issues. Agencies comprised
of facilities with primarily administrative functions should require fewer and more
limited audits than agencies with industrial operations utilizing a large quantity of
hazardous materials. To the greatest extent possible, site-specific factors such as
facility location and local environmental issues also should be taken into
consideration.
• Scope of the environmental management program - The purpose of the audit
program is to measure success in achieving the environmental management
program's goals, thus program managers should design the audit program to review
all aspects of the program, including management systems, standard operating
procedures, organizational structure, and compliance with specific environmental
requirements. Depending on the nature of the agency's operations, certain
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requirements may not apply. As such, the nature and scope of the agency's mission
and operations both have a direct influence on the audit program.
• Agency support - The level of agency environmental awareness, as well as it's
compliance history are factors that affect the frequency of audits. Agencies that
have invested in awareness training programs may find that they can conduct audits
less frequently because facility personnel have a positive attitude toward
environmental protection and that Senior management and other stakeholders will
play a leadership role in developing the audit program.
• Perception of agency environmental commitment - How an agency views itself
and how it is viewed by others with respect to environmental issues is an important
aspect affecting audit program design. Whether senior executives are reactionary,
compliance oriented, or visionary is a significant element in designing an audit
program. While an agency may have a mission that is reactionary by nature, i.e.
responding to an environmental disaster, a more visionary posture when dealing with
inter-agency environmental issues will affect the overall audit program. Likewise,
how others view the agency, stakeholder expectations, is also important in audit
program design. It is important to identify who the stakeholders are, i.e. the general
public, other agencies, etc., and to adequately consider their expectations with
respect to audit program design. This can be especially important with respect to
such activities as cleaning up contaminated sites that will be turned over to the
public.
5.3 IDENTIFYING AUDIT PROGRAM GOALS
At the outset, environmental audit program managers should clearly establish long-term
goals for the audit program. As discussed above, audit program goals should be a
complementary sub-set of an agency's goals for achieving a sound environmental management
system. Environmental management goals will vary from agency to agency and must be
examined within the context of each agency's mission and activities, but may include:
In conformance with Executive Order 12856 (Federal Compliance With Right-to-
Know Laws and Pollution Prevention Requirements"), EPA has developed and issued a
Code of Environmental Management Principles (CEMP) for federal agencies. On
September 3, 1996, EPA transmitted the CEMP to federal agency executives requesting
written commitment to the principles contained in the CEMP.
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The CEMP consists of five broad management principles that have been
developed to address all areas of environmental responsibility of federal agencies.
These five principles include:
1. Management Commitment: The agency makes a written top-management
commitment to improved environmental performance by establishing policies
which emphasize pollution prevention and the need to ensure compliance with
environmental requirements.
2. Compliance Assurance and Pollution Prevention: The agency implements
proactive programs that aggressively identify and address potential compliance
problem areas and utilize pollution prevention approaches to correct
deficiencies and improve environmental performance.
3. Enabling Systems: The agency develops and implements the necessary
measures to enable personnel to perform their functions consistent with
regulatory requirements, agency environmental policies and its overall mission.
4. Performance and Accountability: The agency develops measures to address
employee environmental performance, and accountability of environmental
functions.
5. Measurement and Improvement: The agency develops and implements a
program to assess progress toward meeting its environmental goals and uses the
results to improve environmental performance.
A copy of the CEMP Principles is presented in Appendix G of this document.
Complementary long-term environmental audit program goals should include:
• Development and implementation of a cost-effective audit program;
• Integration of environmental management systems (e.g., pollution prevention) into
audit protocols and facility operations to help an agency to prevent compliance
problems by reducing wastestreams and environmental releases to the greatest
extent possible;
• Conducting environmental audits to identify environmental problems and develop
solutions to enhance agency compliance and overall environmental management.
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Establishing an audit program that effectively fulfills its stated goals requires that some
groundwork be laid. Laying this groundwork may be one aspect of an overall implementation
strategy designed for the audit program. The strategy may specify activities for modifying
current environmental policies to incorporate the audit program, securing adequate resources
and funding, and assigning responsibilities for carrying out the program. Agencies also should
examine internal management practices and organizational structures to determine if changes
are warranted. Agencies that currently lack environmental audit programs may consider
adopting a "phased-in" approach to program implementation by gradually increasing the scope
and/or number of audits conducted over time.
5.4 IDENTIFYING AUDIT PROGRAM OBJECTIVES
Having established goals for the environmental audit program, environmental program
managers should continue to develop an implementation strategy by determining short and
long-term program objectives. As in the case of the audit program goals, objectives will vary
from agency to agency.
The primary short-term objective of the audit program should be to bring the agency into
full compliance with existing environmental requirements. Standard audit protocols can be
used to determine compliance with each applicable regulation (e.g., RCRA, Clean Air Act, etc.).
Using these checklists, audit team members can conduct interviews with shop personnel and
record their observations. Compliance audits conducted in conjunction with the assistance of
facility staff provide an excellent opportunity to informally train personnel in correct procedures
and to raise awareness regarding environmental compliance issues.
Other short term program objectives should be to identify projects for funding under the
requirements of E.O. 12088 or agency funds earmarked for environmental compliance projects
and to collect or verify environmental information that may be needed for other aspects of the
environmental management program (such as hazardous waste generation rates or hazardous
materials consumption), or other internal metrics.
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Long-term audit program objectives should broaden the program focus from strict
compliance with current requirements to include eliminating underlying (root cause)
environmental problems and conducting more detailed evaluations of environmental problems
and management systems. Standard compliance audits alone cannot meet these long-term
objectives. Instead, program managers must use audits tailored to these purposes. Examples
of long-term auditing objectives are described below.
• Eliminate underlying environmental problems - Auditing can be used to identify
the root causes of environmental problems and allow program managers to take
steps to eliminate them rather than continuing to rely on temporary stop-gap or
control measures. For example, recurrent spills in maintenance shops may be
temporarily addressed by using larger quantities of absorbent products.
Alternatively, a long-term solution to the problem would be to purchase better fluid
handling equipment and improve worker training and supervision.
• Identify systemic environmental problems - Agency environmental managers can
use audit results to identify systemic environmental problems that must be resolved
in cooperation with individual facilities. Strategic planning may be needed to
address these systemic environmental problems.
• Forecast future compliance - Audits provide an understanding of the current state
of agency compliance, but also can be used to determine what activities are
necessary to remain in compliance with upcoming or anticipated future regulations.
• Evaluate effectiveness of internal environmental management program - This
review may identify issues such as insufficient resources, lack of vision, or poor
training that may compromise future compliance.
5.5 SELECTING THE TYPE AND SCOPE OF AN ENVIRONMENTAL AUDIT
Over the past decade, the field of environmental auditing has become increasingly
specialized. Audits are no longer limited to determining compliance with current requirements.
Instead, audits can be used to identify and resolve underlying causes of compliance issues,
particularly recurring problems. Federal agencies have a variety of auditing tools at their
disposal to evaluate current compliance status, future risk of non-compliance, and opportunities
for minimizing the potential for non-compliance.
One such tool is EPA's Generic Audit Protocol. The Protocol is an environmental
auditing guide and an environmental management tool specifically developed to assist federal
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agencies in assessing or benchmarking their environmental performance. It is also intended to
be a resource for identifying and correcting deficiencies and to evaluate and manage
environmental risk including the risk of non-compliance with statutes, government regulations,
and federal executive orders. This Protocol is especially helpful in providing guidance on how
agencies may identify the "root cause" of environmental deficiencies such that these problems
will not recur. The Protocol provides federal facilities and agencies with a comprehensive
explication of the environmental auditing basics such as compliance audits, as well as auditing
of specific environmental management systems, and overall audits of environmental programs.
When designing an audit program, agency environmental management staff should first
determine goals and objectives and then select the types of audits to be conducted to best
meet the audit program goals. This section provides a discussion of five types of commonly
conducted environmental audits: compliance, property transfer assessments, management
audits, waste contractor/vendor audits and pollution prevention opportunity assessments.
These audits can be used in combination at a facility if appropriate.
5.5.1 Compliance Audits
Agencies use compliance audits to evaluate facilities' compliance status vis-a-vis current
environmental requirements. Compliance audits may be performed using in-house staff or a
third party, such as a contractor. Typically, the scope of compliance audits is limited to
identifying areas of non-compliance and does not include environmental management as a
long-term approach for coming into compliance. The remainder of this guide focuses on this
type of environmental audit.
5.5.2 Property Transfer Assessments
These types of audits are used by agencies to identify any undisclosed environmental
problems associated with a piece of property prior to purchase. The scope of property transfer
assessments often is much broader and focuses more on business risks and liabilities as
opposed to regulatory compliance. Assessors typically spend more time reviewing records and
conducting on-site monitoring than they would during a compliance audit. Examples of the
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kinds of environmental issues examined during a property transfer assessment include:
asbestos, soil or groundwater contamination, underground storage tanks, PCBs, lead-based
paint, urea, formaldehyde, radon, and contaminated drinking water. The level of detail and
scope of the assessment will depend greatly on the site history. Sites that were formerly
occupied by military or industrial facilities or located near abandoned waste disposal sites will
require more extensive site characterization work than sites that are relatively undeveloped.
The conduct of property transfer audits in the context of federal facilities may also raise
issues similar to those typically encountered in the corporate sphere of merger/acquisition
efforts. This type of property transfer assessment is a "total risk profile" that is focused on the
legal and financial risks that can arise in the sale or purchase of properties with the potential for
significant environmental liability. For example, military base closure activities may result in the
transfer of property to either public or private entities. The entity acquiring the site is likely to
insist on a thorough site characterization before accepting title to any portion of a facility that
could have an environmental risk potential. Many former military facilities had site activities
such as operation of process and production lines that implicate major environmental statutes
such as RCRA or CERCLA. If these facilities produced such items as printed circuit boards
there could be significant issues surrounding the use of solvents and degreasers with the
associated risks particular to those type of industrial activities. A few years back a major
federal agency was found by a court to be a potential responsible party under CERCI-A for site
contamination that occurred almost fifty years in the past. The property in question was a
private industrial site at which that agency had exercised management oversight for purposes
of war production activities. The present day moral is that an agency that doesn't know what its
role was in site environmental issues may face serious future liabilities.
Therefore, it is important for a federal agency or facility to be thoroughly familiar with site
activities including historical activities in order to not only characterize its possible contribution
to site environmental issues, but to be able to identify situations for which it is not responsible.
This is critical in both a divestiture situation as well as an acquisition situation.
5.5.3 Management Audits
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These audits are a distinct type of audit designed to evaluate an organization's ability to
carry out it's environmental management program. Management audits can be conducted in
many ways and utilize either in-house staff or a third-party. Management audits typically
involve the review of: organizational structure; staffing levels and resources; roles and
responsibilities; standard operating procedures; ability to fulfill the organization's assigned
mission; and staff training and expertise. EPA's Generic Audit Protocol describes
environmental management audits, referred to as Phase 2 and Phase 3 audits, as audits that
target specific management issues and assist facilities in identifying the root causes of
environmental deficiencies. Most importantly, because these types of audits focus on the root
cause of deficiencies, they help the facility and agency in implementing permanent corrective
action measures. The Generic Protocol provides guidance on how to evaluate such programs.
5.5.4 Waste Contractor/Vendor Audits
Some Federal agencies require facilities to audit commercial treatment, storage, and
disposal (TSD) facilities prior to issuing a waste management contract. The purpose of this
type of audit is to minimize the long-term risk and liability associated with off-site hazardous
waste treatment and disposal. Superfund allows EPA, under certain conditions, to impose
severe, retroactive, joint and several liability upon any party responsible for the release of
hazardous substances into the environment, including environmental damage resulting from
TSD operations. Federal agency personnel should be aware that "responsible parties" may
include hazardous waste generators.
Federal agencies should seriously consider conducting waste contractor audits at both
RCRA-regulated TSDs and non-RCRA facilities such as solid waste and oil recovery facilities.
By thoroughly assessing the capabilities and operations of a TSD facility, generators often can
reduce the number of facilities utilized for waste treatment and disposal, resulting in a more
focused and cost-effective waste management program. In addition, these audits can be used
to identify and eliminate the use of facilities that present unreasonable environmental risks that
otherwise would not have been evident.
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TSD facility audits can be conducted using in-house staff or independent environmental
consultants. These audits focus on four primary areas: (1) assessing the risks associated with
facility operations; (2) reviewing the financial strength of the TSD facility; (3) understanding
current past and present compliance issues; and (4) assessing the facility's management. After
completing the audit, the team should prepare a report that allows a comparison of the positive
features of the facility and the existing or potential environmental, operational, and financial
risks of the site.
5.5.5 Pollution Prevention Opportunity Assessments
Over the last five years, Federal agencies have begun to use pollution prevention
opportunity assessments (PPOAs) as a tool for identifying and eliminating the underlying
causes of compliance problems. By adopting a pollution prevention approach, agencies can
reduce waste generation and environmental releases, and thus prevent compliance problems
from occurring. Compliance problems may be resolved through a combination of best
management practices, organizational or management changes, or technical modifications
(e.g., material substitution or process modifications). PPOAs are broad in scope and combine
aspects of both compliance audits and management audits. During the PPOA site visit, the
assessment team may examine: facility operations; waste streams and environmental releases;
management practices and systems; floor plans and facility lay-out; inventory control
procedures; energy and water consumption; and materials usage.
As with other types of audits, PPOAs can be conducted either by in-house staff or
independent environmental consultants. However, unlike other audits, conducting PPOAs
requires staff with specialized skills and expertise. Assessment team member should have
received training in how to conduct PPOAs and should be aware of the resources and technical
assistance available for identifying and evaluating pollution prevention options. The
assessment team should produce a report which contains a ranked list of pollution prevention
options, including cost benefit analysis and an evaluation of the technical feasibility of each
opportunity identified.
5.6 TARGETING FACILITIES
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In most cases, agencies must set priorities for conducting audits at their facilities due to
manpower and resource limitations. Depending on the nature of facility operations, some
facilities will require more frequent and more extensive auditing than others. The following
factors are frequently used in prioritizing facilities:
• Size of the facility - The physical area (both improved and unimproved areas),
production levels, waste generation, and/or the number of employees.
• Risk - The likelihood of harm to human health or the environment caused by facility
operations. Facility risk may include factors such as the type and quantity of toxic
chemicals used, the type of products manufactured or processed, the age of the
facility and history of accidents, the danger associated with the operations
conducted at the facility, and the proximity and density of human population.
• Environmental factors - Certain site characteristics may make a location more
susceptible to wide-spread environmental damage. Examples include aquifer
recharge areas, porous soils, subsurface geology and hydrology, steep grades,
prevailing wind direction, and close proximity to bodies of water. In addition, agency
environmental staff should consider the presence of endangered or protected
species in the area of the facility.
• Record of compliance - Facilities with poor compliance records may require more
frequent auditing than those with good records (e.g., facilities operating under
consent decrees, settlement agreements, etc.). Poor compliance may result from
high worker turn-over rates, inadequate training, or a lack of attention to
environmental issues on the part of upper management. In this case, environmental
management audits may be helpful in demonstrating root causes to non-compliance.
Agency environmental staff should begin to set auditing priorities by compiling
information on these factors for each facility. If the agency has many facilities, staff may need
to develop a matrix for ranking each facility based on the factors. By ranking the facilities,
agency staff can prepare a prioritized list of facilities for auditing and a long-range auditing
schedule.
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CHAPTER 6: PROGRAM ADMINISTRATION
6.1 OVERVIEW
This chapter discusses the process of initiating and administering an environmental
audit program based on the framework and procedures outlined in Chapter 5 of this guidance
document. The success of an agency environmental audit program hinges on building a strong
program foundation, including launching the program in a positive manner and carefully
planning a strategy for each phase of the audit program.
6.2 PROGRAM INITIATION (GENESIS OF THE PROGRAM)
Program initiation activities take as a starting point the work done in establishing the
audit program long and short-term goals and objectives. A number of initial steps must be
completed prior to formally launching the audit program. These steps should be carried out by
the environmental staff under the direction of senior management.
6.2.1 Develop An Environmental Audit Policy
The genesis of an agency environmental audit program often is the development of an
audit policy or mission statement. This policy will set help to lay a solid foundation for future
agency audit activities, establish the program's purpose and function, and educate and gain the
support of agency facilities and employees. An agency audit policy should include:
• A detailed description of the scope, goals, and objectives of the program;
• A management statement that the program is intended to help facility managers
improve compliance and reduce the potential for liabilities and is specifically not for
the purpose of "checking on" facility managers;
• A discussion of how the audit program will be managed and administered; and
• A signature of an appropriate agency official, with a senior agency official named as
head of the program.
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In addition to the agency audit policy, environmental managers also should develop a
strategy for program implementation. Some of the issues that should be addressed include:
• Securing resources for funding the program;
• Assigning roles and responsibilities for implementation of the program;
• Supporting the audit policy through agency actions; and
• Determining the best way to communicate the goals, objectives, and results of the
audit program to interested parties within and outside the agency.
6.2.2 Internal Versus External Audits
Agency environmental staff should determine whether facility audits will be conducted
using in-house or external staff early in the planning process. It may be possible to rely on
facility staff to conduct audits at larger facilities, while audits at smaller facilities may require the
involvement of agency headquarters staff. This decision is important with respect to program
success because of the budgetary and internal management issues raised. However, if agency
staff are used they should not report directly to line management as this presents the potential
to jeopardize the audit's objectivity and ultimately its credibility. Another key issue is the
objectivity of audits conducted by facility staff. This is especially important when using in-house
staff and in such cases caution should be used to assure the objectivity of the audit.
Additionally, agencies may consider the possibility of using outside agency personnel. If budget
and personnel constraints permit, it may be desirable to use these personnel to conduct audits
at other facilities and simultaneously train agency staff to allow them to conduct their own audits
in the future. Finally, agencies should be aware that there is considerable expertise within the
Federal government with respect to auditing. Therefore a federal agency may want to involve
personnel from other federal agencies to conduct peer reviews of third-party audits to provide
credibility and objectivity to the audit. Involving other agency personnel may also provide
opportunities to benchmark other audit programs and make improvements to the agency's
overall programmatic approach.
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6.2.3 Use Of Contractors Versus Agency Staff
Agency managers also should consider the option of using contractor support for
conducting environmental audits. Advantages to using contractors for conducting audits
include; audit objectivity, auditor qualifications, staffing issues, audit quality assurance, and
such issues as medical monitoring for audit personnel. Contractors also may be used as a
short-term alternative while agency staff are being trained on audit procedures and protocols.
6.3 PROGRAM MANAGEMENT ISSUES AND ACTIVITIES
Program managers will have to make decisions regarding a wide range of issues as part
of the administration of the audit program. Building a program centers around the completion
of eight basic activities that are closely related to the activities discussed in the preceding
section on program initiation. These include: (1) securing upper management support and
resources; (2) securing support from agency field offices; (3) obtaining qualified personnel; (4)
conducting medical monitoring of audit personnel; (5) conducting quality assurance and
measuring audit program performance including ensuring consistency and objectivity of audit
findings; (6) delineating and following audit reporting responsibilities; (7) conducting post-audit
activities and implementing corrective measures; and (8) Integrating audit findings into the
agency budget process..
6.3.1 Securing Upper Management Support and Resources
Success of an audit program requires a commitment from agency management to
support the development, performance, and follow-up of audit findings and recommendations.
Senior agency officials' commitment to the program helps to ensure the availability of resources
and manpower and a willingness to follow-up on corrective measures in a timely manner.
Upper management commitment can be expressed by signing the environmental audit policy,
holding briefings with organizational directors and other stakeholders, and publishing articles in
Agency newsletters. Management support should include commitments to the following areas
of support:
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• Adequate resources and staffing: This includes such issues as a training of audit
staff in environmental technical and regulatory matters and proper interview
techniques. It also includes providing equipment and facilities (monitoring and
safety equipment, appropriate questionnaires and checklists, and if appropriate
office space) so that audits are properly conducted. This aspect of a successful
audit program is foundational. Upper management support is irrelevant without
properly trained and equipped audit staff.
• Budget for program development and performance: This includes setting aside
sufficient staff man-hours to plan and develop audit program objectives and overall
goals. It is beyond training and staffing issue and is focused on the planning
process such that audit program objectives are anticipated and provided for in future
years. This might include a commitment to bring more costly audit program
activities (but no corrective actions) on-line in a phased approach or expanding
beyond compliance audits to management audits. This element is necessary in
order for the audit program to develop and thrive over time and is evidence of
management's commitment to an audit process rather than a one-shot audit effort.
• Follow-up with corrective action measures in both a budgetary and
programmatic fashion: This involves the commitment to fund and support the
actions necessary to correct deficiencies identified by having committed to the two
prior activities. This includes a commitment to systematic permanent or long-term
corrective action measures as appropriate. Without a commitment to correct the
deficiencies uncovered by the audit findings, the audit program becomes an added
liability to the agency as opposed to reducing its overall risk profile.
6.3.2 Support From Field Offices
In addition to the support of agency headquarters management, the success of an
environmental audit program requires commitment from the agency's field offices. This support
is particularly important because the performance of audit activities generally occurs at the field
level office level. This requires the cooperation of facility managers in furthering program
objectives and diligence in addressing corrective action recommendations. Because agency
senior management at headquarters is frequently far removed from the field office activities,
and is more concerned with broader agency issues, it is essential that the field office
management take a proactive role in advancing the agency's environmental auditing objectives.
One method for ensuring facility level commitment to the agency's program is to appoint one or
more individuals to the task of coordinating and tracking field office support for the audit
program and then having those individuals report directly to upper management.
6.3.3 Obtaining Qualified Personnel
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To a great extent, the quality of the audit program depends on the competency
of the auditors conducting the audit. If auditors and audit team members are not
proficient in their duties, the audit being conducted will likely be flawed and reflect on
the organizations overall environmental management system. Agency management
and, in some cases, facility management and their staff will be looking to the audit
team for guidance in improving their compliance posture, environmental management
systems and overall risk profile. Therefore, it is imperative that the audit team be able to
demonstrate having both appropriate knowledge of the issues included in the scope
of the audit, and sufficient training and proficiency prior to participating in
environmental audits.
The qualifications of the staff assigned to conduct the audit should be
commensurate with the objectives, scope and complexities of that particular audit
assignment. Although audits will vary in scope, as previously mentioned, they all will
require some degree of professional assessment of on-site conditions, and risks related
to apparent problems such as areas of non-compliance, and weaknesses in
management systems. Auditors must also be able to verify and document observations
and findings and use professional judgement to form recommendations for correcting
any observed deficiencies. These often include areas outside the scope of compliance
requirements and extend to environmental management issues at the facility. Key
areas of technical experience and training for environmental auditors should include at
a minimum:
• technical training and experience appropriate to the scope of the audit,
including an understanding of basic audit concepts, practices and
procedures;
• knowledge of environmental regulations, the lines of inquiry and
performance objectives contained in the audit protocol, and general
standards called for in the scope of the audit;
• general familiarity with the type of process operations to be audited at
the site and with the environmental issues likely to be associated with the
various processes and related management issues.
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Above all, the auditor must be flexible and know when and how to apply certain
auditing approaches and theories in different situations. During the course of an
environmental audit, auditors may encounter situations that are outside their
experience or preparation for the audit. In such circumstances it is important for the
auditor to adapt to varied and unfamiliar situations and not be limited to a particular
approach.
The auditor also should receive training in agency administrative procedures (e.g.,
procedures for reporting findings) to ensure that audits will be as consistent as possible from
year to year. Along with audit protocols, program managers should develop quality assurance
procedures to review each audit and determine whether audit protocols were followed.
The audit team should include individuals whose skills and expertise are
complementary. For example, one team member may specialize in air regulations while
another specializes in wastewater issues. The optimal skill mix of team members will depend
on the type of audit conducted and the Facility being audited. If the audit program involves the
conduct of multiple audits, program managers may plan on obtaining resources for preparing
and fielding more than one audit team.
In addition to assuring that qualified personnel are involved in the audit, the roles and
responsibilities of the audit team leader and audit staff should be clearly identified. The team
leader is responsible for the actions of the audit staff and is responsible for any audit staff
debriefings and exit interviews, as well as the overall conduct of the audit, and should take the
lead in resolving any concerns or issues that might arise between the audit staff and the facility.
In addition, the team leader is the contact point for any questions the facility personnel may
have regarding the scope and purpose of the audit. The team leader should be qualified to
manage a group of auditors and have sufficient experience to address any questions that might
arise during the course of the audit. Finally, the team leader is responsible for communication
with the facility regarding the report contents as well as the final report. Audit staff are to follow
the specific tasks assigned to them prior to the beginning of the audit. Also, they should look to
the team leader if they have questions about appropriate activities while on site.
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6.3.4 Medical Monitoring
If in-house staff will conduct most of the audits, program managers should secure
resources for medical monitoring of team personnel. Medical monitoring is particularly
important if team members conduct several audits a year at facilities where occupational
exposure is an issue. Medical monitoring of audit staff has as its primary objective the
protection of the auditors. Evidence of exposure of audit team members to hazardous
substances is an indication of deficiencies in the auditor safety training program and should
receive the highest corrective action priority from management. This is especially important
because of the potential for liability due to worker exposure.
6.3.5 Quality Assurance and Audit Program Performance Measurement
It is important to adequately document and analyze audit findings and observations to a
high degree of quality and competence. This is necessary so that facility management, staff,
and/or subsequent environmental auditors can refer to the audit report and can either concur,
or if they disagree, understand the original findings and recommendations sufficiently.
Therefore, once an environmental audit program is underway, there is a need to assess the
consistency and objectivity of the audit findings. This can be accomplished by conducting a
periodic (e.g., annual) review of the performance of the audit program. To accomplish these
reviews, agency management should consider the use of third parties to evaluate audit program
performance. This is a useful method for assessing program objectivity. Program performance
review should include examination of past efforts as a tool for implementing future
improvements and include assessments of:
• What has the program accomplished?
• Were the program goals and objectives met?
• What were the strengths and weaknesses of program protocols and results?
• What program corrections are needed to improve future audit efforts?
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6.3.6 Reporting Responsibilities
Environmental managers should implement a strategy for communicating the results of
the audit report to upper management and facility personnel. Upper management and facility
personnel should be informed immediately if the team identified any situations that pose an
imminent danger either to shop personnel or the environment. In addition to discussing the
findings, program managers should prepare an explanation of recommended corrective actions
and an estimate of manpower and financial resource needs. Something as simple as an
organizational chart with an attached matrix of facilities and identification of corrective action
measures by facility may be helpful in informing management of audit program status.
6.3.7 Post-Audit Activities and Corrective Measures
Environmental managers should streamline the process for resolving compliance
problems and other issues identified during the audit. Corrective action may involve obtaining
funding, preparing new standard operating procedures, site remediation, purchasing new
equipment, training, and/or sampling and monitoring. Program managers should create a
matrix for comparing and prioritizing corrective action projects. A system for tracking and
monitoring corrective action projects may be needed for large facilities with numerous projects.
Corrective measures for compliance problems range from temporary "quick fixes" to
long-term preventive action (i.e., pollution prevention). For example, recurring spills in a
particular shop may be resolved in the short term by replacing leaking containers. In the long
term, depending on the economic feasibility, the shop may invest in improved secondary
containment, better bulk storage and materials transfer equipment, as well as worker training
and environmental awareness.
6.3.8 Budget Coordination and FEDPLAN
Funding for projects (including environmental compliance and corrective action) typically
is initiated at the installation or facility level, usually by the facility compliance officer or person in
charge of environmental management. Projects requiring capital expenditures are usually
considered line items in an agency's budget. Because of lag times in requesting and securing
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funds, it is necessary for agency environmental management to ensure that facilities are
audited and budget requests for corrective action measures are submitted in a timely manner.
Therefore, scheduling of audits and development of budget needs in response to audit findings
should take into consideration the priority of the problems identified in the audit and the budget
year cycle. This is critical because a costly compliance problem identified after submittal of an
agency's budget could lead to significant problems for the agency.
Once the budget needs have been identified, the agency must submit a report to OMB
which describes the agency's plan for addressing environmental problems (refer to Chapter 2,
Section 2.5). Agency management must develop a process for communicating the needs
identified in the audit process into a report. Identification of compliance problems and
development of budget needs based on audit findings will be moot if this is not translated into a
request for funds to conduct needed corrective actions. As with the budget process, in
scheduling facility audits, management should consider the timing of audits within the calendar
year, this will allow sufficient time to address corrective action plans for serious deficiencies
within the budget process.
6.4 LEGAL ISSUES
6.4.1 Written V. Oral Reports
The use of oral versus written reports is a consideration when dealing with the
disclosure of sensitive materials and/or the discovery of unregulated risk. As discussed in
Chapter 3, it is virtually impossible to guarantee that internal investigatory reports will remain
confidential. Therefore, in matters concerning possible liability, the use of oral reports is of little
value and should not be encouraged. If an agency becomes involved in litigation, the
underlying facts and the response to any problems identified by an audit will be uncovered
through the civil discovery process. Audit reports will, however, have protection from FOIA
requests while they remain in draft or preliminary stage.
An additional problem with oral reports is that they do not exhibit the rigor and careful
analysis of a well written report. Without notes, it is difficult to accurately recall and report
specific facts discovered in an audit. Also, with oral reports, their immediacy may lead to an
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inclination to report in an emotional and opinionated fashion regarding an issue that requires
reasoned examination. Further, the oral report and any notes made to produce the oral report
may be subject to discovery as previously discussed
In limited circumstances, agencies that deal with high security or matters of unusual
sensitivity will be confronted with situations that argue against the written memorialization of an
issue. Either the sensitive materials should be recorded in a separate notebook with limited
distribution, or the less sensitive information should be written and sensitive material
transmitted orally. This is a rare situation applicable to those agencies dealing with national
security issues. The security related issues should be developed separately from the primary
audit report and must be overseen in their entirety by agency legal counsel. The specifics of
invoking national security protections is outside the scope of this document and is best
undertaken by agency counsel. Also, there are legitimate procedures for protecting sensitive
materials from disclosure and these procedures do not necessitate the use of oral reports.
6.4.2 Exit Interview
Oral reports are appropriate at the exit interview, but must remain focused on facts
rather than opinions. For example, it is appropriate to report that the audit team found a red
and green substance flowing out of the unbermed hazardous waste storage area, or found
crumbling white insulation material adjacent to the HVAC intake structure and will test this
substance to determine if it is asbestos. It is not appropriate to report that the team found red
and green hazardous waste flowing out of the illegal hazardous waste storage area in violation
of state and Federal regulations. Such statements are conclusory and not sufficiently
supported by analysis.
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6.4.3 Document Protection And Retention
All audit findings should be recorded in indelible ink in bound notebooks with pages that
can be neither inserted nor deleted. In addition, all notes should become part of the site file.
There are two distinct purposes behind these requirements. First, it provides a single source
for audit results, there will be no question about the existence of additional materials. Second,
it assures a measure of certainty regarding the recordation of the audit findings. It will be
difficult to second-guess the findings with respect to completeness of the audit record if all
entries are in bound notebooks written in indelible ink. Subsequent questions about whether
some finding was deleted or changed, or whether a particular issue was addressed during the
audit can be determined by reference to the notebooks.
Audit team members should clearly identify the time and date the audit began, where on
the facility it began, and clearly identify the point where the final walk-through ended. Auditors
also should sign the notebooks when the audit is completed. These measures will provide
some protection against alteration of audit findings. If there is a need to segregate audit
findings because of security reasons, the audit team should not record the sensitive materials in
the same notebook with the rest of the audit.
6.4.4 Involvement Of General Counsel
The agency general counsel should be involved in the audit planning and conduct from
the beginning to the final report. The general counsel's office role includes furthering agency
policy of complying with all applicable Federal, state and local regulations, and this requires
involvement at the earliest stages of the audit. The participation of the general counsel is also
important in the event significant violations are uncovered, especially those that trigger statutory
or regulatory reporting requirements. It is best to consult with the general counsel's office prior
to the audit in order to plan for the discovery of violations or unregulated risk.
If violations or significant unregulated risks are discovered, it is important that the
general counsel carefully reviews the findings and takes an active role in notifying the
appropriate regulatory agency. Violations must not be mischaracterized or omitted such that
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the audit be interpreted as an affirmative act of concealment. The perception that concealment
is occurring can lead to additional and severe legal consequences. It is counsel's role to stress
to audit team members and facility personnel that purposeful failure to report or be informed
about violations or negligent conditions could be construed as "willful blindness" and possibly
lead to civil or even criminal prosecution. In 1984, a Federal Court upheld the criminal
convictions of a plant foreman and service manager finding that the RCRA penalty provisions
apply "if they knew or should have known that there had been no compliance with the permit
requirement" (United States v. Johnson & Towers, Inc., 741 F.2d 662, 664-665 (3rd Cir. 1984)).
As is evident from this decision, turning a "blind eye" to violations may lead to severe legal
liability.
An additional and critical role for the general counsel is to assure that compliance is fully
documented. It is essential that the agency leave a clear paper trail establishing that it has
devoted resources to the management of environmental matters. The agency should ensure
that corrective actions taken to address discovered violations are carefully documented in the
final report. A prompt and thorough response to problems discovered in an audit is important
with respect to minimizing the potential for future liability.
6.4.5 Report Distribution
The audit notebooks and questionnaires should be retained in a central file by the audit
team members. These notebooks are not to be disseminated or reproduced for non-audit team
members, but should be available to the general counsel's office. The notebooks and the
observations they contain are the factual basis for the final report. While it is appropriate to
disseminate sections of the audit report to facility personnel for comment, it is best to limit
distribution to those individuals qualified to comment on them. For example, the audit report
section dealing with the facility wastewater treatment system should be circulated to the
personnel responsible for that area, and to facility management. The purpose of the limited
distribution is to maintain the confidentiality of the document during its development, while at
the same time allowing an opportunity for open discussion of the issues among the responsible
parties.
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CHAPTER 7:
RESOURCES AND TOOLS FOR AUDITORS
7.1 OVERVIEW
This chapter discusses the types of resources and tools auditors should have available
to them when conducting environmental audits. All of these materials will not be required for
every audit. However, auditors should be aware of and utilize all potential information
resources appropriate to the scope and type of audit they are performing.
7.2 PRE-VISIT QUESTIONNAIRE (PVQ)
A PVQ consists of a series of written questions directed at the facility environmental
manager to determine the nature and extent of any facility environmental issues, as well as to
alert the facility manager as to facility areas and documents to be reviewed during the audit. A
PVQ typically is sent to the facility several weeks prior to the audit and should be returned in
time to provide the audit team with sufficient opportunity to review the facility's responses and
prepare for the site visit. It also is extremely important for facility personnel to fully respond to
the questions raised in the PVQ and contact the audit team with any concerns or questions.
The PVQ is an important tool for both the audit team and the audited facility in
identifying particular areas of concern and setting priorities for audit efforts. A well crafted PVQ
can significantly reduce the on-site time required to conduct the audit, thereby saving valuable
and resources for other audit activities. The PVQ is useful in:
• identifying priority areas to review during the site visit;
• budgeting time for physical areas to be visited and issues to be reviewed;
• providing facility personnel with an opportunity to prepare documents and records;
• providing guidance to the facility on subjects that will be of interest to auditors; and
• alleviating the concerns of facility personnel regarding the audit process and results.
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To gain the full benefit from a PVQ, the questionnaire should be tailored to the facility
being audited, as well as the type of audit being conducted. For example, the questions in a
compliance audit PVQ should seek to collect information about the major environmental
statutes and media that are of concern at the facility. Questions might include:
• Does the facility generate, treat, store, or dispose of hazardous wastes?
• Where is the facility located in proximity to potential receptor populations?
• Is the facility currently undergoing any regulatory enforcement actions?
• What are the main mission (industrial process) activities at the facility?
• Has the facility been notified of possible involvement at a Superfund site?
• Have analyses of hazardous waste streams been conducted and are the results
available?
These types of questions should be developed for each media and issue of
environmental significance (such as air, water, PCBs, pesticides, and underground storage
tanks). In addition, the PVQ may inquire as to whether the state or the Federal government has
primary responsibility for a particular media, or whether local ordinances apply to the facility.
Further, the types of questions asked in PVQs for different types of facilities also will
vary. For example, an office complex PVQ might focus on asbestos and the presence of PCB-
containing transformers, while an industrial facility PVQ likely would emphasize hazardous
waste handling and disposal issues. A sample PVQ used by the U.S. Army in conducting
environmental audits is exhibit in Appendix H.
7.3 PROTOCOLS/CHECKLISTS
Protocols and checklists are the actual working documents which provide the audit team
with an outline for conducting on-site audit activities. These documents allow the team to
evaluate the recordkeeping, operational, and procedural elements of a facility's activities with
respect to the regulatory requirements for a particular compliance area. For example, an audit
protocol might include a pre-typed form which details facility statutory or regulatory
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requirements, the types of issues that should be addressed, where and by whom records are
kept, questions or issues to raise to evaluate each of the above matters, and an area for the
auditor's notes and comments.
Protocols and checklists are essential tools for assuring that an audit has adequately
addressed all Federal and state regulatory matters, including all permits, facility records, and
facility environmental practices. They provide a consistent approach that promotes
comparison between differing facilities and environmental practices, as well as evaluating the
same facility over a period of time. However, protocols and checklists are not a substitute for
critical thinking and should be used only as a reference point to affirm that an issue has been
examined. In reviewing an environmental audit program, agency management should evaluate
protocols and checklists to assure that they:
• are applicable to each type of agency facility;
• are pertinent to of the type(s) of audit(s) to be conducted;
• are periodically reviewed and modified to address new regulatory requirements and
changes in audit program objectives; and
• include a review of facility management structure and procedures, especially with
respect to chain of command and responsibility for remedial action.
EPA, other government agencies, as well as private companies, have developed audit
checklists, protocols, and software to assist auditors in conducting complete and efficient
environmental audits. The products, such as EPA's Generic Audit Protocol, can be used as a
starting point for audit teams in developing more targeted audit checklists and protocols that
meet agency and facility-specific needs. The Generic Audit Protocol, as discussed elsewhere
in this document, (See Section 5.5) is an excellent tool developed specifically for federal
facilities for the purpose of assessing and managing a sound environmental program. Figure 4
contains portions of a sample checklist and worksheet from EPA's Generic Audit Protocol.
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Figure 4
Sample Checklist and Worksheet from EPA's Generic Audit Protocol
Compliance Category:
Hazardous Waste Management
Regulatory Requirements:
Reviewer Checks:
HW.54. The handling of
incompatible wastes, or
incompatible wastes and
materials in containers at
generators must comply
with safe management
practices (40 CFR 262.34
(a)(l)(i) and 265.177).
Verify that incompatible wastes or incompatible wastes and materials are
not placed in the same containers unless it is done so that it does not:
generate extreme heat or pressure, fire, or explosion, or violent reaction
produce uncontrolled toxic mists, fumes, dusts, or gases in sufficient
quantities to threaten human health
produce uncontrolled flammable fumes or gases in sufficient quantities to
pose a risk of fire or explosions
damage the structural integrity of the device or facility
by any other like means threaten human health or the environment
(NOTE: Incompatible wastes as listed in Appendix 4-6 should not be placed
in the same drum.)
Verify that hazardous wastes are not placed in an unwashed container that
previously held an incompatible waste or material.
Verify that containers holding hazardous wastes incompatible with wastes
stored nearby in other containers, open tanks, piles, or surface
impoundments are separated or protected from each other by a dike,
berm, wall or other device.
HW.55. Containers used to
store hazardous waste at
generators should be
managed in accordance
with specific management
practices (MP).
Verify the following by inspecting container storage areas:
containers are not stored more than 2 high and have pallets between
them
containers of highly flammable wastes are electrically grounded (check
for clips and wires and make sure wires lead to ground rod or system)
at least 3 ft (0.91 m) of aisle space is provided between rows of containers
Satellite Accumulation Points
HW.56. Generators may
accumulate as much as 55
gal of hazardous waste or 1
qt of acutely hazardous
waste in containers at or
near any point of initial
generation without
complying with the
requirements for onsite
storage if specific
standards are met (40 CFR
262.34(c)).
(NOTE: The type of storage is often referred to as a satellite accumulation
point.)
Verify that the satellite accumulation point is at or near the point of
generation and is under the control of the operator of the waste generating
process.
Verify that the containers are in good condition and are compatible with the
waste stored in them and the containers are kept closed except when
waste is being added or removed.
Verify that the containers are marked HAZARDOUS WASTE or other
appropriate identification.
(NOTE: See Appendices 4-1, 4-2, 4-3, 4-4, and 4-5 for a guidance list of
hazardous and acute wastes.)
Verify that when waste is accumulated in excess of quantity limitations, the
following actions are taken by interviewing the shop managers:
the excess container is marked with the date the excess amount began
accumulating
the waste is transferred to a 90 day or permitted storage area within 3
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Compliance Category:
Hazardous Waste Management
Regulatory Requirements:
Reviewer Checks:
days.
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7.4 LEGAL REFERENCES
Legal references are source materials that provide agency and facility personnel with
the text of regulatory or statutory language, or provide interpretation of statutes or regulations.
Such references are necessary to determine compliance requirements and to guide
environmental staff in carrying out their duties. Without adequate statutory and regulatory
references, facility environmental staff cannot conduct a proper environmental management
program and the audit team cannot properly assess facility compliance status.
Agency management ultimately will bear the responsibility for the quality and
effectiveness of their agency's environmental programs. Environmental staff should have ready
access to source material and be knowledgeable about environmental statutes and regulations.
It may be useful to have facilities identify those environmental statutes and regulations that
impact their operations and organize these materials in a comprehensive file for facility
reference. Facilities should have a single location that can be accessed for all facility statutory
and regulatory guidance. The following is a list of basic print references that environmental
staff should, at a minimum, have at their disposal:
• Code of Federal Regulations (CFRs) - Regulations specific to media and subject
areas.
• Environmental Statutes - Federal, state, and local that apply to facility compliance
areas.
Additional selected materials that may be investigated as facility source materials include:
• Bureau of National Affairs (BNA) - Published annotated guides and references on
environmental matters by media and cross-media issues which address legal
concerns and Executive Orders that are either topical or fundamental to sound
environmental management. The Environmental Reporter is a particularly useful
source.
• CD ROM Software - Many Federal and state regulations and statutes are now
available on CD and dramatically increase efficiency in searching for statutory or
regulatory citations.
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• Environmental newsletters specific to media compliance areas which provide
abstracts of impending regulations or alert environmental personnel to upcoming
issues. Examples include Inside EPA and Hazardous Waste News.
7.5 PHOTOGRAPHY EQUIPMENT
An instamatic camera is an invaluable aid in documenting facility conditions and serving
as a reminder to the auditor of specific areas and issues that require analysis in the audit
report. Photographs are also useful for making a point regarding facility conditions without
reference to a lengthy explanatory text. With a photograph, it is possible for subsequent
auditors or even facility personnel to see exactly what conditions existed at the time of the audit.
Further, photographs can be a valuable permanent record for the facility file. The audit team
should obtain written permission to take photographs and should be briefed about areas where
photographs are not permitted (i.e., high security or sensitive areas). The issue of photographs
should be addressed prior to the actual site visit, either in the PVQ or at the initial on site
meeting.
7.6 FIELD ASSESSMENT EQUIPMENT
Typically, field assessment equipment is not a major component of an audit. However,
field sampling equipment can provide a snapshot of particular conditions at the time the sample
is collected. Sampling is most useful in verifying an auditor's assessment, but is not a
substitute for critical and thorough review of facility records, site assessment, and interviews
with facility personnel. Agencies should assess the cost of field sampling equipment, some of
which is quite expensive to acquire and maintain and may require special training for personnel,
prior to including site sampling in the agency audit protocol. If the use of field assessment
equipment is deemed necessary, the facility should be informed of any planned sampling in the
PVQ.
Field sampling equipment may be useful in uncovering hidden problems that would
normally escape detection. For example, field equipment capable of detecting organic vapors
either in the soil or near suspect areas of contamination (e.g., stained soil or concrete) may
lend more evidence to an audit observation and finding. Explosimeters, instruments that
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measure the concentration of methane gas, can alert auditors to the presence of such gases in
concentrations before they become dangerous. If a facility is on a former sanitary landfill site,
methane gas build-up, especially in confined spaces could be a problem. A simple device like
an explosimeter can alert the audit team to the need for remedial measures such as proper
venting of gas away from structures. Likewise, a portable gas chromatograph can allow
auditors to determine whether a soil stain is or isn't evidence of serious contamination.
7.7 PROTECTIVE CLOTHING
Protective clothing may be necessary in certain situations to protect audit team
members from exposure to hazardous materials. Such clothing may be as simple as hard hats
and protective eye wear, or as elaborate as respirators and chemical suits. For facilities that
handle hazardous materials or conduct industrial operations, protective clothing may be
required for entry into facility. For example, a facility that repairs military equipment may
conduct complex industrial activities such as metal fabrication and chemical handling that would
require hard hats, protective eye wear, steel toed boots, tyvek suits, and respirators. The need
for protective clothing should be identified and audit personnel should be trained in the proper
use of such equipment prior to arrival on site.
7.8 COMPUTER CAPABILITIES FOR TRACKING AND REPORTING
The volume and complexity of environmental information collected during an
environmental audit makes the use of automated information systems helpful in the effective
management of an agency's environmental audit program. A number of commercial software
packages have been developed to assist auditing efforts. Based on auditor inputs, these
systems can: assist the audit team in developing PVQs and checklists/protocols; identify
situations of non-compliance with statutes or regulations and flag these for further review; and
provide report outputs that identify deficiencies, assist in corrective action recommendations,
and detail positive attributes of the facility environmental program. Many systems also have
data management capabilities that allow for the tracking of audit results and corrective actions,
and alert the reviewer if the corrective action is not addressed. In addition, automated systems
often have an extensive library of environmental statutes and regulations, as well as a glossary
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of statutory/regulatory terms. Most systems are user-friendly and provide on-screen help
capabilities.
Audit software should allow for customization of investigatory efforts and permit the
development of outputs and report formats that are appropriate to a particular agency's mission
and environmental issues. For example, a software package that does not have the ability to
review and address pathological or infectious waste handling issues, or cannot be easily
customized for that purpose, will be of little value for an audit of a health care facility.
7.9 ACCESS TO TECHNICAL REFERENCES
Technical references such as U.S. Geological Survey (USGS) maps and soil survey
maps/booklets can be useful in evaluating details about potential environmental risks posed by
a facility. Such risks may include surface and groundwater contamination, as well as air
emissions to local communities. Maps are useful for review of topographic features such as
direction of water flow which could be important with regard to a facility's stormwater
management plan or possible impact of facility operations on a nearby wetland. Local area
maps displaying the location of structures such as schools and recreation areas may be
important in assessing facility planning in response to accidental release of chemicals. A wind
rose is a graphical representation of prevailing wind direction and intensity. It is useful in
situations where facilities have significant air emissions issues, including defining areas
potentially impacted by the emissions plume. These materials should be reviewed prior to each
facility audit and kept as a permanent part of the facility audit record.
7.10 CHAIN OF TITLE REPORTS
Chain of Title reports provide a sequential record of the ownership of a property based
upon land title records. Land title records usually are maintained at the county courthouse in
which the facility is located. Local firms often specialize in researching and writing such reports.
A Chain of Title report is mandatory in a property transfer assessment, but can be equally
valuable when conducting other types of audit activities. These reports can be an important
component of audit findings, particularly if they reveal that the facility is located on property
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formerly owned by an industry or entity with significant environmental issues. If an audit
uncovers onsite contamination, the Chain of Title report will be necessary in determining who
owned the property at the time of the contamination and is therefore potentially responsible for
site remediation. A Chain of Title report need not be undertaken for each audit event. Rather,
a single report kept in a facility's permanent record is adequate.
7.11 AERIAL PHOTOGRAPHS
Aerial photographs are invaluable as a reference point for reviewing facility structures
and land use status. Review of aerial photographs over a period of years can reveal changes
in land use activities and significant modifications in buildings and grounds at the facility, as well
as adjacent land uses that could significantly impact facility operations. For example, historical
photographs could reveal a former drum storage area or a wetland that is now filled in.
Aerial photographs are available from a variety of Federal, state and local sources.
These include Federal land stewardship agencies such as the Bureau of Land Management
(BLM), the Department of Agriculture (USDA), or the Forestry Service (USFS). State and local
sources include county zoning agencies and agriculture extension services. If appropriate and
available, aerial photographs should be made a permanent part of a facility's audit record.
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CHAPTER 8:
PRE-AUDIT ACTIVITIES
8.1 OVERVIEW
An environmental audit is conducted in basically three major parts or phases
including: (l) pre-audit activities; (2) on-site activities; and (3) post-site activities. Figure
5 provides a schematic overview of the audit process. Although accurately defining
the objectives and scope of the audit are critical to its success and determining the
depth of the investigation, it is important to understand that the numerous activities of
the audit are not restricted to only a site visit. Careful planning prior to the on-site
investigation and appropriate verification of audit findings and observations are just as
critical to the success of the audit as the proper conductance of a site visit and related
inspections.
Careful preparation helps to ensure that the audit team accomplishes its goals during
the site visit while using the least possible resources and labor time. Pre-audit preparation
involves: (1) setting the objectives and scope of the audit; (2) planning and preparing the audit
team for the site visit; and (3) preparing facility management for the audit. All pre-audit
activities should be conducted based on a thorough understanding of the entire audit process.
This chapter addresses the importance of setting the objectives and scope of the audit
and the specific pre-audit activities that should be conducted by the audit team prior to the site
visit. These activities include: developing the objectives and scope, planning and preparing the
audit team for the site visit by developing a pre-visit questionnaire, reviewing relevant
regulations, reviewing and refining protocols, and developing a detailed audit agenda. In
addition, the importance of properly preparing facility management for the audit to ensure the
success of the site visit will also be discussed.
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Figure 5
Schematic Overview of the Audit Process
PRE-AUDIT ACTIVITIES ON-SITE INVESTIGATION ANALYSIS AND
REPORTING
Detailed
Information Analysis
Select Audit Team
Set Objectives and
Scope of Audit
Preparation of Draft
Audit Report
Exit Briefing with Facility
Management
Facility
Orientation Tour
Entrance
Briefing
Develop List of
Preliminary Finding
Final Audit Report
with Corrective
Action Plan
Review Completed
Questionnaire
Review Operations
and Regulations
Review and Refine
Audit Protocols
Record Site
Observations
Review of Draft
Report by Facility
Send Pre-Visit
Questionnaire
Detailed Review of
Facility Practices and
Management Systems
In-depth Interviews
Additional Tours
Examine Records
Review Procedure
Prepare Facility
Management for the
Audit
• Review objectives
and scope of audit
• Define specific
informational
needs
• Schedule the audit
with facility
management
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8.2 SETTING THE OBJECTIVES AND SCOPE OF THE AUDIT
Accurately defining the objectives and scope of the audit are necessary in order
to ensure that the audit achieves the desired results. Clear and explicit objectives
define the needs and expectations of the audit and establishes a benchmark against
which the performance of the auditors or audit team can be judged. The scope
determines the depth and boundaries of the investigation and determines what will be
assessed and verified through the audit process. It is critical to the success of the audit
that both facility management and the audit team members clearly understand and
agree upon the scope and objectives of the audit. In addition, the audit objectives
and scope should be clearly communicated along with the results of the audit to those
who authorized it as well as to all recipients of the audit report.
The objectives define the purpose of the audit and establish performance
criteria for the auditors or audit team. The objectives are often determined by agency
management or policies and reflect the needs of the agency environmental program
and related policies. Facility management representing the facility to be audited may
also have objectives for the audit. For example, the audit site visit may serve as a
training mechanism for facility environmental staff, or a new storm water management
plan may have been recently developed and facility management may be interested
in a review and critique by the audit team members. Therefore, in addition to
evaluating and documenting areas of apparent environmental problems and risks, the
audit may provide the training of facility staff and an evaluation of the new document.
After the audit objectives are determined, it is necessary to define the scope of
the audit. The scope of an audit usually defines a specific procedure or area of
investigation and can be influenced by factors such as facility conditions, cost, staff
availability or other resource constraints. For example audits can focus on basic media
areas (e.g., air, water, solid waste) if the environmental aspects and impacts of that
facility obviate the need for investigating other areas of concern, (e.g., there are no
underground tanks or petroleum storage vessels at the facility). However, for other
facilities, a more comprehensive scope may be necessary to fully assess all
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environmental risks. In another example, a scope may focus only on areas on non-
compliance if the environmental program at the agency is relatively new and limited
funding for an audit program requires agency environmental management to prioritize
immediate informational needs. Conversely, a more mature program at another
agency may determine that the scope should focus on management systems
(environmental management system audits) rather than compliance issues in order to
identify root causes of the symptomatic problems at the site (e.g., persistent non-
compliance with regulations).
8.3 PLANNING AND PREPARING THE AUDIT TEAM FOR THE SITE VISIT
Environmental staff responsible for organizing the audit will spend a significant amount
of time planning for an audit. Careful planning is crucial to ensuring that the limited time
typically available for the site visit is used most effectively. Careful planning also minimizes the
time necessary for follow-up activities after the site visit. Some of the factors environmental
staff typically consider when planning an audit are: (1) the goals and scope of the audit; (2) the
size and complexity of facility operations; (3) the facility's compliance history; (4) the audit
team's familiarity with the site; (5) resources available for conducting the audit; and (6) the
desired form and content of the final audit report.
If a contractor will be conducting the audit, environmental management staff should
develop a scope of work that clearly establishes roles and responsibilities for each phase of the
audit (i.e., pre-audit, on-site, post-audit). If in-house staff are conducting the audits, the team
leader should select team members and assign roles and responsibilities. Many of these roles
as well as other important planning activities can be addressed in the pre-audit meeting. In
addition to defining the roles and responsibilities of each audit team member, the audit team
can strategize on important areas to be evaluated at the site and review necessary precautions
such as the need for protective clothing and equipment (e.g., respirators) and procedures for
entering controlled areas at the site. In addition, other concerns such as security clearances
and the site visit agenda should be reviewed by the team to ensure conformance with
established policies and agreements required by facility management. Regardless of who
performs the audits, as part of the planning phase, the lead auditor or team leader should
ensure that the members of the audit team:
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• clearly understand the goals and scope of the audit;
• understand audit team roles and responsibilities vs. team leader;
• understand the facility's operations, wastestreams, and environmental releases;
• are aware of potential health and safety issues and are prepared to handle them
while on-site;
• have the correct checklists and protocols and understands how to use them;
• agree to follow the detailed audit agenda;
• understand how information collected on-site will be managed and presented in the
final report; and
• have received a correct and completed PVQ from facility management.
8.3.1 Review Relevant Regulations
Prior to the site visit, audit team members should review the environmental statutes and
regulations pertinent to the facility activities. As discussed in Chapter 7, the PVQ can be useful
in determining which statutes and regulations are significant. Special attention should be given
to high risk activities and major facility activities. Regulations should be reviewed down to the
level of specific audit items. For example, regulatory review for wastewater discharges should
include:
Federal Regulations:
• NPDES Permit Requirements (40 CFR 122)
• General Pretreatment Regulations for Existing and New Sources (40 CFR 403)
• Toxic Pollutant Effluent Standards (40 CFR 129)
• Oil Spill Prevention Control and Countermeasures (SPCC) Requirements (40 CFR
112)
• Designation of Hazardous Substances (40 CFR 116)
• Determination of Reportable Quantities for Hazardous Substances (40 CFR 117)
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State Regulations:
• Water Quality Standards
• Effluent Limitations for Direct Discharges
• Permit Monitoring/Reporting Requirements
• Operator and Superintendent Classifications and Certification
• Collection, Handling, Processing of Sewage Sludge
• Oil Discharge Containment, Control and Cleanup
• Standards Applicable to Indirect Discharges (Pretreatment)
Regulatory review should include Federal, state, and local regulations. This may, at
times, require a determination of which regulatory authority has jurisdiction over a particular
issue. In some cases, this will require contacting local authorities to obtain sewer ordinances or
local air quality management district regulations.
As noted in the previous chapter, many Federal and state regulations are now available
on CD ROM or on-line data services that also provide key word search capabilities. Agencies
may wish to consider obtaining these services as a means to achieve significant savings in
research time.
8.3.2 Review and Refine Audit Protocols
Audit protocols should be reviewed prior to each site visit. Based upon the PVQ
completed by the facility, the audit team should revise the protocols to emphasize those areas
that are high risk, involve complex issues unique to the facility, or which pertain to major facility
activities. For example, if a facility has 100 above ground storage tanks, but does not store or
treat hazardous waste, the audit team may wish to modify the protocol to devote additional
effort to the review of the facility Spill Prevention, Control, and Countermeasure plan (SPCC) or
tank integrity testing issues, but minimize or eliminate those sections of the protocol covering
40 CFR 264 and 265 requirements under RCRA.
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Audit protocols are not static, one size fits all documents. They are as different as each
facility, although they may involve review of similar issues. Protocols also will change over time
as regulations are revised and updated. As a result, protocols should be reviewed whenever
major regulatory or statutory revisions occur, and revised as necessary. In addition, audit
objectives may change over time. This is especially true if an agency achieves a high level of
compliance and turns its attention to management audits or audits of unregulated risk.
Protocols should be periodically reviewed to reflect these changes.
After the audit is completed, audit team members should set aside a few moments to
review the audit protocols to determine if they adequately addressed audit objectives. Based
upon that review, the agency should consider making changes to the protocols as appropriate,
or expand the site visit agenda to allow for an investigation or additional areas that were not
reviewed.
8.4 PREPARING FACILITY MANAGEMENT FOR THE AUDIT
Agency environmental staff should contact the facility first by telephone and follow-up
with a letter prior to the site visit. Developing a positive relationship with the facility point of
contact (POC) is vital to the success of the audit. Environmental staff should take care to set
the right tone when contacting facility personnel. Environmental staff should communicate:
• Review Objectives and Scope of the Audit - Facility staff should be fully aware of
the audit's objectives and scope. In addition, facility staff should understand how the
audit results will be used both by their agency and, if appropriate, other outside
agencies (e.g., EPA). Facility understanding of how the audit results will be used is
particularly important in the case of compliance audits and management audits. A
facility's expectations about the audit and its subsequent use should follow from any
up-front agreements reached with the audit team.
• Critical person(s) needed for interview - Agency environmental staff should work
with the facility to develop a list of persons to be interviewed during the site visit.
Examples of typically individuals interviewed as part of a site visit include
environmental staff, satellite accumulation point managers, and shop supervisors
and personnel.
• Information needs - Agency environmental staff should provide the facility with a
list of records and documents that will be reviewed during the site visit (e.g., permits,
hazardous waste manifests). Providing the list of information needs prior to the
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audit helps to ensure that the facility has time to collect the documents and have
them available for review during the site visit.
• Time schedules - Agency environmental staff should work with the facility to
develop a detailed agenda and schedule for the audit. The time schedule will
depend on the size and complexity of the facility and the number of individuals that
need to be interviewed.
As discussed in Chapter 7 of this guide, the audit team should submit a Pre-Visit
Questionnaire (PVQ) to the facility prior to the site visit to inform the facility about the audit.
The PVQ also alerts the facility environmental manager as to reports and documents that
should be available to the audit team and the facility personnel that the audit team will want to
interview. A timely and well crafted PVQ will save the audit team considerable time by
answering fundamental questions about facility practices and allows the audit team to focus the
site visit on high risk issues or matters requiring a more detailed investigation.
It is important to stress to the facility environmental manager the need to have the PVQ
returned several weeks prior to the site visit. The PVQ and a follow-up phone call can aid the
audit team in developing a good working relationship with facility personnel prior to the site visit
and reassure the environmental manager about the purpose and goals of the audit.
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CHAPTER 9: ON-SITE ACTIVITIES
9.1 OVERVIEW
This chapter provides a discussion of some of the primary issues that an audit team must
address during a site visit. The emphasis in this chapter is on developing a consistent procedure
for on-site activities. By developing and implementing a consistent audit policy, agency
environmental managers will be able to compare and contrast the effectiveness of audit efforts
across a spectrum of facility types, including those with distinctly different environmental concerns
and compliance issues.
9.2 INTRODUCTIONS WITH FACILITY MANAGEMENT
Agency environmental staff should provide the facility with sufficient advanced notice of
the upcoming audit and should arrange a meeting time prior to the arrival of the audit team on
site. The pre-audit meeting serves a number of purposes - it reassures the facility's management
about the purpose of the audit and provides an opportunity to adequately schedule site walk-
through and interview times, and ensure the availability of documents and reports needed by the
audit team. The meeting also provides an opportunity to discuss issues that the facility managers
wish to raise and allows auditors to gauge facility management cooperation with the audit
process.
9.3 SITE INTERVIEW WITH PERTINENT FACILITY STAFF
A sound audit program should identify the structure and chain of command (names and
titles) for environmental issues at the facility prior to the initiation of the audit. When addressing a
specific environmental issue, audit team members must be careful to direct their questions to the
appropriate individuals. This is particularly important with respect to line staff who are involved in
the day-to-day conduct of activities, but will likely be unaware of detailed environmental
regulations. Auditors also must determine if the personnel they are interviewing have
environmental responsibilities as a primary or secondary job assignment, and identify who is
responsible for remedial action or remediation of violations if any are discovered.
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Examples of pertinent facility staff to interview may include:
environmental staff;
production supervisors;
purchasing personnel; and
accounting department staff.
The interview provides an opportunity to develop a dialog with facility personnel prior to the
site walk-through. It also affords the audit team a chance to review audit checklists and protocols
as a means of planning for the walk-through. The audit team also can use interviews to clarify
unclear PVQ responses and answer any questions the facility may have regarding information
needs prior to the records review.
Additionally, it is important to review with facility management audit objectives and scope.
Not only will this make facility management feel they are part of the audit effort, it also may
produce a more thorough audit. Facility managers that fully understand the audit scope and
objectives may be able to provide information or insights that they would not otherwise realize are
important to the audit effort.
Finally, it cannot be sufficiently emphasized how important it is to identify all facility staff
needed for audit interviews as well as confirming that resources needed by the audit team will be
available. Also, as mentioned in Chapters 7 and 8, safety requirements (the need for hard hats,
steeled toed boots, respirators, etc.) should be fully discussed prior to the site visit.
9.4 SITE WALK-THROUGH
With the exception of the post site visit contacts with regulators and vendors, the site walk-
through is the culmination of the data collection phase of an audit. The success of the walk-
through is, in part, a product of leveraging the information collected in the PVQ, interviews with
facility staff, and the other pre-site visit efforts. Ideally, the auditors should be sufficiently familiar
with the facility and applicable regulations so that the walk-through helps to complete and
enhance a previously developed understanding of the facility. Therefore, in developing a sound
audit program, the agency should view the site walk-through as only one of many critical
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components of an audit. The walk-through should include a physical inspection of facilities, as
well as observation for evidence of spills or other unpermitted releases or environmental
impairment such as stained soil and pavement, or discolored vegetation or water bodies.
During the site walk through it is a requirement that auditors stop at various points along
the walk through and actively document their observations and findings in writing and not wait to
return to a briefing or assembly room to record their notes. This is also the appropriate time to
take any photographs, if permitted by facility management.
The physical inspection should cover all environmental media and areas of concern
(water, air, solid and hazardous wastes, PCBs, asbestos, and chemical and waste storage areas).
If applicable, treatment systems (e.g., air scrubbers, wastewater treatment equipment) also
should be inspected. The physical inspection should include an examination of all emission
points, emission control devices and equipment, chemical handling areas including process
chemicals, and environmental monitoring equipment. Also, auditors should examine the
appearance of berm walls for cracks or staining, as well as tanks and piping for signs of
deterioration. Both positive and negative observations and findings regarding facility conditions
should be recorded at the time of inspection.
It is important that reports regarding observations of release or environmental impairment,
such as stains, be as factual as possible without resorting to subjective opinions. Information that
should be collected regarding observed impairments includes:
• What is the physical observation made at the site (e.g., leak, spill)?
• What is the evidence of the nature and extent of contamination?
• When did it occur?
How did it occur?
• Who is/was responsible for reporting it?
Did corrective action occur and what was the outcome?
• Who is/was responsible for corrective action?
Inspection of remote facility areas also is critical to the success of the walk-through
process. Remote areas often are unintentionally neglected with respect to compliance and risk
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review, or may unknowingly be subject to dumping by third parties. This is particularly important
for those agencies that oversee large facilities with many structures or significant acreage.
As previously noted, agencies should encourage the taking of photographs of areas and
equipment that will likely become principle findings (both positive and negative) if appropriate.
This provides a convenient record for future reference and, in the event of liability issues, can be
useful in establishing that the photographed area was inspected. As previously noted, audit team
members should verify permission to take photographs prior to commencing the audit.
9.5 RECORD/DOCUMENTATION REVIEW
The site visit at the facility should include a record and documentation review addressing
Federal, state and local permits including air, water, and solid and hazardous materials and
wastes (such as pesticides, PCBs, asbestos, and radioactive materials). If the facility is involved
in the handling of hazardous materials, the audit should include a review of documentation such
as MSD sheets, RCRA waste manifests, monitoring data, and regulatory permits. The records
should include a review of all permit limits and conditions, permit renewal dates, and any
monitoring required by the permit. Monitoring data should be carefully reviewed and reconciled
against permit limits for that particular source. In addition, the audit team should evaluate the
facility's environmental record-keeping procedures. Facility management should be alert as to the
accuracy and completeness of the reporting data, and whether the monitoring has been reported
to the appropriate agency. A sound monitoring program should include systematic inspection
activities for all media sources.
Documentation and record reviews should also include review of correspondence and/or
notices pertaining to past or present enforcement actions or agreements, notices of violation, or
compliance schedules. This is particularly important for two reasons. First, it provides a history of
how the facility has performed and an indication of where it is headed, especially with respect to
how the environmental enforcement agencies perceive that facility. Second, if the facility has
inadequate records related to any of the above issues, it serves as a warning that the facility is not
properly documenting is environmental status and may be keeping inadequate records in other
respects.
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Manifests and bills of lading for chemical and waste materials also should be reviewed by
the audit team. Environmental managers should have accurate records of who is removing
wastes and/or hazardous materials from the facility, where the wastes are sent, and who at the
facility is responsible for monitoring this activity. The review should include a meeting with the
individual who signs the manifests/bills of lading. This is particularly important with respect to the
disposal of hazardous waste and non-hazardous wastes. Removal of wastes by unauthorized
haulers or removal to unauthorized treatment/disposal facilities is a violation of the law for which
the agency can be held responsible.
If a facility is using chemicals which require that MSDSs and other safety records be kept
on site, it is important that the audit team identify these materials and assess their availability to
personnel that are handling the chemicals. The audit team also should determine if the facility is
placing adequate warning labels on chemical containers.
9.6 EXIT INTERVIEWS
If the audit team leader chooses to conduct an exit interview, he or she should be careful
about what is said and to whom. In these cases, the audit team leader must exercise sound
judgment. Exit interviews should be conducted by the team leader, they should be limited to a
brief oral summary of findings and should be conducted with facility management present.
Auditors should avoid conclusory statements about possible violations and potential liability unless
there is imminent danger of harm or release of hazardous materials. Conclusions regarding
facility status typically should be discussed in final audit reports rather than in exit interviews. In
most cases, conclusions are the product of careful and reasoned analysis of audit findings.
Therefore, any discussion of audit findings should be confined to a recapitulation of the facts. This
is especially important with respect to unregulated risks, as such issues may require additional
review by agency management including consultation with the agency's general counsel.
In some cases, it may be necessary for audit findings to be kept confidential until the
agency has an opportunity to address matters uncovered by the audit. If confidentiality is
important, sensitive issues should be reserved solely for examination and discussion by top level
facility personnel and any written communications should be marked as draft or provisional. For
example, if an auditor has strong suspicions about possible criminal violations of environmental
laws, he or she should not use such pejorative terms in an exit interview but must call the
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agency's or facility's attention to the gravity of the situation. In such cases, it may be necessary to
inform facility management that there are additional issues that require confidential reporting. In
these situations, it is critical that the information be fully disclosed so that an investigation can be
undertaken. It is especially important that sensitive matters not be discussed at exit interviews,
except with those individuals that will bear responsibility for acting on them. Dissemination of
information, either verbally or in writing, to large numbers of facility personnel could compromise
confidentiality privileges.
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CHAPTER 10: POST SITE ACTIVITIES
10.1 OVERVIEW
This chapter will address the post site activities that should be conducted upon
completion of the on-site activities discussed in Chapter 9 of this guide. Post site activities
include audit team debriefing, substantiation of significant findings, and gathering additional
audit data.
10.2. AUDIT TEAM DEBRIEFING
10.2.1 Preliminary Issues
Prior to the audit team debriefing, a meeting agenda should be circulated to all team
members. The audit team debriefing should review the list of significant findings, discuss audit
findings that requiring immediate action (i.e., the priority issues), and confirm report writing
responsibilities, including regulatory reviews and contacts with vendors and regulators. The
audit team should also begin formulating recommendations for corrective action while the audit
experience is still fresh in their minds. Time should be set aside for team members to raise
questions about the audit and/or request additional resources. The debriefing also is an
excellent opportunity for regular review of audit protocols. A question and answer session can
inform other audit team members of issues about which they have information requirements
and is an opportunity to critique the audit effort and identify means for strengthening the audit
program. Keep in mind that this debriefing is solely for the audit team. Facility exit interviews
were discussed in the previous chapter.
10.2.2 Develop List of Significant Findings
The audit team should organize it's significant findings in a manner that reflects the
intent of the audit and the type of audit conducted. A compliance audit should be organized
around compliance areas, while a risk liability audit may be best organized by media and level
of risk, or by facility function and level of risk. For example, the audit findings for a compliance
audit could be reported as follows:
• Record Keeping
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• Overall environmental management
• Water and wastewater
• Hazardous materials
• Hazardous wastes
• Toxics (e.g., PCBs)
• Other areas (e.g., EPCRA, pathological wastes)
By contrast, a risk liability audit might focus on the most significant liability areas
regardless of any other issues, or evaluate risk by media or governing environmental statute.
Risk liability audits might also be reported by facility area, i.e. liabilities concerning a process
operation that encompasses air, water, and solid waste issues might be discussed as a discrete
unit rather than be divided among separate discussions of air, water, and solid waste.
The audit team debriefing should address all of these areas, including a discussion of
positive findings for each area, as well as areas of deficiency or negative findings. The list of
findings also should consider whether deficiencies are regulatory or procedural. Procedural
deficiencies are those that are not in keeping with agency or facility practices but do not involve
reportable violations of Federal or state regulations or statutes. It may also be helpful to break
out or separate deficiencies into different media areas such as waste management, air
emission management, etc.
10.2.3 Prioritize Audit Findings
Each agency should develop a system for setting priorities among audit findings that
allows for a consistent approach to addressing deficiencies. A consistent approach for
addressing deficiencies includes targeting areas that pose the greatest liability potential or risk
to the facility or agency such as immediate endangerment to human health and the
environment. This requires a high degree of experience and professional judgment. These
high priority issues will require an immediate response. If the most serious problem is a minor
one, such as a recordkeeping violation, it should still be given the highest priority and dealt with
as soon as possible. The system also should recognize excellence in environmental
management. It also is important to identify and highlight sound environmental practices as
these set an example for other facilities and departments.
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Two possible systems for setting priorities are described in greater detail below. Both
systems take into consideration the specific activities and media/compliance matters at a
facility. The first sets priorities on the basis of overall risk, regardless of the media at issue.
The second establishes priorities on the basis of deficiencies within a specific media, without
distinguishing whether deficiencies of equal rank within one media are more serious than those
of equal rank in another media.
The first system takes into consideration the specific activities and media/compliance
matters at a facility and rates them on a hierarchy of risk. For a compliance audit, the media or
compliance area that poses the greatest risk at the facility should be ranked first overall in
terms of priority. Determination of the most important area can be made by the audit team
alone or in conjunction with agency legal staff, and may be based upon any number of factors
such as the media of concern or degrees of mass compliance area with the most number of
problems or issues of concern; the area with the highest volume of waste production; or the
area with the greatest potential for liability because of unique hazard characteristics (e.g., acute
toxic or hazardous waste or proximity to receptor populations). The level or significance of the
deficiency is then ranked (prioritized) in descending order from the highest to lowest. This is a
subjective ranking which rates risks and deficiencies on the basis of specific facility activities.
For example, if the asbestos abatement program is considered to be the greatest area of
vulnerability or risk at the site, then a high level deficiency in this area would be the most
significant one at the facility. This approach requires auditors to draw conclusions about which
deficiencies pose the greatest overall risk potential, regardless of media or compliance area,
and rates them accordingly.
The second system is to rate the audit findings from the highest risk (a significant
deficiency) to lower risks (such as major or minor deficiencies), within each media area, without
assigning an overall highest risk. A significant deficiency is one that poses an imminent risk of
release, endangerment of human health, threat to the environment, or threat to the successful
conduct of the facility's mission. A major deficiency is one that requires action, but not
necessarily immediate action. Major deficiencies typically are of a magnitude to result in a
reportable violation to a regulatory agency but do not pose an imminent threat of release or
endangerment. A minor deficiency is one that is primarily administrative such as recordkeeping
violations (e.g., failure to sign a waste manifest form).
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The two suggested systems are quite different. The first subjectively prioritizes
deficiencies on the basis of overall risk regardless of the media and defines a single worst risk.
The second system uses environmental media as general categories and prioritizes risk by
media without establishing an absolute hierarchy of which risk is most significant. The second
system provides the agency or facility with flexibility in carrying out corrective action because it
does not prioritize or rank deficiencies which are of the same category, but in different media
areas. Thus, a significant deficiency in the water program would be of equal weight to a
deficiency in the air program. However, for facilities with serious deficiency problems, such a
system may not provide sufficient structure and direction with respect to corrective action.
10.2.4 Clarify Assignments for Audit Team Members
An audit report typically contains an executive summary, a discussion of the audit
process, an overview of the facility, and a discussion of findings and recommendations. The
assignment of responsibility for writing these sections is up to the audit team leader, however,
all audit team members should have the opportunity to review and comment upon the final
report.
With respect to writing the audit findings section, the auditor that reviews a particular
area should be responsible for preparing the report section for that area (i.e., the report writing
responsibilities should mirror the auditing process). For example, if one auditor reviewed all
machine shop activities and its related media issues, the report may include a discussion of air,
water, and hazardous materials issues for the shop prepared by that auditor. Ideally, report
writing responsibilities should be allocated prior to the audit so that the individuals conducting
the audit are aware of their responsibilities while on site. Assigning report writing
responsibilities prior to the site visit also helps to better focus the auditors attention on details
and the need to be thorough.
If the report authorship is divided by functional areas as stated above, the audit team
might consider a two-tiered review process in which selected individuals have responsibility for
report review by environmental media. These individuals would review all findings for their
assigned media (such as air, water, or solid waste), regardless of who actually audited or wrote
the report section for a particular physical area of the facility. Finally, completion schedules for
draft and final report sections should be determined at the time the assignments are made.
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10.3 SUBSTANTIATION OF SIGNIFICANT FINDINGS
10.3.1 Regulatory Reviews
A regulatory review should include a determination of what regulations apply to the
facility, whether the facility is in compliance with the regulations, how the facility assesses or
evaluates it's compliance, and whether and how facility environmental managers stay informed
of regulatory changes.
As a first step, the audit team should establish which federal, state, and local regulations
(i.e., compliance areas) apply to the facility. For each compliance area, the auditors should
determine who are the primary and secondary regulatory authorities (i.e., Federal, state, or
local) and determine if there are overlapping authorities. Typical compliance areas include:
• Air
• Water and wastewater
• Solid waste
• Hazardous materials (PCBs, pesticides, organic chemicals)
• Hazardous wastes
• Community right to know
• Underground storage tanks
There may be numerous issues at a given facility for each compliance area. For
example, at a large Federal facility, water and wastewater issues may include NPDES permits,
sludge permits, monitoring reports, indirect discharge issues, stormwater discharges, treatment
plant operations, certification/licensing of plant operators, drinking water sampling and analysis,
and related drinking water reporting requirements. If germane, each of these issues should be
examined.
The regulatory review should address whether the facility is in compliance with
appropriate regulations and cover all media, including an affirmation if a particular media is not
of concern. The review also should document records of all reportable non-compliance
situations and corrective actions. Depending upon the scope of the audits to be performed, the
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audit team should ensure the existence of management procedures to prevent future non-
compliance issues.
A sound regulatory review also should include inquiries as to how facility personnel are
kept informed of changes and updates in regulations and how regulatory evolution affects their
responsibilities.
10.3.2 Phone Calls/FOIA Requests to Regulators
Contact with regulators is helpful in substantiating audit findings. At the Federal and
state levels, it is likely that responsibility for each environmental media will be handled by a
different regulator. FOIA requests may take weeks or months to complete and therefore should
be planned accordingly. Local health and/or environmental departments also should be
contacted if findings indicate deficiencies or overlapping authority for a particular media area.
As a general rule, these calls should:
• state identity and purpose of caller;
• avoid divulging unconfirmed non-compliance situations;
• determine when the facility was last inspected;
• ask about next planned inspection date;
• ask about any past or recent violations or enforcement actions;
• inquire into outstanding attributes about facility environmental practices;
• ask who the regulator deals with at the facility; and
• inquire if any of the facility vendors have been investigated or cited.
10.3.3 Vendors
Improper or illegal environmental practices on the part of waste management or
disposal vendors can be a source of facility liability with respect to cleanup costs if the facility is
identified as a potentially responsible party under CERCLA. When investigating hazardous
waste disposal vendors, auditors should make sure that vendors are properly handling and
disposing of facility wastes. Auditors should also evaluate whether the vendor is competent to
handle facility wastes. This is particularly important for liability purposes if it is later determined
that the agency/facility failed to investigate the technical competence of the vendor. Also,
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auditors should carefully evaluate the prices charged by disposal vendors. Waste disposal
prices that are unusually low or below market rates may be reason for further investigation.
In addition there are a number of data bases that can be valuable in investigating
vendors. CERCLIS is a data base that allows for identification of treatment/disposal facilities or
even abandoned sites that are PRPs. This is particularly useful in identifying vendors that have
CERCLA liability problems including those vendors that may have moved or opened a new
location. Also, RCRIS is a data base that identifies RCRA facilities that have committed Class I
violations of RCRA. If a RCRA facility is facing five-million dollars in RCRA clean-up liability but
only has two-million dollars available to clean-up the violations, the auditors should be aware of
the potential for the audit facility to become liable for future clean-up expenses. Keep in mind,
however, that vendors also can be an information source to confirm facility management
practices and audit findings, or a source of technical and/or compliance assistance for a facility.
Vendor contacts should include verification that they in fact provide the reported
services or equipment to the facility. Also, in the case of waste transportation or disposal
vendors, the call should verify who the vendor deals with at the facility, how long they have
been under contract, and where wastes are being sent.
10.4 IDENTIFY AND GATHER ADDITIONAL DATA
It is not unusual for an audit team to identify additional data needs following the site visit.
Typically, this involves verification of findings and observations on a particular issue or may
include the need to follow a "paper trail" regarding reporting or monitoring requirements. In
these situations, the need to collect additional data should be established as early as possible
and one team member should coordinate all requests for the additional data, collect all
questions from audit team members, and forward these to the facility for immediate action. The
audit team should avoid repeated calls to the facility for additional data.
As stated above, additional data needs typically should focus on securing monitoring
data, reports, and other documentation and records. It is not usually intended that sampling
and analysis be performed. For certain situations, such as stains on the ground, a sample can
be useful in determining if a serious problem exists. If review of the audit findings indicates the
need for sampling, this activity will require a significant lead time to complete and should be
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scheduled as a separate follow-up activity after the completion of the audit. Post-audit
sampling is not intended to be an audit activity. Post-audit sampling is usually conducted in
discrete phases. For example, an audit can be considered a Phase I investigation to evaluate
and document the general range of apparent problems associated with the facility. A Phase II
investigation is used to evaluate and characterize the nature and scope of environmental
contamination and is beyond the scope of an audit or Phase I activity. A Phase III investigation
is the point usually where field samples are collected and analyzed to confirm the nature and
extent of contamination.
In addition, post-audit sampling creates uncertainty regarding the situation at the time of
the audit compared to the time of the sample collection. For example, an auditor may report
the presence of discoloration in the effluent from the wastewater treatment system but return to
the facility to find that the water is no longer discolored and that sampling reveals the
wastewater well within permit limits for all parameters. Post-audit sampling, like securing
written documentation should be limited to verifying observations and audit findings and is not
intended as a means of expanding the scope of the audit. In those cases in which limited
sampling is necessary and appropriate, as an assurance on validity, samples should be
collected by experienced sampling technicians and preserved and analyzed in accordance with
EPA sampling and analysis procedures. This includes the use of specialized sampling
containers, the use of preservation techniques such as keeping samples cooled below a certain
temperature, and in some cases, observing requirements for limited holding times.
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CHAPTER 11: REPORT WRITING AND FOLLOW-UP
11.1 OVERVIEW
The audit report is the culmination of the environmental audit. The primary purpose of
the report is to describe the findings of the audit team and provide a blueprint to assist facility
staff in achieving and maintaining compliance. It is necessary to prepare properly both during
and after the audit to produce a report that meets these needs. This chapter addresses a
number of issues that should be considered in writing the audit report and conducting audit
follow-up activities.
11.2 FIELD PREPARATION
Audit team members can take several steps while still in the field to ease the report
writing process. These include:
Review and update notes on a daily basis to ensure that information is complete
and identify any compliance areas that may have been overlooked.
Schedule a few minutes following interviews to summarize the results in
writing. The effort should be aimed at memorializing specific sets of facts and
impressions regarding the interview. This will be invaluable in writing the report
when the team has returned to the office and the interviews begin to run together in
the auditor's recollection.
Develop an annotated outline of findings. This also will prepare the auditor for
the audit team debriefing, assure that all areas of the audit have been covered, and
will help to organize field notes for later report writing.
• Assemble and critically evaluate the audit findings as a means of tightening and
focusing collected information. This will aid in exposing flaws in the audit
methodology and in identifying inadequately supported conclusions.
Prepare a well developed audit team debriefing. These debriefing materials can
form the nucleus of the audit report to be prepared.
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11.3 REPORT PREPARATION
It is essential that the audit report be prepared as soon as possible upon the conclusion
of the site visit and post site activities. As discussed above, an annotated outline is helpful in
this regard. Auditors should consider organizing notes by compliance area and writing
introductory paragraphs for each section as soon as possible, perhaps even prior to the
debriefing. Regardless of the format used, each agency should adhere to a consistent format
to ensure that subsequent audit reports are prepared in the same manner. This allows for
comparison of reports between different facilities to be made against common elements. It also
allows for an easier assessment of how a specific facility is (or is not) improving its compliance
status over time by comparing findings in one report to the findings in subsequent audit reports.
The audit report should be written in clear concise language, with adequate supporting
information. Indefinite adjectives such as "very," "some," "significant," "small," "high," "large,"
should not be used. Sensational language or hyperbole, such as "dangerous," "negligent,"
"willful," "criminal" also should be avoided. Auditors should actively avoid unsupported
conclusions and inadequate descriptions. Nothing should be left to the subjective interpretation
of the reader. All acronyms used in the report should be spelled out at their first usage.
The report should contain accurate descriptions (distance and compass direction) of
locations where specific items or situations are noted. When items are described, the specific
item(s) being discussed is(are) should be identified (e.g., do not say that three drums were
leaking; rather, identify precisely which three drums are leaking, either by indicating the exact
location of the drums or be referencing something unique about those three drums such as an
identification number).
A good rule of thumb to use when writing a report is to provide a level of detail that is
adequate to allow someone else to go into the facility and accurately identify what is being
described in the report and understand the auditor's concerns with the issue(s). Overall, the
report should be as short as possible without compromising on necessary details.
11.4 SAMPLE REPORT FORMAT
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Audit reports can take many forms and be organized in a number of ways, depending on
agency needs and audit scope and goals. The following is a description of generic audit report.
Section I: Description of administrative aspects of the audit. This includes the date
the audit was conducted, who at the facility was interviewed, who
performed the audit, what office or department was responsible for
conducting the audit, and any limitations or exclusions regarding the audit
scope or methodology, e.g., if the facility management refused auditors
access to certain areas.
Section II: Brief executive summary written for upper-level facility and agency
personnel that highlights the key findings and recommendations of the
audit report including a summary of compliance status.
Section III: Description of each audit findings, priority rank or media category, and
regulatory citation. This section should include the physical description of
the facility and provide a detailed description of related facility media
management areas and emission sources as well as a discussion of how
there are controlled.
Section IV: Recommendations or suggested corrective actions for the facility to come
into compliance. These may range from simple administrative suggestions
to recommendations for a capital improvement. The recommendations
also may focus on the need for additional investigation or further analysis
before a final solution is proposed. When presenting recommendations in
the audit report, keep in mind that the final report is subject to public
disclosure under the Freedom of Information Act. As a result,
recommendations for corrective actions must be implemented by the facility
or the facility may face increased liability risk. If there is some doubt
regarding the implementation of the audit team's recommendations due to
lack of resources, staffing or funds, then agency management and legal
counsel should be consulted about the situation and plans for corrective
action.
Section V: Supporting data and information to provide relevant backup information
(such as analytical data, any enforcement actions taken by regulatory
agencies, copies of Notices of Violations, plot plans or maps, schematic
diagrams, or photographs) should be presented here. The benefits of
including supplementary material should be weighed against the impact
that such material could have when the audit report is subject to public
release.
11.5 REPORT FOLLOW-UP (COURTESY DRAFT TO FACILITY MANAGEMENT)
All environmental compliance audit reports should undergo rigorous review by agency
counsel, who should ensure that legal references are correctly stated and applied. The draft
report written in the weeks following the audit also should be submitted to and signed by the
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facility manager, who should solicit comment from facility staff as appropriate. The draft report
should then be submitted up the agency chain of command as appropriate. Chapter 2 of this
guide addressed a number of recommendations for protecting draft reports from premature
disclosure under FOIA under the predecisional and deliberative draft exemptions. Chapter 2
also discussed EPA's new audit policy regarding incentives to audit and that careful
consideration should be given by facility management, agency general counsel, and agency
senior management regarding the benefits of seeking treatment of audit findings under the
1995 EPA audit policy. Report distribution should be limited to those individuals with a "need to
know." Numbering of draft reports is one method for controlling distribution. Each agency also
should develop a formal records retention policy for auditors notes, draft reports, associated
documents, and final reports.
11.6 DEVELOP ACTION PLANS AND CORRECTIVE MEASURES
A sound audit program includes provisions for follow-up action on audit findings and
recommendations. Audit reports should include a list of action items and an individual
designated with responsibility for seeing the these items are addressed. Tracking can be as
simple as follow-up phone calls to facility managers or may involve conducting a follow-up audit.
Rather than setting a final date for a corrective action, it may be useful to set milestones for
beginning, conducting, and completing corrective measures.
11.7 COMMUNICATIONS WITH SENIOR AGENCY OFFICIALS ON SIGNIFICANT
REPORTS FINDINGS
Communicating with agency officials regarding findings that have high potential for
affecting agency liability, image, and budget is critical. As discussed previously, if the agency
becomes involved in litigation concerning an audited facility, the audit report and supporting
materials will be subject to discovery. If there are matters which appear to raise serious liability
issues, agency legal staff or general counsel's office should take the lead in managing the
distribution and dissemination of sensitive materials. This is done not as an attempt to conceal
findings, but to inform and allow counsel adequate time to develop a response. The report
should be written and sufficiently detailed such that agency management can make informed
decisions regarding the audit findings and recommendations. Dissemination of sensitive
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findings to other than counsel and senior agency officials may compromise the agency's ability
to address compliance or liability problems and should therefore be tightly controlled.
11.8 ENTER AUDIT FINDINGS AND RECOMMENDATIONS INTO A FORMALIZED
TRACKING SYSTEM
The environmental audit process should include the use of a formalized tracking system
for recommendations. This is necessary to assure that findings and recommendations are
specifically addressed on a definite schedule. The tracking system should identify the item, the
planned action, and the anticipated date for completing action on that item even if the schedule
calls for a long-term, multi-year effort.
A number of commercial software audit packages are available that generate "tickler
reports" on a predetermined schedule to alert facility or agency personnel regarding compliance
or action item deadlines. Tickler reports are time sensitive reports that selected software
packages can generate automatically, if instructed by the user, so as to alert the user that an
important deadline is upcoming. Some of these systems will actually flash a message on the
users computer screen on predetermined dates, alerting the user to a deadline. If an agency
has responsibility for a large number of facilities, or is responsible for a few facilities with a
significant number of issues, such products should be investigated. Further, it is important for
an individual to be charged with specific responsibility for this task. If no one is specifically
tasked with this responsibility, it may never be adequately addressed.
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11.9 BUDGET FOR CORRECTIVE ACTIONS AND COORDINATE WITH
FEDERAL BUDGET CYCLE
Budgeting for corrective action and coordination with the facility budget requires
cooperation between the audit team and either facility or agency financial staff. As an aid to
federal facility personnel, EPA has developed the FEDPLAN program which is described in
Chapter 2. In developing a budget for corrective actions, environmental audit team members
should consider all aspects of the audit including non-compliance issues and unregulated risk
that require funding.
Audit team leaders should consider developing a hierarchy of compliance problems and
unregulated risks and assign these to one of two budget needs categories; (i) capital
expenditures, and (ii) management/training needs. These two categories should be prioritized
to identify the most pressing problems within each category. Timely development of budget
requests and integration with the agency budget planning process is essential for securing
needed funds for corrective action and control of unregulated risks. To assure that the budget
is developed and forwarded to management in a timely fashion, it may be necessary to assign
responsibility for this activity to one or more persons. These individuals should identify all
corrective action and unregulated risk issues that require immediate funding and forward these
to agency management. Audit team members involved in this effort should be aware of the
Federal year budget cycle and anticipate budget needs accordingly.
11.10 FOLLOW-UP AUDITS AND VERIFICATION THAT CORRECTIVE
MEASURES HAVE BEEN IMPLEMENTED
By developing action items and using tracking systems, an agency will have put in place
only part of what is necessary to assure that corrective actions have been implemented. As
discussed above, follow-up phone calls or even secondary audits addressing specific action
items may be included in the audit process.
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Verification that corrective measures have been taken should include a paper trail. For
example, if there is an action item to remove two leaking drums of hazardous waste, the
verification should include manifests for where the waste was sent and paper work on the
disposal or destruction of the leaking drums. Failure to implement corrective actions may result
in outside pressure and adverse public relations if the final report is publicly released pursuant a
FOIA request, or serious liability problems if legal proceedings are initiated against the agency.
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APPENDIX A
1986 EPA AUDIT POLICY
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wsm
Federal R«giat*r / Vol. 51. No. 131 / Wednesday, July S. 1986 / NoSicea
ENVIRONMENTAL PROTECTION
AGENCY
1OPPS-RU.-304S-®!
Envfronmtntal Auditing Policy
Statement
AOINCV: Environmental Protection
Agency (EPA).
action: Final policy statement.
summary; It is EPA policy to encourage
the use of environmental auditing by
regulated entities lo help achieve and
maintain compliance with
environmental laws and regulations, as
well as to help identify and correct
unregulated environmental hazards.
EPA first published this policy as
interim guidance on November B. 1985
(50 FR 46504). Based on comments
received regarding the interim guidance,
the Agency is issuing today's final
policy statement with only minor
changes.
This final policy statement
specifically:
• Encourages regulated entities to
develop, implement and upgrade
environmental auditing programs;
• Discusses when the Agency may or
may not request audit reports;
• Explains how EPA's inspection and
enforcement activities may respond to
regulated entities' efforts to assure
compliance through auditing;
¦ Endorses environmental auditing at
federal facilities:
• Encourages state and local
environmental auditing initiatives; and'
• Outlines elements of effective audit
programs.
Environmental auditing includes a
variety of compliance assessment
techniques which go beyond those
legally required and are used to identify
actual and potential environmental
problems. Effective environmental
auditing can lead to higher levels of
Overall compliance and reduced risk lo
human health and the environment. EPA
endorses the practice of environmental
auditing and supports its accelerated
use by regulated entities to help meet
the goals of federal, state and local
environmental requirements. However,
the existence of an auditing program
does not create any defense to, or
otherwise limit, the responsibility of any
regulated entity to comply with
applicable regulatory requirements.
States are encouraged to adopt these
or similar and equally effective policies
in order to advance the use of
environmental auditing on a consistent,
nationwide basis.
DATM: This final policy statement is
effective July 9.1966.
F0* FURTHER IMPORTATION eOffTACT;
Leonard Fleck ens tein. Office of Policy.
Planning and Evaluation. (202) 382-
2728;
or
Cheryl Wasserman. Office of
Enforcement and Compliance
Monitoring. (202) 382-7550. '
SUmJtMfKTAMY INFORMATION:
ENVIRONMENTAL AUDITING
POLICY STATEMENT
I. Preamble
On November 8,1985 EPA published
an Environmental Auditing Policy
Statement, effective as interim guidance,
and solicited written comments until.
January 7,1986.
Thirteen commenters submitted
written comments. Eight were from
private industry. Two commenters
represented industry trade associations.
One federal agency, one consulting firm
and one law firm also submitted
comments.
Twelve commenters addressed EPA
requests for audit reports. Three
comments per subject were received
regarding inspections, enforcement
response and elements of effective
environmental auditing. One commenter
addressed audit provisions as remedies
in enforcement actions, one addressed
environmental auditing at federal
facilities, and one addressed the
relationship of the policy statement to
state or locat regulatory agencies.
Comments generally supported both the
concept of a policy statement and the
interim guidance, but raised specific
concerns with respect to particular
language and policy issues in sections of
the guidance.
General Comments
Three commenters found the interim
guidance to be constructive, balanced
and effective at encouraging more and
better environmental auditing.
Another commenter, while
considering the policy on the whole lo
be constructive, felt that new and
identifiable auditing "incentives" should
be offered by EPA. Based on earlier
comments received from industry, EPA
believes most companies would not
support or participate in an "incentives-
based" environmental auditing program
with EPA. Moreover, general promises
to forgo inspections or reduce
enforcement responses in exchange for
companies' adoption of environmental
auditing programs—the "incentives"
most frequently mentioned in this
context—are fraught with legal and
policy obstacles.
Several commenters expressed
concern that states or localities might
use the interim guidance to require
auditing. The Agency disagrees that t)
policy statement op;ns the way for
stales and localises to require auditin
No EPA policy can grant states or
localities any more (or less) authority
than they already possess. EPA be lie v
that the interim guidance effectively
encourages voluntary auditing. In fact
Section II.B. of the policy states:
"because audit quality depends to a
large degree on genuine management
commitment to the program and its
objectives, auditing should remain a
voluntary program."
Another commenter suggested that
EPA should not expect an audit to
identify all potential problem areas or
conclude that a problem identified in a
audit reflects normal operations and
procedures. EPA agrees that an audit
'report should clearly reflect these
realities and should be written to point
out the audit's limitations. However,
since EPA will not routinely request
audit reports,- the Agency does not
believe these concerns raise issues
which need to be addressed in the
policy statement.
A second concern expressed by the
same commenter was that EPA should
acknowledge that environmental audits
are only part of a successful
environmental management program
and thus should not be expected to
cover every environmental issue or
solve all problems. EPA agrees and
accordingly has amended the statement
of purpose which appears at the end of
this preamble.
Yet another commenter thought EPA
should focus on environmental
performance results (compliance or non-
compliance). not on the processes or
vehicles used lo achieve those results. !i
general, EPA agrees with this statement
and will continue to focus on
environmental results. However. EPA
also believes that such results can be
improved through Agency efforts to
identify and encourage effective
environmental management practices,
and will continue to encourage such
practices in non-regulatory ways.
A final general comment
recommended that EPA should sponsor
seminars for small businesses on how to
start auditing programs. EPA agrees that
such seminars would be useful.
However, since audit seminars already
are available from several private sector
organizations. EPA does not believe it
should intervene in that market, with the
possible exception of seminars for
government agencies, especially federal
agencies, for which EPA has a broad
mandate under Executive Order 12068 to
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25005
provide technical assistance for
environmental compliance.
Requests for Reports
EPA received 12 comments regarding
Agency requests for environmental audit
reports, far more than on any other topic
in the policy statement. One commenter
full thai EPA struck an appropriate
balance between respecting the need for
self-evaluation with some measure of
privacy, and allowing the Agency
enough flexibility of inquiry to
accomplish future statutory missions.
However, most commenters expressed
concern that the interim guidance did
not go far enough to assuage corporate
ffiara that EPA will use audit reports for
environmental compliance "witch
hunts." Several commenters suggested
additional specific assurances regarding
the circumstances under which EPA wil!
request such reports.
One commenter recommended that
EPA request audit reports only "when
ihe Agency can show the information it
needs to perform its statutory mission
cannot be obtained from the monitoring,
compliance or other data that is
otherwise reportable and/or accessible
to EPA. or where the Government deems
an audit report material to a criminal
investigation." EPA accepts this
recommendation in part The Agency
believes it would not be ill the best
interest of human health and the
environment to commit to making a
"showing" of a compelling information
need before ever requesting an audit
report While EPA may normally be
willing to do so. the Agency cannot rule
out in advance all circumstances in
which such a showing may not be
possible. However, it would be helpful
to further diarify that a request for an
audit report or a portion of a report
normally will be made when needed
information is not available by
alternative means. Therefore, EPA has
revised Section ILLA., paragraph two
and added the phrase: "and usually
made where the information seeded
cannot be obtained from monitoring,
reporting or other data otherwise
available to the Agency."
Another commenter suggested that
(except in the case of criminal
investigations] EPA should limit
requests for audit documents to specific
questions. By including the phrase "or
relevant portions of a report" in Section
HLA_ EPA meant to emphasise it would
not request en entire audit document.
when only a relevant portion would
suffice. Likewise. EPA fully intends not
to request even a portion of a report if
needed Information or data can be
otherwise obtained. To further clarify
this point EPA haa added the phrase.
"most likely focused on particular
information needs rather than the entire
report." to the second sentence of
paragraph two. Section II1.A.
Incorporating the two comments above,
the first two sentences in paragraph two
of final Section Ili.A. now read: "EPA's
authority to request an audit report or
relevant portions thereof, will be
exercised on a case-by-case basis where
the Agency determines it is needed to
accomplish a statutory mission or the
Government deems it to be material to a
criminal investigation. EPA expects such
requests to be limited, most likely
focused on particular information needs
rather than the entire report and usually
made where.the information needed
cannot be obtained from monitoring,
reporting or other data otherwise
available td the Agency."
Other commenters recommended that
EPA not request audit reports under any
circumstances, that requests be
"restricted H only those legally
required." that requests be limited to
criminal investigations, or that requests
be made only when EPA has reason to
believe "that the audit programs or
reports are being used to conceal
evidence of environmental non-
compliance or otherwise being used in
bad faith." EPA appreciates concerns
underlying all of these comments and
has considered each carefully. However,
the Agency believes that these
recommendations do not strike the
appropriate balance between retaining
the flexibility to accomplish EPA's
statutory missions in future, unforeseen
circumstances, and acknowledging
regulated entities' need to self-evaluate
environmental performance with some
measure of privacy. Indeed, based on
prime informal comments, the small
number of formal comments received,
and the even smaller number of adverse
comments, EPA believes the filial policy
statement should remain largely
unchanged from the interim version.
Elements of Effective Environmental
Auditing
Three commenters expressed
concerns regarding the seven general
elements EPA outlined in the Appendix
to the interim guidance.
One commenter noted that were EPA
to further expand or more fully detail
such elements, programs not specifically
fulfilling each element would then be
Judged inadequate. EPA agrees that
presenting highly specific and
prescriptive auditing elements could be
counter-productive by not taking Into
account numerous factors which very
extensively from one organization to
another, but which may still result in
effective auditing programs.
Accordingly, EPA does not plan to
expand or more fully detail these
auditing elements.
Another commenter asserted that
states and localities should be cautioned
not to consider EPA's auditing elements
as mandatory steps. The Agency is fully
aware of this concern and in the interim
guidance noted its strong opinion that
"regulatory agencies should not attempt
to prescribe the precise form and
structure of regulated entities
environmental management or auditing
programs." While EPA cannot require
state or local regulators to adopt this or
similar policies, the Agency does
strongly encourage them to do so. both
in the interim and final policies.
A final commenter thought the
Appendix too specifically prescribed
what should and what should not be
included in an auditing program. Other
commenters, on the other hand, viewed
the elements described as very general
in nature. EPA agrees with these other
commenters. The elements are in no
way binding. Moreover. EPA believes
that most mature, effective
environmental auditing programs do
incorporate each of these general
elements in some form, and considers
them useful yardsticks for those
considering adopting or upgrading audit
programs. For these reasons EPA has
not revised the Appendix in today's
final policy statement
Other Comments
Other significant comments addressed
EPA inspection priorities for. and
enforcement responses to, organizations
with environmental auditing programs.
One commenter. stressing that audit
programs are inVtmai management
tools, took exception to the phrase in the
second paragraph of section I1E.B.1. of
the interim guidance which states that
environmental audits can 'complement'
regulatory oversight By using the word
'complement' in this context EPA does
not intend to imply that audit reports
must be obtained by the Agency in order
to supplement regulatory Inspections.
'Complement' Is used in a broad sense
of being in addition to inspections and
providing something (I.e.. self-
assessment) which otherwise would be
lacking. To clarify this point EPA has
added the phrase "by providing self-
assessment to assure compliance" after
"environmental audits may complement
inspections" In this paragraph.
The same commenter also expressed
concern that as EPA sets Inspection
priorities, a company having an audit
program could appear to be a 'poor
performer* due to complete and accural-
reporting when measured against a
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Federal Rentier / Vol. 51. No. 131 / Wednesday, July 9. 1966 / Notices
company which reports something lest
than required by lew. EPA agree# that it
fa important to communicate this fact to
Agency and ante personnel, and will do
so. However, the Agency does not
believe a change in the policy statement
is necessary.
A further comment suggested EPA
should commit to take auditing
programs into account when assessing
all enforcement actions. However, in
order to maintain enforcement flexibility
under varied circumstances, the Agency
cannot promise reduced enforcement
responses to violations at all audited
facilities when other factors may be
overriding. Therefore the policy
statement continues to state that EPA
ntn> exercise its decrelion to consider
auditing programs as evidence of honest
and genuine efforts to assure
compliance, which would then be taken
into account in fashioning enforcement
responses to violations.
A final commenter suggested the
phrase 'expeditiously correct
environmental problems" not be used in
the enforcement context since it implied
EPA would use an entity's record of
correcting nonregulated matters when
evaluating regulatory violations. EPA
did not intend for such an inference to
be made. EPA intended the term
"environmental problems" to refer to the
underlying circumstances which
eventually lead up to the violations. To
clarify this point. EPA is revising the
first two sentences of the paragraph to
which this comment refers by changing
"environmental problems" to "violations
and underlying environmental
problems" in the first sentence and to
"underlying environmental problems" in
the second sentence.
In a separate development EPA is
preparing an update of its January.1064
Federal Facilities Compliance Strategy.
which is referenced in section III. C of
the auditing policy. The Strategy should
'be completed and available on request
from EPA's Office of Federal Activities
later this year.
EPA thanks all commenters for
responding to the November 8.1983
publication. Today's notice is being
issued to inform regulated entities and
the public of EPA's final policy toward
environmental auditing. This policy was
develo'ped to help (a) encourage
regulttted entities to institutionalize
effective audit practices as one means of
improving compliance and sound ¦
environmental management, and (b)
guide internal EPA actions directly
related to regulated entitles'
environmental auditing programs.
EPA will evaluate implementation of
this final policy lo ensure it meets the
above goals and continues to encourage
better environmental management,
while strengthening the Agency's own
efforts to monitor and enforce
compliance with environmental
requirements.
II. General EPA Policy oo
Environmental Auditing
A. Introduction
Environmental auditing is a
systematic, documented, periodic and
objective review by regulated entities '
of facility operations and practices
related to meeting environmental
requirements. Audits can be designed to
accomplish any or all of the following:
verify compliance with environmental
requirements; evaluate the effectiveness
of environmental management systems
already in place: or assess risks from
regulated and unregulated materials and
practices.
Auditing serves at a quality assurance
check to help improve the effectiveness
of basic environmental management by
verifying that management practices are
in place, functioning and adequate.
Environmental audits evaluate, and are
not a substitute for. direct compliance
activities such as obtaining permits,
installing controls, monitoring
compliance, reporting violations, and
keeping records. Environmental auditing
may verify but does not include
activities required by law. regulation or
permit (e.g.. continuous emissions
monitoring, composite correction plans
at wastewater treatment plants, etc.).
Audits do not in any way replace
regulatory agency inspections. However,
environmental audits can improve
compliance by complementing
conventional federal, state and local
oversight.
The appendix to this policy statement
outlines some basic elements of
environmental auditing (e.g.. auditor
independence and top management
support) for use by those considering
implementation of effective auditing
programs to help achieve and maintain
compliance. Additional information on
environmental auditing practices can be
found in various published materials.1
1 "Regulated tnHil«r include private firm* and
p-uUic agrnciti with facltiliet tubjcci to
«r.vire(unin(«t reputation* Public agendet can
include federal, Mat* or local agenci** tvtU
fpecj«l-purpo*e organization* inch aa rafionat
agwags commistKm*.
* See. e.g.. "Currcftl Pnctkci in Environmental
Auditing/' EPA Report Ho.
Frbmary 1984: "A*noi*lfrd Bibliofraphy on
Environmental Audi linn." Fifth Edition. September
IMS. both available front: Regulatory Reform Staff.
PM-22X EPA. 401 M Si reel SW. Wuhinglon. DC
204*0,
Environmental auditing has develo'
for sound business reasons, particula.
as a means of helping regulated entiti
manage pollution control affirmative!,
over time instead of reacting to crises
Auditing can result in improved facili
environmental performance, help
communicate effective solutions to
common environmental problems, foe
facility managers' attention on curren
and upcoming regulatory requirement
and generate protocols and checklists
which help facilities better manage
themselves. Auditing also can result it
better-integrated management of
environmental hazards, since auditors
frequently identify environmental
liabilities which go beyond regulatory
compliance. Companies, public entitle
and federal facilities have employed a
variety of environmental auditing
practices in recent years. Several
hundred major firms in diverse
industries now have environmental
auditing programs, although they often
are known by other names such as
assessment, survey, surveillance, revif
or appraisal.
While auditing has demonstrated i(a
usefulness to those with audit program
many others still do not audit.
Clarification of EPA's position regards
auditing may help encourage regulated
entities to establish audit programs or
upgrade systems already in place.
B. EPA Encourages the Use of
Environmental Auditing
EPA encourages regulated entities to
adopt sound environmental
management practices to improve
environmental performance. In
particular. EPA encourages regulated
entities subject to environmental
regulations to institute environmental
auditing programs to help ensure the
adequacy of internal systems to a chic v
maintain and monitor compliance.
Implementation of environmental
auditing programs can result in better
identification, resolution and avoidanci
of environmental problems, as well as
improvements to management practice;
Audits can be conducted effectively by
independent internal or third party
auditors. Larger organizations genera-ij
have greater resources to devote to an
internal audit team, while smaller
entities might be more likely to use
outside auditors.
Regulated entities are responsible foi
taking all necessary steps to ensure
compliance with environmental
requirements, whether or not they adop
audit programs. Although environments
laws do not require a regulated facility
to have an auditing program, ultimate
responsibility for the environmental
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25007
performance of the facility lies with lop
management, which therefore has a
strong incentive to use reasonable
means, such as environmental auditing,
to secure reliable information of facility
compliance status.
EPA does not intend to dictate or
interfere with the environmental
management practices of private or
public organizations. Nor does EPA
intend to mandate auditing (though in
certain instances EPA may seek to
include provisions for environmental
auditing as pari of settlement
agreements, as noted below). Because
environmental auditing systems have
been widely adopted on a voluntary
basis in the past, and because audit
qual'ty depends to a large degree upon
genuine management commitment to the
program and its objectives, auditing
should remain s voluntary activity.
III. EPA Policy on Specific
Environmental Auditing Issues
A. Air -y Requests for Audit Reports
EPA has broad statutory authority to
request relevant information on the
environmental compliance status of
regulated entities. However. EPA
believes routine Agency requests for
audit reports 3 could inhibit auditing in
the long run. decreasing both the
quantity and quality of audits
conducted. Therefore, as a matter of
policy. EPA will not routinely request
environmental audit reports.
EPA's authority to request an audit
report, or relevant portions thereof, will
be exercised on a case-by-case basis
where the Agency determines it is
needed to accomplish a statutory
mission, or where the Government
deems it to be material to a criminal
investigation. EPA expect* such
requests to be limited, most likely
focused on particular information needs
rather than the entire report, and usually
mode where the information needed
cannot be obtained from monitoring,
reporting or other data otherwise
available to the Agency. Examples
would likely include situations where:
audits are conducted under consent
decrees or other settlement agreements:
a company has placed its management
practices at issue by raising them as a
defense: or stale of mind or intent are a
relevant element of inquiry, such as
during a criminal investigation. This list
* An "anvmmjnentaJ audit report" «« a written
report which candidly and thoroughly preset*£a
finding: fnwn a nvtrw. conducted a« p«rt ol an
environmental audit ai described In fraction II.A- of
ftocilily environmental performance and practice*.
An eurUi report ia not a lobstilute tor compliance
monitoring reports or other report* or recorda which
may be required by EPA or other regulatory
is illustrative rather than exhaustive,
since there doubtless will be other
situations, not subject to prediction, in
which audit reports rather than
information may be required.
EPA acknowledges regulated entities
need to self-evaluate environmental!
performance with some measure of
privacy and encourages such activity.
However, audit reports may not shield
monitoring, compliance, or other
information that would otherwise be
reportable and/or accessible to EPA.
even if there is no explicit 'requirement'
to generate that data 4 Thus, this policy
does not alter regulated entities' existing
or future obligations to monitor, record
or report information required under
environmental statutes, regulations or
permits, or to allow EPA access to that
information. Nor does this policy alter
EPA's authority to request and receive
any relevant information—including tha't
contained in audit reports—under
various environmental statutes (e.g..
Clean Water Act section 306. Clean-Air
Act sections 114 and 208] or in other
administrative or judicial proceedings.
Regulated entities also should be
aware that certain audit findings may by
law have to be reported to government
agencies. However, in addition to any
such requirements. EPA encourages
regulated entities to notify appropriate
State or Federal officials of findings
which suggest significant environmental
or public health risks, even when not
specifically required to do so.
B. EPA Response to Environmental
Auditing
1. General Policy
EPA will not promise to forgo
inspections, reduce enforcement
responses, or offer other such incentives
in exchange for implementation of
environmental auditing or other sound
environmental management practices.
Indeed, a credible enforcement program
provides a strong incentive for regulated
entities to audit.
Regulatory agencies have an
obligation to assess source compliance
Status independently and cannot
eliminate inspections for particular firms
or classes of firms. Although
environmental audits may complement
inspections by providing self-
assessment to assure compliance, they
are in no way a substitute for regulatory
oversight. Moreover, certain statutes
(e.g. RCRAJ and Agency policies
4 5«*. for txampl*. MDu(i«a la Report or DtecEae*
Information on the Environmental Aaptcls of
Bucinet* AciiviUet." Cnvironmenul IntUluU
report lo CPA. final report. September IMS.
A-4
establish minimum facility inspection
frequencies to which EPA will adhere.
However. EPA will continue to
address environmental problems on a
priority basis and will consequently
inspect facilities with poor
environmental records and practices
more frequently. Since effective
environmental auditing helps
management Identify and promptly
correct actual or potential problems,
audited facilities' environmental
performance should improve. Thus,
while EPA inspections of self-audited
facilities will continue, lo the extent that
compliance performance is considered
in setting inspection priorities, facilities
with a good compliance history may be
subject to fewer inspections.
In fashioning enforcement responses
to violations. EPA policy is to take into
account, on a case-by-case basis, the
honest and genuine efforts of regulated
entities to avoid and promptly correct
violations and underlying environmental
problems. When regulated entities take
reasonable precautions lo avoid
noncompliance, expeditiously correct
underlying environmental problems
discovered through audits or other
means, and implement measures to
prevent their recurrence. EPA may
exercise its discretion to consider such
actions as honest and genuine efforts to
assure compliance. Such consideration
applies particularly when a regulated
entity promptly reports violations or
compliance data which otherwise were
not required to be recorded or reported
to EPA.
2. Audit Provisions as Remedies in
Enforcement Actions
EPA may propose environmental
auditing provisions in consent decrees
and in other settlement negotiations
where auditing could provide a remedy
for identified problems and reduce the
likelihood of similar problems recurring
in the future.* Environmental auditing
provisions are most likely to be
proposed in settlement negotiations
where:
* A pattern of violations can be
attributed, at least in part, to the
absence or poor functioning of an
environmental management system: or
• The type or nature of violations
indicates a likelihood that similar
noncompliance problems may exist or
occur elsewhere in the facility or at
other facilities operated by the regulated
entity.
* EPA is developing (raidanc* (or use by Agency
nefhMialon in structuring appropriate environmental
Audit provision* for content d«cre*e and ethftf
aetiJemcnl mtforuiioom.
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Thruugh this consent decree approach
and other m«ans. EPA may consider
how lo enr.ouragp effective auditing by
publicly owned sewage treatment works
(POTWs). ROTWs often have
compliance problems related lo
nperntion and maintenance procedures
which can be oddressed effectively
thrnufth 1 hf? use of environmental
auditing. Under its National Municipal
Policy EPA already is requiring many
POTVVs lo develop composite correction
plans lo identify and correct compliance
problems
C Er viw.rnentj! Auditing at Federal
Fsciiil.es
EPA encourages all federal agencies
subiect lo environment*! laws and
regulalions to institute environmental
auditing systems to help ensure the
adequacy of internal systems to achieve,
nidinta:n and monitor compliance.
En vi run menial auditing at federal
facilities can be an effective supplement
to EPA and state inspections. Such
federal facility environmental audit
programs should be structured to
promptly identify environmental
p:oblems and expenditiously develop
schedules for remedial action.
To the extent feasible. EPA will
provide technical assistance to help
federal agencies design and initiate
audit programs. Where appropriate. EPA
will enter into agreements with other
agencies to clarify the respective roles,
responsibilities and commitments of
each agency in conducting and
responding lo federal facility
environmental audits.
With respect lo inspections of self-
audited facilities (see section IIi.fi.1
above) and requests for audit reports
(see section 11! A above). EPA generally
will respond to environmental audits by
federal facilities in the same manner as
it does for other regulated entities, in
keeping with the spirit and intent of
Executive Order 12068 and tbe EPA
Federal Facilities Compliance Strategy
(January 1984. update forthcoming in
late 1986). Federal agencies should,
however, be aware that the Freedom of
Information Act will govern any
disclosure of audit reports or audit-
generated information requested from
federal agencies by the public.
When federal agencies discover
significant violations through an
environmental audit. EPA encourages
them to submit the related audit findings
and remedial action plana expeditiously
to the applicable EPA regional office
(and responsible state agencies, where
appropriate) even when not specifically
required to do so. EPA wit! review the
audit findings sod action plans and
either provide written approval or
negotiate » Federal Facilities
Compliance Agreement. EPA will utilize
the escalation procedures provided in
Executive Order 12088 and the EPA
Federal Facilities Compliance Strategy
only when agreement between agencies
cannot be reached. In any event, federal
agencies are expected to report pollution
abatement projects involving costs
(necessary to correct problems
discovered through the audit) to EPA in
accordance with OMB Circular A-108.
Upon request, and in appropriate
circumstances. EPA will assist affected
federal agencies through coordination of
any public release of audit findings with
approved action plans once agreement
has been reached.
IV. Relationship la St*te ac Local
Regulatory Agencies
State and local regulatory agencies
have independent jurisdiction over
regulated entities. EPA encourages them
to adopt these or similar policies, in
order lo advance the use of effective
environmental auditing in a consistent
manner.
EPA recognizes thai some states have
already undertaken environmental
auditing initiatives which differ
somewhat from this policy. Other states
also may want to develop auditing
policies which accommodate their
particular needs or circumstances.
Nothing in this poLicy statement is
intended to preempt or preclude states
from developing other approaches to
environmental auditing. EPA encourages
state and local authorities to consider
the basic principles which guided the
Agency in developing this policy:
• Regulated entities must continue to
report or record compliance information
required under existing statutes or
regulations, regardless of whether such
information is generated by an
environmental audit or contained in an
audit report. Required information
cannot be withheld merely because it is
generated by an audit rather than by
some other means.
• Regulatory agencies cannot make
promises to forgo or limit enforcement
action against a particular facility or
class of facilities in exchange for the use
of environmental auditing systems.
However, such agencies may use their
discretion lo adjust enforcement actions
on a case-by-case basis in response to
honest and genuine efforts by regulated
entities to assure environmental
compliance.
• When selling inspection priorities
regulatory agencies should focus lo Ihe
extent possible on compliance
performance «nd environmental results.
• Regulatory agencies must continue
to meet minimum program requirements
(e.g.. minimum inspection requiremc
esc.).
• Regulatory agencies should not
attempt to prescribe the precise fore
and structure of regulated entities'
environmental management oraudili
programs.
An effective state/federal partner!
is needed to accomplish the mutual g
of achieving and maintaining high let
of compliance with environmental Is
and regulations. The greater the
consistency between state or local
policies and this federal response tc
environmental auditing, the greater if
degree to which sound auditing
pracliccs might be adopted and
compliance levels improve.
Dated: June Z&. 1986
Urn M. Tbomss.
Administrator.
Appendix—Elements of Effective
Environmental Auditing Programs
Introduction: Environmental audiur
is a systematic, documented, periodic
and objective review by a regulated
entity of facility operations and
practices related lo meeting
environmental requirements.
Private sector environmental audits
facilities have been conducted for
several years and have taken a vajiet-
of forms, in part lo accommodate uniq
organizational structures and
circumstances. Nevertheless, effective
environmental audits appear to have
certain discernible elements in commc
with other kinds of audits. Standards f
internal audits have been documented
extensively. The elements outlined
below draw heavily on two of these
documents: "Compendium of Audit
Standards" ('1983. Walter WiUbom.
American Society for Quality Control)
and "Standards for the Professional
Practice of Internal Auditing" (<1961,
The Institute of Internal Auditors. Lnc )
They also reflect Ageocy analyses
conducted over the last several years.
Performance-oriented auditing
elements are outlined here lo help
accomplish several objectives. A gener
description of features of effective,
mature audit programs can help those
starting audit programs, especially
federal agencies and smaller business*
These elements also indicate the
attributes of auditing EPA generally
considers important to ensure program
effectiveness. Regulatory agencies may
use these elements in negotiating
environmental auditing provisions tor
consent decrees. Finally, these element
can help guide stales and localities
considering auditing initiatives.
A-5
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Federal Register / Vol. SI. No. 131 / Wednesday, July 9. 1986 / Notices
25®@§
An effective environmental auditing
system will likely include the following
general elements:
I. Explicit top management support for
environmental auditing and
commitment to follow-up on audit
findings. Management support may be
demonstrated by a written policy
articulating upper management support
for the auditing program, and for
compliance with all pertinent
requirements, including corporate
policies and permit requirements ai well
•a federal, state and local statutes and
regulations.
Management support for the auditing
program also should be demonstrated
by an explicit written commitment to
follow-up on audit findings to correct
identified problems and prevent their
recurrence.
II. environmental auditing function
independent of audited activities. The
status or organizational locus of
environmental auditors should be
sufficient to ensure objective and
unobstructed inquiry, observation and
testing Auditor objectivity should not
be impaired by personal relationships,
financial or other conflicts of interest,
interference with free inquiry or
judgment, or fear of potential
retribution.
III. Adequate team staffing and
auditor training Environmental auditors
should possess or have ready access to
the knowledge, skills, and disciplines
needed to accomplish audit objectives.
Each individual auditor should comply
with the company's professional
standards of conduct. Auditors, whether
full-time or pan-time, should maintain
their technical and analytical
competence through continuing
education and training.
IV. Explicit audit program objectives,
scope, resources and frequency. At a
minimum, audit objectives should
include assessing compliance with
applicable environmental laws and
evaluating the adequacy of internal
compliance policies, procedures and
personnel training programs to ensure
continued compliance.
Audits should be based on a process
which provides auditors: all corporate
policies, permits, and federal, atata. and
local regulations pertinent to the facility:
and checklists or protocols addressing
specific features that should be
evaluated by auditors.
Explicit written audit procedures
generally should be used for planning
audits, establishing audit scope,
examining and evaluating audit findings,
communicating audit results, and
following-up.
V. A process which collects, analyzes,
interprets and documents information
sufficient to achieve audit objectives.
Information should be collected before
and during an onsile visit regarding
environmental compliance!.?),
environmental management
effectiveness!.?), and other matters (JJ
related to audit objectives and s~ope.
This information should be sufficient
reliable, relevant and useful to provide a
sound basis for audit findings and
recommendations.
a. Sufficient information is factual,
adequate and convincing so that a
prudent, informed person would be
likely to reach the same conclusions as
the auditor.
b. Reliable information is the best
attainable through use of appropriate
audit techniques.
c. Relevant information supports audit
findings and recommendations and is
consistent with the objectives for the
audit.
d. Useful information helps the
organization meet its goals.
The audit process should include a
periodic review of the reliability and
integrity of this information and the
means used to identify, measure,
classify and report it. Audit procedures,
including the testing and sampling
techniques employed, should be selected
in advance, to the extent practical, and
expanded or altered if circumstances
wan-ant. The process of collecting,
analyzing, interpreting, and
documenting information should provide
reasonable assurance that audit
objectivity is maintained and audit goals
are met.
VI. A process which includes specific
procedures to promptly prepare candid,
clear and appropriate written reports on
audit, findings, corrective actions, and
schedules for implementation.
Procedure# should be in place to ensure
that such information is communicated
to managers, including facility and
corporate management, who can
evaluate the information and ensure
correction of identified problems.
Procedures also should be in place for
determining what internal findings are
reportable to state or federal agencies.
VII. A process which includes quality
assurance procedures to assure the
accuracy and thoroughness of
environmental audits. Quality assurance
may be accomplished through
supervision, independent internal
reviews, external reviews, or a
combination of these approaches.
Footnote* to Appendix
(») A comprehensive assessment of
compliance with federal environmental
repuiadons requires an analysis of facility
performance against numerous
en\ironmental statutes and implementing
regulations. These statutes include:
Resource Conservation and Recovery Act
Federal Water Pollution Control Act
Clean Air Act
Hazardous Materials Transportation Act
Toxic Substances Control Act
Comprehensive Environmental Response.
Compensation and Liability Act
Safe Drinking Water Act
Federal Insecticide. Fungicide and
Rodenlicide Act
Marine Protection. Research and Sanctuaries
Act
Uranium Mill Tailing® Radiation Control Act
In addition, dale and local government are
likely to have their own environmental laws.
Many slates have been delegated authority to
administer federal programs. Many local
governments' building, fire, safety and health
codes also have environmental requirements
retevsn! lo an audit evaluation.
[2) An environmental audit could go well
beyond the type of compliance assessment
normally conducted during regulatory
inspections, for example, by evaluating
policies and practices, regardless of whether
they are part of the environmental system at
the operating and maintenance procedures.
Specifically, audits can evaluate the extent to
which systems or procedures:
1. Develop organizational environmental
policies which: a. implement regulatory
requirements: b. provide management
guidance for environmental hazards net
specifically addressed in regulations.
2. Train and motivate facility personnel to
work in an environmentally-acceptable
manner and to understand and comply with
government regulations and the entity s
environmental policy:
3 Communicate retevsnt environmental
developments expeditiously lo facility and
other personnel:
« Communicate effectively with
government and the public regarding serious
environmental incidents:
S. Require third parties working for. with or
on behalf of the organization to follow its
environmental procedures:
A-6
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25010
Federal Ragtetec / Vol.. 51, No. 131 / Wednwfrty. Hy fl. 1988 / Noticea
8. Make proficient peraoanej, avail able at
ail timet to cany out anvlrotfvinhLl
(espedaffy emergency) procedure*;
7. Incorporate environments) psotacMon
into written operating procedures;
& Apply beat management practices end
operetiag procedures, including "feed
ho use beeping" techniques;
fl. Institute preventive and corrective
maintenance systems to minimize actual and
potential environmental harm:
10. Utilize beat available process arid
control technologies:
11. Use moat-effective sampling and
monitoring techniques, test methods,
recordkeeping systems or reporting protocols
{beyond minimum legal requirements);
12. Evaluate causes behind any serious
environmental incidents and establish
procedures to avoid recurrence;
13. Exploit source reduction, recycle and
reuse potential wherever practical: and
14. Substitute materials or processes to
allow use of the least-hazardous substances
feasible.
13) Auditors could also assess
environmental risks and uncertainties.
|FR Doc. S&-15423 Filed 7-4S-80 0:43 amj
muma com. mm-so-m
A-7
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APPENDIX B
EPA POLICY REGARDING INCENTIVES FOR SELF-POLICING:
DISCOVERY, DISCLOSURE, CORRECTION AND PREVENTION OF
VIOLATIONS
-------
Friday
December 22, 1995
Part III
Environmental
Protection Agency
Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of
Violations; Notice
66705
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86706
Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices
ENVIRONMENTAL PROTECTION
AGENCY
IFRL-6400-1]
Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention
of Violations
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Final Policy Statement.
SUMMARY: The Environmental Protection
Agency (EPA) today issues its final
policy to enhance protection of human
health and the environment by
encouraging regulated entities to
voluntarily discover, and disclose and
correct violations of environmental
requirements. Incentives include
eliminating or substantially reducing
the gravity component of civil penalties
and not recommending cases for
criminal prosecution where specified
conditions are met, to those who
voluntarily self-disclose and promptly
correct violations. The policy also
restates EPA's long-standing practice of
not requesting voluntary audit reports to
trigger enforcement investigations. This
policy was developed in close
consultation with the U.S. Department
of Justice, states, public interest groups
and the regulated community, and will
be applied uniformly by the Agency's
enforcement programs.
DATES: This policy is effective January
22, 1996.
FOR FURTHER INFORMATION CONTACT:
Additional documentation relating to
the development of this policy is
contained in the environmental auditing
public docket. Documents from the
docket may be obtained by calling (202)
260-7548, requesting an index to docket
#C-94-01, and faxing document
requests to (202) 260-4400. Hours of
operation are 8 a.m. to 5:30 p.m.,
Monday through Friday, except legal
holidays. Additional contacts are Robert
Fentress or Brian Riedel, at (202) 564-
4187.
SUPPLEMENTARY INFORMATION:
I. Explanation of Policy
A. Introduction
The Environmental Protection Agency
today issues its final policy to enhance
protection of human health and the
environment by encouraging regulated
entities to discover voluntarily, disclose,
correct and prevent violations of federal
environmental law. Effective 30 days
from today, where violations are found
through voluntary environmental audits
or efforts that reflect a regulated entity's
due diligence, and are promptly
disclosed and expeditiously corrected,
EPA will not seek gravity-based (i.e.,
non-economic benefit) penalties and
will generally not recommend criminal
prosecution against the regulated entity.
EPA will reduce gravity-based penalties
by 75% for violations that are
voluntarily discovered, and are
promptly disclosed and corrected, even
if not found through a formal audit or
due diligence. Finally, the policy
restates EPA's long-held policy and
practice to refrain from routine requests
for environmental audit reports.
The policy includes important
safeguards to deter irresponsible
behavior and protect the public and
environment. For example, in addition
to prompt disclosure and expeditious
correction, the policy requires
companies to act to prevent recurrence
of the violation and to remedy any
environmental harm which may have
occurred. Repeated violations or those
which result in actual harm or may
present imminent and substantial
endangerment are not eligible for relief
under this policy, and companies will
not be allowed to gain an economic
advantage over their competitors by
delaying their investment in
compliance. Corporations remain
criminally liable for violations that
result from conscious disregard of their
obligations under the law, and
individuals are liable for criminal
misconduct.
The issuance of this policy concludes
EPA's eighteen-month public evaluation
of the optimum way to encourage
voluntary self-policing while preserving
fair and effective enforcement. The
incentives, conditions and exceptions
announced today reflect thoughtful
suggestions from the Department of
Justice, state attorneys general and local
prosecutors, state environmental
agencies, the regulated community, and
public interest organizations. EPA
believes that it has found a balanced
and responsible approach, and will
conduct a study within three years to
determine the effectiveness of this
policy.
B. Public Process
One of the Environmental Protection
Agency's most important
responsibilities is ensuring compliance
with federal laws that protect public
health and safeguard the environment.
Effective deterrence requires inspecting,
bringing penalty actions and securing
compliance and remediation of harm.
But EPA realizes that achieving
compliance also requires the
cooperation of thousands of businesses
and other regulated entities subject to
these requirements. Accordingly, in
May of 1994, the Administrator asked
the Office of Enforcement and
Compliance Assurance (OECA) to
determine whether additional
incentives were needed to encourage
voluntary disclosure and correction of
violations uncovered during
environmental audits.
EPA began its evaluation with a two-
day public meeting in July of 1994, in
Washington, D.C., followed by a two-
day meeting in San Francisco on
January 19,1995 with stakeholders from
industry, trade groups, state
environmental commissioners and
attorneys general, district attorneys,
public interest organizations and
professional environmental auditors.
The Agency also established and
maintained a public docket of testimony
presented at these meetings and all
comment and correspondence
submitted to EPA by outside parties on
this issue.
In addition to considering opinion
and information from stakeholders, the
Agency examined other federal and
state policies related to self-policing,
self-disclosure and correction. The
Agency also considered relevant surveys
on auditing practices in the private
sector. EPA completed the first stage of
this effort with the announcement of an
interim policy on April 3 of this year,
which defined conditions under which
EPA would reduce civil penalties and
not recommend criminal prosecution for
companies that audited, disclosed, and
corrected violations.
Interested parties were asked to
submit comment on the interim policy
by.June 30 of this year (60 FR 15875),
and EPA received over 300 responses
from a wide variety of private and
public organizations. (Comments on the
interim audit policy are contained in the
Auditing Policy Docket, hereinafter,
"Docket".) Further, the American Bar
Association SONREEL Subcommittee
hosted five days of dialogue with
representatives from the regulated
industry, states and public interest
organizations in June and September of
this year, which identified options for
strengthening the interim policy. The
changes to the interim policy
announced today reflect insight gained
through comments submitted to EPA,
the ABA dialogue, and the Agency's
practical experience implementing the
interim policy.
C. Purpose
This policy is designed to encourage
greater compliance with laws and
regulations that protect human health
and the environment. It promotes a
higher standard of self-policing by
waiving gravity-based penalties for
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Federal Register / Vol. 60, No. 246 I Friday, December 22, 1995 / Notices
66707
violations that are promptly disclosed
and corrected, and which were
discovered through voluntary audits or
compliance management systems that
demonstrate due diligence. To further
promote compliance, the policy reduces
gravity-based penalties by 75% for any
violation voluntarily discovered and
promptly disclosed and corrected, even
if not found through an audit or
compliance management system.
EPA's enforcement program provides
a strong incentive for responsible
behavior by imposing stiff sanctions for
noncompliance. Enforcement has
contributed to the dramatic expansion
of environmental auditing measured in
numerous recent surveys. For example,
more than 90% of the corporate
respondents to a 1995 Price-Waterhouse
survey who conduct audits said that one
of the reasons they did so was to find
and correct violations before they were
found by government inspectors. (A
copy of the Price-Waterhouse survey is
contained in the Docket as document
VIII-A—76.)
At the same time, because government
resources are limited, maximum
compliance cannot be achieved without
active efforts by the regulated
community to police themselves. More
than half of the respondents to the same
1995 Price-Waterhouse survey said that
they would expand environmental
auditing in exchange for reduced
penalties for violations discovered and
corrected. While many companies
already audit or have compliance
management programs, EPA believes
that the incentives offered in this policy
will improve the frequency and quality
of these self-monitoring efforts.
D. Incentives for Self-Policing
Section C of EPA's policy identifies
the major incentives that EPA will
provide to encourage self-policing, self-
disclosure, and prompt self-correction.
These include not seeking gravity-based
civil penalties or reducing them by
75%, declining to recommend criminal
prosecution for regulated entities that
self-police, and refraining from routine
requests for audits. (As noted in Section
C of the policy, EPA has refrained from
making routine requests for audit
reports since issuance of its 1986 policy
on environmental auditing.)
1. Eliminating Gravity-Based Penalties
Under Section C[l) of the policy, EPA
will not seek gravity-based penalties for
violations found through auditing that
are promptly disclosed and corrected.
Gravity-based penalties will also be
waived foT violations found through any
documented procedure for self*policing,
where the company can show that it has
a compliance management program that
meets the criteria for due diligence in
Section B of the policy.
Gravity-based penalties (defined in
Section B of the policy) generally reflect
the seriousness of the violator's
behavior. EPA has elected to waive such
penalties for violations discovered
through due diligence or environmental
audits, recognizing that these voluntary
efforts play a critical role in protecting
human health and the environment by
identifying, correcting and ultimately
preventing violations. All of the
conditions set forth in Section D, which
include prompt disclosure and
expeditious correction, must be satisfied
for gravity-based penalties to be waived.
As in the interim policy, EPA reserves
the right to collect any economic benefit
that may have been realized as a result
of noncompliance, even where
companies meet all other conditions of
the policy. Economic benefit may be
waived, however, where the Agency
determines that it is insignificant.
After considering public comment,
EPA has decided to retain the discretion
to recover economic benefit for two
reasons. First, it provides an incentive
to comply on time. Taxpayers expect to
pay interest or a penalty fee if their tax
payments are late; the same principle
should apply to corporations that have
delayed their investment in compliance.
Second, it is fair because it protects
responsible companies from being
undercut by their noncomplying
competitors, thereby preserving a level
playing field. The concept of recovering
economic benefit was supported in
public comments by many stakeholders,
including industry representatives (see,
e.g.. Docket, Il-F-39, II-F-ZB, and II—F—
18).
2. 75% Reduction of Gravity
The policy appropriately limits the
complete waiver of gravity-based civil
penalties to companies that meet the
higher standard of environmental
auditing or systematic compliance
management. However, to provide
additional encouragement for the kind
of self-policing that benefits the public,
gravity-based penalties will ba reduced
by 75% for a violation that is
voluntarily discovered, promptly
disclosed and expeditiously corrected,
even if it was not found through an
environmental audit and the company
cannot document due diligence. EPA
expects that this will encourage
companies to come forward and work
with the Agency to resolve
environmental problems and begin to
develop an effective compliance
management program.
Gravity-based penalties will be
reduced 75% only where the company
meets all conditions in Sections D(2)
through D(9). EPA has eliminated
language from the interim policy
indicating that penalties may be
reduced "up to" 75% where "most"
conditions are met. because the Agency
believes that all of the conditions in
D(2) through D(9) are reasonable and
essential to achieving compliance. This
change also responds to requests for
greater clarity and predictability.
3. No Recommendations for Criminal
Prosecution
EPA has never recommended criminal
prosecution of a regulated entity based
on voluntary disclosure of violations
discovered through audits and disclosed
to the government before an
investigation was already under way.
Thus, EPA will not recommend criminal
prosecution for a regulated entity that
uncovers violations through
environmental audits or due diligence,
promptly discloses and expeditiously
corrects those violations, and meets all
other conditions of Section D of the
policy.
This policy is limited to good actors,
and therefore has important limitations
It will not apply, for example, where
corporate officials are consciously
involved in or willfully blind to
violations, or conceal or condone
noncompliance. Since the regulated
entity must satisfy all of the conditions
of Section D of the policy, violations
that caused serious harm or which may-
pose imminent and substantial
endangerment to human health or the
environment are not covered by this
policy. Finally, EPA reserves the right to
recommend prosecution for the criminal
conduct of any culpable individual.
Even where all of the conditions of
this policy are not met, however, it is
important to remember that EPA may
decline to recommend prosecution of a
company or individual for many other
reasons under other Agency
enforcement policies. For example, the
Agency may decline to recommend
prosecution where there is no
significant harm or culpability and the
individual or corporate defendant has
cooperated fully.
Where a company has met the
conditions for avoiding a
recommendation for criminal
prosecution under this policy, it will
not face any civil liability for gravity-
based penalties. That is because the
same conditions for discovery,
disclosure, and correction apply in both
cases. This represents a clarification of
the interim policy, not a substantive
change.
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§6708
Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices
4. No Routine Requests for Audits
EPA is reaffirming its policy, in effect
since 1986, to refrain from routine
requests for audits. Eighteen months of
public testimony and debate have
produced no evidence that the Agency
has deviated, or should deviate, from
this policy.
If the Agency has independent
evidence of a violation, it may seek
information needed to establish the
extent and nature of the problem and
the degree of culpability. In general,
however, an audit which results in
prompt correction clearly will reduce
liability, not expand it. Furthermore, a
review of the criminal docket did not
reveal a single criminal prosecution for
violations discovered as a result of an
audit self-disclosed to the government.
E. Conditions
Section D describes the nine
conditions that a regulated entity must
meet in order for the Agency not to seek
(or to reduce] gravity-based penalties
under the policy. As explained in the
Summary above, regulated entities that
meet all nine conditions will not face
gravity-based civil penalties, and will
generally not have to fear criminal
prosecution. Where the regulated entity
meets all of the conditions except the
first (D(l)), EPA will reduce gravity-
based penalties by 75%.
1. Discovery of the Violation Through
an Environmental Audit or Due
Diligence
Under Section D(l), the violation
must have been discovered through
either (a) an environmental audit that is
systematic, objective, and periodic as
defined in the 1986 audit policy, or (b)
a documented, systematic procedure or
practice which reflects the regulated
entity's due diligence in preventing,
detecting, and correcting violations. The
interim policy provided full credit for
any violation found through "voluntary
self-evaluation," even if the evaluation
did not constitute an audit. In order to
receive full credit under the final policy,
any self-evaluation that is not an audit
must be part of a "due diligence"
program. Both "environmental audit"
and "due diligence" are defined in
Section B of the policy.
Where the violation is discovered
through a "systematic procedure or
practice" which is not an audit, the
regulated entity will be asked to
document how its program reflects the
criteria for due diligence as defined in
Section B of the policy. These criteria,
which are adapted from existing codes
of practice such as the 1991 Criminal
Sentencing Guidelines, were fully
discussed during the ABA dialogue. The
criteria are flexible enough to
accommodate different types and sizes
of businesses. The Agency recognizes
that a variety of compliance
management programs may develop
under the due diligence criteria, and
will use its review under this policy to
determine whether basic criteria have
been met.
Compliance management programs
which train and motivate production
staff to prevent, detect and correct
violations on a daily basis are a valuable
complement to periodic auditing. The
policy is responsive to
recommendations received during
public comment and from the ABA
dialogue to give compliance
management efforts which meet the
criteria for due diligence the same
penalty reduction offered for
environmental audits. (See, e.g., II—F—
39, II—E—18. and II-G-18 in the Docket.)
EPA may require as a condition of
penalty mitigation that a description of
the regulated entity's due diligence
efforts be made publicly available. The
Agency added this provision in
response to suggestions from
environmental groups, and believes that
the availability of such information will
allow the public to judge the adequacy
of compliance management systems,
lead to enhanced compliance, and foster
greater public trust in the integrity of
compliance management systems.
2. Voluntary Discovery and Prompt
Disclosure
Under Section D(2) of the final policy,
the violation must have been identified
voluntarily, and not through a
monitoring, sampling, or auditing
procedure that is required by statute,
regulation, permit, judicial or
administrative order, or consent
agreement. Section D(4) requires that
disclosure of the violation be prompt
and in writing. To avoid confusion and
respond to state requests for greater
clarity, disclosures under this policy
should be made to EPA. The Agency
will work closely with states in
implementing the policy.
The requirement that discovery of the
violation be voluntary is consistent with
proposed federal and state bills which
would reward those discoveries that the
regulated entity can legitimately
attribute to its own voluntary efforts.
The policy gives three specific
examples of discovery that would not be
voluntary, and therefore would not be
eligible for penalty mitigation;
emissions violations delected through a
required continuous emiss on monitor,
violations ofNPDES dis 1 rge units
found through prescribed nion taring.
and violations discovered through a
compliance audit required to be
performed by the terms of a consent
order or settlement agreement.
The final policy generally applies to
any violation that is voluntarily
discovered, regardless of whether the
violation is required to be reported. This
definition responds to comments
•pointing out that reporting requirements
are extensive, and that excluding them
from the policy's scope would severely
limit the incentive for self-policing (see,
e.g., II-C-48 in the Docket],
The Agency wishes to emphasize that
the integrity of federal environmental
law depends upon timely and accurate
reporting. The public relies on timely
and accurate reports from the regulated
community, not only to measure
compliance but to evaluate health or
environmental risk and gauge progress
in reducing pollutant loadings. EPA
expects the policy to encourage the kind
of vigorous self-policing that will serve
these objectives, and not to provide an
excuse for delayed reporting. Where
violations of reporting requirements are
voluntarily discovered, they must be
promptly reported (as discussed below).
Where a failure to report results in
imminent and substantial endangerment
or serious harm, that violation is not
covered under this policy (see
Condition D(8)}. The policy also
requires the regulated entity to prevent
recurrence of the violation, to ensure
that noncompliance with reporting
requirements is not repeated. EPA will
closely scrutinize the effect of the policy
in furthering the public interest in
tilnely and accurate reports from the
regulated community.
Under Section D(4), disclosure of the
violation should be made within 10
days of its discovery, and in writing to
EPA. Where a statute or regulation
requires reporting be made in less than
10 days, disclosure should be made
within the time limit established by law.
Where reporting within ten days is not
practical because the violation is
complex and compliance cannot be
determined within that period, the
Agency may accept later disclosures if
the circumstances do not present a
serious threat and the regulated entity
meets its burden of showing that the
additional time was needed to
determine compliance status.
This condition recognizes that it is
critical for EPA to get timely reporting
of violations in order that it might have
clear notice of the violations and the
opportunity to respond if necessary, as
well as an accurate picture of a given
facility's compliance record. Prompt
disclosure is also evidence of the
regulated entity's good faith in wanting
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Federal Register I Vol. 60, No. 246 / Friday, December 22, 1995 / Notices
66709
to achieve or return to compliance as
soon as possible.
In the final policy, the Agency has
added the words, "or may have
occurred," to the sentence, "The
regulated entity fully discloses that a
specific violation has occurred, or may
have occurred * * This change,
which was made in response to
comments received, clarifies that where
an entity has some doubt about the
existence of a violation, the
recommended course is for it to disclose
and allow the regulatory authorities to
make a definitive determination.
In general, the Freedom of
Information Act will govern the
Agency's release of disclosures made
pursuant to this policy. EPA will,
independently of FOIA, make publicly
available any compliance agreements
reached under the policy (see Section H
of the policy), as well as descriptions of
due diligence programs submitted under
Section D.l of the Policy. Any material
claimed to be Confidential Business
Information will be treated in
accordance with EPA regulations at 40
C.F.R. Part 2.
3. Discovery and Disclosure
Independent of Government or Third
Party Plaintiff
Under Section D(3], in order to be
"voluntary", the violation must be
identified and disclosed by the
regulated entity prior to: the
commencement of a federal state or
local agency inspection, investigation,
or information request; notice of a
citizen suit; legal complaint by a third
party; the reporting of the violation to
EPA by a "whistleblower" employee;
and imminent discovery of the violation
by a regulatory agency.
This condition means that regulated
entities must have taken the initiative to
find violations and promptly report
them, rather than reacting to knowledge
of a pending enforcement action or
third-party complaint. This concept was
reflected in the interim policy and in
federal and state penalty immunity laws
and did not prove controversial in the
public comment process.
4. Correction and Remediation
Section D(5) ensures that, in order to
receive the penalty mitigation benefits
available under the policy, the regulated
entity not only voluntarily discovers
and promptly discloses a violation, but
expeditiously corrects it, remedies any
harm caused by that violation
(including responding to any spill and
carrying out any removal or remedial
action required by law), and
expeditiously certifies in writing to
appropriate state, local and EPA
authorities that violations have been
corrected. It also enables EPA to ensure
that the regulated entity will be publicly
accountable for its commitments
through binding written agreements,
orders or consent decrees where
necessary.
The final policy requires the violation
to be corrected within 60 days, or that
the regulated entity provide written
notice where violations may take longer
to correct. EPA recognizes that some
violations can and should be corrected
immediately, while others [e.g., where
capital expenditures are involved), may
take longer than 60 days to correct. In
all cases, the regulated entity will be
expected to do its utmost to achieve or
return to compliance as expeditiously as
possible.
Where correction of the violation
depends upon issuance of a permit
which has been applied for but not
issued by federal or state authorities, the
Agency will, where appropriate, make
reasonable efforts to secure timely
review of the permit.
5. Prevent Recurrence
Under Section D(6), the regulated
entity must agree to take steps to
prevent a recurrence of the violation,
including but not limited to
improvements to its environmental
auditing or due diligence efforts. The
final policy makes clear that the
preventive steps may include
improvements to a regulated entity's
environmental auditing or due diligence
efforts to prevent recurrence of the
violation.
In the interim policy, the Agency
required that the entity implement
appropriate measures to prevent a
recurrence of the violation, a
requirement that operates prospectively.
However, a separate condition in the
interim policy also required that the
violation not indicate "a failure to take
appropriate steps to avoid repeat or
recurring violations"—a requirement
that operates retrospectively. In the
interest of both clarity and fairness, the
Agency has decided for purposes of this
condition to keep the focus prospective
and thus to require only that steps be
taken to prevent recurrence of the
violation after it has been disclosed.
6. No Repeat Violations
In response to requests from
commenters (see, e.g., 1I-F-39 and II-G—
18 in the Docket), EPA has established
"bright lines" to determine when
previous violations will bar a regulated
entity from obtaining relief under this
policy. These will help protect the
public and responsible companies by
ensuring that penalties are not waived
for repeat offenders. Under condition
D(7), the same or closely-related
violation must not have occurred
previously within the past three years at
the same facility, or be part of a pattern
of violations on the regulated entity's
part over the past five years. This
provides companies with a continuing
incentive to prevent violations, without
being unfair to regulated entities
responsible for managing hundreds of
facilities. It would be unreasonable to
provide unlimited amnesty for repeated
violations of the same requirement.
The term "violation" includes any
violation subject to a federal or state
civil judicial or administrative order,
consent agreement, conviction or plea
agreement. Recognizing that minor
violations are sometimes settled without
a formal action in court, the term also
covers any act or omission for which the
regulated entity has received a penalty
reduction in the past. Together, these
conditions identify situations in which
the regulated community has had clear
notice of its noncompliance and an
opportunity to correct.
7. Other Violations Excluded
Section D(8) makes clear that penalty
reductions are not available under this
policy for violations that resulted in
serious actual harm or which may have
presented an imminent and substantial
endangerment to public health or the
environment. Such events indicate a
serious failure (or absence) of a self-
policing program, which should be
designed to prevent such risks, and it
would seriously undermine deterrence
to waive penalties for such violations.
These exceptions are responsive to
suggestions from public interest
organizations, as well as other
commenters. (See, e.g.. II-F-39 and II-
G-18 in the Docket.)
The final policy also excludes penalty
reductions for violations of the specific
terms of any order, consent agreement,
or plea agreement. (See, II-E-60 in the
Docket.) Once a consent agreement has
been negotiated, there is little incentive
to comply if there are no sanctions for
violating its specific requirements. The
exclusion in this section applies to
violations of the terms of any response,
removal or remedial action covered by
a written agreement.
8. Cooperation
Under Section D(9), the regulated
entity must cooperate as required by
EPA and provide information necessary
to determine the applicability of the
policy. This condition is largely
unchanged from the interim policy. In
the final policy, however, the Agency
has added that "cooperation" includes
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assistance in determining the facts of
any related violations suggested by the
disclosure, as well as of the disclosed
violation itself. This was added to allow
the agency to obtain information about
any violations indicated by the
disclosure, even where the violation is
not initially identified by the regulated
entity.
F. Opposition to Privilege
The Agency remains firmly apposed
to the establishment of a statutory
evidentiary privilege for environmental
audits for the following reasons:
1. Privilege, by definition, invites
secrecy, instead of the openness needed
to build public trust in industry's ability
to self-police. American law reflects the
high value that the public places on fair
access to the facts. The Supreme Court,
for example, has said of privileges that,
"[wlhatever their origins, these
exceptions to the demand for every
man's evidence are not lightly created
nor expansively construed, for they are
in derogation of the search for truth."
United States v. Nixon, 418 U.S. 683
(1974). Federal courts have
unanimously refused to recognize a
privilege for environmental audits in the
context of government investigations.
See, e.g., United States v. Dexter, 132
F.R.D. 8, 9-10 (D.Conn. 1990)
(application of a privilege "would
effectively impede (EPA's) ability to
enforce the Clean Water Act. and would
be contrary to stated public policy.")
2. Eighteen months have failed to
produce any evidence that a privilege is
needed. Public testimony on the interim
policy confirmed that EPA rarely uses
audit reports as evidence. Furthermore,
surveys demonstrate that environmental
auditing has expanded rapidly over the
past decade without the stimulus of a
privilege. Most recently, the 1995 Price
VVaterhouse survey found that those few
large or mid-sized companies that do
not audit generally do not perceive any
need to; concern about confidentiality
ranked as one of the least important
factors in their decisions.
3. A privilege would invite
defendants to claim as "audit" materia!
almost any evidence the government
needed to establish a violation or
determine who was responsible. For
example, most audit privilege bills
under consideration in federal and state
legislatures would arguably protect
factual information—such as health
studies or contaminated sediment
data—and not just the conclusions of
the auditors. While the government
might have access to required
monitoring data under the law, as some
industry commenters have suggested, a
privilege of that nature would cloak
underlying facts needed to determine
whether such data were accurate.
4. An audit privilege would breed
litigation, as both parties struggled to
determine what material fell within its
scope. The problem is compounded by
the lack of any clear national standard
for audits. The "in camera" (i.e., non-
public) proceedings used to resolve
these disputes under some statutory
schemes would result in a series of
time-consuming, expensive mini-trials.
5. The Agency's policy eliminates the
need for any privilege as against the
government, by reducing civil penalties
and criminal liability for those
companies that audit, disclose and
correct violations. The 1995 Price
VVaterhouse survey indicated that
companies would expand their auditing
programs in exchange for the kind of
incentives that EPA provides in its
policy.
6. Finally, audit privileges are
strongly opposed by the law
enforcement community, including the
National District Attorneys Association,
as well as by public interest groups.
(See, e.g.. Docket, 1I-C-21,1I-028, II-
C-52. IV-G-10, II—C—25, U-C-33, II—C—
52, II—C—48, and II—G—13 through II—G—
24.)
G. Effect on States
The final policy reflects EPA's desire
to develop fair and effective incentives
for self-policing that will have practical
value to states that share responsibility
for enforcing federal environmental
laws. To that end, the Agency has
consulted closely with stale officials in
developing ihis policy, through a series
of special meetings and conference calls
in addition to the extensive opportunity
for public commenl. As a result, EPA
believes its final policy is grounded in
common-sense principles that should
prove useful in the development of state
programs and policies.
As always, states are encouraged to
experiment with different approaches
that do not jeopardize the fundamental
national interest in assuring that
violations of federal law do not threaten
the public health or the environment, or
make it profitable not to comply. The
Agency remains opposed to state
legislation that does not include these
basic protections, and reserves its right
to bring independent action against
regulated entities for violations of
federal law that threaten human health
or the environment, reflect criminal
conduct or repeated noncompliance, or
allow one company to make a
substantial profit at the expense of its
law-abiding competitors. Where a state
has obtained appropriate sanctions
needed to deter such misconduct, there
is no need for EPA action.
H. Scope of Policy
EPA has developed this document as
a policy to guide settlement actions.
EPA employees will be expected to
follow this policy, and the Agency will
take steps to assure national consistency
in application. For example, the Agency
will make public any compliance
agreements reached under this policy,
in order to provide the regulated
community with fair notice of decisions
and greater accountability to affected
communities. Many in the regulated
community recommended that the
Agency convert the policy into a
regulation because they felt it might
ensure greater consistency and
predictability. While EPA is taking steps
to ensure consistency and predictability
and believes that it will be successful,
the Agency will consider this issue and
will provide notice if it determines that
a rulemaking is appropriate.
II. Statement of Policy: Incentives for
Self-Policing
Discovery. Disclosure. Correction and
Prevention
A. Purpose
This policy is designed to enhance
protection of human health and the
environment by encouraging regulated
entities to voluntarily discover, disclose,
correct and prevent violations of federal
environmental requirements.
B. Definitions
For purposes of this policy, the
following definitions apply:
"Environmental Audit" has the
definition given to it in EPA's 1986
audit policy on environmental auditing,
i.e., "a systematic, documented,
periodic and objective review by
regulated entities of facility operations
and practices related to meeting
environmental requirements."
"Due Diligence" encompasses the
regulated entity's systematic efforts,
appropriate to the size and nature of its
business, to prevent, detect and correct
violations through all of the following:
(a) Compliance policies, standards
and procedures that identify how
employees and agents are to meet the
requirements of laws, regulations,
permits and other sources of authority
for environmental requirements;
(b) Assignment of overall
responsibility for overseeing compliance
with policies, standards, and
procedures, and assignment of specific
responsibility for assuring compliance
at each facility or operation;
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66711
(c) Mechanisms for systematically
assuring that compliance policies,
standards and procedures are being
carried out, including monitoring and
auditing systems reasonably designed to
detect and correct violations, periodic
evaluation of the overall performance of
the compliance management system,
and a means for employees or agents to
report violations of environmental
requirements without fear of retaliation;
(d) Efforts to communicate effectively
the regulated entity's standards and
procedures to all employees and other
agents;
(e) Appropriate incentives to
managers and employees to perform in
accordance with the compliance
policies, standards and procedures,
including consistent enforcement
through appropriate disciplinary
mechanisms; and
(0 Procedures for the prompt and
appropriate correction of any violations,
and any necessary modifications to the
regulated entity's program to prevent
future violations.
"Environmental audit report" means
the analysis, conclusions, and
recommendations resulting from an
environmental audit, but does not
include data obtained in, or testimonial
evidence concerning, the environmental
audit.
"Gravity-based penalties" are that
portion of a penalty over and above the
economic benefit., i.e., the punitive
portion of the penalty, rather than that
portion representing a defendant's
economic gain from non-compliance.
(For further discussion of this concept,
see "A Framework for Statute-Specific
Approaches to Penalty Assessments",
SGM-22,1980. U.S. EPA General
Enforcement Policy Compendium).
"Regulated entity" means any entity,
including a federal, state or municipal
agency or facility, regulated under
federal environmental laws.
C. Incentives for Self-Policing
1. No Gravity-Based Penalties
Where the regulated entity establishes
that it satisfies all of the conditions of
Section D of the policy, EPA will not
seek gravity-based penalties for
violations of federal environmental
requirements.
2. Reduction of Gravity-Based Penalties
by 75%
EPA will reduce gravity-based
penalties for violations of federal
environmental requirements by 75% so
long as the regulated entity satisfies all
of the conditions of Section D(2)
through D{9) below.
3. No Criminal Recommendations
(a] EPA will not recommend to the
Department of Justice or other
prosecuting authority that criminal
charges be brought against a regulated
entity where EPA determines that all of
the conditions in Section D are satisfied,
so long as the violation does not
demonstrate or involve;
(i) a prevalent management
philosophy or practice that concealed or
condoned environmental violations; or
[ii] high-level corporate officials' or
managers' conscious involvement in, or
willful blindness to, the violations.
(b) Whether or not EPA refers the
regulated entity for criminal prosecution
under this section, the Agency reserves
the right to recommend prosecution for
the criminal acts of individual managers
or employees under existing policies
guiding the exercise of enforcement
discretion.
4. No Routine Request for Audits
EPA will not request or use an
environmental audit report to initiate a
civil or criminal investigation of the
entity. For example, EPA will not
request an environmental audit report in
routine inspections. If the Agency has
independent reason to believe that a
violation has occurred, however, EPA
may seek any information relevant to
identifying violations or determining
liability or extent of harm.
D. Conditions
1. Systematic Discovery
The violation was discovered through:
(a) an environmental audit; or
(b) an objective, documented,
systematic procedure or practice
reflecting the regulated entity's due
diligence in preventing, detecting, and
correcting violations. The regulated
entity must provide accurate and
complete documentation to the Agency
as to how it exercises due diligence to
prevent, detect and correct violations
according to the criteria for due
diligence outlined in Section B. EPA
may require as a condition of penalty
mitigation that a description of the
regulated entity's due diligence efforts
be made publicly available.
2. Voluntary Discovery
The violation was identified
voluntarily, and not through a legally
mandated monitoring or sampling
requirement prescribed by statute,
regulation, permit, judicial or
administrative order, or consent
agreement. For example, the policy does
not apply to:
(a) emissions violations detected
through a continuous emissions monitor
(or alternative monitor established in a
permit) where any such monitoring is
required;
(b) violations of National Pollutant
Discharge Elimination System (NPDES)
discharge limits detected through
required sampling or monitoring;
(c) violations discovered through a
compliance audit required to be
performed by the terms of a consent
order or settlement agreement.
3. Prompt Disclosure
The regulated entity fully discloses a
specific violation within 10 days {or
such shorter period provided by law)
after it has discovered that the violation
has occurred, or may have occurred, in
writing to EPA;
4. Discovery and Disclosure
Independent of Government or Third
Party Plaintiff
The violation must also be identified
and disclosed by the regulated entity
prior to:
(a) the commencement of a federal,
state or local agency inspection or
investigation, or the issuance by such
agency of an information request to the
regulated entity;
(b) notice of a citizen suit;
(c) the filing of a complaint by a third
party;
(d) the reporting of the violation to
EPA (or other government agency) by a
"whistleblower" employer, rafliur than
by one authorized to speak on behalf of
the regulated entity; or
(e) imminent discovery of the
violation by a regulatory agency;
5. Correction and Remediation
The regulated entity corrects the
violation within 60 days, certifies in
writing that violations have been
corrected, and takes appropriate
measures as determined by EPA to
remedy any environmental or human
harm due to the violation. If more than
60 days will be needed to correct the
violation(s), the regulated entity must so
notify EPA in writing before the 60-day
period has passed. Where appropriate,
EPA may require that to satisfy
conditions 5 and 6. a regulated entity
enter into a publicly available written
agreement, administrative consent order
or judicial consent decree, particularly
where compliance or remedial measures
are complex or a lengthy schedule for
attaining and maintaining compliance
or remediating harm is required;
6. Prevent Recurrence
The regulated entity agrees in writing
to take steps to prevent a recurrence of
the violation, which may include
improvements to its environmental
auditing or due diligence efforts;
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Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices
7. No Repeat Violations
The specific violation (or closely
related violation) has not occurred
previously within the past three years at
the same facility, or is not part of a
pattern of federal, state or local
violations by the facility's parent
organization {if any), which have
occurred within the past five years. For
the purposes of this section, a violation
is:
(a) any violation of federal, state or
local environmental law identified in a
judicial or administrative order, consent
agreement or order, complaint, or notice
of violation, conviction or plea
agreement; or
(b) any act or omission for which the
regulated entity has previously received
penalty mitigation from EPA or a state
or local agency.
8. Other Violations Excluded
The violation is not one which (i)
resulted in serious actual harm, or may
have presented an imminent and
substantial endangerment to, human
health or the environment, or (ii)
violates the specific terms of any
judicial or administrative order, or
consent agreement.
9. Cooperation
The regulated entity cooperates as
requested by EPA and provides such
information as is necessary and
requested by EPA to determine
applicability of this policy. Cooperation
includes, at a minimum, providing all
requested documents and access to
employees and assistance in
investigating the violation, any
noncompliance problems related to the
disclosure, and any environmental
consequences related to the violations.
E. Economic Benefit
EPA will retain its full discretion to
recover any economic benefit gained as
a result of noncompliance to preserve a
"level playing field" in which violators
do not gain a competitive advantage
over regulated entities that do comply,
EPA may forgive the entire penalty for
violations which meet conditions 1
through 9 in section D and, in the
Agency's opinion, do not merit any
penalty due to the insignificant amount
of any economic benefit.
F. Effect on State Law, Regulation or
Policy
EPA will work closely with states to
encourage their adoption of policies that
reflect the incentives and conditions
outlined in this policy. EPA remains
firmly opposed to statutory
environmental audit privileges that
shield evidence of environmental
violations and undermine the public's
right to know, as well as to blanket
immunities for violations that reflect
criminal conduct, present serious
threats or actual harm to health and the
environment, allow noncomplying
companies to gain an economic
advantage over their competitors, or
reflect a repeated fc ill to comply with
federal law. EPA will w rk with states
to address any pro\ ors of state audit
privilege or immunity laws that are
inconsistent with this policy, and which
may prevent a timely and appropriate
response to significant environmental
violations. The Agency reserves its right
to take necessary actions to protect
public health or the environment by
enforcing against any violations of
federal law.
G. Applicability
(1) This policy applies to the
assessment of penalties for any
violations under all of the federal
environmental statutes that EPA
administers, and supersedes any
inconsistent provisions in media-
specific penalty or enforcement policies
and EPA's 1986 Environmental
Auditing Policy Statement.
(2) To the extent that existing EPA
enforcement policies are not
inconsistent, they will continue to apply
in conjunction with this policy.
However, a regulated entity that has
received penalty mitigation for
satisfying specific conditions under this
policy may not receive additional
penalty mitigation for satisfying the
same or similar conditions under other
policies for the same violation(s), nor
will this policy apply to violations
which have received penalty mitigation
under other policies.
(3} This policy sets forth factors for
consideration that will guide the
Agency in the exercise of its
prosecutorial discretion. It states the
Agency's views as to the proper
allocation of its enforcement resources.
The policy is not final agency action,
and is intended as guidance. It does not
create any rights, duties, obligations, or
defenses, implied or otherwise, in any
third parties.
(4) This policy should be used
whenever applicable in settlement
negotiations for both administrative and
civil judicial enforcement actions. It is
not intended for use in pleading, at
hearing or at trial. The policy may be
applied at EPA's discretion to the
settlement of administrative and judicial
enforcement actions instituted prior to,
hut not yet resolved, as of the effective
date of this policy.
H. Public Accountability
(1) Within 3 years of the effective date
of this policy, EPA will complete a
study of the effectiveness of the policy
in encouraging:
(a) changes in compliance behavior
within the regulated community,
including improved compliance rates;
(b) prompt disclosure and correction
of violations, including timely and
accurate compliance with reporting
requirements;
(c) corporate compliance programs
that are successful in preventing
violations, improving environmental
performance, and promoting public
disclosure;
Ed) consistency among state programs
that provide incentives for voluntary
compliance.
EPA will make the study available to
the public.
(2) EPA will make publicly available
the terms and conditions of any
compliance agreement reached under
this policy, including the nature of the
violation, the remedy, and the schedule
for returning to compliance.
I. Effective Date
This policy is effective January 22,
1996.
Dated: December 18,1995.
Steven A. Herman,
/issisfanl Administrator for Enforcement and
Compliance Assurance.
IFR Doc. 95—31146 Filed 12-21-95; 8:45 am!
BILLING CODE &5M-60-P
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APPENDIX C
DO J POLICY - FACTORS IN DECISIONS OF CRIMINAL PROSECUTIONS
FOR ENVIRONMENTAL VIOLATIONS IN THE CONTEXT OF
SIGNIFICANT VOLUNTARY COMPLIANCE OR DISCLOSURE EFFORTS
BY THE VIOLATOR
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'¦T^-v U.S. Department of Justice
WajtogM*. D C 205)0
July 1, 1991
FACTORS IN DECISIONS ON CRIMINAL
PROSECUTIONS FOR ENVIRONMENTAL VIOLATIONS
IN THE CONTEXT OF SIGNIFICANT VOLUNTARY
COMPLIANCE OR DISCLOSURE EFFORTS BY THE VIOLATOR
I • Introduction
It is the policy of the Department of Justice to encourage
self-auditing, self-policing and voluntary disclosure of
environmental violations by the regulated community by indicating
that these activities are viewed as mitigating factors in the
Department's exercise of criminal environmental enforcement
discretion. This document is intended to describe the factors
that the Department of Justice considers in deciding whether to
bring a criminal prosecution for a violation of an environmental
statute, so that such prosecutions do not create a disincentive
to or undermine the goal of encouraging critical self-auditing,
self-policing, and voluntary disclosure. It is designed to give
federal prosecutors direction concerning the exercise of
prosecutorial discretion in environmental criminal cases and to
ensure that such discretion is exercised consistently nationwide
It is also intended to give the regulated community a sense of
how the federal government exercises its criminal prosecutorial
discretion with respect to such factors as the defendant's
voluntary disclosure of violations, cooperation with the
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government in investigating the violations, use of environmental
audits and other procedures to ensure compliance with all
applicable environmental laws and regulations, and use of
measures to remedy expeditiously and completely any violations
and the harms caused thereby.
This guidance and the examples contained herein provide a
framework for the determination of whether a particular case
presents the type of circumstances in which lenience would be
appropriate.
II. Factors to be Considered
Where the law and evidence would otherwise be sufficient for
prosecution, the attorney for the Department should consider the
factors contained herein, to the extent they are applicable,
along with any other relevant factors, in determining whether and
how to prosecute. It must be emphasized that these are examples
of the types of factors which could be relevant. They do not
constitute a definitive recipe or checklist of requirements.
They merely illustrate some of the types of information which is
relevant to our exercise of prosecutorial discretion.
It is unlikely that any one factor will be dispositive in
any given case. All relevant factors are considered and given
the weight deemed appropriate in the particular case. See
Federal Principles of Prosecution (U.S. Dept. of Justice, 1980),
Comment to Part A.2; Part B.3.
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A. Voluntary Disclosure
The attorney for the Department should consider whether the
person^/ made a voluntary, timely and complete disclosure of the
matter under investigation. Consideration should be given to
whether the person came forward promptly after discovering the
noncompliance, and to the quantity and quality of information
provided. Particular consideration should be given to whether
the disclosure substantially aided the government's investigatory
process, and whether it occurred before a law enforcement or
regulatory authority (federal, state or local authority) ha
already obtained knowledge regarding noncompliance. A disclosure
is not considered to be "voluntary" if that disclosure is already
specifically required by law, regulation, or permit.
B. Cooperation
The attorney for the Department should consider the degree
and timeliness of cooperation by the person. Full and prompt
cooperation is essential, whether in the context of a voluntary
disclosure or after the government has independently learned of a
violation. Consideration should be given to the violator's
!¦/ As used in this document, the terms "person" and "violator"
are intended to refer to business and nonprofit entities as well
as individuals.
2V For example, any person in charge of a vessel or of an on
shore facility or an offshore facility is required to notify the
appropriate agency of the United States Government of any
discharge of oil or a hazardous substance into or upon inter alia
the navigable waters of the United States. Section 311(b)(5) of
the Clean Water Act, 33 U.S.C. 1321(b)(5), as amended by the Oil
Pollution Act of 1990, Pub. L. 101-3 80, § 4301 (a), 104 Stat. 4 3 5,
533 ( 1990) .
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willingness to make all relevant information (including the
complete results of any internal or external investigation and
the names of all potential witnesses) available to government
investigators and prosecutors. Consideration should also be
given to the extent and quality of the violator's assistance to
the government's investigation.
C. Preventive Measures and Compliance Programs
The attorney for the Department should consider the
existence and scope of any regularized, intensive, and
comprehensive environmental compliance program; such a program
may include an environmental compliance or management audit.
Particular consideration should be given to whether the
compliance or audit program includes sufficient measures to
identify and prevent future noncompliance, and whether the
program was adopted in good faith in a timely manner.
Compliance programs may vary but the following questions
should be asked in evaluating any program: Was there a strong
institutional policy to comply with all environmental
requirements? Had safeguards beyond those required by existing
1 aw been developed and implemented to prevent noncompliance from
occurring? Were there regular procedures, including internal or
external compliance and management audits, to evaluate, detect,
prevent and remedy circumstances like those that led to the
noncompliance? Were there procedures and safeguards to ensure
the integrity of any audit conducted? Did the audit evaluate all
sources of pollution (i.e.. all media), including the possibility
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- 5 -
of cross-media transfers of pollutants? Were the auditor's
recommendations implemented in a timely fashion? Were adequate
resources committed to the auditing program and to implementing
its recommendations? Was environmental compliance a standard by
which employee and corporate departmental performance was judged
D. Additiona1 Factors Which May Relevant
1. Pervasiveness of Noncompliance
Pervasive noncompliance may indicate systemic or repeated
participation in or condonation of criminal behavior. It may
also indicate the lack of a meaningful compliance program. In
evaluating this factor, the attorney for the Department should
consider, among other things, the number and level of employees
participating in the unlawful activities and the obviousness,
seriousness, duration, history, and frequency of noncompliance.
2 . Internal Discipl inary. Action
Effective internal disciplinary action is crucial to any
compliance program. The attorney for the Department should
consider whether there was an effective system of discipline for
employees who violated company environmental compliance policies
Did the disciplinary system establish an awareness in other
employees that unlawful conduct would not be condoned?
3. Subsequent Compliance Efforts
The attorney for the Department should consider the extent
of any efforts to remedy any ongoing noncompliance. The
promptness and completeness of any action taken to remove the
source of the noncompliance and to lessen the environmental harm
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- 6 -
resulting from the noncompliance should be considered,
considerable weight should be given to prompt, good-faith efforts
to reach environmental compliance agreements with federal or
state authorities, or both. Full compliance with such agreements
should be a factor in any decision whether to prosecute.
III. Application of These Factors to Hypothetical Examples-^
These examples are intended to assist federal prosecutors in
their exercise of discretion in evaluating environmental cases.
The situations facing prosecutors, of course, present a wide
variety of fact patterns. Therefore, in a given case, some of
the criteria may be satisfied while others may not. Moreover,
satisfaction of various criteria may be a matter of degree.
Consequently, the effect of a given mix of factors also is a
matter of degree. In the ideal situation, if a company fully
meets all of the criteria, the result may be a decision not to
prosecute that company criminally. Even if satisfaction of the
criteria is not complete, still the company may benefit in terms
of degree of enforcement response by the government. The
following hypothetical examples are intended to illustrate the
operation of these guidelines.
Example 1:
This is the ideal case in terms of criteria satisfaction and
consequent prosecution leniency.
3-/ While this policy applies to both individuals and
organizational violators, these examples focus particularly upon
situations involving organizations.
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1. Company A regularly conducts a comprehensive audit of
its compliance with environmental requirements.
2. The audit uncovers information about employees'
disposing of hazardous wastes by dumping them in an
unpermitted location.
3. An internal company investigation confirms the audit
information. (Depending upon the nature of the audit, this
follow-up investigation may be unnecessary.)
4. Prior to the violations the company had a sound
compliance program, which included clear policies, employee
training, and a hotline for suspected violations.
5. As soon as the company confirms the violations, it
discloses all pertinent information to the appropriate
government agency; it undertakes compliance planning with
that agency; and it carries out satisfactory remediation
measures.
6. The company also undertakes to correct any false
information previously submitted to the government in
relation to the violations.
7. Internally the company disciplines the employees
actually involved in the violations, including any
supervisor who was lax in preventing or detecting the
activity. Also, the company reviews its compliance program
to determine how the violations slipped by and corrects the
weaknesses found by that review.
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- 8 -
8. The company discloses to the government the names of
the employees actually responsible for the violations, and
it cooperates with the government by providing documentation
necessary to the investigation of those persons.
Under these circumstances Company A would stand a good
chance of being favorably considered for prosecutorial leniency,
to the extent of not being criminally prosecuted at all. The
degree of any leniency, however, may turn upon other relevant
factors not specifically dealt with in these guidelines.^/
Example 2:
At the opposite end of the scale is Company Z, which meets
few of the criteria. The 1ikelihood of prosecutorial leniency,
therefore, is remote. Company Z's circumstances may include any
of the following:
1. Because an employee has threatened to report a
violation to federal authorities, the company is afraid that
investigators may begin looking at it. An audit is
undertaken, but it focuses only upon the particular
violation, ignoring the possibility that the violation may
be indicative of widespread activities in the organization.
2. After completing the audit, Company Z reports the
violations discovered to the government.
4-/ For example, if the company had a long history of
noncompliance, the compliance audit was done only under pressure
from regulators, and a timely audit would have ended the
violations much sooner, those circumstances would be considered.
-------
3. The company had a compliance program, but it was
effectively no more than a collection of paper. No effort
is made to disseminate its content, impress upon employees
its significance, train employees in its application, or
oversee its implementation.
4. Even after "discovery" of the violation the company
makes no effort to strengthen its compliance procedures.
5. The company makes no effort to come to terms with
regulators regarding its violations. It resists any
remedial work and refuses to pay any monetary sanctions.
6. Because of the non-compliance, information submitted to
regulators over the years has been materially inaccurate,
painting a substantially false picture of the company's true
compliance situation. The company fails to take any steps
to correct that inaccuracy.
7. The company does not cooperate with prosecutors in
identifying those employees (including managers) who
actually were involved in the violation, and it resists
disclosure of any documents relating either to the
violations or to the responsible employees.
In these circumstances leniency is unlikely. The only
positive action is the so-called audit, but that was so narrowly
focused as to be of questionable value, and it was undertaken
only to head off a possible criminal investigation, otherwise,
the company demonstrated no good faith either in terms of
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10
compliance efforts or in assisting the government in obtaining a
full understanding of the violation and discovering its sources.
Nonetheless, these factors do not assure a criminal
prosecution of Company 2. As with Company A, above, other
circumstances may be present which affect the balance struck by
prosecutors. For example, the effect of the violation (because
of substance, duration, or amount) may be such that prosecutors
would not consider it to be an appropriate crimina1 case.
Administrative or civil proceedings may be considered a more
appropriate response.
Other examples:
Between these extremes there is a range of possibilities.
The presence, absence, or degree of any criterion may affect the
prosecution's exercise of discretion. Below are some examples of
such effects:
1. In a situation otherwise similar to that of Company h,
above, Company B performs an audit that is very limited in
scope and probably reflects no more than an effort to avoid
prosecution. Despite that background, Company B is
cooperative in terms of both bringing itself into compliance
and providing information regarding the crime and its
perpetrators. The result could be any of a number of
outcomes, including prosecution of a lesser charge or a
decision to prosecute the individuals rather than the
company.
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2. Again the situation is similar to company A's, but
Company C refuses to reveal any information regarding the
individual violators. The likelihood of the government's
prosecuting the company are substantially increased.
3. In another situation similar to Company A's, Company D
chooses to "sit on" the audit and take corrective action
without telling the government. The government learns of
the situation months or years after the fact.
A complicating fact here is that environmental
regulatory programs are self policing; they include a
substantial number of reporting requirements. If reports
which in fact presented false information are allowed to
stand uncorrected, the reliability of this system is
undermined. They also may lead to adverse and unfair
impacts upon other members of the regulated community. For
example, Company D failed to report discharges of X
contaminant into a municipal sewer system, discharges that
were terminated as a result of an audit. The sewer
authority, though, knowing only that there have been
excessive loadings of X, but not knowing that Company D was
a source, tightens limitations upon all known sources of X.
Thus, all of those sources incur additional treatment
expenses, but Company D is unaffected. Had Company D
revealed its audit results, the other companies would not
have suffered unnecessary expenses.
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- 12 -
In some situations, moreover, failure to report is a
crime. See, e.g., 33 U.S.C. § 1321(b)(5) and 42 U.S.C. §
9603(b). To illustrate the effect of this factor, consider
Company E, which conducts a thorough audit and finds that
hazardous wastes have been disposed of by dumping them on
the ground. The company cleans up the area and tightens up
its compliance program, but does not reveal the situation to
regulators. Assuming that a reportable quantity of a
hazardous substance was released, the company was under a
legal obligation under 42 U.S.C. § 9603(b) to report that
release as soon as it had knowledge of it, thereby allowing
regulators the opportunity to assure proper clean up.
Company E's knowing failure to report the release upon
learning of it is itself a felony.
In the cases of both Company D and Company E,
consideration would be given by prosecutors for remedial
efforts; hence prosecution of fewer or lesser charges might
result. However, because Company D's silence adversely
affected others who are entitled to fair regulatory
treatment and because Company E deprived those legally
responsible for evaluating cleanup needs of the ability to
carry out their functions, the likelihood of their totally
escaping criminal prosecution is significantly reduced.
4. Company F's situation is similar to that of Company B.
However, with regard to the various violations shown by the
audit, it concentrates upon correcting only the easier, less
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-In-
expensive, less significant among them. Its lackadaisical
approach to correction does not make it a strong candidate
for leniency.
5. Company G is similar to Company D in that it performs an
audit and finds violations, but does not bring them to the
government's attention. Those violations do not involve
failures to comply with reporting requirements. The company
undertakes a program of gradually correcting its violations.
When the government learns of the situation, Company G still
has not remedied its most significant violations, but claims
that it certainly planned to get to them. Company G could
receive some consideration for its efforts, but its failure
to disclose and the slowness of its remedial work probably
mean that it cannot expect a substantial degree of leniency.
6. Comprehensive audits are considered positive efforts
toward good faith compliance. However, such audits are not
indispensable to enforcement leniency. Company H's.
situation is essentially identical to that of Company A,
except for the fact that it does not undertake a
comprehensive audit. It does not have a formal audit
program, but, as a part of its efforts to ensure compliance,
does realize that it is committing an environmental
violation. It thereafter takes steps otherwise identical to
those of Company A in terms of compliance efforts and
cooperation. Company H is also a likely candidate for
leniency, including possibly no criminal prosecution.
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- 14 -
In sum, mitigating efforts made by the regulated community
will be recognized, and evaluated. The greater the showing of
good faith, the more likely it will be met with leniency.
Conversely, the less good faith shown, the less likely that
prosecutorial discretion will tend toward leniency.
IV. Nature of this Guidance
This guidance explains the current general practice of the
Department in making criminal prosecutive and other decisions
after giving consideration to the criteria described above, as
well as any other criteria that are relevant to the exercise of
criminal prosecutorial discretion in a particular case. This
discussion is an expression of, and in no way departs from, the
long tradition of exercising prosecutorial discretion. The
decision to prosecute "generally rests entirely in [the
prosecutor's] discretion." Bordenkircher v. Haves. 434 U.S. 357,
364 (1978).-5/ This discretion is especially firmly held by the
criminal prosecutor.£/ The criteria set forth above are intended
only as internal guidance to Department of Justice attorneys.
They are not intended to, do not, and may not be relied upon to
create a right or benefit, substantive or procedural, enforceable
¦§¦/ Although some statutes have occasionally been held to require
civil enforcement actions, see. e.g.. Dunlop v. Sachowski. 421
U.S. 560 (1975), those are unusual cases, and the general rule is
that both civil and criminal enforcement is at the enforcement
agency's discretion where not prescribed by law. Hecklar v.
Chanev. 470 U.S. 821, 830-35 (1985) ; Cutler v. Haves. 818 F. 2d
879, 893 (D.C. Cir. 1987) (decisions not to enforce are not
reviewable unless the statute provides an "inflexible mandate").
6/
Newman v. United States, 382 F.2d 479, 480 {D.C. Cir. 1967) .
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- 15 -
at law by a party to litigation with the United States, nor do
they in any way limit the lawful litigative prerogatives,
including civil enforcement actions, of the Department of Justice
or the Environmental Protection Agency. They are provided to
guide the effective use of limited enforcement resources, and do
not derive from, find their basis in, nor constitute any legal
requirement, whether constitutional, statutory, or otherwise, to
forego or modify any enforcement action or the use of any
evidentiary material. See Principles of Federal Prosecution
(U.S. Dept. of Justice, 1980) p. 4; United States Attorneys'
Manual (U.S. Dept. of Justice, 1986) 1-1.000.
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APPENDIX D
UNITED STATES SENTENCING COMMISSION GUIDELINES -
DEFINITION OF EFFECTIVE "DUE DILIGENCE PROGRAM"
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UNITED
STATES
SENTENCING
COMMISSION
GUIDELINES MANUAL
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November 1, 1994
Guidelines Manual
Ch. 8
CHAPTER EIGHT - SENTENCING OF ORGANIZATIONS
Introductory Commentary
The guidelines and policy statements in this chapter apply when the convicted defendant is an
organization* Organizations can act only through agents and, under federal criminal law, generally
are vicariously liable for offenses committed by their agents. Al the same time, individual agents are
responsible for their own criminal conduct. Federal prosecutions of organizations therefore frequently
involve individual and organizational co-defendants. Convicted individual agents of organizations
are sentenced in accordance with the guidelines and policy statements in the preceding chapters. This
chapter is designed so that the sanctions imposed upon organizations and their agents, taken together,
will provide just punishment, adequate deterrence, and incentives for organizations to maintain
internal mechanisms for preventing, detecting, and reporting criminal conduct.
This chapter reflects the following general principles: First, the court must, whenever
practicable, order the organization to remedy any harm caused by the offense. The resources
expended to remedy the harm should not be viewed as punishment, but rather as a means of making
victims whole for the harm caused. Second, if the organization operated primarily for a criminal
purpose or primarily by criminal means, the fine should be set sufficiently high to divest the
organization of all its assets. Third, the fine range for any other organization should be based on
the seriousness of the offense and the culpability of the organization. The seriousness of the offense
generally will be reflected by the highest of the pecuniary gain, the pecuniary loss, or the amount in
a guideline offense level fine table. Culpability generally will be determined by the steps taken by the
organization prior to the offense to prevent and delect criminal conduct, the level and extent of
involvement in or tolerance of the offense by certain personnel, and the organization's actions after
an offense has been committed. Fourth, probation is an appropriate sentence for an organizational
defendant when needed to ensure that another sanction will be fully implemented, or to ensure that
steps will be taken within the organization to reduce the likelihood of future criminal conduct.
Historical Note: Effective November 1, 1991 (see Appendix C. amendment 422).
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Guidelines Manual
November 1, 1994
J. The following are definitions of terms used frequently in this chapter:
(a) "Offense" means the offense of conviction and all relevant conduct under §1B1.3
(Relevant Conduct) unless a different meaning is specified or is otherwise clear from the
context.
(b) "High-level personnel of the organization" means individuals who have substantial control
over the organization or who have a substantial role in the making of policy within the
organization. The term includes: a director; an executive officer; an individual in charge
of a major business or functional unit of the organization, such as sales, administration,
or finance; and an individual with a substantial ownership interest. "High-level personnel
of a unit of the organization" is defined in the Commentary to §8C2.S (Culpability
Score).
(c) "Substantial authority personnel" means individuals who within the scope of their
authority exercise a substantial measure of discretion in acting on behalf of an
organization. The term includes high-level personnel, individuals who exercise substantial
supervisory authority (e.e.. a plant manager, a sales manager), and any other individuals
who, although not a part of an organization's management, nevertheless exercise
substantial discretion when acting within the scope of their authority /e.g., an individual
with authority in an organization to negotiate or set price levels or an individual
authorized to negotiate or approve significant contracts). Whether an individual falls
within this category must be determined on a case-by-case basis.
(d) "Agent" means any individual, including a director, an officer, an employee, or an
independent contractor, authorized to act on behalf of the organization.
(e) An individual "condoned" art offense if the individual knew of the offense and did not
take reasonable steps to prevent or terminate the offense.
(f) "Similar misconduct" means prior conduct that is similar in nature to the conduct
underlying the instant offense, without regard to whether or not such conduct violated the
same statutory provision. For example, prior Medicare fraud would be misconduct
similar to an instant offense involving another type of fraud.
(g) "Prior criminal adjudication" means conviction by trial, plea of guilty (including an
AUord pica), or plea of nolo contendere.
(h) "Pecuniary gain" is derived from 18 U.S.C. § 3571(d) and means the additional before-
tax profit to the defendant resulting from the relevant conduct of the offense. Gain can
result from either additional revenue or cost sailings. For example, an offense involving
odometer tampering can produce additional revenue. In such a case, the pecuniary gain
is the additional revenue received because the automobiles appeared to have less
mileage, the difference between the price received or expected for the automobiles
with the apparent mileage and the fair market value of the automobiles with the actual
mileage. An offense in wiving defense procurement fraud related to defect hv product
testing can produce pecuniary gain resulting from cost savings. In such a case, the
pecuniary gain is the amount saved because the product was not tested in the required
manner.
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November 1, 1994
Guidelines Manual
ISAO
(i) "Pecuniary loss" is derived from 18 U.S. C. § 3571(d) and is equivalent to the term "loss"
as used in Chapter Two (Offense Conduct). See Commentary to SS2B1.1 (Larceny,
Embezzlement, and Other Forms of Theft), 2F1.1 (Fraud and Deceit), and definitions
of "tax loss" in Chapter Two, Fart T (Offenses Involving Taxation).
(j) An individual was "willfully ignorant of the offense* if the individual did not investigate
the possible occurrence of unlawful conduct despite knowledge of circumstances that
would lead a reasonable person to investigate whether unlawful conduct had occurred.
(k) An "effective program to prevent and detect violations of law" means a program that has
been reasonably designed, implemented, and enforced so that it generally will be effective
in preventing and detecting criminal conduct. Failure to prevent or detect the instant
offense, by itself, does not mean that the program mot not effective. The hallmark of
an effective program to prevent and detect violations of law is that the organization
exercised due diligence in seeking to prevent and detect criminal conduct by its employees
and other agents. Due diligence requires at a minimum that the organization must have
taken the following types of steps:
(1) The organization must have established compliance standards and procedures to
be followed by its employees and other agents that are reasonably capable of
reducing the prospect of criminal conduct.
(2) Specific individual(s) within high-level personnel of the organization must have
been assigned overall responsibility to oversee compliance with such standards
and procedures.
(3) The organization must have used due care not to delegate substantial
discretionary authority to individuals whom the organization knew, or should
have known through the exercise of due diligence, had a propensity to engage in
illegal activities.
(4) The organization must have taken steps to communicate effectively its standards
and procedures to all employees and other agents, by requiring participation
in training programs or by disseminating publications that explain in a practical
manner what is required.
(5) The organization must have taken reasonable steps to achieve compliance with
its standards, e.g.. by utilizing monitoring and auditing systems reasonably
designed to delect criminal conduct by its employees and other agents and by
having in place and publicizing a reporting system whereby employees and other
agents could report criminal conduct by others within the organization without
fear of retribution.
(6) The standards must have been consistently enforced through appropriate
disciplinary mechanisms, including, as appropriate, discipline of individuals
responsible for the failure to detect an offense. Adequate discipline of
individuals responsible for an offense is a necessary component of enforcement;
however, the form of discipline that will be appropriate will be case specific.
(7) After an offense has been detected, the organization must have taken all
reasonable steps lo respond appropriately to the offense and to prevent further
similar offenses -- including any necessary modifications to its program to prevent
and detect violations of law.
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$8A1*2
Guidelines Manual
November 1, 1994
The precise actions necessary for an effective program to prevent and detect violations
of law will depend upon a number of factors. Among the relevant factors are:
(i) Size of the organization — The requisite degree of formality of a program to
prevent and detect violations of law will vary with the size of the organization:
the larger the organization, the more formal the program typically should be. A
larger organization generally should have established written policies defining the
standards and procedures to be followed by its employees and other agents.
(ii) Likelihood that certain offenses may occur because of the nature of its business
— If because of the nature of an organization's business there is a substantial risk
that certain types of offenses may occur, management must have taken steps to
prevent and detect those types of offenses. For example, if an organization
handles toxic substances, it must have established standards and procedures
designed to ensure that those substances are properly handled at all times. If an
organization employs sales personnel who have flexibility in setting prices, it must
have established standards and procedures designed to prevent and delect price-
fixing. If an organization employs sales personnel who have flexibility to
represent the material characteristics of a product, it must have established
standards and procedures designed to prevent fraud.
(Hi) Prior history of the organization — An organization's prior history may indicate
types of offenses that it should have taken actions to prevent. Recurrence of
misconduct similar to that which an organization has previously committed casts
doubt on whether it took all reasonable steps to prevent such misconduct.
An organization's failure to incorporate and follow applicable industry practice or the
standards called for by any applicable governmental regulation weighs against a finding
of an effective program to prevent and detect violations of law.
Historical Note: Effective November 1, J991 (see Appendix C, amendment 422).
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APPENDIX E
EPA POLICY CONCERNING THE ROLE OF CORPORATE ATTITUDE IN
CRIMINAL DELISTING
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APPENDIX H
SAMPLE PRE-VISIT QUESTIONNAIRE - U.S. ARMY
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2. PREVISIT QUESTIONNAIRE:
TABLE 1
ENVIRONMENTAL COMPLIANCE ASSESSMENT SYSTEMS (EGAS)
PREVISIT QUESTIONNAIRE (PVQ)
This questionnaire will provide background information necessary for Hie assessment team to
plan and conduct an environmental compliance assessment Additionally, it provides insight
for properly designing the composition of expertise on the assessment team.
WA COM:
Name of Installation:
Environmental POC:
Telephone Number: _
YES NO N A
Does the installation want the assessment team to
provide the "optional package" (Appendix A of the report) of
preparing the applicable 1383 exhibits, 4283 work orders, and first
page of appropriate 1391 's relative to the corrective
actions?
A. Clean Air Act (CAA)
2. Does the installation have any air permits to maintain with stale regulatory an-
thority (i.e., boilers, paihological incinerators, operating or construction permits,
paint spray booths, petroleum, oil, and lubricant (POL) tank vents, etc.)? Inclusive-
ly, list the types and number of each.
Type of Permit Quantity
2. Does the installation operate any central heating plants?
TYPE NUMBER OF EACH
a. Steam?
b. Hot water?
c. Coal-fired?
d. Oil-fired?
— IX —
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YES NO N/A
10. Please list any additional shop activities that generate any
form of air pollution: (i.e., vehicle emission systems, ventilation
systems for various operations, etc.)
11. Arc any hazardous or toxic air pollutants present in the installation's air emis-
sions (i.e., beryllium, mercury, and vinyl chloride)?
12. Docs the installation have a dry cleaning facility?
13. Does the installation use CFCs or Halons?
14. Are there any regulated vapor emission requirements for
oil/water separators?
15. Is there a woriang management system in place thai precludes
violations from recurring in this media area?
B, Clean Water Act (CWA)
1. Does the installation have any National Pollutant Discharge
Elimination (NPDES) and/or State Pollutant Discharge Elimination System (SPDES)
permits?
2. Identify the types of discharges:
a. Storm water runoff permits?
b. Drainage water from dredge and fill materials?
c. Wastewater treatment plant?
How many and what size?
d. Process wastewater?
e. Heat/Power production cooling blowdown water?
f. Storm water runoff from fuel dispensing areas, airfields, and
parking Jots/aprons and maintenance facilities?
g. Vehicle wash facilities? How many? ^
h. Plating shop?
i. Docs the installation maintain sedimentation holding ponds or
seepage pits from vehicle/aircraft washing, maintenance shop
drainage (shop operations and motor parks), and other
activities?
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E. Resource Conservation and Recovery Act, Subtitle D (RCRA-D)
YES NO N/A
1. Does the installation have a solid waste management facility
onsite?
TYPE NUMBER
¦ LandfiO
Incinerator
Transfer Point _
2. Docs the installation have a:
a. DRMO on the installation?
b. DRMO off the installation? _
d. Solid waste recycling program? _
List commodities recycled (i.e., paper, aluminum, glass, etc.).
e. Construction debris landfill? Is it permitted?
Operated by: Contractor ?
Ln-house personnel ?
3. Is waste transported off-instaliaaon for disposal:
a. In landfills?
b. In incinerators?
c. Transfer stations?
d. Recycling plant?
4. -Docs the installation dispose of ash residues or sludge:
a. Onpost?
b. Offpost?
5. Docs the installation receive refuse from outside the United States?
(Is laboratory testing performed?)
— xv —
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8. Does the installation have any sludge disposal areas from
vehicle/equipment washing operations?
S. Is the sludge analyzed or characterized on a schedule
frequency prior to disposal?
10. Is there stormwaler runoff from vehicle/aircraft handstands, that
collect POL product and discharge to open ditches/ponds?
13. Are there any Section 404 Permits?
12, What percent of vehicle maintenance is performed by contract?
Is it performed onpost or offpost ?
13. Is there a working management system in place to preclude violations
from recurring in this media?
C. Safe Drinking Water Act (SDWA)
1. Does the installation operate a public water system?
2. Does the installation maintain wellheads?
3. Does the installation operate an underground injection well?
4. Are there groundwater aquifers on the installation?
Are they in use?
5. Is the installation located cm a sole source aquifer?
6. Are protective or preventive measures in place to
prevent contamination of these aquifers?
7. Does a drinking water surveillance program exist?
8. Are field water purification units used?
(How is the backwash managed from these mobile units?)
9. Is there a working management system in place to
preclude violations from recurring in this media area?
— xiii —
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4. Is a field Logistics Control Center (LCC) operated by:
Military?
Civilian?
Contractor?
5. Is the LCC operated permanently or only during
training ?
6. Does the installation have an AAFES-operated or other type of gas station?
If yes, how many USTs are located at the gas station and what
size are they?
7. Does the installation have any other USTs used to store petroleum
products?
If yes, list: (Attach a separate inventory sheet if necessary.)
Location Quantity Size Material Stored Permitted
8. Does the installation have any USTs used to store hazardous
substances/wastes?
If yes, where are they located, how many are there, what size are
they, and what hazardous product do they contain?
9. Does the installation have any underground tanks out cf
service or abandoned?
10. Is there a program in place to manage unservicable/abandoned
tanks?
11. Does the installation have a Used Solvent Elimination (USE)
program?
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2. Arc PCB (polycfilorinaied biphenyl) or PCB contaminated
oils in use or stored in the installation:
a.
Transformers?
b.
Capacitors?
c.
Etectrom a^iets?
d.
Heal Transfer or Hydraulic systems?
c.
Circuit Breakers?
f.
Fluorescent Light Ballasts?
g-
Other?
3. Docs the installation dispose of PCBs or PCB items at the installation?
4. Docs the facility transport PCBs?
5. Is there a working management system in place to
preclude violations from reaimng in this media area?
I. Federal Insecticide, Fungicide, and Rodenticide Act (FJQPRA)
1. Docs the installation use pesticides?
Contractor application
In-housc application
Both contractor and in-housc application
2. Arc pesticide wastes disposed of at the installation?
3. Arc pesticides stored on the installation?
Please list locations:
4, Are medical records kept for individuals involved in the
management of pesticides?
5. Where arc pesticides used at the installation?
(Attach a separate list if necessary.)
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10. Does the installation have in storage or know of any locations
of Native American burials, cemeteries, or human remains?
11. Arc there any areas on the installation considered to have
religious importance to any Native American tribe?
K.: Natural Resources Management
2. Does the installation have any outdoor recreation areas?
(i.e., athletic fields, walldng/running tracks, off-road
vehicle tracks, etc.)
2. Does the installation have a plan for managing its natural
resources?
3. Are there any areas on the installation that have:
a. Wetlands? If so, axe they pennitied/regiilaied by definition?
b. Flood Plains?
25-yr?
50-yr?
100-yr?
4. Has a survey to locate and identify threatened and endangered
species and critical habitats been initiated?
5. Does the installation have any endangered species
on its property?
6. Is the information on endangered species incorporated
into the Installation Master Plan?
7. Are there any conflicts with the inventory of threatened or endangered
species and training/firing operations?
8. Is the installation actively involved with ITAM?
9- Does the installation have the following plans:
Forestry Management
Wildlife Management
Land Management
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6. Will the installation have any demolition, remodeling, or
renovation projects underway at the time of the EGAS assessment?
Please identify those projects and buildings:
7. Does the installation have primary or secondary schools?
Do they have asbestos?
8. Is asbestos materia] removed by contract or in-house
personnel?
If in-house personnel, is the team trained/certified?
9. Is there a working management system in place to
preclude violations from irajning in this media area?
N. Noise Abatement
1. Does the installation have an active runway?
2. Does the installation have any operations or maneuvers that
produce environmental noise or noise that goes outside the installation
(i.e., ranges, skeet range, helicopter pad, generators, highway
transportation)?
3. Does a current ICUZ Management Plan exist?
4. Do any cooperative agreements exist regarding land-use
development with bordering communities?
5. Are there any Zone 13 or Zone En's off the
installation?
6. Are noise contour zones reviewed for operation/missi on/training changes
prior to implementation?
7. Has any public involvement or interface taken place to an
installation's initiative to work and resolve c preclude future
conflicts?
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7. What is the total number of sub-environmental programs
currently required to manage the entire environmental program
(i.e., Air, Hazardous Waste/Material, Groundwater, Surface Water.
Solid Waste, Noise, Training. POL, Archeology, Asbestos, etc.)?
8. Is the Environmental Program Manager a participant
in the budgetary processes of the installation? (i.e., Input to Annual
Work, Plan, Command Operating Budget, Unfmanced Requirements Report, etc.)?
9. From the perspective of the Environmental Management
Office, does the environmental program receive adequate
support or cooperation from:
a. Preventive Medicine Activity?
b. Safety Office?
c. Inspector General?
d. Manpower Survey Activity of Resource Management Directorate?
e. Civilian Personnel Office (i.e., Recruitment/Placement
and Position Management/Classification)?
f. Staff Judge Advocate?
g. Directorate of Plans, Training, Mobilization, and Security
(Range Control, Aviation, Maintenance)?
h. Directorate of Logistics (Maintenance, Supply, and Services)?
i. Directorate of Contracting or Procurement?
j. Directorate of Engineering and Housing (i.e., DEH, DDEH,
O&M Divisions. Engineering Plans and Services etc.)?
k. MATES, UTES, ECS, AMSAjs, CSMS. etc.?
1. Major garrison military units?
m. Transient troop units (ix„ USAR/ARNG, and active
Army components special training exercises)?
n. Public Affairs Officer (PAO)
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Q. Hazardous Materials Management
1. Has the installation conducted training for individuals working
with hazardous materials?
1. Does the installation have an Oil and Hazardous Substance
Contingency Plan?
3. Is there a working management system in place to
preclude violations from recurring in this media area?
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ATTENTION: The following records should be available for review by the
assessment team either prior to the assessment or immediate] y upon
arrival at the installation.
(NOTE: Not all installations will have, or arc even required to have, all
of the foil owing documents.)
General
1. Detailed maps of the installation indicating street names and
building numbers. Enough for one for every member of the assessment
team.
2. A copy of the Building Information Schedule (activity listing by Bldg. No.).
Clean Air Act (CAA)
1. Air emissions inventory
2. Ail air related permits
3. A list of steam generating units and toilers and their locations
Clean Water Act (CWA)
1. Any NPDES/SPDES permits
2. A list of POL storage areas
3. The SPCC Plan
4. Maps of the sanitary, storm, and industrial sewers
5. A list of maintenance shops/operations to include wash facilities.
6. Locations of holding ponds, sedimentation pits, and open/end-of-pipc discharge points.
7. Fresh water wetlands ideations
S. Topographic maps depicting water aquifers (sole source also) and
prime/unique farmlands.
Safe Drinking Water Act (SDWA)
1. Sampling records
2. Monitoring records
3. Copies of notices of noncompliance
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4. MSDS sheets for pesticides
5. Pfersoimel Certifications (applications}
6. Contracts
National Historic Preservation Act (NHPA)
1. A list of properties nominated for the National Register
2. Management plans
Natural Resources Management
1. The endangered species survey
2. The Natural Resources Management Plan (Land, Forestry, Wildlife)
3. IT AM Program
National Environmental Policy Ad (NEPA)
1. Recent EAs, EISs, FNSIs or NOIs.
Asbestos Management Program
1. The results of the asbestos survey
2. The Asbestos Management Plan
Noise Abatement
1. Trie AICUZ Study
2. Noise complaints
Radon Program
1, Survey results
Environmental Program Management
Hazardous Materials Management
1. A list of hazardous material storage/use areas
2. The Waste miniroization plan
3. MSDS Sheets
4. Documentation of personnel training
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