On December 9, 2015, EPA announced the launch of a new web-based eDisclosure system that allows regulated entities to submit self-disclosures pertaining to violations uncovered during environmental audits conducted pursuant to: (1) the Audit Policy titled “Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations” (65 Fed. Reg.19618) (Audit Policy), or (2) the Small Business Compliance Policy (65 Fed. Reg. 19630) (80Fed. Reg. 74676). Under those policies, entities that voluntarily disclose and correct violations uncovered may be entitled to mitigation of civil penalties. EPA is not modifying the substantive conditions under either of these policies, but, by setting up the eDisclosure system, EPA intends to allow members of the regulated community to disclose violations more easily and EPA to process disclosures more efficiently.
EPA’s Audit Policy provides significant incentives for regulated entities that self-disclose environmental violations in accordance with the terms of the Policy. In general, if all Audit Policy conditions are met, EPA will not refer the matter for criminal prosecution and will waive up to 100 percent of gravity-based penalties, which are based on the seriousness of the violation and represent the punitive component of a civil penalty. The Small Business Compliance Policy allows similar incentives for entities with up to 100 employees.
New eDisclosure Categories
The eDisclosure system will accept two newly defined categories of self-disclosures —“Category 1” and “Category 2” disclosures. Category 1 disclosures are limited to Emergency Planning and Community Right-to-Know Act (EPCRA) violations that meet all Audit Policy or Small Business Compliance Policy conditions. Category 1 excludes: (i) chemical-release reporting violations under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 103 or EPCRA Section 304, and (ii) EPCRA violations that resulted in significant economic benefit as defined by EPA. The new eDisclosure system will automatically issue an electronic Notice of Determination (eNOD) confirming that the violations are resolved with no assessment of civil penalties, conditioned on the accuracy and completeness of the submitter’s disclosure. EPA will spot check Category 1 disclosures to ensure compliance with EPCRA, and disclosures meet the conditions of the Audit Policy, the Small Business Compliance Policy, and eDisclosure.
“Category 2” disclosures include (i) all non-EPCRA violations; (ii) EPCRA violations with respect to which the regulated entity cannot meet the Audit Policy’s “systematic discovery” condition but can meet its other conditions; and (iii) EPCRA/CERCLA violations excluded from Category 1. The eDisclosure system will automatically issue an Acknowledgement Letter noting EPA’s receipt of the disclosure and notifying the entity that EPA will make a determination as to eligibility for penalty mitigation if, and when, it considers taking enforcement action for environmental violations. EPA will screen Category 2 disclosures for significant concerns such as criminal conduct and potential imminent hazards. Note that all preexisting, unresolved disclosures are now classified as Category 2, unless preexisting EPCRA disclosures are resubmitted by April 8, 2017.
New eDisclosure Process
Entities wishing to disclose a potential violation through the eDisclosure system must follow a three-step process. First, the entity must register with EPA’s Central Data Exchange (CDX) system. Second, the entity must disclose the violation online. Third, the entity must submit a Compliance Certification in the eDisclosure system certifying that any noncompliance was timely corrected. Users must report violations via the eDisclosure System within 21 days of discovery, in accordance with the existing Audit Policy. Within 60 days of submitting an Audit Policy disclosure or within 90 days of submitting a Small Business Compliance Policy disclosure, the user must submit a “Compliance Certification” to the eDisclosure System. The certification must identify the specific violation being disclosed, certify that the violation has been corrected, and certify that the Audit Policy or Small Business Compliance Policy requirements have been met.
Corrective Action Extensions
EPA is also automating the process for handling corrective action extension requests by creating procedures dependent upon the disclosure category. For Category 1 Audit Policy Disclosures, EPA will not issue corrective action extensions. Instead, if the user requests an extension for a Category 1 disclosure, the disclosure will potentially be eligible only for Category 2 treatment. For Category 2 Audit Policy Disclosures, users can make an online request for a 30-day extension of the corrective action deadline without any explanation. The extension will be granted automatically by the eDisclosure system at the time of request. Users can make an online request for an additional extension, provided the date does not extend beyond 180 days after the date of discovery. If a user is making this additional request, it must include a justification for the extension. For Category 2 Small Business Compliance Policy Disclosures, users can make an online request for a 90-day extension without any explanation. The extension will be granted automatically by the eDisclosure system at the time of request. Users can make an online request for an additional extension, provided the date does not extend beyond 360 days after discovery. If a user is making this additional request, it must include a justification for the extension.
New Owner Policy
Owners of newly acquired facilities can benefit from penalty mitigation beyond what the Audit Policy offers if they disclose violations within nine months of becoming a new owner and meet other requirements of the New Owner Policy. New owners may now elect to use eDisclosure for violations at their new facilities but doing so will not provide the expanded benefits of the New Owner Policy. EPA will continue to accept and manually process disclosures under the New Owner Policy outside of the eDisclosure system.
The eDisclosure system is not designed to receive or process any information claimed as confidential business information (CBI). Entities must submit sanitized (non-CBI) information through the online system. Follow-up CBI must be submitted manually according to EPA procedures and the requirements of 40 CFR Part 2. Concerns with submittal of CBI to the agency have increased because, effective December 9, 2015, EPA has eliminated its presumption against release of information related to unresolved disclosures of environmental violations.
EPA’s development of the eDisclosure system signals a renewed interest in encouraging continued use of the Audit and Small Business Compliance policies. The new system will is likely to save time and resources for Category 1 violations. However, users submitting Category 2 disclosures may not receive resolution from EPA unless and until EPA decides to bring an enforcement action.
Did you know?
The EPA provided notice of emission allowance allocations to certain units under the new unit set aside (NUSA) provisions of the Cross State Air Pollution Rule (CSAPR) federal implementation plans (FIPs). EPA recorded the allocated CSAPR allowances in sources’ Allowance Management System (AMS) accounts by February 15, 2016.
EPA announced the submission of a continuing information collection request to the OMB regarding the NSPS for small municipal waste combustors (40 CFR 60, Subpart AAAA). The collection addresses requirements for owners and operators of affected facilities to submit initial notifications, performance tests and periodic reports and results and to maintain records of periods of startup, shutdown or malfunction, or when the monitoring system is inoperative. Comments were due March 30, 2016.
EPA announced the submission of a continuing information collection request to the OMB regarding the NSPS for stationary combustion turbines (40 CFR 60, Subpart KKKK). The collection addresses requirements for owners and operators to submit initial notification, performance tests, and periodic reports and results and to maintain records of periods of startup, shutdown or malfunction, or when the monitoring system is inoperative. Comments were due March 30, 2016.
EPA has submitted an ICR on “NSPS for Surface Coating of Plastic Parts for Business Machines (40 CFR part 60, subpart TTT) (Renewal).” This regulation impacts facilities that perform industrial surface coating on plastic parts for business machines. Owners or operators of the affected facilities must make an initial notification report, performance tests, periodic reports, and maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. Comments were due March 18, 2016.