Most States, including New York, Connecticut and Massachusetts, and the US EPA have “audit policies”, which are really self-reporting policies, promising small or no fines if a company self-reports a violation that does not otherwise require reporting.  The New York State Department of Environmental Conservation is now proposing a policy to encourage companies to do more than just report – they want you to audit yourself, and then self-report.  And they are providing some incentives to do so.

The Audit Incentive Policy would not just reward the self-reporters by eliminating gravity-based penalties.  It would also provide incentives, some financial, for those companies that “go beyond compliance”, by signing an agreement with NYSDEC to conduct audits, and to correct those violations that are revealed.  It also provides new owners with more time to report newly discovered non-compliance to obtain penalty waivers.

By entering into an Audit Agreement, a company agrees to perform a compliance audit, and correct violations found in a timely manner.  The incentives available for doing so include:

For entities that agree to enter into an Audit Agreement and to identify pollution prevention opportunities through implementation of an environmental management system, they get the incentives set out above, plus:

  • Receive a waiver of any economic benefit component of a penalty for a disclosed violation by the amount the entity commits to invest in pollution prevention, and
  • Meet the record of compliance standard required for entrance into the Leadership Tier of the NYEL Program.

NYSDEC is encouraging entities that enter into the Audit Agreements and implement environmental management systems to apply to the NYEL program, and is providing  as an incentive priority to assistance for DEC technical and financial assistance programs, including those funded by the Pollution Prevention and Environmental Compliance Coordinating Council.

The Environmental Audit Incentive Policy would supplement the existing Civil Penalty Policy and Enforcement Guidance Memoranda Series, such as the Civil Penalty Policy.  (It will supersede the Small Business Self-Disclosure Policy, which will be repealed.)    Comments are due by April 22, 2013.