Turn to the nation's most objective and informative daily environmental news resource to learn how the United States and key players around the world are responding to the environmental...
By Renee Schoof
July 20 — There are significant benefits to using the new eDisclosure system of online self-reported environmental violations, but it brings a new risk for some users as well, attorneys say.
Launched in December 2015, the Environmental Protection Agency's new system for self-disclosure automatically processes two types of civil violations. Those in Category One—violations of the Emergency Planning and Community Right-to-Know Act (EPCRA) that meet certain conditions—receive a confirmation that they won't face penalties. All others under the Audit Policy for Small Business Compliance Policy, in Category 2, receive an immediate acknowledgement letter saying the EPA will decide on eligibility for penalty mitigation if it pursues an enforcement action.
A new development raising some concerns is the EPA's decision to no longer exempt this information from Freedom of Information Act (FOIA) releases.
Attorneys suggest caution about the risk that any release of their disclosures could expose them to news stories or citizen suits. Yet they also note that eDisclosure provides significant benefits that should be taken into account—penalty mitigation and a reduced risk referral for criminal prosecution. The EPA says the system has saved time and money, both for the agency and for regulated entities.
“The issue of the change of presumption for FOIA releases is definitely a factor that regulated industry is taking into consideration when evaluating self-disclosing,” J. Tom Boer, a partner at Hunton & Williams LLP in San Francisco, told Bloomberg BNA. “If it’s a significant enough potential violation, there going to be some regulated entities that are going to be very concerned about the possibility that the story basically gets out ahead of their effort to address compliance.”
The eDisclosure website itself isn't publicly accessible. The EPA announced it will review any FOIA requests individually but generally plans to release such information. Doing so would put information about disclosed violations on a publicly searchable FOIA website.
Companies using eDisclosure must report violations within 21 days of discovery. Except for Category One EPCRA violations that receive an electronic notice of determination, other disclosures must be followed up within 60 days to 90 days with a certification showing the violations have been corrected, unless an extension is granted.
In complex cases, it could be impossible to resolve the violation within the period the EPA allows, Boer said in an interview.
“Where there is potential for improvement is for more rapid turnaround for closing out cases that EPA decides do not necessitate an enforcement response and resolving smaller cases that perhaps have some sort of penalty but are not higher profile or more complex,” he said. “Those were areas EPA really wanted to have improvement. But it's too early to say whether that in fact is how things turn out.”
Joel Eagle, an associate at Thompson Hine LLP law firm in Cleveland, said the new online disclosure system “doesn't change our basic analysis for whether to report issues to the agency, as we will always consider the pros and cons of each unique situation.” But he added that the new system was another factor to consider.
“Often, the benefits of potential civil penalty immunity or mitigation outweigh the risks of disclosing issues to the government and public. But the continued push to increase the availability of information, both publicly and electronically with just a few keystrokes, might weigh more heavily in certain situations going forward,” Eagle told Bloomberg BNA via e-mail. “Overall, we’ve used the benefits of the Audit Policy for many years with significant successes such as penalty avoidance and our clients’ return to compliance in cases where EPA was likely to discover the violation on its own, and we expect to continue to do so.”
The risk of access to eDisclosure submittals through the FOIA process is a factor that is considered, he said, “but this risk, in and of itself, typically would not deter our clients from utilizing the EPA's Audit Policy.”
Eagle said his firm had not heard of any specific instances where a party's eDisclosure was the subject of a FOIA request. A search of EPA FOIA requests for “eDisclosure” also showed none.
Before eDisclosure, the EPA said it was receiving so many self-disclosure notices that it had trouble resolving them all promptly.
“After seven months, EPA's online eDisclosure portal is already producing the benefits that EPA sought when it launched this Next Generation Compliance system for automatically processing self-disclosed civil violations, pursuant to EPA's Audit Policy and Small Business Compliance Policy,” the agency told Bloomberg BNA by e-mail.eDisclosure So Far
According to the EPA, since it launched eDisclosure last December:
The automatic processing eliminates “back-and-forth communications with the agency and sometimes lengthy delays in resolution,” the EPA said.
“The eDisclosure system is fundamentally about saving the agency resources,” said Andrew Stewart, who led the division that designed the system as former acting director of the EPA's Special Litigation and Projects Division in the Office of Civil Enforcement.
“The genesis for this was EPA looking across its enforcement programs and really looking for areas to make cuts. The EPA concluded it could save FTEs, or full-time equivalent resources, by changing the way it implements the audit policy,” Stewart told Bloomberg BNA.
Stewart, who left the agency last year and joined Vinson & Elkins LLP’s environmental and natural resources group, said he has heard concerns both about FOIA releases and about uncertainty about penalties.
“Although it gives you an automatic response, and you could say you get good government because EPA responds, you may not get a resolution for your disclosure unless or until EPA decides to independently investigate you,” he said. In the past, companies in some cases had an opportunity to work with an EPA enforcement officer to get a complete resolution of violations disclosed.
But it was also true that in the past some companies made disclosures and didn't hear back from the EPA because the agency had such a backlog, Stewart said.
Thompson Hine's Eagle said things hadn't changed much in terms of certainty for clients.
“At least in the early stages of the new process, the level of certainty when submitting a Category 2 disclosure doesn’t appear to be very different from the days when we sent in hard copy letters, in that you generally don’t know how or even if EPA might respond,” he said. “In fact, over the past several years, we’ve seen fewer and fewer instances where EPA responds to a disclosure, either by pursuing enforcement or issuing requests for more information.”
The EPA said the modernized audit policy provided quicker and more efficient automated responses to self-disclosures. “Still, we have heard back from EPA in some cases, such as with multiregion disclosures that we submitted to EPA headquarters rather than a specific region.”
There also have been some problems using the system, such as having it time out while a person is trying to file a more complicated disclosure, Stewart said.
“The system may have some glitches right now,” Eagle said, “such as the limited amount of space given to fill in narrative responses, ensuring that electronic notices of determination (eNOD) or acknowledgment letters (AL) are automatically issued in each case, and general system problems like receiving error messages when filling out fields.”
To contact the reporter on this story: Renee Schoof in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Larry Pearl at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)