Understanding Self-Audit Privileges

We all might try to be perfect when it comes to environmental compliance, but in reality, it is unlikely that anyone is 100 percent perfect all of the time. If your facility has an environmental management plan (EMP), then environmental auditing practices are not a new concept. Even without an EMP, routinely auditing facility practices against permit or regulatory conditions is a good proactive measure and can potentially save you money.

Under Kentucky statute, regulated entities are given an incentive to voluntarily disclose violations discovered during an environmental audit. In general, if an entity chooses to voluntarily disclose, the cabinet does not seek a civil penalty given the following conditions are met:

  1. The owner or operator has made voluntary disclosure to the cabinet of the voluntary discovery of the violation;
  2. The owner or operator has corrected the violation within sixty (60) days of voluntary discovery or other time period approved by the cabinet;
  3. The owner or operator has agreed, in writing, to take steps to prevent a recurrence of the violation;
  4. The specific violation, or closely related violation, has not occurred within the past three (3) years at the facility and is not part of a pattern of violations of federal, state or local laws;
  5. The violation is not one that resulted in serious actual harm, or presented an imminent and substantial endangerment to human health or the environment, or violated the terms of a judicial or administrative order, consent decree or agreed order or plea agreement;
  6. Is not an act or omission for which the facility has received penalty mitigation from a federal, state or local agency;
  7. The violation is not one that resulted in significant economic benefit, which gives to the violator a clear advantage over its business competitors; and
  8. The owner or operator of the facility cooperates as requested by the cabinet and provides information as necessary to determine the applicability of this section.

In order to take advantage of this privilege, entities must submit a letter to the appropriate division director (air, water or waste management) requesting coverage under KRS 224.01-040. The letter must be submitted promptly after the discovery of noncompliance.

In that letter, an entity must explain when the environmental audit was conducted and document that the audit was not conducted as part of a legal requirement. The letter must also address each of the following criteria––what violations were discovered, corrective action measures and that the discovery was not the result of a citizen suit, complaint or imminent regulatory inspection.

Once submitted, the letter is reviewed by DEP staff and management to determine coverage eligibility. Upon review, the entity will receive in writing a letter stating coverage is either granted or denied.

For facilities that have applicable regulations not delegated to Kentucky (such as FIFRA, SPCC, TSCA, and EPCRA), voluntary disclosure is allowed on the federal level. However, federal standards for voluntary disclosure and penalty waiver are different than those outlined in KRS 224.01-040. Before disclosing on the federal level, please make sure you are aware of all requirements and legal implications. Information can be found at  http://www.epa.gov/compliance/incentives/auditing/auditpolicy.html.

While it is not easy to “tell” on oneself, voluntary disclosure is an incentive that many facilities may not be aware of or do not utilize appropriately. The Division of Compliance Assistance can provide facilities with information on steps to voluntary disclosure at 800-926-8111 or via email at envhelp@ky.gov. For more information on KRS224.01-040, please visit http://www.lrc.ky.gov/KRS/224-01/040.PDF.