Reducing Environmental Risk

DEC Announces New Environmental Self-Audit Policy With Incentives For Participating Businesses

Have you ever wondered what you can do to reduce fines for environmental violations that you suspect you may have, but you live in fear of an environmental enforcement action that hammers you for it?

You may be able to avoid some of the pain by simply telling the government about the violation yourself, under a new state Environmental Audit Incentive Policy. While it may seem like shooting yourself in the foot to report yourself for suspected violations, the New York State Department of Environmental Conservation (“DEC”) Commissioner Policy 59 is designed to encourage corporations and other regulated entities to regularly take stock of their operations to detect environmental problems.

After Commissioner Policy 59 takes effect on November 18, 2013, those who choose to incorporate voluntary discovery and disclosure as a part of the ordinary course of business will be eligible for a number of incentives. Through this program, DEC hopes that the overall number of environmental infractions will be reduced.

In Commissioner Policy 59, DEC encourages active environmental compliance by operators with environmental laws and regulations in two distinct ways:

1) Regulated businesses can conduct environmental self-audits – internal compliance reviews – within their facilities. These compliance assessments can be done using existing environmental management systems (“EMSs”), or by obtaining formal third-party audits. Businesses may also reach out to DEC (or other regulators) to seek compliance assistance. Any violations discovered during these processes must be disclosed to DEC, and the entity must try to quickly fix the problem. As a reward for such proactive behavior, DEC may reduce the civil penalties assessed.
2) DEC will offer financial incentives for companies that develop and use EMSs to cover all significant aspects of their facility’s operations, as outlined in CP-34: Using EMSs and Other Environmental Performance Improvement Tools in Department Programs. You get additional incentives for implementation of pollution prevention programs, as defined by Environmental Conservation Law § 28-0105.3, that exceed what is required by law. The Pollution Prevention Unit has been identified as a resource in designing such programs.

The benefits of this program are numerous and potentially substantial. Self-identification and reporting of environmental problems can result in the reduction or waiver of administrative and civil penalties. Generally, fines are assessed against a violator based on the gravity of the violation and the economic benefit realized by delayed compliance. When an entity chooses to self-report, the portion of the fine based on the violation’s gravity will be waived.

The DEC will still seek penalties for economic benefits of noncompliance which exceed $5,000 per violation. However, entities that choose to implement pollution prevention programs at their facilities may qualify for waiver of the economic benefit portion, as well.

Additionally, implementation of an environmental management or pollution prevention program leads to several incentives, including cost sharing with the New York State Energy Research and Development Authority (“NYSERDA”) for energy reduction projects, funding from the Small Business Environmental Assistance Program, and recognition as a member of the New York Environmental Leaders. This policy also lengthens the disclosure period for participating new owners of facilities subject to regulation.

Excluded from the policy are those businesses which DEC has determined to have violated laws and regulations in the past and were uncooperative in remedying the issues, as well as those businesses whose violations which were previously detected and have recurred or gone uncorrected. Criminal violations of environmental statutes are specifically exempted from relief under the policy as well. The policy is designed to reward past and future good-faith behavior in the area of environmental compliance.

The environmental attorneys at Periconi, LLC hope that this policy will be as successful as DEC expects. But until we can see the benefits of the program in action, we have to withhold judgment and proceed with caution. Please contact us if we can assist you in assessing whether implementing an internal environmental self-audit procedure in accordance with Commissioner Policy 59 is right for you.



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