EPA Audit Policy Options: What do you think?

Posted on January 7, 2013 by Mary Ellen Ternes

Environmental practitioners and their clients have benefitted greatly from the EPA’s historic implementation of the EPA Audit Policy.  Thus, the level of concern that has been expressed by environmental practitioners in response to EPA’s statements that the Audit Policy may not live through 2013 is not surprising.  For background, see Linda Bochert’s posting, “Dear EPA:  please don’t abandon your Audit Policy!”,  and FY2013 OECA National Program Manager Guidance.

EPA has discussed the basis for its proposal to abandon the Audit Policy in terms of perceived decreasing utility, which creates difficulty in justifying the expense of implementation.  The explanation goes something like this:  with the maturity of the environmental programs, regulated industry knows that it needs to comply by now, thus the incentives provided by the Audit Policy are no longer necessary.  Also, along with industry outgrowing the original purpose of the Policy, the cost of implementing the policy does not justify its continued implementation in this era of shrinking budgets, particularly given the relatively minor noncompliance events reported pursuant to the Audit Policy.

Has EPA really considered the entire calculus?  And, assuming one buys into the external benefits provided by the continued implementation of the Audit Policy, given what’s at stake, isn’t it worth developing options for implementation that don’t impose the same level of staff investment?

Many believe that the Audit Policy has served a purpose far greater than the mere forgiveness of the gravity component of the reported noncompliance events.  For many years, the EPA Audit Policy has provided regulated entities with a mechanism to conduct compliance audits with confidence that noncompliance issues can be corrected without fear of punitive enforcement action.  The Audit Policy continues to serve this purpose, despite the maturity of the environmental programs, because the nature of regulated entities and industry sectors is so dynamic.  Regulated entities are in a constant state of change, as are many EPA programs at any one time.  EPA’s assertion that the EPA’s Audit Policy is no longer needed contemplates regulated entities and applicable regulations as static and monolithic bodies and does not recognize the constant state of change across industry sectors and within individual entities, particularly in response to new and modified regulations.  Industry sectors also vary in their inherent levels of sophistication and adaptability to changing regulatory requirements, depending in large part upon the degree to which the industry has been pervasively regulated in the past.  New regulations across an industry sector upset the equilibrium and demand new management models and compliance approaches, requiring a period of education, acquisition of staff, operational and cultural adaptation to the new requirements.  Adaptation within industry sectors can be slowed when immediate demands are placed on sector resources for all entities in that sector simultaneously such as occurs with new industry sector-wide regulation, prioritizing rapid reaction to new regulation over comprehensive proactive compliance.  In this regulatory environment, the Audit Policy continues to serve the same purpose as it always has, to encourage a culture of compliance in the dynamic landscape in which regulated entities operate.

To read more and provide your own input on how you believe EPA should approach the future of the EPA Audit Policy, click here.



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