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New DEC Environmental-Audit Policy is Worth Considering

By Robert R. Tyson


Let’s face it — ensuring environmental compliance can be a daunting task given the proliferation of increasingly complicated regulations. To help the regulated community, in 1995, the U.S. Environmental Protection Agency (EPA) issued a policy entitled “Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations,” more commonly known as the “EPA audit policy.”

The EPA audit policy has provided incentives, most notably in the form of penalty reduction or waiver, to organizations that voluntarily audit their compliance with federal environmental regulations, disclose potential violations, and return to compliance. By most accounts, the EPA audit policy has been a clear “win-win” scenario, because it has improved environmental compliance and eliminated financial penalties that would otherwise have been assessed.


DEC policy

The EPA audit policy is focused exclusively on compliance with federal environmental regulations, and of course, most Central New York facilities are also subject to New York state environmental regulations. Accordingly, the performance of an environmental audit always raised the concern of what to do if potential violations of New York regulations were identified (as they frequently are). That concern has been resolved by the New York State Department of Environmental Conservation’s (DEC) recent issuance of a new Commissioner Policy, entitled “Environmental Audit Incentive Policy” (the “DEC policy), which took effect on Nov. 18, 2013.

Much like its federal counterpart, the DEC policy encourages the regulated community to audit operations, take measures to prevent violations, and to voluntarily disclose and promptly correct any violations that are discovered, thereby improving environmental compliance and protecting public health and the environment. The DEC policy applies to any entity regulated under New York State environmental laws and regulations.

Significantly, the environmental-audit program can consist of an informal, internal review or a formal third-party audit. As an incentive, the DEC can reduce or waive penalties for violations that are discovered and disclosed voluntarily. Certain violations are excluded, such as those involving alleged criminal conduct, or that are reported by a member of the public or a “whistleblower” employee, or violations required to be self-reported. Companies or organizations with a history of non-compliance, and which have not been cooperative in resolving past violations, may also ineligible to use the DEC policy.

A regulated entity must disclose a violation or suspected violation promptly in writing to the DEC regional office, generally within 30 days of discovery. This timeframe is important — a regulated entity is deemed to have discovered the violation when any officer, director, employee, or agent of the facility knows or has reason to believe that a violation has, or may have, occurred. Practically, this could mean the clock starts ticking the day an EHS manager or consultant learns of a potential violation, not later when senior management hears about it.

New owners of a facility can benefit from the DEC policy for violations discovered prior to or within 60 days of acquisition, provided they disclose within 60 days after acquisition or within 30 days of discovery of the violation, whichever is later. In all cases, unless a different time frame is specified by law, violations must be corrected within 60 days after disclosure.

To appreciate how significant the penalty waiver could be, it is important to understand how an initial penalty is calculated. A monetary penalty consists of a gravity component (how significant was the harm?) and an economic-benefit component (how much did the organization save by not complying?). The New York DEC will waive the gravity component for eligible cases, and for entities engaged in environmental audits and environmental-management systems during the ordinary course of business, the economic-benefit component may be waived where de minimis. For certain types of violations, this can easily save tens or hundreds of thousands of dollars.

Savings of this magnitude can certainly justify the cost — in time and resources — to undertake an environmental audit.


Robert R. Tyson is a partner and an environmental and energy attorney at Bond, Schoeneck & King, PLLC. His practice includes New York state and federal regulatory compliance, environmental enforcement and litigation, and environmental issues in business and property transactions. Contact him at (315) 218-8221 or email:



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