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GASTON & ASSOCIATES ———————————————————————————- |
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Environmental Business News Current Environmental Issues February 2005 |
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Introduction to Environmental Audits
The Self Audit Privilege
No Audit Privilege in California
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Gaston and Associates Environmental Consulting
20 Truman, Suite 108 Irvine, CA 92620
Phone: 949-262-0440 Fax: 949-262-0750
GastonAssociates.com
© Gaston and Associates 2005 |
Previous issues of this newsletter discussed the Phase I Environmental Assessment and its function to evaluate potential environmental risks associated with property transactions. This issue reviews the related Environmental Audit, which is generally a review of current facility operational practices. Environmental Audits include the following types of reviews: health and safety audits, management system audits, environmental liability audits, compliance audits, or a combination of these. Environmental audits are often used by businesses that have waste management, air quality, and hazardous waste generation issues.
Environmental auditing was developed for sound business reasons, particularly as a means to help manage pollution control affirmatively over time instead of reacting to crises. Auditing can improve facility performance before the regulatory inspector arrives by identifying, resolving, and avoiding environmental problems.
Although environmental laws do not require auditing, audits have been widely adopted voluntarily. Responsibility for facility management lies ultimately with upper management which is charged to ensure compliance with environmental requirements. It is important to note that audits evaluate compliance activities; they do not substitute for compliance activities such as actually obtaining permits or reporting violations.
Environmental audits do not currently have universal standards, although the U.S. EPA, US Department of Justice (DOJ), the European Union, and the International Organization for Standards (ISO) have developed standards and guidelines defining an acceptable environmental audit program. The US EPA has defined environmental auditing as “a systematic, documented, periodic and objective review of facility operations and practices related to meeting environmental regulations.”
The US EPA policy encourages auditing whether done by an independent internal group, a third party, or a combination of both. Larger organizations generally have greater resources to devote to an internal audit team, whereas smaller firms might be more likely to retain outside auditors.
Whether internal staff tasked or outside consultants are utilized, the audit team will:
The audit team purpose is to provide assurance to management that all relevant regulatory requirements are being met in accordance with federal, state, local laws and with company polices and procedures.
Generally, audits occur once every two to five years, depending on the facility activities. It is important that the audit meets the needs and objectives of the individual company. Audits are useful tools when they are used to evaluate and improve management systems, protect from potential liabilities, increase environmental awareness, and show due diligence.
Both the US EPA and the DOJ have issued formal policy statements encouraging the use of environmental audits and assessments. As part of their efforts to encourage voluntary disclosure and cooperation, violations that are revealed and promptly remedied are given zero or greatly reduced civil penalties and are not recommended for criminal prosecution by the US EPA. Likewise, the DOJ considers the scope of the audit and compliance management system as factors in determining whether and how to prosecute an entity for suspected environmental violations. This “self-audit privilege” provides incentives to those who conduct audits and then identify and promptly remedy areas that are out of compliance.
Although several states have adopted environmental self-audit privilege laws which may protect some environmental information from public disclosure, the State of California has not codified a formal self-audit privilege law. However, the California EPA has instituted a Recommended Guidance on Incentives for Voluntary Disclosure – October 2003. This document can be found at here The stated purpose is to “enhance the protection of human health and the environment by encouraging regulated entities to prevent or to discover voluntarily, disclose, and correct violations of federal, state and local environmental requirements through the use of routine, systematic application of an environmental compliance auditing program.”
An environmental audit is a useful tool for business to help insure compliance with the myriad of environmental health and safety regulations.
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