On December 9, 2015, The Environmental Protection Agency (“EPA”) introduced its new eDisclosure system in the Federal Register, Notice of eDisclosure Portal Launch: Modernizing Implementation of EPA’s Self-Policing Incentive Policies. The eDisclosure system does not modify the substantive provisions of its Audit Policy or Small Business Compliance Policy; rather, the eDisclosure system streamlines the EPA’s existing self-disclosure policies by utilizing the EPA’s Central Data Exchange (“CDX”) web-based system to allow self-reporting entities to promptly disclose and submit environmental violations to the EPA for automatic receipt and processing. See http://www.epa.gov/cdx. The eDisclosure system continues the benefits of the self-disclosure policies, including penalty mitigation and other incentives, while making the processing of disclosures quicker and more efficient for reporting entities and the EPA.
Under the eDisclosure system, all self-disclosed civil violations must be made through the CDX, however, the EPA will continue to accept and process outside the automated eDisclosure system any new owner self-disclosures and any potential criminal violations disclosed to the Voluntary Disclosure Board.
Two categories of disclosures may be made through the eDisclosure system. Category 1 disclosures include:
1. Violations of Emergency Planning and Community Right-to-Know Act (“EPCRA”) that meet all Audit Policy conditions and
2. EPCRA violations that meet all Small Business Compliance Policy conditions.
Category 1 violations do not include EPCRA Section 304 chemical release reporting violations, violations of Section 103 Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), or EPCRA violations with significant economic benefit as defined by the EPA. Conditioned on the accuracy and completeness of the reporting entity’s disclosure, the eDisclosure system will spot-check Category 1 disclosures and issue an automatic electronic Notice of Determination, confirming that the violations are resolved with no assessment of civil penalties. As the EPA gains experience with the eDisclosure system, it will evaluate whether to expand the types of violations that can qualify for Category 1 treatment.
Category 2 disclosures include:
1. All non-EPCRA violations
2. EPCRA violations where the reporting-entity can only certify compliance with Audit Policy Conditions 2-9 (i.e., discovery was not systematic), and
3. EPCRA and CERCLA violations excluded from Category 1.
The eDisclosure system will automatically issue an Acknowledgment Letter for Category 2 disclosures, stating that the EPA will make a determination as to eligibility for penalty mitigation if and when it considers taking enforcement action for the disclosed environmental violations. Thereafter, the EPA will screen Category 2 disclosures for significant concerns, such as criminal conduct and potential imminent hazards.
It is important to note that the eDisclosure system is not designed to receive or process confidential business information (“CBI”). Reporting entities must submit sanitized, non-CBI, information through the eDisclosure system, and submit any follow-up CBI manually according to the EPA procedures and requirements codified at 40 C.F.R. If the disclosure requires the submission of CBI, the reporting entity must contact the eDisclosure help desk to arrange for the secure transmission of such information.
To submit electronic self-disclosure through the eDisclosure system, reporting entities must follow three steps. First, reporting entities must register in the EPA’s CDX. Next, reporting entities must select: eDisclosure: Voluntary Disclosure System Program Service and Disclose/Certify role, then select the New Disclosure button. Reporting entities must keep in mind that in order to be considered “prompt” under the existing self-disclosure policies, potential violations must be disclosed within 21 calendar days of the entity’s discovery that such potential violations may have occurred. If the 21st day after discovery falls on a weekend or federal holiday, the eDisclosure system will treat the disclosure as prompt if it is submitted on the next business day. Reporting entities can disclose potential violations while they continue assessing whether the potential violation actually occurred and specifically identify the nature of the violation.
Finally, reporting entities must certify compliance. Within 60 days of submitting an Audit Policy disclosure and within 90 days of submitting a Small Business Compliance Policy disclosure, the reporting entity must submit a Compliance Certification in the eDisclosure system. Extensions of these deadlines apply in limited circumstances, as discussed in the Notice of eDisclosure Portal Launch: Modernizing Implementation of EPA’s Self-Policing Incentive Policies. Compliance Certifications must identify the specific violations, certify that the violations have been corrected, and certify that the Audit Policy or Small Business Compliance Policy conditions have been met. Deadlines for correcting violations, however, run from the date of discovery, not the date of disclosure.
Disclosed violations will be considered withdrawn when the reporting entity:
1. Voluntarily withdraws its disclosure before submitting its Compliance Certification, such as where it determines that no violations actually occurred;
2. Does not timely submit its Compliance Certification; or
3. Submits a Compliance Certification that does not meet the conditions of the Audit Policy or Small Business Compliance Policy.
The eDisclosure system automatically records the reporting entity’s attempt to self-disclose, notifies the reporting entity that the EPA will retain such records, and sends the reporting entity notice that the disclosure did not qualify for penalty mitigation through its disclosure.
Please feel free to contact our Environmental Practice Group with any questions related to the EPA eDisclosure system or any other environmental legal matters.
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