AUDIT POLICY UPDATE 

53 Disclosures Under 

Audit Policy, Including 

13 Settled Cases 

To date, 53 companies have come 

forward and disclosed environmental 

violations to EPA under the interim 

and final Audit/Self-Policing 

Policies. Of the 53 companies, EPA 

has settled cases with 13 companies 

and is in the process of negotiating 

the remaining cases. In the 13 

settled cases, EPA waived all 

penalties against 12 companies and 

greatly reduced the penalties for 1 

company. 

Companies Receiving Audit Policy 

Relief: 

Austin Sculpture, Pharr, TX 

Auto Trim, Inc., Brownsville, TX 

Bortec Industrial, El Paso, TX 

Gobar Systems, Brownsville, TX 

Invacare, McAllen, TX 

Lambda Electronics, McAllen, TX 

Magnatek, Brownsville, TX 

Midwestern Machinery , Minneapolis, MN

Norton Company, Stevensville, TX 

TRW Vehicle Safety Systems, McAllen, TX

TRW Automotive Product Remanu.,McAllen, TX

Teccor Electronics, Brownsville, TX

Thomson Saginaw Ball Screw, Saginaw, MI

The final Audit Policy was 

announced on December 22, 1995 as 

part of the Clinton Administration's 

Reinvention of Environmental 

Regulation. Under the final Audit 

Policy, EPA will greatly reduce --

and may waive completely -- penalties 

for companies that voluntarily 

disclose and fix violations 

discovered through environmental 

audits or compliance management 

programs. 

Penalty Waiver in Minnesota 

PCB Case 

A 48-year-old Minnesota company 

that refurbishes business equipment 

voluntarily discovered and corrected 

violations involving improper storage 

Vol.1, No.1 April 1996 

and use of Polychlorinated Biphenyls 

(PCBs) contained in business 

equipment it purchased. PCBs, 

regulated under the Toxic Substances 

Control Act, are persistent 

bioaccumlators which cause birth 

defects, hormonal disruptions, and 

possibly cancer in humans and 

animals. 

In correcting the violation, the 

company properly disposed of over 195 

lbs. of PCBs contained in 65 large 

capacitors that were being unsafely 

stored. The Audit Policy made it 

possible to reduce the original 

penalty amount of $15,000 to zero. 

Substantial Penalty Reduction in 

Michigan TRI Case 

A Michigan manufacturer of 

precision metal parts for airplanes 

voluntarily discovered and corrected 

its failure to file Toxic Release 

Inventory (TRI) reports required 

under the Emergency Planning and 

Community Right-to-Know Act (EPCRA). 

The TRI reports provide information 

to communities and the public about 

toxic releases to the environment 

which in turn has been an impetus for 

industry to dramatically reduce toxic 

releases. Local communities and 

citizens have the right to know this 

information to make decisions 

affecting their lives and families. 

The Audit Policy made it possible to 

reduce Thomson's original penalty 

from $60,797 to $5,000. 

As part of the settlement, Thomson 

performed a Supplemental 

Environmental Project (SEP) which 

involved the replacement of 2500 lbs. 

of solvents with a safe water-based 

process. Another required SEP will 

eliminate the use of over 7000 lbs. 

per year of other toxic chemicals. 

Penalty Waiver in 11 Texas 

Hazardous Waste Cases 

The remaining settled cases involve 

11 Texas companies that operate 

facilities in the Maquiladora (U.S. 

Border) region in Mexico. These 
companies had violated the transport 

manifest provisions of the Resource, 

Conservation, and Recovery Act 

(RCRA), e.g., failure to include 

an accurate EPA identification number 

for the hazardous waste, generator, 

or transporter on the manifest forms. 

The manifest forms are critical for 

tracking hazardous waste to help 

ensure its proper treatment, 

recycling and disposal and to prevent 

uncontrolled release of these 

dangerous chemicals which can cause 

serious harm to public health and the 

environment. 

The companies came forward after 

EPA Region 6 presented the interim 

audit policy at the Reynossa 

Maquiladora Association Annual 

Environmental Forum in July 1995. 

Thereafter EPA waived all penalties 

for all of the companies under the 

audit policy. Normally, settlements 

for these types of violations range 

from $20,000 to $45,000. 

Audit Policy Docket Contains 

Wealth of Information 

EPA established the Audit Policy 

Docket to make information related to 

the EPA audit policies and 

environmental auditing publicly 

available. In addition to hundreds of 

letters and other documents, the 

Docket contains over 300 comments 

that can be obtained by calling 202-

260-7548 or faxing 202-260-4400 and 

referencing docket n umber C-94-01. 

EPA Contacts for Making Disclosures 

Regulated entities that wish to take 

advantage of the Policy should 

contact the appropriate EPA Region: 

Region 1 (New England): 617-565-3441 

Region 2 (NJ,NY): 212-637-5039 

Region 3 (mid-atlantic): 215-597-7265 

Region 4 (south,SE): 404-347-3555 

Region 5 (IL,IN,MI,MN,OH,WI):312-886-9296 

Region 6 (AR,LA,NM,OK,TX):214-665-2210 

Region 7 (IA,KS,MO,NE): 913-551-7281 

Region 8 (CO,MT,ND,SD,UT,WY):303-294-7583 

Region 9 (AZ,CA,HI,NV): 415-744-1364 

Region 10 (AK,ID,OR,WA): 206-553-1073 

Audit Policy Update is published 

periodically by EPA-OECA to provide 

information to the public and regulated 

community regarding developments under the 

EPA Audit Policy. 

Editor: Brian Riedel 

Audit Policy Provides Significant 

Incentives to Discover, Disclose and 

Correct Environmental Violations 
Under the final Audit/Self-Policing 

Policy, EPA will not seek gravitybased penalties and will not 

recommend criminal prosecution for 

companies that meet the requirements 

of the Policy. Gravity-based 

penalties represent the “seriousness” 

or “punitive” portion of penalties 

over and above the portion 

representing the economic gain from 

non-compliance. The Policy requires 

companies: 

* to promptly disclose and correct 

violations, 

* to prevent recurrence of the 

violation, and 

* to remedy any environmental harm 

The Policy excludes: 

* repeated violations, 

* violations that result in serious 

actual harm, and 

* violations that may present an 

imminent and substantial 

endangerment 

Corporations remain criminally 

liable for violations resulting from 

conscious disregard of their legal 

duties, and individuals remain liable 

for criminal wrongdoing. EPA retains 

discretion to recover the economic 

benefit gained as a result on 

noncompliance, so that companies will 

not be able to obtain an economic 

advantage over their competitors by 

delaying investment in compliance. 

Companies that do not discover 

violations through an audit or CMS, 

yet meet all of the other Policy 

conditions, will receive 75% 

mitigation of gravity-based 

penalties. 

The Final Audit/Self-Policing 

Policy was published in the Federal 

Register on December 22, 1996 (60 FR 

66706). It took effect on January 22, 

1996. For further information, 

contact the Audit Policy Docket or 

call 202-564-4187. 

EPA to Shortly Issue Q&As 

EPA plans to issue a Question and 

Answer document on the Final 

Audit/Self-Policing Policy by the end 

of May 1996. The Q&A document will be 

available in the Audit Policy Docket.