Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 44991 

Summary: EPA expressed 

environmental concerns about potential 

water quality impacts to riparian/stream 

systems due to past grazing activities. 

EPA supports adaptive management 

practices proposed by the Forest Service 

for improve existing resource conditions 

impacted by grazing and long-term 

drought. EPA requested that the final 

EIS include a drought management plan 

and baseline data for monitoring and 

protecting water quality. Rating EC2. 

EIS No. 20080219, ERP No. D–NOA–

E39073–00, Programmatic—Coral 

Restoration in the Florida Keys and 

Flower Garden Banks National Marine 

Sanctuaries, Implementation, FL, TX, 

and LA. 

Summary: EPA does not object to the 

proposed action, but requested 

additional data to clarify timeframes of 

coral growth and the level of effort to 

conduct the restoration projects. Rating 

LO. 

Dated: July 29, 2008. 

Robert W. Hargrove, 

Director, NEPA Compliance Division, Office 

of Federal Activities. 

[FR Doc. E8–17718 Filed 7–31–08; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

[ER–FRL–8584–2] 

Environmental Impacts Statements; 

Notice of Availability 

Responsible Agency: Office of Federal 

Activities, General Information (202) 

564–7167 or http://www.epa.gov/ 

compliance/nepa/. 

Weekly receipt of Environmental Impact 

Statements 

Filed 07/21/2008 Through 07/25/2008. 

Pursuant to 40 CFR 1506.9. 

EIS No. 20080285, Final EIS, NPS, MT, 

Avalanche Hazard Reduction Project, 

Issuance of Special Use Permit for the 

Use of Explosives in the Park, 

Burlington Northern Santa Fe 

Railway, Glacier National Park, 

Flathead National Forest, Flathead 

and Glacier Counties, MT, Wait 

Period Ends: 09/02/2008, Contact: 

Chas Cartwright 406–888–7898. 

EIS No. 20080286, Final EIS, AFS, UT, 

Pockets Resource Management 

Project, Proposes to Salvage Dead and 

Dying Spruce/Fir, Regenerate Aspen, 

and Manage Travel, Escalate Ranger 

District, Dixie National Forest, 

Garfield County, UT, Wait Period 

Ends: 09/02/2008, Contact: Robert G. 

MacWhorter 435–826–5400. 

EIS No. 20080287, Final EIS, BLM, UT, 

Moab Field Office Planning Area, 

Resource Management Plan, 

Implementation, Grand and San Juan 

Counties, UT, Wait Period Ends: 09/ 

02/2008, Contact: Brent Northrup 

435–259–2100. 

EIS No. 20080288, Draft Supplement, 

NOA, 00, Amendment 16 to the 

Fishery Management Plan for the 

Snapper Grouper Fishery, Additional 

Information to Analyze Four New 

Management Measures Alternatives 

for Gag and Vermillion Snapper, 

Implementation, South Atlantic 

Region, Comment Period Ends: 09/15/ 

2008, Contact: Dr. Roy E. Crabtree 

727–824–5305. 

EIS No. 20080289, Final EIS, FTA, TX, 

Northwest Corridor Light Rail Transit 

Line (LRT) to Irving/Dallas/Fort 

Worth International Airport, 

Construction, Dallas County, TX, Wait 

Period Ends: 09/02/2008, Contact: 

Elizabeth Zekasko 202–366–0244. 

EIS No. 20080290, Draft EIS, STB, 00, 

Elgin, Joliet & Eastern Railroad 

(Finance Docket No. 35087) Proposed 

Acquisition by Canadian National 

(CN) Railway and Grand Trunk 

Corporation to connect all Five of 

CN’s Rail lines, Chicago, Illinois and 

Gary, Indiana, Comment Period Ends: 

09/30/2008, Contact: Phillis JohnsonBall 202–245–0304. 

EIS No. 20080291, Draft EIS, AFS, CO, 

Colorado Roadless Areas Rulemaking, 

Proposes to Promulgate a StateSpecific Rule to Manage Roadless 

Values and Characteristics, Colorado 

Forests with Roadless Areas include: 

Arapaho and Roosevelt: Grand Mesa, 

Uncompahgre, and Gunnison; MantiLa Sal (portion in Colorado); Pike and 

San Isabel; Rio Grande; Routt: San 

Juan; and White River National 

Forests, CO, Comment Period Ends: 

10/23/2008, Contact: Kathy Kurtz 

303–275–5083. 

EIS No. 20080292, Draft EIS, IBR, CA, 

Millerton Lake Resource Management 

Plan (RMP) and General Plan, 

Implementation, Fresno and Madera 

Counties, CA, Comment Period Ends: 

09/15/2008, Contact: Robert Epperson 

559–269–4518. 

EIS No. 20080293, Draft EIS, IBR, CA, 

Cachuma Lake Resource Management 

Plan, Implementation, Cachuma Lake, 

Santa Barbara County, CA, Comment 

Period Ends: 09/15/2008, Contact: 

Sharon McHale 916–989–7172. 

EIS No. 20080294, Final EIS, FHW, VA, 

U.S. 460 Location Study Project, 

Transportation Improvements from I–

295 in Prince George County to the 

Interchange of Route 460 and 58 along 

the Suffolk Bypass, Funding, U.S. 

Army COE Section 10 and 404 

Permits, Prince George, Sussex, Surry, 

Southampton and Isle of Wight 

Counties, VA, Wait Period Ends: 09/ 

02/2008, Contact: Kenneth Myers 

804–775–3353. 

Amended Notices 

EIS No. 20080227, Second Draft 

Supplement, TPT, CA, Presidio Trust 

Management Plan (PTMP), Updated 

Information on the Concept for the 

120-Acre Main Post District, Area B of 

the Presidio of San Francisco, 

Implementation, City and County of 

San Francisco, CA, Comment Period 

Ends: 09/19/2008, Contact: John G. 

Pelka 415–561–5300. 

Revision to FR Notice Published: 

Extending Comment Period from 07/31/ 

2008 to 09/19/2008. 

Dated: July 29, 2008. 

Robert W. Hargrove, 

Director, NEPA Compliance Division, Office 

of Federal Activities. 

[FR Doc. E8–17722 Filed 7–31–08; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

[EPA–HQ–OECA–2007–0291; FRL–8700–2] 

Interim Approach to Applying the Audit 

Policy to New Owners 

AGENCY: Environmental Protection 

Agency. 

ACTION: Notice; request for comment. 

SUMMARY: The Environmental Protection 

Agency (‘‘EPA’’ or ‘‘the Agency’’) 

announces and requests comment on its 

Interim Approach to Applying the Audit 

Policy to New Owners (‘‘Interim 

Approach’’). (EPA’s April 11, 2000 

policy on ‘‘Incentives for Self-Policing: 

Discovery, Disclosure, Correction and 

Prevention of Violations,’’ is commonly 

referred to as the ‘‘Audit Policy’’ (65 FR 

19618).) This Interim Approach offers a 

detailed description of how EPA will 

apply its Audit Policy to new owners of 

regulated facilities. Under the Interim 

Approach, EPA will offer certain 

incentives specifically tailored to new 

owners that want to make a ‘‘clean 

start’’ at their newly acquired facilities 

by addressing environmental 

noncompliance that began prior to 

acquisition. This Interim Approach is 

designed to motivate new owners to 

audit newly acquired facilities and use 

the Audit Policy to disclose, correct, 

and prevent the recurrence of violations. 

It is also designed to encourage selfdisclosures of violations that will, once 

corrected, yield significant pollutant 

reductions and benefits to the 

environment. The incentives tailored for 

new owners include penalty mitigation 

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44992 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 

beyond what is provided in the Audit 

Policy, as well as the modification of 

certain Audit Policy conditions. 

Through applying a clear, transparent, 

and easily administered Interim 

Approach to resolving disclosures from 

new owners, the Agency seeks to use 

the Audit Policy to leverage its ability 

to make effective use of scarce 

government resources. If procedural and 

transaction costs can be minimized for 

regulators and self-disclosing new 

owners, EPA anticipates that the 

opportunity to work with new owners 

as they make clean starts at their new 

facilities can help secure higher quality 

environmental improvements more 

quickly and effectively than might 

otherwise occur. 

On May 14, 2007, EPA published a 

Federal Register Notice entitled 

‘‘Enhancing Environmental Outcomes 

From Audit Policy Disclosures Through 

Tailored Incentives for New Owners’’

(72 FR 27116) (‘‘First Notice’’) seeking 

public comment on whether and to 

what extent the Agency should consider 

offering tailored incentives to encourage 

new owners of regulated entities to 

discover, disclose, correct, and prevent 

the recurrence of environmental 

violations pursuant to the Audit Policy. 

The Agency received public comment 

supportive of the idea of offering 

tailored incentives to new owners, and 

decided to develop an approach to 

applying the Audit Policy to new 

owners. The Agency believes the most 

efficient way to effectively test this 

strategy, and learn from practical 

experience, is to implement it on an 

interim basis. Accordingly, the Agency 

has decided to begin applying the 

Interim Approach, effective upon 

publication of this Notice. EPA is 

concurrently seeking public comment 

on the Interim Approach for a period of 

90 days. EPA will be reviewing public 

comment as it is received and will 

continue its dialogue with stakeholders 

on whether refinements to the Interim 

Approach are needed. In addition, the 

Agency will place into the public docket 

copies of agreements resolving 

violations disclosed by new owners 

under the Interim Approach. In any 

event, EPA intends to assess the 

effectiveness of the Interim Approach 

on a continual basis. Based on public 

comment and after the Agency has 

gained sufficient experience in 

implementing the Interim Approach, 

EPA will decide to finalize, revise or 

discontinue these tailored incentives for 

new owners. 

DATES: The Interim Approach is 

effective upon publication of this 

Notice. EPA urges interested parties to 

comment on the Interim Approach in 

writing. Comments must be received by 

EPA no later than October 30, 2008. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ–

OECA–2007–0291, by one of the 

following methods: 

• http://www.regulations.gov: Follow 

the on-line instructions for submitting 

comments. 

• E-mail: docket.oeca@epa.gov, 

Attention Docket ID No. EPA–HQ–

OECA–2007–0291. 

• Fax: (202) 566–9744, Attention 

Docket ID No. EPA–HQ–OECA–2007–

0291. 

• Mail: Enforcement and Compliance 

Docket Information Center, 

Environmental Protection Agency, 

Mailcode: 2822T, 1200 Pennsylvania 

Ave., NW., Washington, DC, 20460, 

Attention Docket ID No. EPA–HQ–

OECA–2007–0291. 

• Hand Delivery: Enforcement and 

Compliance Docket Information Center 

in the EPA Docket Center (EPA/DC), 

EPA West, Room B 3334, 1301 

Constitution Avenue, NW., Washington, 

DC. The EPA Docket Center Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Reading Room is (202) 

566–1744, and the telephone number for 

the Enforcement and Compliance 

Docket is (202) 566–1927. Such 

deliveries are only accepted during the 

Docket’s normal hours of operation, and 

special arrangements should be made 

for deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OECA–2007–

0291. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at http:// 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through http:// 

www.regulations.gov. The http:// 

www.regulations.gov Web site is an 

‘‘anonymous access’’ system, which 

means EPA will not know your identity 

or contact information unless you 

provide it in the body of your comment. 

If you send an e-mail comment directly 

to EPA without going through http:// 

www.regulations.gov, your e-mail 

address will be automatically captured 

and included as part of the comment 

that is placed in the public docket and 

made available on the Internet. If you 

submit an electronic comment, EPA 

recommends that you include your 

name and other contact information in 

the body of your comment and with any 

disk or CD–ROM you submit. If EPA 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EPA may not be 

able to consider your comment. 

Electronic files should avoid the use of 

special characters, any form of 

encryption, and be free of any defects or 

viruses. For additional information 

about EPA’s public docket, visit the EPA 

Docket Center homepage at http:// 

www.epa.gov/epahome/dockets.htm. 

Docket: All documents in the docket 

are listed in the http:// 

www.regulations.gov index. Although 

listed in the index, some information is 

not publicly available, e.g., CBI or other 

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

will be publicly available only in hard 

copy. Publicly available docket 

materials are available either 

electronically at http:// 

www.regulations.gov or in hard copy at 

the Enforcement and Compliance 

Docket Information Center in the EPA 

Docket Center (EPA/DC), EPA West, 

Room B 3334, 1301 Constitution 

Avenue, NW., Washington, DC. The 

EPA Docket Center Public Reading 

Room is open from 8:30 a.m. to 4:30 

p.m., Monday through Friday, excluding 

legal holidays. The telephone number 

for the Reading Room is (202) 566–1744, 

and the telephone number for the 

Enforcement and Compliance Docket is 

(202) 566–1927. 

FOR FURTHER INFORMATION CONTACT: For 

further information, contact Caroline 

Makepeace of EPA’s Office of 

Enforcement and Compliance 

Assurance, Office of Civil Enforcement, 

Special Litigation and Projects Division 

at makepeace.caroline@epa.gov or (202) 

564–6012. 

SUPPLEMENTARY INFORMATION: 

I. Background and Goals 

A. Background on EPA’s Exploration of 

Tailored Incentives for New Owners 

1. Overview of the Audit Policy 

On April 11, 2000, EPA issued its 

revised final Audit Policy, or ‘‘2000 

Audit Policy’’ (65 FR 19618). The 

purpose of the Audit Policy is to 

enhance protection of human health and 

the environment by encouraging 

regulated entities to voluntarily 

discover, promptly disclose, 

expeditiously correct and prevent the 

recurrence of violations of federal 

environmental law. Benefits available to 

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Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 44993 

1The 2007 Frequently Asked Questions 

document can be found on the Internet at http:// 

www.epa.gov/compliance/incentives/auditing/ 

2007-faqs.pdf. 

2Under the regulations governing CAA Title V 

permit applications and annual compliance 

certifications, any application, form, report or 

compliance certification is required to contain a 

certification by a responsible official of the truth, 

accuracy and completeness of information 

contained in such documents. The regulations 

further provide that ‘‘[t]his certification and any 

other certification required under this part shall 

state that, based on information and belief formed 

after reasonable inquiry, the statements and 

information in the document are true, accurate, and 

complete.’’ 40 CFR 70.5(d). 

entities that make disclosures under the 

terms of the Audit Policy include 

reductions in and, in some cases, the 

elimination of civil penalties and an 

EPA determination not to recommend 

criminal prosecution of disclosing 

entities (ultimate prosecutorial 

discretion resides with the U.S. 

Department of Justice). 

The Audit Policy contains nine 

conditions, and entities that meet all of 

them are eligible for 100 percent 

mitigation of any gravity-based civil 

penalties that otherwise could be 

assessed in settlement of the disclosed 

violations. (‘‘Gravity-based’’ penalty 

refers to that portion of the civil penalty 

over and above the portion that 

represents the entity’s economic gain 

from noncompliance, known as the 

‘‘economic benefit.’’) Regulated entities 

that do not meet the first condition—

systematic discovery of violations—but 

meet the other eight conditions are 

eligible for 75 percent mitigation of any 

gravity-based penalties. The Audit 

Policy includes important safeguards to 

deter violations and protect the 

environment. For example, the Audit 

Policy requires entities to act to prevent 

recurrence of violations and to remedy 

any environmental harm that may have 

occurred. Repeat violations, those that 

resulted in serious actual harm to the 

environment, and those that may have 

presented an imminent and substantial 

endangerment are not eligible for relief 

under the Audit Policy. Entities and 

individuals also remain criminally 

liable for violations that result from 

conscious disregard of, or willful 

blindness to, their obligations under the 

law. 

Once a regulated entity discloses 

violations in writing to EPA, EPA 

evaluates the violations against the 

criteria set forth in the Audit Policy, and 

determines the appropriate enforcement 

response. For cases involving no 

assessment of penalties, the 

enforcement response for voluntary 

disclosures is usually a Notice of 

Determination (‘‘NOD’’). Audit Policy 

disclosures may also be resolved 

through an administrative consent 

agreement and final order, or a civil 

judicial consent decree. If the disclosure 

does not meet the conditions of the 

applicable policy, the matter is handled 

under the appropriate media-specific 

penalty policies, which often include 

penalty mitigation for voluntary 

disclosures. 

The Audit Policy and related 

documents are available on the Internet 

at http://www.epa.gov/compliance/ 

incentives/auditing/auditpolicy.html. 

Additional guidance for implementing 

the Policy in the context of criminal 

violations can be found at http:// 

www.epa.gov/compliance/resources/ 

policies/incentives/auditing/ 

auditcrimvio-mem.PDF. The Small 

Business Compliance Policy (65 FR 

19630), published April 11, 2000, is an 

additional voluntary disclosure policy 

that provides incentives for small 

businesses (of 100 or fewer employees) 

that voluntarily discover, promptly 

disclose and expeditiously correct 

environmental violations. More 

information on the Small Business 

Compliance Policy is available at 

http://www.epa.gov/compliance/ 

incentives/smallbusiness/index.html. 

2. How the Audit Policy Has Been 

Applied to New Owners 

Historically, EPA has recognized that 

additional flexibility in Audit Policy 

implementation may be appropriate for 

new owners. The 2000 Audit Policy 

addressed new owners and repeat 

violations, focusing on pre-acquisition 

violations at the newly acquired facility: 

‘‘[i]f a facility has been newly acquired, 

the existence of a violation prior to 

acquisition does not trigger the repeat 

violations exclusion’’ as to the new 

owner (65 FR at 19623). In addition, the 

Audit Policy states that, in the 

acquisitions context, EPA will consider 

extending the prompt disclosure period 

on a case-by-case basis. It also states that 

the 21-day disclosure period will begin 

on the date of discovery by the 

acquiring entity, but in no case will the 

period begin earlier than the date of 

acquisition. See 65 FR at 19622. 

EPA’s primary interest is to encourage 

owners of newly acquired facilities to 

undertake a comprehensive examination 

of and improvements to a facility’s 

environmental compliance and its 

compliance management systems. 

Notwithstanding a new owner’s history 

of violations at its other facilities, if its 

efforts to examine and improve upon an 

acquired facility’s environmental 

operations are thorough and are likely to 

result in improved compliance, EPA’s 

intent is to encourage such 

examinations. 

On April 30, 2007, EPA issued the 

‘‘Audit Policy: Frequently Asked 

Questions (2007)’’ document 

(‘‘Frequently Asked Questions’’) which 

recognizes that new owners are 

uniquely situated to examine and 

improve performance at newly acquired 

facilities.1 Specifically, EPA’s Answer to 

Question 2 of the 2007 Frequently 

Asked Questions document provides 

that: 

• For new owners that in good faith 

undertake a compliance evaluation and 

inform the Agency of such actions, 

either by disclosure in writing or entry 

into an Audit Agreement, prior to 

submission of its first annual Title V 

certification, the violations disclosed 

would be considered voluntarily 

discovered for purposes of the Audit 

Policy. 

Generally, Clean Air Act (CAA) 

violations discovered during activities 

supporting Title V certification 

requirements are not eligible for penalty 

mitigation under the Policy. Condition 2 

of the Audit Policy requires that 

disclosed violations must not be 

discovered through a legally mandated 

monitoring or sampling requirement 

prescribed by statute or regulation; 

therefore, examination of CAA 

compliance accompanying a Title V 

annual certification is not voluntary.2

However, EPA wants to encourage new 

owners to examine facility operations to 

determine compliance, correct 

violations, and upgrade deficient 

equipment and practices. Thus, for new 

owners that in good faith undertake 

such efforts and inform the Agency of 

such actions, either by disclosure in 

writing or entry into an audit agreement 

with EPA prior to submission of the 

facility’s first annual Title V 

certification under new ownership, the 

violations disclosed would be 

considered voluntarily discovered for 

purposes of the Audit Policy. 

EPA’s Answer to Question 5 of the 

2007 Frequently Asked Questions 

document also provides that: 

• New owners may be eligible for 

penalty mitigation under the Audit 

Policy for violations at newly acquired 

facilities irrespective of the disclosing 

entity’s compliance history at other 

facilities. 

3. First Federal Register Notice and 

Public Comment Process on This Topic 

EPA’s First Notice was issued to 

solicit public input and information to 

be used in helping EPA better 

understand and formulate decisions 

about issues associated with offering 

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44994 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 

tailored Audit Policy incentives to new 

owners. The Agency identified for 

comment a series of questions: (1) 

Should EPA offer tailored incentives to 

encourage new owners of regulated 

entities to discover, disclose, correct, 

and prevent environmental violations; 

(2) how should the Agency determine 

who is a new owner; (3) what incentives 

should the Agency consider offering in 

order to encourage new owners to selfaudit and disclose; and (4) if such 

tailored incentives are offered, what 

measures should the Agency use in 

determining whether and to what extent 

self-audits by and disclosures from new 

owners are achieving significant 

improvements to the environment. 

Formal notice and comment on such 

policy matters are not required, but the 

Agency thought it prudent to invite 

public input, given the significant 

objectives EPA hopes to achieve and its 

desire to develop any incentives in a 

transparent and inclusive way. 

EPA set up an electronic docket to 

facilitate the comment process for the 

First Notice and to make all the 

comments readily available to the 

public. The Agency also held two public 

meetings, in Washington, DC and San 

Francisco, California to facilitate oral 

comments. In addition, the day after 

each public meeting, the Agency invited 

a diverse and balanced group of 

industry, government, academic and 

interest group participants to smaller 

working sessions to discuss the same 

questions and issues that were posed in 

the First Notice. The working sessions 

were designed to give the Agency an 

opportunity to hear the views of a 

variety of individuals with different 

perspectives and experiences in a 

relatively informal and frank 

atmosphere, where remarks would be 

summarized but not attributed to 

individual participants. No consensus of 

opinion was sought or presented. 

The written comments, transcripts of 

the public meetings and summaries of 

the comments made during the working 

sessions, as well as the Notice itself are 

available in the docket at http:// 

www.regulations.gov, Docket ID No. 

EPA–HQ–OECA–2007–0291, or at the 

EPA Docket Center for which the 

physical address is listed above. 

EPA received thoughtful and 

informative comments in response to 

the First Notice that helped the Agency 

as it considered whether to proceed in 

developing an approach to applying the 

Audit Policy to new owners, and how 

to structure such an approach to meet 

the goals described below in section I.B. 

B. EPA’s Development of an Interim 

Approach to Applying the Audit Policy 

in the New Owner Context 

While EPA’s Audit Policy program 

has been a successful effort to date, 

resolving disclosed violations involving 

over 3,500 entities and nearly 10,000 

facilities, its potential as a tool to 

promote compliance, and in particular 

to produce significant pollutant 

reductions, has still not been fully 

realized. More than half of these Audit 

Policy disclosures have involved 

reporting violations which, while 

important for public information and 

safety purposes, may not produce 

significant reductions in pollutant 

emissions once the violations are 

corrected. Consistent with EPA’s 

strategic plan, the Agency is seeking 

ways to increase the number of Audit 

Policy self-disclosures that have the 

potential to yield significant 

environmental benefits while effecting 

compliance with federal environmental 

requirements. In developing and 

implementing an approach to applying 

the Audit Policy to new owners, the 

Agency has two primary goals: (1) To 

secure the prompt correction of 

environmental violations, and (2) to 

achieve significant pollutant reductions 

and improvements to the environment 

as efficiently and expeditiously as 

possible. 

Based in part on its recent experience 

with corporate auditing agreements and 

disclosures following acquisitions, the 

Agency believes that encouraging the 

new owners of regulated facilities to 

assess, disclose, and address 

environmental compliance at their 

newly acquired facilities presents a 

promising opportunity to achieve 

significant improvements to the 

environment in an expeditious and 

efficient way. EPA believes that when a 

new owner takes control of a facility, a 

host of factors may make it feasible and 

attractive for a new owner to focus on, 

and invest in, assessing and addressing 

environmental compliance issues. New 

owners may be well-situated to make an 

environmental ‘‘clean start’’ because 

they may already be auditing and 

assessing their new facilities, may have 

funding available to fix problems, and 

have an opportunity to manage and 

reduce risk by addressing and disclosing 

noncompliance. 

Although EPA believes there are 

compelling reasons that new owners 

may be motivated to address 

noncompliance at their facilities, the 

Agency recognizes that there may be 

factors that new owners otherwise 

interested in using the Audit Policy 

perceive as disincentives. New owners 

may still have to pay substantial civil 

penalties under the Audit Policy, unless 

the economic benefit portion of the 

penalty is insignificant. Therefore, new 

owners may be reluctant to call EPA’s 

attention to compliance issues at their 

newly acquired facilities when they 

themselves may not be fully aware of all 

the compliance issues presented. 

Particularly when many and/or complex 

facilities are involved, it may be 

difficult for new owners to have a 

reasonable idea of the full spectrum of 

compliance issues. 

In addition, the Agency’s experience 

with implementing the Audit Policy, 

especially with regard to corporate 

auditing agreements, suggests that one 

of the major reasons a company may be 

hesitant to self-audit and disclose under 

the Audit Policy is uncertainty about 

how the Agency will treat such selfdisclosures. EPA is currently making an 

effort to provide greater overall certainty 

and consistency in the Audit Policy’s 

implementation, and the recently-issued 

2007 Frequently Asked Questions 

document should help provide greater 

certainty about how the Agency will 

apply the Audit Policy to a particular 

set of facts. Nevertheless, there is likely 

still some hesitation on the part of new 

owners to self-disclose violations, 

because of concerns about exactly how 

such disclosures will be handled by the 

Agency. 

In the Interim Approach to applying 

the Audit Policy to new owners, 

described in this Notice, EPA is offering 

certain incentives to further encourage 

new owners to discover, disclose, 

correct and prevent the recurrence of 

violations that began prior to their 

acquisition. The incentives include 

penalty mitigation beyond what the 

Audit Policy generally provides and the 

clearly-stated modification of certain 

Audit Policy conditions. The Agency 

recognizes that there are equitable and 

policy arguments that a new owner 

should not be penalized for the full 

economic benefit relating to violations 

that arose before a facility was under its 

control, if that new owner is willing to 

promptly address such violations and 

make changes to ensure that the facility 

stays in compliance in the future. EPA 

anticipates that such incentives may 

make the difference in the willingness 

of new owners to come forward and 

commit to improving environmental 

compliance and reduce impacts on the 

environment. 

Through implementing a clear, 

transparent, and easily administered 

approach to resolving disclosures from 

new owners, the Agency seeks to use 

the Audit Policy to leverage its ability 

to make effective use of scarce 

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Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 44995 

government resources. If procedural and 

transaction costs can be minimized for 

regulators and self-disclosing new 

owners, EPA expects that the 

opportunity to work with new owners 

as they make clean starts at their new 

facilities can help secure higher quality 

environmental improvements more 

quickly and effectively than might 

otherwise occur. 

The Agency intends to assess, on an 

ongoing basis, whether this is in fact a 

useful approach, yielding worthwhile 

results, and to consider whether such 

incentives produce any unintended 

adverse results, such as discouraging 

appropriate due diligence, timely 

compliance and/or the achievement and 

maintenance of a fair and level playing 

field. The approach will be 

implemented on an interim basis, with 

opportunity for changes or 

discontinuation, if warranted. 

II. Interim Approach To Applying the 

Audit Policy To New Owners 

To further the goals described above 

in section I.B., EPA has developed an 

Interim Approach to applying the Audit 

Policy to new owners, which is 

described in this section. Comments 

that the Agency received from the 

public in response to the First Notice on 

this topic were supportive of developing 

tailored Audit Policy incentives for new 

owners. Many comments did include 

caveats that any successful approach 

would need to be reasonable, simple, 

certain and clear, with a predictable and 

streamlined resolution process that still 

allowed flexibility, where appropriate. 

The Agency decided that the most 

efficient way to effectively test and 

refine the approach would be to 

implement it on an interim basis, and 

reap the benefit of practical experience. 

Accordingly, with this Notice, EPA is 

announcing that the Agency will 

implement the Interim Approach, 

effective immediately. In addition, EPA 

is concurrently seeking comment on the 

overall design and specific elements of 

the Interim Approach, as well as on any 

relevant issues or considerations which 

may not appear to be reflected. In some 

sections, certain issues are specifically 

raised for comment. 

The Agency is now calling the initial 

phase of this project an Interim 

Approach rather than a pilot program. 

As EPA reviewed public comments, it 

appeared that certain 

misunderstandings arose from the 

concept of a ‘‘program.’’ Many 

commenters incorrectly perceived that 

the Agency was considering some sort 

of award or special status program 

which would bestow benefits on 

accepted members once they had 

‘‘applied’’ and met eligibility 

requirements. To others, the term 

‘‘pilot’’ appeared to imply, again 

incorrectly, that the use of this 

settlement approach would be a limited 

experiment, open only to a select group 

of new owners. Thus, EPA is now 

describing the first phase of applying of 

the Audit Policy to new owners as an 

Interim Approach. However defined, 

EPA intends to test the approach, and 

decide to continue, change, or abandon 

it, once the Agency has sufficient 

information and feedback to evaluate its 

effectiveness. 

A. Definition of ‘‘New Owner’’

EPA has developed a set of criteria 

defining which entities are eligible to be 

considered new owners under the 

Interim Approach. 

1. Interim Approach to Defining ‘‘New 

Owner’’

For purposes of the application of this 

tailored Interim Approach, an entity 

will be considered a ‘‘new owner’’

where it certifies to the following 

criteria: 

a. Prior to the transaction, the new 

owner was not responsible for 

environmental compliance at the facility 

which is the subject of the disclosure, 

did not cause the violations being 

disclosed and could not have prevented 

their occurrence; 

b. The violation which is the subject 

of the disclosure originated with the 

prior owner; and 

c. Prior to the transaction, neither the 

buyer nor the seller had the largest 

ownership share of the other entity, and 

they did not have a common corporate 

parent. 

2. Discussion of the ‘‘New Owner’’

Definition 

In its First Notice, EPA sought 

comment on what should constitute a 

‘‘new owner’’ for purposes of being 

offered tailored incentives under the 

Audit Policy. Commenters on the First 

Notice generally urged EPA to define a 

‘‘new owner’’ broadly and to consider 

that a wide range of transactions might 

potentially produce a qualifying new 

owner. While most commenters 

recommended that the Agency make no 

distinctions between asset, stock, or 

merger transactions, most did not 

believe that either new entities created 

in corporate ‘‘spin-offs’’ or owners who 

had prior control over the facility 

should qualify as new owners. 

The Agency intends that this Interim 

Approach apply only to new owners 

that did not control operations at the 

facility before the transaction, and only 

to violations that the new owner did not 

initiate. The first criterion of the 

definition of ‘‘new owner’’ asks the new 

owner to confirm the history of its 

relationship to the facility at issue, and 

to the violations being disclosed. EPA 

intends that this criterion be interpreted 

broadly, and in a common sense 

manner. For purposes of interpreting 

this criterion, the Agency’s focus will be 

on ownership, or managerial, or 

operational control of the environmental 

operations at the facility. EPA will 

assume, for purposes of interpreting this 

criterion, that responsibility for 

environmental compliance or for any 

violations may be shared by corporate 

entities, controlling stockholders and 

operators and does not, for example, lie 

solely with individual employees or 

contractors at the facility. 

The second criterion specifies that the 

‘‘new owner’’ approach will only be 

applied to violations that did not 

originate with the new owner, as 

opposed to violations that are wholly 

new and began after the transaction. For 

example, if the new owner were to 

install a new oil storage tank and fail to 

provide for required secondary 

containment pursuant to 40 CFR 112, 

such action would trigger a wholly new 

violation. If the new owner disclosed 

this violation to EPA, the Agency would 

not apply the new owner approach to 

resolve the disclosure, but would treat 

it as a regular Audit Policy matter. New 

owners should bear in mind that even 

if such violations would not qualify for 

new owner penalty mitigation and 

benefits, they may nonetheless be 

eligible for Audit Policy consideration. 

The third criterion serves several 

functions. Notwithstanding that a new 

owner might be willing and able to 

certify under the first criterion that it 

lacked actual control of operations at 

the facility, the Agency is proposing to 

exclude all new owners that had the 

largest pre-transaction ownership 

interest in the facility. Drawing this 

clear line at ‘‘largest ownership share’’

is intended to help ensure that the 

Agency is faced with fewer scenarios 

that raise questions about the extent of 

influence that the new and previous 

owners may have had over each other. 

Such questions might necessitate just 

the sort of analysis of corporate history 

and the terms of the transaction the 

Agency seeks to avoid because of 

efficiency and ambiguity concerns, and 

would raise transaction costs for all 

parties involved. This criterion excludes 

corporate spin-offs, because it excludes 

situations where a seller had the largest 

pre-transaction ownership share of the 

new owner entity, or was the new 

owner’s corporate parent. The third 

criterion would allow participation by a 

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new owner which, prior to the 

transaction, was a silent or inactive 

partner in a joint venture, and then 

purchased the rest of the business and 

became the active owner, so long as its 

prior share was less than the largest, and 

the new owner can certify to the first 

criterion. It would also allow 

participation by a new owner which is 

the product of a merger, so long as 

neither party had previously held the 

greatest ownership share of the entity 

with which it merged. In the case of 

stock transactions, EPA intends that 

‘‘largest ownership share’’ be 

interpreted to mean ownership of the 

largest number either of shares of stock 

or of voting rights. The third criterion 

also bars situations where the buyer and 

the seller had a common corporate 

parent. EPA assumes, for purposes of 

interpreting this criterion, that the 

corporate parent was in control of the 

prior owner, the ‘‘new’’ owner, and 

facility operations. Accordingly, where 

two companies have a common 

corporate parent and one subsidiary 

buys another, the acquiring entity is not 

sufficiently ‘‘new’’ to warrant this 

tailored application of the Audit Policy. 

The Agency’s intent is to minimize 

the resources necessary to apply the 

Audit Policy to new owners, and sought 

a simple and direct way to identify 

owners who want to make a clean start 

for their newly acquired operations. 

EPA considered and preliminarily 

concluded that the expenditure of 

resources necessary to research and 

analyze corporate transactions would be 

so great as to be unworkable, and would 

detract from efficient and effective 

resolution of violations. Thus, the 

Agency decided, as a policy matter, to 

rely generally on a self-certification 

from the new owner that it meets the 

criteria in section II.A.1. New owners 

should be aware that this certification 

will be required as a condition to 

resolving disclosed violations. 

Most public comments about the 

certification issue advised that any 

required certifications not be so 

burdensome or complex as to chill new 

owners’ interest in coming forward to 

the government. The eligibility criteria 

above are clear and straightforward, and 

the certification will simply be included 

along with the certifications made by 

the self-disclosing entity that all Audit 

Policy conditions, as applied to new 

owners, have been met. This approach 

is designed to be sufficiently 

uncomplicated and manageable, while 

seeking to ensure that only appropriate 

new owners benefit from the Agency’s 

Interim Approach. 

Commenters did suggest that the 

Agency might adopt a range of preexisting methods for defining ‘‘new 

owner,’’ which included: (1) Using the 

‘‘no affiliation’’ or ‘‘bona fide 

prospective purchaser’’ definitions 

found in the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

(CERCLA), as amended by the Small 

Business Liability Relief and 

Brownfields Revitalization Act (Pub. L. 

107–118, 115 Stat. 2356, ‘‘the 

Brownfields Amendments’’); (2) 

requiring that the transaction occurred 

at ‘‘at arms’’ length;’’ (3) adopting the 

change of ownership standards used for 

various federal environmental statutes; 

(4) relying on verification of ownership 

change by other regulatory agencies 

such as the Internal Revenue Service or 

Securities and Exchange Commission; 

(5) seeking assurance from the new 

owner that the transaction was not 

conducted to avoid penalties; (6) 

applying a ‘‘management test;’’ and (7) 

using the definitions with which the 

State of New Jersey implements its 

Industrial Site Recovery Act (N.J.S.A. 

13:1K–6 and N.J.A.C. 7:26B). 

Consideration of all of these 

approaches was instructive and useful 

in developing the criteria. However, for 

a variety of reasons, EPA found that 

none of them seemed appropriate to 

adopt wholesale in the new owners 

context. Given the different scenarios to 

which the suggested definitions were 

meant to apply, and EPA’s desire to 

provide clarity and certainty to the 

public, the Agency decided to adopt a 

bright-line approach that is easily 

understood and applied by regulator 

and regulated alike. 

The Agency hopes to be inclusive 

enough to maximize the number of 

facilities brought into compliance under 

the Audit Policy, and to ensure 

sufficient opportunities to fully test the 

Interim Approach. This definition of 

new owner is solely intended to apply 

to the application of the Audit Policy in 

the context of the Interim Approach. 

However, since the Agency is concerned 

that only appropriate new owners be 

eligible for the benefits of this approach, 

EPA specifically invites comment on the 

criteria for defining ‘‘new ownership’’

and whether the standard above is 

appropriate. 

B. Timing for Availability of New Owner 

Incentives: For How Long Is an Owner 

‘‘New?’’

1. Two Scenarios: Audit Agreement or 

Prompt Disclosure Within Nine Months 

of Closing 

Under this Interim Approach, EPA 

will consider an owner ‘‘new,’’ and 

eligible for ‘‘new owner’’ treatment and 

benefits, for nine months after the date 

of the transaction closing. For nine 

months after the date of the transaction 

closing, the new owner can choose to 

make disclosures in two different 

contexts, which are described in detail 

in sections a. and b. below. The new 

owner can choose to enter into an audit 

agreement which will specify the 

facility or facilities to be audited, the 

scope of regulatory programs covered, 

dates for completion of audits and 

disclosure of violations. Alternatively, 

the new owner can choose to make 

disclosures individually, as violations 

are discovered, but each disclosure 

would have to be made promptly, 

within 21 days of discovery, or within 

45 days of the closing, whichever is 

longer. See section II.E.3., ‘‘Prompt 

Disclosure Condition,’’ below. A new 

owner could also elect to make separate 

individual disclosures as described 

below in section II.B.1.b., and then 

decide to enter into an audit agreement 

and make further disclosures under that 

agreement. Of course, such an audit 

agreement would need to be entered 

into within nine months of the closing 

date for the transaction. 

a. New Owner Enters into an Audit 

Agreement with EPA, within Nine 

Months of the Closing, and Receives 

‘‘New Owner’’ Audit Policy 

Consideration, for Violations Disclosed 

Pursuant to that Agreement. 

An audit agreement provides the 

opportunity to tailor timeframes and 

expectations to the new owner’s unique 

situation. While the audit agreement 

approach is optional, it is highly 

recommended if the circumstances or 

complexity of facilities would likely 

require more time to audit or if a new 

owner expects to be making more than 

one disclosure to EPA. An audit 

agreement also reduces uncertainty, for 

both the new owner and EPA, as it 

specifies the timeframes for completing 

the audit, the facilities covered, the 

environmental requirements to be 

evaluated, and when the discovered 

violations will be disclosed. 

Most importantly, and consistent with 

EPA practice, an audit agreement ‘‘stops 

the clock’’ with regard to the Prompt 

Disclosure condition, for violations 

discovered and disclosed pursuant to 

the agreement. An audit agreement also 

‘‘stops the clock’’ with regard to the 

disclosure of violations that involve 

required monitoring, sampling or 

auditing, if the new owner enters into 

an audit agreement prior to the first 

instance when such action is required. 

See section II.E.2., ‘‘Voluntary Discovery 

Condition,’’ below. 

‘‘Entering into an audit agreement’’

means that (1) the new owner has 

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committed in writing to audit a specific 

newly acquired facility or facilities, (2) 

the new owner has specified the scope 

of regulatory programs to be covered, 

dates for completion of the audits and 

dates for the disclosure of violations 

found, and (3) EPA has accepted those 

terms. EPA reserves its right to negotiate 

with the new owner about the scope, 

timing and sequence of the audits and 

disclosures. An audit agreement may be 

entered via a formal bilateral agreement 

or through an exchange of letters, 

provided the letters reflect a meeting of 

the minds and contain the appropriate 

information and commitments. 

EPA does not intend that entering into 

an audit agreement be a lengthy or 

resource-intensive process for either 

new owners or the Agency. While the 

Agency will not disqualify a new owner 

whose audit agreement was not 

finalized before the end of the ninemonth period because of delay on the 

part of EPA, new owners seeking an 

agreement should approach the Agency 

as early as possible, sufficient to allow 

a reasonable time to finalize an audit 

agreement with EPA. 

b. New Owner Audit Policy 

Treatment Will Be Available for 

Violations Disclosed Within Nine 

Months After the Transaction Closing, 

as Long as the New Owner Discloses 

and Corrects Each Violation Promptly, 

and Meets All Other Conditions of the 

Audit Policy. 

If a new owner prefers not to commit 

to performing audits and making 

disclosures within particular 

timeframes, it need not choose the audit 

agreement option, and can make 

individual disclosures as they are 

found, during the nine months 

following acquisition. This option may 

give a new owner more control over, 

and privacy concerning, its auditing, but 

to be eligible for new owner Audit 

Policy incentives, each violation found 

must be disclosed and corrected 

promptly, as described below in 

sections II.E.3. ‘‘Prompt Disclosure 

Condition,’’ and II.E.5. ‘‘Correction and 

Remediation Condition.’’ This option 

also requires that the new owner 

disclose any violations that involve 

required monitoring, sampling or 

auditing prior to the first instance when 

such action is required, in order to meet 

the Voluntary Discovery condition, and 

be eligible for Audit Policy 

consideration, as described in section 

II.E.2. ‘‘Voluntary Discovery Condition.’’

Of course, each disclosure would also 

have to meet the other six Audit Policy 

conditions, as applied to new owners. 

2. Discussion of Timing 

In the First Notice, EPA asked for 

comment on the issue of how long after 

acquisition an owner should be 

considered ‘‘new’’ for purposes of being 

eligible for new owner Audit Policy 

benefits. While some commenters 

suggested six months, the majority 

recommended one year or more, up to 

three years. Commenters described the 

challenges of making decisions about 

auditing and disclosing when, after an 

acquisition, there are many immediate 

and competing priorities. 

The Agency recognizes that posttransaction demands may make it 

difficult to focus corporate attention on 

an immediate evaluation of 

environmental compliance issues, 

especially when the company would 

have to make a potentially expensive 

commitment to conduct audits and 

address noncompliance. The Agency 

believes that requiring such potentially 

high-stakes decision-making too quickly 

after the transaction, before the new 

owner has had the chance to operate its 

facility, would mean that fewer new 

owners would come forward, 

notwithstanding that, given more time 

for consideration and analysis of the 

situation, some would have indeed used 

the Audit Policy. Since EPA’s intent is 

to encourage new owners to audit and 

disclose, and work with the Agency to 

correct problems, it seems advisable to 

provide sufficient time for decisionmaking. 

However, the Agency is concerned 

that compliance may be unduly delayed 

if new owner benefits are offered for a 

year or more. The longer the Agency 

allows for the new owner to decide to 

make disclosures, or to enter into an 

audit agreement, the longer it may be 

before violations are identified, 

disclosed, and corrected. The potential 

for an audit agreement schedule to 

allow time frames for auditing and 

disclosures well beyond nine months, 

depending on the scope and nature of 

the overall auditing plan, could only 

exacerbate this potential issue. 

Notwithstanding that such extended 

timeframes may be approved only if the 

new owner is making a significant 

commitment to audit and fix many and/ 

or complex facilities, there is potential 

for a significant passage of time before 

the disclosed violations are fully 

corrected. On the other hand, the longer 

a new owner delays coming forward, the 

more likely it is that certain violations 

which would have been eligible if 

disclosed earlier, because the new 

owner was coming forward before the 

first instance when ‘‘otherwise 

required’’ monitoring, sampling or 

auditing was due, could no longer be 

given Audit Policy consideration. See 

Section II.E.2. ‘‘Voluntary Discovery 

Condition.’’ In addition, as discussed 

below in Section II.D., the Agency 

would assess penalties for the economic 

benefit of costs saved from not having 

to operate or maintain controls and 

equipment, from the date of acquisition 

until the corrections are complete. Thus, 

the longer new owners take to undertake 

and complete an audit, and to disclose 

and correct violations found, the higher 

the penalty associated with avoided 

operation and maintenance costs would 

be. 

Because of the above considerations, 

although the majority of commenters 

asked that new owners be considered 

‘‘new’’ for at least a year after the 

transaction, EPA decided to give ‘‘new 

owners’’ a nine-month window of time 

to come forward to the Agency, and 

benefit from the new owner approach to 

penalty mitigation and application of 

the Audit Policy conditions. If a new 

owner makes disclosures after the ninemonth window has passed, and has not 

entered into an audit agreement which 

extends the disclosure schedule, the 

disclosure may still be eligible for 

regular Audit Policy treatment, although 

the ‘‘new owner’’ benefits will not be 

available. EPA requests comment on 

whether more or less time would be 

advisable. 

3. Flexibility Regarding Approach and 

Commitment to Auditing and 

Disclosures 

On a related issue, commenters also 

asked for flexibility in the level of 

commitment to auditing and disclosure 

that a new owner need make when it 

comes forward to EPA, including when 

and how that commitment would be 

required. Some commenters suggested a 

tiering approach based on the level and 

complexity of the expected disclosures. 

Other commenters reflected the 

misapprehension that the Agency was 

envisioning a ‘‘program’’ to which a 

new owner would first need to apply, 

and be credentialed as a new owner, 

separate from any firm intention or 

commitment to actually audit or make 

disclosures. Since the Agency’s focus is 

on the actual disclosure of violations 

and commitment to audit and correct 

violations, EPA believes that designing 

any precursory or ‘‘place-holding’’

steps, such as self-identifying as a new 

owner or merely indicating potential 

interest in auditing, would be 

unnecessary and a waste of effort for 

both EPA and the new owner. 

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3The specific amount is $209,530 and was 

generated by the current version of the Agency’s 

BEN computer model using the following 

assumptions: (1) The violator was in the average 

maximum tax bracket of 40%; (2) the violator’s cost 

of money (i.e., the discount/compound rate) was the 

current BEN default value of 9.4%; and (3) inflation 

was based on the Plant Cost Index published in 

Chemical Engineering magazine. The BEN 

computer model can be found at http:// 

www.epa.gov/compliance/civil/econmodels/ 

index.html. 

4A release and covenant not to sue is a legal 

mechanism under which EPA agrees to relinquish 

any potential claims to initiate a lawsuit against a 

party for any of the violations settled under the 

agreement, where that party complies with all of the 

terms of the settlement agreement. 

C. Interim Approach to the Calculation 

and Assessment of Penalties 

EPA’s Interim Approach to 

implementation of the Audit Policy is 

designed to address the fact that new 

owners may still have to pay substantial 

civil penalties under the Audit Policy. 

Although 100 percent of the gravity 

portion of the penalty may be mitigated 

under the Audit Policy, the economic 

benefit portion may still be significant. 

The Agency recognizes that there are 

equitable and policy arguments that a 

new owner should not be penalized for 

the full economic benefit relating to 

violations that arose before a facility 

was under its control, if that new owner 

is willing to promptly address such 

violations and make changes to ensure 

that the facility stays in compliance in 

the future. 

The uncertainties associated with the 

calculation and assessment of economic 

benefit may be factors that new owners 

otherwise interested in using the Audit 

Policy perceive as disincentives. In this 

section, EPA discusses an approach to 

calculating and assessing economic 

benefit in the new owner context. 

1. Interim Approach to the Calculation 

and Assessment of Penalties 

a. No penalties for economic benefit 

or gravity will be assessed against the 

new owner for the period before the 

date of acquisition. 

b. Penalties for economic benefit 

associated with avoided operation and 

maintenance costs will be assessed 

against the new owner from the date of 

acquisition. 

c. Penalties for economic benefit 

associated with delayed capital 

expenditures or with unfair competitive 

advantage will not be assessed against 

the new owner if violations are 

corrected in accordance with the Audit 

Policy (i.e., within 60 days of the date 

of discovery or another reasonable 

timeframe to which EPA has agreed). 

2. Background of Economic Benefit 

Recapture 

The imposition of civil penalties that 

recapture the economic benefit of 

noncompliance is a cornerstone of the 

EPA’s civil penalty program. Benefit 

recapture has been a part of the Audit 

Policy since it was first issued on the 

premise that, even in self-audit and 

disclosure situations, penalties should 

not be reduced below the level 

necessary to recapture economic benefit 

when a violator has achieved an unfair 

economic advantage over its complying 

competitors. Accordingly, the Audit 

Policy provides that EPA reserves the 

right to assess any economic benefit 

which may have been realized as a 

result of noncompliance, even where 

the entity meets all Audit Policy 

conditions. The Audit Policy further 

provides that the Agency may waive the 

economic benefit component of the 

penalty where the Agency determines 

that the economic benefit is 

insignificant. 

Violators obtain an economic benefit 

from violating the law by delaying 

compliance, avoiding compliance, or 

obtaining an unfair competitive 

advantage. When violators delay 

compliance, they have the use of the 

money that should have been spent on 

compliance to put into profit-making 

investments. Simply put, violators 

‘‘gain’’ the returns on the amount of 

money that should have been invested 

in pollution control equipment. A 

typical example is where a factory 

delays installation of a required 

wastewater treatment facility. If the 

wastewater treatment facility costs 

$1,000,000 to install, and the violator 

waits three years past the required date 

to comply, the violator has saved over 

$200,000 by delaying compliance.3

A second type of economic benefit is 

derived when a violator avoids the 

annual costs it would have incurred had 

it complied in a timely manner. A 

typical example would be where a 

factory avoids the operation and 

maintenance costs for the abovementioned wastewater treatment plant 

for the three years the polluter was out 

of compliance. 

The third type of economic benefit is 

derived from the violator obtaining an 

unfair competitive advantage. Economic 

benefit associated with unfair 

competitive advantage might arise in a 

number of new owner scenarios. An 

example could involve a newly acquired 

facility with permit limits on its hours 

of operation and/or throughput. The 

new owner may discover that its facility 

is operating two hours beyond its permit 

limit each day in order to achieve more 

output. The funds made from that extra 

output would also constitute unfair 

competitive advantage economic 

benefit. 

3. Discussion of Calculation and 

Assessment of Penalties 

In the First Notice, the Agency asked 

for comment on the issue of how 

economic benefit should be calculated 

for disclosures by new owners. Many 

commenters addressed the issue of 

penalties to recapture economic benefit, 

and the issue of whether they should be 

eliminated or reduced in the new owner 

situation. Some commenters posited 

that the new owner does not actually 

receive any economic benefit from the 

previous owner’s delayed or avoided 

compliance. On the other hand, it is 

possible that benefit does accrue; for 

example, it may be reflected in the 

purchase price. Notwithstanding 

arguments over whether economic 

benefit could inure to a new owner, it 

is difficult to accurately determine the 

amount of any such benefit. There are 

also equitable and policy arguments that 

a new owner should not be penalized 

for economic benefits relating to 

violations that originated when a facility 

was not in its control, and the new 

owner is willing to self-disclose and 

expeditiously correct the violations, and 

make changes to ensure future 

compliance. The Agency has speculated 

that one of the reasons that there have 

been relatively few Audit Policy 

disclosures of violations requiring the 

installation of significant environmental 

controls may relate to the potential size 

of penalties to recapture economic 

benefit. There may be significant 

economic benefit associated with 

corrections requiring expensive 

environmental controls, and companies 

may well consider it prudent to quietly 

fix their problems, without advising 

EPA (or the state) or seeking input from 

regulators. However, new owners 

investing tens of millions of dollars to 

correct violations that began prior to 

their ownership may want to involve 

EPA and receive a covenant not to sue 4

for those violations as part of a 

settlement. As a matter of course, EPA 

settlements typically release and 

covenant not to sue for the alleged 

violations resolved under the settlement 

agreement. 

By providing certainty to the 

economic benefit assessment, EPA’s 

intent is to increase the number of 

disclosures of significant violations, 

which will allow the Agency to 

participate in developing the approach 

to correcting such violations and 

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5The ‘‘Audit Policy Interpretive Guidance,’’

issued on January 15, 1997, can be found at http:// 

www.epa.gov/compliance/resources/ 

policies/civil/rcra/audpolintepgui-mem.pdf. The 

1997 Interpretive Guidance was developed to 

answer frequently asked questions regarding the 

implementation of the original Audit Policy issued 

in 1995 (60 FR 66,706 (December 22, 1995)). The 

2007 Frequently Asked Questions document 

describes the differences between the original Audit 

Policy and the 2000 Policy and is intended to 

supplement the 1997 Interpretive Guidance. 

securing appropriate environmental 

benefit. To further this goal, and 

because of the equities of the new owner 

situation, the Agency believes it is 

appropriate to modify its approach to 

calculating and assessing economic 

benefit with respect to disclosures from 

new owners. 

One issue raised in the First Notice 

was whether EPA should take into 

account possible purchase price 

adjustments attributable to 

environmental compliance liabilities in 

designing the Agency’s approach to new 

owners. Such consideration of 

adjustments to purchase price could 

potentially factor into the Agency’s 

approach to calculating and assessing 

penalties in the new owner context. 

However, no commenters recommended 

that EPA try to incorporate a 

consideration of possible purchase price 

adjustments into the approach to new 

owners. Some commenters asserted that 

purchase price is often set at the outset 

of negotiations and that, especially in 

larger transactions, environmental 

compliance costs or savings are 

immaterial to the pricing of the 

transaction. Commenters pointed out 

that, even in the event that there were 

negotiations to adjust pricing, 

confidentiality issues may preclude its 

consideration by the Agency, and 

inquiries into if and how price may 

have been adjusted may chill 

participation in this Interim Approach. 

The Agency is also concerned that it 

would be prohibitively costly and 

difficult, if not impossible, for EPA to 

accurately and effectively analyze 

whether a price adjustment attributable 

to environmental issues occurred, or to 

conclusively determine how large it 

was. Incurring such time-intensive 

transaction costs, which would likely 

still yield inconclusive results, would 

detract from EPA’s goals of leveraging 

its resources to secure higher quality 

environmental improvements more 

quickly and effectively than might 

otherwise occur. Accordingly, under 

this Interim Approach, EPA does not 

intend to consider adjustments to 

purchase price. 

Commenters offered various 

suggestions for ways to approach the 

issue of penalties for economic benefit 

including: Waiving any pre-closing 

penalties; calculating penalties from the 

date the audit is complete; beginning 

the calculation of penalties only after a 

reasonable period for achieving 

compliance; calculating penalties 

starting a year after the end of the audit; 

and offsetting penalties by the cost of 

the audit, or by the cost of corrective 

measures. EPA has considered a variety 

of options and the Interim Approach 

focuses on two elements. First, for the 

reasons stated above, EPA will not seek 

penalties for economic benefit 

associated with capital expenditures, 

assuming the violations are promptly 

corrected. Second, because the new 

owner does clearly benefit from not 

having to operate and maintain controls 

and equipment before they are installed 

and functioning, the Agency will assess 

penalties for economic benefit 

associated with those savings, starting 

from the date the facility was acquired 

until the corrections are complete. EPA 

considers this a fair approach, and, 

because such penalties for avoided costs 

will rise the longer it takes to complete 

auditing, disclosures, and correction, 

one that may help motivate new owners 

to avoid delays. EPA does not intend to 

offset the cost of performing audits from 

any penalties for economic benefit 

since, especially for newly acquired 

facilities, auditing is generally a means 

by which to assess and assure 

compliance, and a cost of doing 

business in a responsible manner. In 

addition, there are situations where 

auditing may be required as a matter of 

compliance (e.g., Risk Management 

Plans under Clean Air Act 112(r)(7)), 

and where EPA considers it 

inappropriate to credit the cost of the 

audit against assessed penalties. 

As is the case in the settlement of any 

violation, EPA may provide additional 

flexibility in assessing economic benefit 

on a case-by-case basis, if the Agency 

believes it is warranted and appropriate 

given the facts in a particular situation. 

As EPA has already stated in its Answer 

to Question 9 of the 2007 Frequently 

Asked Questions document, the Agency 

intends to consider all factors of 

settlement in assessing economic benefit 

in Audit Policy cases, and fairness is the 

central guiding principle underlying 

Agency decisions regarding the 

assessment of economic benefit. 

D. Interim Approach to Application of 

Certain Audit Policy Conditions to New 

Owners 

This section describes EPA’s Interim 

Approach to applying the nine 

conditions of the Audit Policy to new 

owners. The Agency is proposing to 

apply five conditions differently in the 

new owner context (Condition D.1. 

Systematic Discovery; Condition D.2. 

Voluntary Discovery; Condition D.3. 

Prompt Disclosure; Condition D.8. Other 

Violations Excluded; and Condition D.9. 

Cooperation). For the sake of clarity and 

completeness, this section discusses the 

Agency’s usual approach to applying 

the remaining Audit Policy conditions 

(Condition D.4. Independent Discovery; 

Condition D.5. Correction and 

Remediation; Condition D.6. Prevent 

Recurrence; and Condition D.7. No 

Repeat Violations), as described in the 

2000 Audit Policy, the 2007 Frequently 

Asked Questions document and/or the 

Audit Policy Interpretive Guidance 

(‘‘1997 Interpretive Guidance’’),5

although the Agency does not intend to 

alter the approach it has taken to their 

application or interpretation in the new 

owners context. 

In order for the Agency to offer the 

incentives of this Interim Approach to 

applying the Audit Policy, the new 

owner would have to meet all nine of 

the following conditions, as tailored for 

new owners, as well as certify to the 

criteria of the new owner definition. 

1. Systematic Discovery Condition 

(Condition D.1.) 

The Systematic Discovery condition 

of the Audit Policy provides that 

violations be discovered through either 

an environmental audit or a compliance 

management system (CMS), if disclosing 

entities are to receive 100 percent 

mitigation of gravity-based penalties (if 

a violation is discovered outside such a 

review, and meets all the other Audit 

Policy conditions, 75 percent mitigation 

is available). The Audit Policy 

definition of ‘‘Environmental Audit’’ is 

a systematic, documented, periodic and 

objective review by regulated entities of 

facility operations and practices related 

to meeting environmental requirements. 

A ‘‘Compliance Management System’’

encompasses the regulated entity’s 

documented systematic efforts, 

appropriate to the size and nature of its 

business to prevent, detect, and correct 

violations. For the full definitions of 

‘‘Environmental Audit’’ and ‘‘CMS,’’ see 

section II.B. of the Audit Policy at 65 FR 

19625. 

a. Interim Approach to Systematic 

Discovery Condition in the New Owner 

Context 

In the new owner context, EPA 

recognizes that pre-closing due 

diligence may meet all the elements of 

the Audit Policy definition of 

‘‘Environmental Audit,’’ with the 

exception of the periodic review 

element. EPA recognizes that a new 

owner’s pre-closing due diligence 

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6The Audit Policy’s Voluntary Discovery 

exclusion does not apply to violations that are 

discovered pursuant to audits that are conducted as 

part of a comprehensive environmental 

management system (EMS) required under a 

settlement agreement. See 65 FR at 19621 (April 11, 

2000). 

7See supra note 2. 

review is by its nature a one-time event, 

and will waive the element of the 

Systematic Discovery condition that 

calls for that review to be ‘‘periodic.’’ In 

all other aspects, for new owner 

disclosures, EPA will apply the 

Systematic Discovery condition and 

standards in the usual manner. 

b. Discussion of Systematic Discovery 

In the First Notice, EPA asked for 

comment on whether the Agency should 

require that new owners have performed 

a certain level of pre-transaction due 

diligence to qualify for new owner 

benefits. Public comments on this issue 

reflected the fact that mergers and 

acquisitions vary widely in size, type 

and circumstance. Many commenters 

asserted that the level of environmental 

due diligence review a prospective 

buyer can perform is largely determined 

by the size, scope, speed and 

circumstances of negotiations, and can 

range from in-depth inquiries to 

scenarios where very little information 

can be gathered. Commenters indicated 

that a buyer’s pre-purchase information 

on regulatory compliance is often 

imperfect and incomplete. Commenters 

asserted that any pre-condition from 

EPA that a certain level of due diligence 

must have been performed to make 

disclosures as a new owner would 

simply inhibit such disclosures from 

buyers, rather than encourage more due 

diligence. In addition, commenters 

posited that, aside from the fact that 

some buyers may simply be unable to 

perform the requisite due diligence, 

many would be concerned about how 

EPA might interpret the sufficiency of 

their efforts, and thus dissuaded from 

making disclosures. Some commenters 

recommended requiring the CERCLA 

‘‘all appropriate inquiry’’ standard for 

prospective purchasers. However, that 

standard, with its emphasis on 

identifying contamination, was 

developed for a different situation. 

EPA does not see a compelling reason 

to layer more or different review 

conditions onto the Audit Policy 

standards that currently exist. The 

Agency has concerns about the 

resources that would be needed to 

analyze and verify whether any new 

standard of review had been met. 

Moreover, EPA does not wish to deviate 

from the original intent of the Audit 

Policy and this condition. The only 

circumstance that warrants a different 

approach in the new owner context is 

that a prospective buyer would not have 

had an opportunity to perform periodic 

reviews of a facility it does not yet own. 

For that reason, EPA will not require 

that a new owner’s pre-closing review 

meet the ‘‘periodic’’ element in order to 

be considered for full penalty 

mitigation. 

2. Voluntary Discovery Condition 

(Condition D.2.) 

The Voluntary Discovery condition of 

the Audit Policy provides that the 

disclosed violation must have been 

identified voluntarily, and not through 

a legally mandated monitoring, 

sampling, or auditing procedure that is 

required by statute, regulation, permit, 

judicial or administrative order, or 

consent agreement. The Audit Policy 

provides three examples of discovery 

which would not be ‘‘voluntary’’ such 

that they would be ineligible for penalty 

mitigation: emissions violations 

detected through a required emissions 

monitor; violations of a National 

Pollutant Discharge Elimination System 

(NPDES) discharge limit found through 

prescribed monitoring; and violations 

found through a compliance audit 

required to be performed by the terms 

of a consent order or settlement 

agreement.6

Generally, Clean Air Act violations 

discovered during activities supporting 

Title V certification requirements are 

not eligible for penalty mitigation under 

the Policy based on the Voluntary 

Discovery condition.7 The Answer to 

Question 2 of EPA’s 2007 Frequently 

Asked Questions document described a 

limited exception to this condition for 

new owners. Clean Air Act violations 

discovered at newly acquired facilities 

as part of the new owner’s 

reexamination of facility compliance 

under Title V are considered voluntarily 

discovered for purposes of the Audit 

Policy, provided that the new owner 

either discloses the violation in writing 

or enters into an audit agreement with 

EPA before the new owner’s first annual 

compliance certification under new 

ownership. 

a. Interim Approach to Voluntary 

Discovery Condition 

Under the Interim Approach, EPA is 

expanding its interpretation of the 

Voluntary Discovery condition of the 

Audit Policy in the new owner context, 

previously limited to compliance with 

Title V of the Clean Air Act, to allow 

consideration of all violations which 

would otherwise be ineligible for Audit 

Policy consideration under this 

condition. EPA wants to encourage new 

owners to broadly examine facility 

compliance and facility operations, 

correct violations found, and upgrade 

deficient equipment and practices, as 

soon as possible. Thus, for new owners 

that undertake such efforts and either 

disclose violations or enter into an audit 

agreement with an auditing and 

disclosure schedule, before the first 

instance when the monitoring, sampling 

or auditing is required, the disclosures 

would not be disqualified from Audit 

Policy consideration because of the 

Voluntary Discovery condition. 

Providing this limited window for 

disclosure, prior to the first required 

instance of monitoring, sampling, or 

auditing, would provide a one-time 

‘‘catch-up’’ period for new owners to 

use the Audit Policy for violations 

found through activities that are already 

required. For example, an entity could 

perform its Annual Comprehensive Site 

Compliance Evaluation required by the 

NPDES General Industrial Stormwater 

Permits and Stormwater Pollution 

Prevention Plans (SWPPP) prior to its 

due date, and discover and disclose 

violations for Audit Policy 

consideration. Of course, this eligibility 

for Audit Policy consideration would 

not affect the new owner’s independent 

obligation to make appropriate and 

timely notifications and reports to 

regulatory authorities. 

b. Discussion of Voluntary Discovery 

In the First Notice, EPA asked for 

comment on whether the Agency should 

allow Audit Policy consideration of 

violations that might otherwise be 

excluded when the disclosures come 

from new owners. Most commenters 

supported the idea of allowing new 

owners to be eligible for penalty 

mitigation consideration for ‘‘nonvoluntarily’’ discovered violations by 

expanding the Agency’s interpretation 

of the Voluntary Discovery condition to 

other statutes and regulations, beyond 

the Clean Air Act Title V scenario 

described in EPA’s 2007 Frequently 

Asked Questions document. While 

voluntary discovery is fundamental to 

EPA’s Audit Policy, the approach to 

new owners is aimed at encouraging 

new owners’ quick and thorough 

scrutiny of all operations and required 

practices, and providing this 

opportunity may make new owners 

proactive in checking for compliance 

issues as soon as possible. Thus, the 

Agency is willing to give new owners 

this limited ‘‘catch-up’’ period to 

monitor, sample and audit, and will 

allow otherwise ineligible violations to 

receive Audit Policy consideration, if 

the new owner (a) promptly discloses 

the violations or (b) enters into an audit 

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agreement with an auditing and 

disclosure schedule before the date the 

monitoring, sampling, or auditing 

would be required. 

3. Prompt Disclosure Condition 

(Condition D.3.) 

The Audit Policy provides that the 

regulated entity fully must disclose the 

specific violation in writing to EPA 

within 21 days (or within such shorter 

time as may be required by law) after 

the entity discovered that the violation 

has, or may have, occurred. The Audit 

Policy defines discovery as the time at 

which there is an objectively reasonable 

basis for believing that a violation has, 

or may have, occurred. 

The preamble of the Audit Policy 

states that, in the acquisitions context, 

EPA will consider extending the prompt 

disclosure period on a case-by-case 

basis. It also states that the 21-day 

disclosure period will begin on the date 

of discovery by the acquiring entity, but 

in no case will the period begin earlier 

than the date of acquisition. See 65 FR 

at 19622. 

As EPA currently implements the 

Audit Policy, if an entity enters into an 

audit agreement with the Agency, ‘‘the 

clock stops’’ with regard to the Prompt 

Disclosure condition for any violations 

discovered thereafter and disclosed in 

accordance with the agreement. 

a. Interim Approach to Prompt 

Disclosure Condition 

Under the Interim Approach, EPA 

will allow limited flexibility in applying 

the Prompt Disclosure condition in the 

new owner context. For violations 

discovered pre-closing, prompt 

disclosure to EPA would have to be 

made within 45 days after the 

transaction closing to be considered for 

new owner incentives. For violations 

discovered post-closing, the new owner 

would have to disclose violations 

within 21 days after discovery or within 

45 days after the transaction closing, 

whichever time period is longer. If a 

new owner has entered into an audit 

agreement with EPA, violations 

discovered and disclosed pursuant to 

that agreement would be governed by 

the disclosure schedule in the 

agreement. Of course, if a statute or 

regulation requires that a violation be 

reported or disclosed more quickly than 

the time frames above, disclosures must 

be made within the time limit 

established by law. 

b. Discussion of Prompt Disclosure 

Although EPA did not, in the First 

Notice, specifically ask for comment on 

the Prompt Disclosure condition, 

several commenters requested that 

violations discovered in pre-acquisition 

due diligence be considered promptly 

disclosed if disclosures were made 

between 30 and 60 days after closing. 

Commenters described the many 

immediate and competing priorities that 

may distract from focusing corporate 

attention on a decision to make 

voluntary disclosures to a regulatory 

agency. Commenters noted that without 

adequate time for the new management 

to consider whether to self-disclose the 

issues found in pre-transaction due 

diligence reviews, the default decision 

may be to not engage with EPA, but 

rather to quietly fix problems found. 

EPA recognizes that the time period 

immediately following a transaction 

closing may be quite turbulent and that, 

notwithstanding the fact that the new 

owner had information about violations 

before acquisition, it may be a 

particularly difficult time to make 

speedy decisions about coming forward 

to EPA. To encourage new owners to 

decide to disclose due diligence 

findings, and in the spirit of the 2000 

Audit Policy preamble language 

discussed above, the Agency will now 

allow new owners up to 45 days after 

acquisition to disclose and meet the 

Prompt Disclosure condition. 

A few commenters requested that the 

post-closing timeframes for disclosure 

be extended from 21 days. With one 

exception, EPA does not see a 

compelling reason to change current 

implementation of the Audit Policy, 

since it provides adequate timeframes 

for regulated entities to meet the prompt 

disclosure condition. Any new owner 

concerned about its ability to meet the 

Prompt Disclosure condition can enter 

into an audit agreement during the first 

nine months after acquisition and ‘‘the 

clock will stop’’ with regard to prompt 

disclosure for violations discovered 

thereafter and disclosed in accordance 

with the agreement. EPA is willing to 

appropriately tailor timeframes and 

expectations for auditing and reporting 

to the new owner’s particular situation 

(e.g., number and complexity of 

facilities, scope of audit). 

However, if the new owner chooses 

not to enter into an audit agreement 

during the nine months after 

acquisition, disclosures would have to 

be made promptly either within 21 days 

of discovery or within 45 days of the 

closing, whichever is later. Otherwise, if 

EPA held that all violations found posttransaction had to be disclosed within 

21 days, any problems found soon after 

closing would need to be disclosed 

earlier than the violations already 

discovered in pre-acquisition due 

diligence. To avoid this unintended 

result, EPA will allow the new owner to 

make disclosures by whichever date is 

later. For example, if a new owner 

discovered a violation a week after 

acquisition, prompt disclosure can be 

made within 45 days of the closing. 

4. Discovery and Disclosure 

Independent of Government or Third 

Party Plaintiff Condition (Condition 

D.4.) 

The Audit Policy states that violations 

must be discovered and identified 

before EPA or another government 

agency likely would have identified the 

problem. This condition provides that 

regulated entities must take the 

initiative to find violations on their own 

and disclose them promptly instead of 

waiting for an indication of pending 

enforcement action or third-party 

complaint. The Audit Policy lists the 

circumstances under which discovery 

and disclosure will not be considered 

independent. Discovery and disclosure 

must be made before the beginning of a 

federal, state or local agency inspection, 

investigation or information request; 

notice of a citizen suit; the filing of a 

complaint by a third party; the reporting 

of the violation to EPA (or other 

government agency) by a 

’’whistleblower’’ employee; or imminent 

discovery of the violation by a 

regulatory agency. However, where EPA 

determines that a facility did not know 

it was under civil investigation, and 

EPA determines that the entity is 

otherwise acting in good faith, the 

Agency may exercise its discretion to 

reduce or waive civil penalties under 

the Audit Policy. 

EPA encourages multi-facility 

auditing and does not intend that the 

‘‘independent discovery’’ condition 

preclude the availability of the Audit 

Policy when multiple facilities are 

involved. Thus, for entities that own or 

operate multiple facilities, the fact that 

one facility is already the subject of an 

investigation, inspection, information 

request or third-party complaint does 

not preclude the Agency from exercising 

its discretion to make the Audit Policy 

available for violations self-discovered 

at other facilities owned or operated by 

the same regulated entity. 

a. Interim Approach to Independent 

Discovery Condition 

EPA is not changing its current 

interpretations of the Discovery and 

Disclosure Independent of Government 

or Third Party Plaintiff condition as 

applied to new owner disclosures. 

b. Discussion of Independent Discovery 

Although EPA did not, in the First 

Notice, specifically ask for comment on 

the Independent Discovery condition, 

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8See ‘‘Processing Requests for Use of 

Enforcement Discretion,’’ Memorandum from 

Steven A. Herman (March 3, 1995), which can be 

found on the Internet at http://www.epa.gov/ 

compliance/resources/policies/civil/io/proreqhermn-mem.pdf. 

one commenter suggested that 

disclosures of violations found during 

due diligence that were raised by third 

parties or governmental agencies should 

not be disqualified from Audit Policy 

consideration under this condition. The 

Agency disagrees. For example, in a 

matter involving a new owner, it is 

possible that potential violations have 

already been reported by the seller or 

included by the seller in a report to a 

regulatory agency, especially when the 

seller had been under an obligation to 

perform monitoring, sampling, or 

auditing. Because the new owner’s 

disclosure of those violations would not 

have occurred prior to ‘‘imminent 

discovery’’ by the government or the 

commencement of a government 

investigation, EPA would be unable to 

apply Audit Policy penalty mitigation. 

Also, if a government agency has 

initiated an investigation and the 

facility’s prior owner were aware of this, 

such issues would be considered 

‘‘known,’’ and the new owner would not 

receive Audit Policy consideration and 

new owner benefits. An underlying 

objective of the Audit Policy is to 

conserve government resources and 

those of citizen plaintiffs by 

encouraging the regulated community to 

self-police. That objective would be 

thwarted, in part, if the Agency 

conferred Audit Policy benefits on a 

new owner on notice that its facility is 

already under investigation. While EPA 

does not want to expend its limited 

resources to conduct fact-finding on the 

extent to which a new owner was aware 

of a pending civil investigation prior to 

disclosure, the Agency may exercise its 

discretion to waive or reduce penalties 

for new owners if EPA determines that 

(1) the new owner did not know that its 

newly acquired facility was under 

investigation and (2) the new owner is 

otherwise acting in good faith. 

The Agency, of course, encourages the 

cooperative and speedy resolution of 

known violations. Even if the violation 

was ineligible for the Audit Policy, the 

Agency will generally consider the 

willingness of a new owner to address 

and correct problems a positive factor in 

determining the appropriateness of any 

EPA enforcement response, penalty 

assessment or resolution. 

5. Correction and Remediation 

Condition (Condition D.5.) 

Under the Audit Policy, the regulated 

entity must correct the disclosed 

violation within 60 calendar days from 

the date of discovery, certify in writing 

that the violation has been corrected, 

and take appropriate measures as 

required by law to remedy any 

environmental or human harm due to 

the violation. 

In both the 2000 Audit Policy and the 

2007 Frequently Asked Questions 

document, EPA recognizes that not all 

violations can be corrected in the 60-day 

time frame. EPA may allow for an 

extension of time for corrections that 

require significant expenditures, involve 

technically complex issues, or involve 

decisions for which an entity seeks or is 

required to obtain EPA, state or local 

input or approval. If more than 60 days 

will be needed to correct the violation, 

the entity must notify EPA in writing 

before the end of the 60-day period. 

a. Interim Approach to Correction and 

Remediation Condition 

EPA is not changing its current 

interpretation of the Correction and 

Remediation condition in the context of 

new owner disclosures. 

Where violations are discovered by 

the new owner prior to acquisition, EPA 

will consider the date of the transaction 

closing as the date of discovery, for 

purposes of interpreting the Correction 

and Remediation condition. Thus, for 

violations found before the new owner 

owned the facility, correction would 

need to be completed within 60 days 

from the date of the acquisition closing, 

although EPA may agree to a longer 

period of time if appropriate and 

warranted. 

b. Discussion of Correction and 

Remediation 

Although EPA did not, in the First 

Notice, specifically ask for comment on 

the Correction and Remediation 

condition, many commenters discussed 

it. While some commenters sought 

extensions to 90 or 120 days from the 

60-day prompt correction period, other 

commenters supported maintaining the 

Agency’s current interpretation, and 

some commenters from the regulated 

community acknowledged that 

violations frequently can be handled 

case-by-case under today’s existing 

disclosure process (e.g., under the Audit 

Policy). One commenter urged that, in 

designing any tailored incentives for 

new owners, the Agency take care that 

any new owner approach not be used by 

the disclosing entity as a means to delay 

compliance. 

One of EPA’s primary goals in 

developing the approach to new owners 

is to secure pollutant reductions and 

environmental improvements as quickly 

as possible, and a blanket extension of 

the 60-day correction period would 

undercut that aim. However, especially 

in the context of an audit agreement 

involving complex facilities and 

technical issues, the Agency is willing 

to consider tailoring a compliance 

schedule appropriate for the situation 

and circumstances. 

One commenter requested that EPA 

issue enforcement discretion letters to 

allow the continued operation of 

noncompliant facilities while they wait 

for ‘‘completion of required acts.’’ EPA’s 

standing policy on enforcement 

discretion only allows the Agency to 

approve such a ‘‘no action assurance’’ in 

extremely unusual circumstances where 

it is clearly necessary to serve the public 

interest and where no other mechanism 

can adequately address the situation.8 In 

the scenario described, an appropriate 

approach already exists, since under 

EPA’s current application of the Audit 

Policy the Agency recognizes that not 

all violations can be corrected within 60 

days of discovery. EPA may allow an 

extension for corrections that require 

significant expenditures, involve 

technically complex issues, or involve 

decisions for which an entity seeks or is 

required to obtain EPA or state input or 

approval (e.g., permits). While the 

Agency may consider a permit 

application adequate to address timing 

under the correction condition under 

the Audit Policy, ultimately any 

resolution of the underlying violation 

will be conditioned on the timely and 

full achievement of compliance, and 

that caveat will be clearly stated in any 

settlement or resolution documents. 

Where a violation cannot be fully 

corrected until a permit is received by 

the new owner, EPA may require the 

new owner to implement interim 

measures or controls as part of the 

settlement document. 

6. Prevent Recurrence (Condition D.6.) 

Under the Prevent Recurrence 

condition, the disclosing entity must 

agree in writing to take steps to prevent 

a recurrence of the violation after it has 

been disclosed and corrected. 

Preventative steps may include, but are 

not limited to, improvements to the 

entity’s environmental auditing efforts 

or compliance management system. 

a. Interim Approach to Prevent 

Recurrence Condition 

EPA is not changing the Prevent 

Recurrence condition of the Audit 

Policy as applied to new owner 

disclosures. 

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b. Discussion of Prevention of 

Recurrence 

No comments were received on the 

Prevent Recurrence condition. A 

fundamental goal of the Audit Policy is 

to create incentives for regulated entities 

to not only look for and correct 

environmental violations, but to put 

systems and practices in place to 

prevent the recurrence of the violation 

disclosed. EPA will continue to apply 

this condition to require new owners to 

agree take steps to prevent the 

recurrence of violations disclosed. An 

underpinning of the significant penalty 

mitigation offered under the Audit 

Policy is the assurance from the 

disclosing entity that the problem that 

gave rise to the violation has in fact 

been fully addressed, and EPA sees no 

reason to propose a different approach 

for new owners. 

7. No Repeat Violations Condition 

(Condition D.7.) 

Condition 7 of the Audit Policy 

provides that repeat violations are not 

eligible for Audit Policy benefits. 

Specifically, under the No Repeat 

Violations condition, the same or 

closely-related violation must have not 

occurred at the same facility within the 

past three years. For purposes of this 

condition, the term ‘‘violation’’ includes 

any violation subject to a federal, state 

or local civil judicial or administrative 

order, consent agreement, conviction or 

plea agreement. Recognizing that minor 

violations are sometimes settled without 

a formal action in court or in an 

administrative enforcement proceeding, 

the term also covers any act or omission 

for which the regulated entity has 

received a penalty reduction. When the 

facility is part of a multi-facility 

organization, the Audit Policy is not 

available if the same or closely-related 

violation occurred as part of a pattern of 

violations at one or more of these 

facilities within the last five years. 

As articulated in the preamble to the 

Audit Policy, ‘‘[i]f a facility has been 

newly acquired, the existence of a 

violation prior to the acquisition does 

not trigger the repeat violations 

exclusion’’ as to the new owner. See 65 

FR at 19623 (April 11, 2000). Most 

recently, in the Answer to Question 5 of 

EPA’s 2007 Frequently Asked Questions 

document, the Agency stated that new 

owners that undertake examinations of 

newly acquired facilities generally will 

be eligible under the No Repeat 

Violations condition of the Audit Policy 

irrespective of the new owner’s history 

of violations at other facilities that were 

not recently acquired. 

a. Interim Approach to No Repeat 

Violations Condition 

EPA is not changing its current 

interpretations of the No Repeat 

Violations condition as applied to new 

owner disclosures. 

b. Discussion of No Repeat Violations 

Several comments discussed the 

Repeat Violations condition, and all 

support the Agency’s current 

interpretation. The Repeat Violations 

exclusion benefits both the public and 

law-abiding entities by ensuring that 

penalties are not waived for those 

entities that have previously been on 

notice of violations, and failed to 

prevent repeat violations. 

8. Other Violations Excluded Condition 

(Condition D.8.) 

The Audit Policy provides that certain 

violations are not eligible for the 

incentives available under the Policy. In 

order to be eligible for Audit Policy 

consideration, the violation cannot be 

one which (a) resulted in serious actual 

harm, or may have presented an 

imminent and substantial 

endangerment, to human health or the 

environment, or (b) violates the specific 

terms of any judicial or administrative 

order, or consent agreement. 

a. Interim Approach to Exclusion of 

Violations Condition for Violations 

Which Resulted in Serious Actual Harm 

or May Have Presented an Imminent 

and Substantial Endangerment 

Under EPA’s Interim Approach, 

absent a fatality, community evacuation, 

or other seriously injurious or 

catastrophic event, where the violation 

that gave rise to serious actual harm or 

imminent and substantial endangerment 

began before the new owner acquired 

the facility, EPA will not exclude new 

owners’ disclosures of such violations 

from Audit Policy consideration 

because of the Other Violations 

Excluded condition. 

This eligibility for Audit Policy 

consideration and penalty mitigation 

would not affect either the new owner’s 

independent obligation to notify 

appropriate regulatory authorities in the 

event of a release or the new owner’s 

liability for the violation and its 

correction. In all circumstances, EPA 

reserves its authority and ability to take 

enforcement action to abate any 

endangerment or address violations, 

including the issuance of appropriate 

orders. 

b. Discussion of Serious Actual Harm 

and Imminent and Substantial 

Endangerment 

Although EPA did not, in the First 

Notice, specifically ask for comment on 

the Other Violations Excluded 

condition, the Agency received several 

comments about allowing Audit Policy 

consideration for violations that may 

have caused ‘‘serious actual harm.’’

Commenters contended that unless EPA 

were more flexible in implementing this 

condition, the Agency would not 

receive disclosures of significant 

violations, since a new owner could not 

be confident of receiving any Audit 

Policy consideration. 

The incentives for new owners are 

specifically aimed at encouraging the 

disclosure and correction of these 

potentially more serious violations. 

EPA’s goal is to motivate new owners to 

find and disclose violations, which will, 

once corrected, result in significant 

environmental protection and benefit. 

For example, EPA wants to encourage 

new owners to identify and correct New 

Source Review violations, and put in 

place the required environmental 

controls avoided by previous owners. 

EPA recognizes that such significant 

violations may meet the threshold of 

what results in serious actual harm or 

may have presented an imminent and 

substantial, and that the Audit Policy 

specifically excludes such violations. 

EPA’s waiver, absent catastrophic 

events, of part (a) of Condition D.8. in 

the new owner context, is intended to 

allow and invite new owner disclosures 

of significant violations which began 

before acquisition, without either 

undermining the Agency’s ability to 

invoke its imminent and substantial 

endangerment authorities to address 

similar violations, or compromising 

EPA’s ability to allege that similar 

violations resulted in serious actual 

harm. 

The Agency believes the specific goals 

and equities of the new owner context 

warrant the decision to create an 

exception for the Interim Approach to 

allow the disclosure of serious 

violations by new owners, with the 

caveats described above in section 

II.D.8.a. However, EPA seeks further 

comment on creating this exception. 

9. Cooperation (Condition D.9.) 

Under the Audit Policy, the regulated 

entity must cooperate as required by 

EPA and provide the Agency with the 

information it needs to determine Policy 

applicability. With respect to this 

condition, EPA looks only to whether an 

entity cooperated with the Agency in 

the consideration of the entity’s request 

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45004 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 

for treatment under the Audit Policy, 

not whether the entity has cooperated 

with the Agency in past matters or 

whether the entity is in litigation with 

the Agency on other matters. 

a. Interim Approach to Cooperation 

Condition 

EPA is modifying the Cooperation 

condition of the Audit Policy only to 

make clear that the disclosing entity 

must cooperate with EPA and provide 

such information as is necessary and 

requested by EPA to determine the 

applicability of the Audit Policy, as 

modified by this Interim Approach. In 

particular, EPA may ask an entity 

seeking new owner benefits to provide 

information to support its submission 

that it is a ‘‘new owner’’ as defined 

under Section II.A. 

b. Discussion of Cooperation 

No comments were requested or 

received concerning the Cooperation 

condition. However, because the Interim 

Approach applies only to ‘‘new owners’’

and modifies certain conditions of the 

Audit Policy, the Agency wants to make 

clear that regulated entities seeking 

treatment under the Interim Approach 

will be expected to cooperate by 

providing information as necessary and 

requested by EPA to determine whether 

such entities are entitled to new owner 

benefits. In all other respects, EPA will 

continue to apply the Cooperation 

condition, as articulated in the Audit 

Policy and EPA’s Answer to Question 7 

of the 2007 Frequently Asked Questions 

document, to violations disclosed 

pursuant to the Interim Approach. See 

65 FR at 19623. 

E. Other Issues Related to the Interim 

Approach 

1. Consideration of Indemnification 

Agreements 

Most commenters did not recommend 

that the Agency take indemnification 

agreements into account in designing its 

approach to new owners’ disclosures. 

They noted the confidential nature of 

such agreements, and urged that EPA 

not try to investigate arrangements for 

risk allocation between a buyer and 

seller that are properly determined by 

the marketplace. Many commenters 

asserted that the analysis of such 

indemnification agreements would be 

complex, costly and time-consuming. 

As EPA’s focus is on the effective use of 

scarce government resources to achieve 

compliance and significant 

environmental benefits, the Agency 

does not intend to scrutinize or consider 

indemnification agreements a new 

owner may have arranged. 

2. Effect on Merger and Acquisition 

(M&A) Activity 

EPA does not believe there is a high 

probability that implementing an 

Interim Approach to resolving Audit 

Policy disclosures from new owners 

would have a noticeable effect on 

merger and acquisition activity. The 

Agency did receive comments 

suggesting that encouraging new owners 

to disclose violations might lead sellers 

to either avoid buyers likely to audit 

and disclose, or to include ‘‘no-tell’’

clauses in their transaction or indemnity 

agreements, making indemnification 

contingent on the new owner refraining 

from any disclosures of environmental 

or other violations to the government. 

However, EPA also received 

comments asserting that consideration 

of environmental compliance liabilities, 

as opposed to environmental 

contamination and clean-up liabilities, 

is generally not a driving force in, or 

important element of, M&A 

transactions. In addition, the Agency 

received comments suggesting that such 

incentives for new owners might have a 

beneficial effect on negotiations, 

encouraging prospective sellers to 

address violations before closing, or 

giving prospective buyers leverage to 

negotiate for the seller to correct 

violations found during due diligence. If 

sellers were to include ‘‘no tell’’ clauses 

in their transaction or indemnity 

agreements, such clauses may well be 

voidable as contrary to the public 

interest. 

3. Approach to Sellers 

EPA received comments urging it to 

provide enforcement protection to the 

prior owners of facilities whose new 

owners have disclosed noncompliance 

under the Audit Policy. However, EPA 

does not believe that this would be 

appropriate. Moreover, the Agency does 

not intend to allow sellers the same 

penalty mitigation benefits as new 

owners, as requested by some 

commenters, or to require joint 

disclosures from buyer and seller. A 

seller that did not discover, disclose and 

correct violations when it operated a 

facility should not be a beneficiary of 

the Audit Policy, simply because the 

facility’s new owner decides to 

undertake such actions. The 

opportunity to properly operate the 

facility and to address noncompliance, 

including through use of the Audit 

Policy, was available to the seller while 

it operated the facility. Resolving the 

violations with the new owners should 

provide the appropriate environmental 

controls and improvements necessary to 

reduce pollution and ensure ongoing 

compliance at the facility. Nevertheless, 

the Agency reserves its rights to pursue 

sellers where the circumstances and 

equities warrant. 

4. Recognition as an Incentive 

Some commenters supported the idea 

of recognition from EPA as an incentive 

to motivate disclosures from new 

owners, but others noted the potential 

for publicity to be misunderstood or 

misinterpreted. Some types of 

recognition suggested, such as logos and 

public promotions, seemed more 

appropriate for an Agency award 

program. Other ideas, such as access to 

an ombudsman who would keep 

internal lists of participants and seek to 

resolve company disputes with 

regulators, seemed unsuitable as 

recognition for having used the Audit 

Policy to disclose and resolve 

violations, notwithstanding the 

Agency’s appreciation of a new owner’s 

choice to come forward. Some 

commenters suggested making 

recognition optional, or letting the new 

owners choose the sort of recognition to 

receive, but these concepts pose 

sufficient implementation difficulties to 

make them unattractive options for the 

Agency. EPA does recognize the 

voluntary nature of the new owner’s 

choice to come forward to the 

government and will seek to 

appropriately reflect that in Agency 

statements concerning the disclosure 

and correction of violations by new 

owners. 

5. State and Local Coordination 

Commenters noted that lack of 

coordination or inconsistencies with 

state programs, and state audit policies 

where they exist, may dissuade new 

owners from coming forward to EPA, 

and that new owners might choose 

instead to deal with states, especially 

where states are authorized to 

implement federal regulatory programs. 

EPA recognizes that state and local 

regulatory agencies are partners in 

implementing the enforcement and 

compliance assurance program, and has 

established ways of coordinating and 

working together with our state and 

local partners. When consistent with 

EPA’s policies on protecting 

confidential and sensitive information, 

the Agency will share with state and 

local agencies information relating to 

the disclosure of violations of federallyauthorized, approved or delegated 

programs. Whether a new owner should 

make a disclosure to EPA, the state, or 

both, depends on the type of regulation 

violated, availability of a state audit 

program, whether multiple facilities 

located in different states are involved, 

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Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 45005 

9See ‘‘Restrictions on Communicating with 

Outside Parties Regarding Enforcement Actions,’’

Memorandum from Granta Y. Nakayama (March 8, 

2006), which can be found on the Internet at 

http://www.epa.gov/compliance/resources/policies/ 

civil/io/commrestrictionsnakayamamemo030806.pdf. 

10See ‘‘Confidentiality of Information Received 

under the Agency’s Self-Disclosure Policy,’’

Memorandum from Steven A. Herman (January 16, 

1997), which can be found on the Internet at 

http://www.epa.gov/compliance/resources/policies/ 

incentives/auditing/sahmemo.pdf. 

and the scope of legal relief sought by 

the entity. Federal liability can only be 

resolved by EPA. 

6. Confidentiality 

Various commenters expressed 

concern about the confidentiality of 

both audit and transaction documents. 

The Agency does not believe these 

concerns are warranted. First, it is 

generally not EPA’s intention to request 

documents related to the transaction, 

since the Agency has no plans to review 

or analyze them. Second, since 1986, 

the Agency has had a policy to refrain 

from routine requests for audit reports 

in the context of disclosures of civil 

violations, except in the rare event that 

the information is necessary to 

determine whether the conditions of the 

Audit Policy have been met. This Policy 

was re-affirmed in the 2000 Audit 

Policy, and EPA will not alter this 

practice in the context of disclosures 

from new owners. Third, EPA has longstanding policies of not publicly 

disclosing any information that might 

interfere with settlement negotiations 9

and of withholding Audit Policy selfdisclosures from release prior to 

resolution of the disclosures.10

F. How Should a New Owner SelfDisclose or Request an Audit 

Agreement? 

New Owners should contact either 

Philip Milton ((202) 564–5029, 

milton.philip@epa.gov) or Caroline 

Makepeace ((202) 564–6012 or 

makepeace.caroline@epa.gov) of EPA’s 

Office of Enforcement and Compliance 

Assurance, Office of Civil Enforcement, 

Special Litigation and Projects Division 

regarding disclosures or audit 

agreements. 

G. Applicability 

This Interim Approach applies to 

settlement of claims for civil penalties 

for any violations under all of the 

federal environmental statutes that EPA 

administers. EPA has issued documents 

addressing several applicability issues 

pertaining to the Audit Policy. New 

owners considering whether to take 

advantage of the Interim Approach 

should review those documents as well 

as the 2000 Audit Policy to see whether 

they address any relevant questions. 

The 2000 Audit Policy and related 

documents are available on the Internet 

at http://www.epa.gov/compliance/ 

incentives/auditing/auditpolicy.html. 

Additional guidance for implementing 

the Policy in the context of criminal 

violations can be found at http:// 

www.epa.gov/compliance/resources/ 

policies/incentives/auditing/ 

auditcrimvio-mem.PDF. 

To the extent that the Interim 

Approach’s conditions or criteria differ 

from the 2000 Audit Policy, the 2007 

Frequently Asked Questions, or the 

1997 Interpretive Guidance, the Interim 

Approach will, in the new owner 

context, supersede any inconsistent 

provisions. All other provisions of the 

2000 Audit Policy and the two other 

documents will continue to apply to 

self-disclosing new owners. 

The Interim Approach is intended to 

inform the public and regulated entities 

of the Agency’s current enforcement 

approach to new owners disclosing 

violations under the Audit Policy. As is 

the case with all Agency policies, 

application of the Audit Policy and this 

Interim Approach is subject to EPA’s 

enforcement discretion and is not 

binding on the public or EPA. See also 

Section II.G. of the 2000 Audit Policy 

for discussion of the Audit Policy’s 

applicability (65 FR 19626). 

H. Approach to Assessment of Interim 

Approach 

1. Measures to Assess Interim Approach 

The Agency intends to assess the 

effectiveness of the Interim Approach 

on an ongoing basis and will measure 

the following indicators: 

a. Number of new owner disclosures 

resolved. 

b. Pounds of pollutants estimated to 

be reduced, treated or eliminated. 

c. Dollars invested in improved 

environmental performance or 

improved environmental management 

practices. 

In addition, to help the Agency assess 

the Interim Approach and identify 

where opportunities may exist to 

improve it, EPA intends to observe the 

number of recently acquired facilities 

whose new owners chose not to make 

‘‘new owner’’ disclosures under the 

Audit Policy. Within a relevant universe 

of mergers and acquisitions transactions 

(i.e., facilities under new ownership 

which are subject to environmental 

regulations and requirements), EPA will 

identify facilities whose new owners 

did not audit and disclose to EPA, and 

cross-reference these newly acquired 

facilities with other already available 

enforcement data (e.g., history of 

violations, unresolved violations, last 

inspections, type of permitted activity, 

priority area). 

2. Discussion of Measures and 

Assessment 

Commenters were supportive of 

testing and assessing the effectiveness of 

a tailored approach to new owners, but 

not of limiting the effort in scope or 

size, or to any particular industrial 

sector. Some commenters urged a focus 

on only compliance measures (e.g., 

number of violations corrected, number 

of violators in compliance, number and 

type of disclosures), while other 

commenters discussed pollution 

reductions as the best measure of 

success, albeit acknowledging that such 

reductions can be difficult to quantify. 

Some commenters recommended that 

the Agency define criteria for significant 

environmental improvement. 

The measures described above focus 

on both increases in compliance and 

benefits to the environment, tracking 

not only the number of new owner 

disclosures resolved but also how much 

was expended to correct them, and how 

much of an effect on pollution those 

corrections had. In addition, since the 

Agency is interested in an accurate 

assessment of how much the Interim 

Approach may motivate new owners to 

come forward to EPA, the Agency 

intends to track new owners that did not 

take advantage of the Audit Policy. EPA 

will look at a relevant sub-set of ongoing 

mergers and acquisitions activity (i.e., 

facilities under new ownership which 

are subject to environmental regulations 

and requirements) and may narrow the 

scope of inquiry further, to focus on 

facilities that have significant 

environmental regulatory obligations, or 

on facilities in certain sectors. Such an 

effort may help give EPA a sense of the 

sorts of enforcement issues the Agency 

may be ‘‘missing’’ in the effort to 

promote disclosures and compliance. 

EPA may also identify some of the 

non-disclosing facilities which changed 

ownership nine months or more before 

as potential ‘‘facilities of interest,’’

where the analysis of available 

enforcement data indicates there may be 

compliance issues, or significant gaps in 

EPA’s understanding of a facility’s 

compliance status. While such facilities 

may potentially be ripe or appropriate 

for an inspection or enforcement 

attention, EPA has not established any 

new enforcement priority focused on 

M&A transactions or recently acquired 

facilities. EPA does expect, however, 

that awareness that the Agency will be 

tracking disclosures after relevant 

transactions may favorably affect the 

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45006 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Notices 

tipping point of the new owner’s 

internal risk analysis in favor of 

auditing and disclosing. EPA’s tracking 

is intended to help inform the Agency’s 

assessment of the effectiveness of the 

Interim Approach and may at some 

point serve as a scoping element for 

enforcement planning. 

III. Public Process 

EPA seeks public comment on the 

Interim Approach described in this 

Notice, and asks that comments be 

specifically aimed at improving the 

overall design and specific elements of 

the Interim Approach, as well as at 

addressing any relevant issues or 

considerations which may not appear to 

be reflected. The public comment 

docket will be open for a period of 90 

days. The Agency will concurrently 

begin applying the Interim Approach, as 

EPA believes the most efficient way to 

effectively test this strategy, and learn 

from practical experience, is to 

implement it on an interim basis. 

EPA will be reviewing public 

comment as it is received and will 

continue its dialogue with stakeholders 

on whether refinements to the Interim 

Approach are needed. In addition, the 

Agency will place into the public docket 

copies of agreements resolving 

violations disclosed by new owners 

under the Interim Approach. EPA 

intends to assess the effectiveness of the 

Interim Approach on a continual basis. 

Based on public comment and after the 

Agency has gained sufficient experience 

in implementing the Interim Approach, 

EPA will decide to finalize, revise or 

discontinue these tailored incentives for 

new owners. 

EPA encourages parties of all 

interests, including state, tribal and 

local government, industry, not-forprofit organizations, municipalities, 

public interest groups and private 

citizens to comment, so that the Agency 

can hear from as broad a spectrum of 

stakeholders as possible. 

IV. What Should I Consider as I 

Prepare My Comments for EPA? 

1. Submitting CBI. Do not submit CBI 

to EPA through http:// 

www.regulations.gov or e-mail. Clearly 

mark the part or all of the information 

that you claim to be CBI. For CBI 

information in a disk or CD–ROM that 

you mail to EPA, mark the outside of the 

disk or CD–ROM as CBI and then 

identify electronically within the disk or 

CD–ROM the specific information that 

is claimed as CBI. In addition to one 

complete version of the comment that 

includes information claimed as CBI, a 

copy of the comment that does not 

contain the information claimed as CBI 

must be submitted for inclusion in the 

public docket. Information so marked 

will not be disclosed except in 

accordance with procedures set forth in 

40 CFR part 2. 

2. Tips for Preparing Your Comments. 

When submitting comments, remember 

to: 

• Identify the Notice and Request for 

Comments by docket number and other 

identifying information (subject 

heading, Federal Register date and page 

number). 

• Follow directions—The Agency 

may ask you to respond to specific 

questions. 

• Explain why you agree or disagree; 

suggest alternatives and language. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If possible, provide any pertinent 

information about the context for your 

comments (e.g., the size and type of 

acquisition transaction you have in 

mind). 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as 

possible. 

• Submit your comments on time. 

Dated: July 25, 2008. 

Granta Y. Nakayama, 

Assistant Administrator, Office of 

Enforcement and Compliance Assurance. 

[FR Doc. E8–17715 Filed 7–31–08; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

[CG Docket No. 03–123; DA 08–1673] 

Notice of Certification of State 

Telecommunications Relay Service 

(TRS) Programs 

AGENCY: Federal Communications 

Commission. 

ACTION: Notice. 

SUMMARY: In this document, the 

Consumer & Governmental Affairs 

Bureau (Bureau) grants certification of 

fifty states’, two territories’, and the 

District of Columbia’s TRS programs. 

The current certification for state TRS 

programs expires this year. This action 

certifies state TRS programs for the next 

five years, pursuant to the Commission’s 

rules. 

DATES: Certifications effective July 26, 

2008, through July 25, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Diane Mason, (202) 418–7126 (voice), 

(202) 418–7828 (TTY), or e-mail: 

Diane.Mason@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Bureau’s public notice 

DA 08–1673, released July 16, 2008, in 

CG Docket No. 03–123. The full text of 

document DA 08–1673 is available for 

public inspection and copying during 

regular business hours at the FCC 

Reference Information Center, Portals II, 

445 12th Street, SW., Room CY–A257, 

Washington, DC 20554. It also may be 

purchased from the Commission’s 

duplicating contractor at Portals II, 445 

12th Street, SW., Room CY–B402, 

Washington, DC 20554; the contractor’s 

Web site, http://www.bcpiweb.com; or 

by calling (800) 378–3160. 

To request materials in accessible 

formats for people with disabilities 

(Braille, large print, electronic files, 

audio format), send an e-mail to 

fcc504@fcc.gov or call the Consumer & 

Governmental Affairs Bureau at (202) 

418–0530 (voice) or (202) 418–0432 

(TTY). Document DA 08–1673 can also 

be downloaded in Word or Portable 

Document Format (PDF) at: http:// 

www.fcc.gov/cgb/dro/trs.html. In 

addition, the applications for 

certification may be viewed on the 

Bureau’s Disability Rights Office Web 

site at http://www.fcc.gov/cgb/dro/ 

trs_by_state.html . 

Synopsis 

The applications for certification of 

TRS programs of the states, territories, 

and the District of Columbia listed 

below (hereinafter, ‘‘states’’) have been 

granted, pursuant to Title IV of the 

Americans with Disabilities Act (ADA), 

47 U.S.C. 225(f)(2), and 47 CFR 

64.606(b). On the basis of the state 

applications, the Bureau has determined 

that: 

(1) The TRS program of the states 

meet or exceed all operational, 

technical, and functional minimum 

standards contained in 47 CFR 64.604; 

(2) The TRS programs of the listed 

states make available adequate 

procedures and remedies for enforcing 

the requirements of the state program; 

and 

(3) The TRS programs of the listed 

states in no way conflict with federal 

law. 

The Bureau also has determined that, 

where applicable, the intrastate funding 

mechanisms of the listed states are 

labeled in a manner that promotes 

national understanding of TRS and does 

not offend the public, consistent with 47 

CFR 64.606(d). 

Because the Commission may adopt 

changes to the rules governing relay 

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