Workshop G Corporate Sustainability Best Practices EHS Auditing, - - PDF document

Workshop G

Corporate Sustainability Best Practices … EHS Auditing, Enforcement Initiatives, and Improving the Culture of Self Governance

Tuesday, March 26, 2019 11:15 a.m. to 12:30 p.m.

Biographical Information Kelli Totten, Environmental Supervisor, Marathon Petroleum PO Box 1492 11631 US Route 23, Catlettsburg, KY 41120 606.921.6481 kellimtotten@marathonpetroleum.com

• Mrs. Totten is an Environmental Supervisor at Marathon’s Catlettsburg, KY refinery. She is responsible

for supervising a staff of 11 while ensuring superior environmental compliance for the refinery in air, water, and waste media. Under her direction, the refinery has implemented not only communications and auditing programs to continually improve environmental performance in a cost-efficient manner, but she has also worked to stream-line the air, water, and waste permits for the facility. Recently, she led a corporate-wide team to revamp the auditing program at all 17 Marathon refineries. While Mrs. Totten is in her 6th year as Environmental Supervisor, she has worked at the Catlettsburg Refinery for a total of 18 years serving as an engineer or supervisor in Process Controls, Technical Services, Products Control, and Operations. Mrs. Totten graduated from West Virginia University Institute of Technology with a Bachelor of Science degree in Chemical Engineering. She is also a mother of 8 children ranging in age from 16 to 1. Amanda Jennings, Managing Consultant, Trinity Consultants 110 Polaris Parkway, Suite 200, Westerville, Ohio 43082 614.433.0733 ajennings@trinityconsultants.com

• Ms. Jennings is a Managing Consultant in Trinity’s Westerville, Ohio, office and provides air quality

support for several industries in Ohio, including but not limited to, petroleum refining/distribution, chemical manufacturing, surface coating, asphalt processing/shingle manufacturing, and fiberglass and foam insulation manufacturing. She has completed numerous projects over her 14 years of consulting experience ranging from minor and major source state construction permit to install (PTI) or permits to install and operate (PTIO) applications, Fee Emissions Reports (FERs), emissions inventories, Toxic Release Inventory Reports (TRIs), Title V operating permit renewal and modification applications, MACT and GACT general consulting/compliance assistance, and regulatory applicability analyses. Ms. Jennings graduated from Ohio University with a Bachelor of Science Degree in Chemical Engineering. Rob Large, Managing Consultant, Trinity Consultants 110 Polaris Parkway, Suite 200, Westerville, Ohio 43082 614.433.0733 rlarge@trinityconsultants.com

• Mr. Large is a Managing Consultant in Trinity’s Westerville, Ohio, office, and part of the EHS

Performance and Risk Management (EPRM) business line based in Raleigh, NC. He provides EHS regulatory compliance auditing services for companies in the U.S., Canada and Mexico and lead auditor and training support for companies with Environmental Management Systems (EMS) or Health and Safety (HSMS) management systems and corporations that are certified under the ISO 14001 and 45001 standards. He has over 28 years of environmental and occupational health and safety experience including over 17 years of auditing experience; both as a consultant and as an internal environmental or EHS auditor. He serves as Lead Auditor for enterprise and single site audits and has conducted over 400 audits of industrial locations included in the following industries; automotive manufacturing and distribution, avionics and guidance systems repair and test centers, aerospace manufacturing, power plants, electric transmission & distribution sites, oil and gas transmission, distribution & production, ferrous and aluminum casting facilities, railroad transportation, water & wastewater treatment facilities, laboratories, research & development facilities, general manufacturing, warehousing and distribution, government (DoD) sites, metal stamping, plastic mold injection facilities, timber products, and sawmills to a variety of environmental and occupational health and safety

• standards. Mr. Large graduated from The Ohio State University with a Bachelor of Science Degree in

Zoology / Environmental Science and holds a Master of Science Degree from the University of Findlay in Environmental Management. He is a Certified Professional Environmental Auditor (CPEA) and a Certified Hazardous Materials Manager (CHMM).

1

Environmental, Health & Safety Auditing

Enforcement Initiatives and Improving the Culture of S elf Governance

Trinity Consultants: Robert Large Amanda Jennings Marathon Petroleum : Kelli Totten

2

Agenda

˃ Risk Management

 Understanding Risk Management in Y

• ur Organization

 Establishing auditing; 3 lines of defense model and

EHS

˃ Auditing Within Y

• ur Organization

 Functional roles

(Board/ leadership, risk management, compliance & ethics, internal audit)

♦Establishing cross-functional relationships

˃ Role Of Management S

ystems

 OHS

AS 18001, ANS I Z10, IS O 9000, IS O 14001, IS O 31000, and IS O 45001 and other voluntary sustainability standards

˃ Why Audit?

; and the Value Proposition

3

Agenda Cont’d

˃ Audit Enforcement and Initiatives ˃ Auditing Program Marathon Petroleum

 Tier I  Tier II  Tier III

˃ Auditing Issues and Trends

 Issues  Regulatory Changes

˃ E-disclosure ˃ Questions, Comments and S

ummary

4

Risk Management

5

Understanding Risk Management in Your Organization

6

Defining Systems, Strategies, and Vocabulary for Risk Management

˃

S tandards recommended



COS O - Ent er

prise Risk Management —Int egrat ed Framework 2017



IS O – IS O 31000 Risk Management

˃

S trategies



As an audit group understand the strategic goals &

• bj ectives of the company and

the risk inventory identified within them



How does the risk management group describe, quantify, and categorize risks (CAUTION: Independence and Obj ectivity is a MUS T)



How can EHS audits support company performance

7

Establishing auditing

Three lines of defense model and EHS

S

• urce: IIA Position Paper: The Three Lines Of Defense In Effective Risk Management And Control; January 2013, The

Institute of Internal Auditors

8

Auditing Within Your Organization

9

Definition and Understanding of Auditing

Internal auditing is an independent, obj ective assurance and consulting activity designed to add value and improve an organization's

• perations. It helps an
• rganization accomplish its
• bj ectives by bringing a

systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

S

• urce: The Institute of Internal Auditors, Mandatory Guidance,

Definit ion of Int ernal Audit ing

Audit is a systematic, documented process of

• bj ectively collecting and

evaluating factual information in order to verify a site or

• rganization’s environmental,

health or safety status with respect to specific, predetermined criteria. Audits encompass both compliance audits, which are directed at verifying a site or

• rganization’s compliance with

requirements, and management system audits, which evaluate the effectiveness of management systems.

S

• urce: S

tandards for the Professional Practice OF Environmental, Health AND S afety Auditing, The Institute of Internal Auditors, Board of Environmental, Health And S afety Auditor Certificat ions (BEAC)

10

Functional roles and Relationships Building

˃ Chief Audit Executive (reporting to the Board and/ or Audit Committee) ˃ Risk Management Officer ˃ Internal Audit group ˃ Compliance and inspection groups ˃ S ite compliance groups

˃

Environmental, Health & S afety

Collaboration / Common understanding Common Goals / Common Language Risk Assessment Benefits Common Skill sets / Training

Enterprise Risk Management Internal Audit and/ or EHS Audit Compliance Coordinated Efforts

11

Functional Roles

˃ Risk managers, internal auditors, EHS

professionals, quality systems analysts, loss prevention specialists, etc. are all a part of the system of internal controls strategy for an

• rganization

˃ The key between each group is understanding

that for effective risk management, in support of management systems and the increasing movement toward consensus standards, is to collaborate in identifying and controlling a broad array of risk exposures in support of the

• rganization’s strategic plan and mission

EHS Auditing and Risk Communication

12

Role of ISO 14001, ISO 31000, ISO 45001, and other Management Systems / Sustainability Standards

13

ISO Standards

• Help organizations improve their performance by specifying repeatable steps that
• rganizations consciously implement to achieve their goals and obj ectives, and to create an
• rganizational culture that reflexively engages in a continuous cycle of self-evaluation,

correction and improvement of operations and processes through heightened employee awareness and management leadership and commitment.

• Audits are a vital part of the management syst em approach as they enable the company or
• rganization to check how far their achievements meet their obj ectives and show conformity

to the standard.

• IS

O 9000 Quality S ystems, IS O 14001 Environmental Management, IS O 31000 Risk Management, and newly released IS O 45001 Occupational S afety and Health all have audit requirements.

• IS

O 14001 and IS O 45001 also refer to audits for both conformance (system elements) and compliance (legal and other) requirements.

14

Why Audit? –The Value Proposition

15

Value Proposition – Why Audit?

˃

Proactively identify and correct potential violations

˃

Establish culture of compliance, conformance and corrective action

˃

Eliminate potential fines and penalties –Audit Privilege, e-Disclosure

˃

Identify system issues that could lead to violations in the future;

˃

Provide improvement recommendations, improve organization’s performance

˃

Provide assurance to stakeholders, board, and the community at large

˃

Protect organizational reputation

˃

Meet certification standard requirements

˃

Protect critical natural resources and human resources including employees

16

What are External Drivers for Auditing

˃

Public complaints

˃

Follow-up from previous inspections, checks for remediation / abatement of issues / violations cited on previous inspections

˃

Missing information from reports filed with an Agency

˃

Missing reports

˃

Routine inspection

˃

Collection of information

˃

Imminent danger situations



Hazards that could cause death or serious physical harm.

˃

S evere inj uries and illnesses



Fatalities, work-related inpatient hospitalizations, amputations, or losses of an eye

˃

Worker Complaints

˃

Referrals of hazards from other federal, state or local agencies, individuals, organizations or the media

˃

Targeted inspections



Inspections aimed at specific high-hazard industries or individual workplaces that have experienced high rates of inj uries and illnesses

17

EHS Value and Business Value Chain

˃ Even as you consider

EHS audits as value, using the vocabulary

• f the rest of the

business in terms of value aligns the function better strategically

˃ Contributing to the

effectiveness of business operations and minimizing risk

Source: Taking Bold Steps To Create Business Value; Stephen Poltorzycki, Arthur D. Little Inc., February 1997

THE VALUE PORTFOLIO

Future Focus Beyond Compliance Risk Management Regulatory Influence Strategic Objectives Growth Image Innovation Differentiation Present Focus Compliance Regulatory Compliance Safety License to Operate Operational Effectiveness Time to Market Customer Service Cost Quality EHS Value Business Value

18

Audit Enforcement and Initiatives

19

Source: U.S. Department of Justice, Fraud Section, February 2017 https://www.justice.gov/criminal‐ fraud/page/file/937501/download

20

Source: USEPA May 2018

https://www.epa.gov/compliance/epa ‐announces‐renewed‐emphasis‐self‐ disclosed‐violation‐policies

21

EPA Enforcement Stats - 2018

Source: https://www.epa.gov/sites/production/files/2019‐02/documents/fy18‐enforcement‐annual‐results‐data‐ graphs.pdf and USEPA media release 2/8/18

22

EPA Enforcement Stats - 2017

Source: https://www.epa.gov/sites/production/files/2019‐02/documents/fy18‐enforcement‐annual‐results‐data‐ graphs.pdf and USEPA media release 2/8/18

23

EPA Enforcement Initiatives

FY 2017-2019

˃

Federal enforcement NOT delegated to S tates

˃

EP A in FY 2019 has put out a new initiative to transition National Enforcement Initiatives (NEIs) to National Compliance Initiatives (NCIs) reference: US EP A Memorandum 8/ 28/ 18)

˃

Air



Reducing Air Pollution from the Largest S

• urces



Cutting Hazardous Air Pollutants (Expanded initiative for FY17-19)

˃

Energy Extraction



Ensuring Energy Extraction Activities Comply with Environmental Laws

˃

Hazardous Chemicals



Reducing Risk of Hazardous Air Emissions from Hazardous Waste Facilities



Reducing Risks of Accidental Releases at Industrial and Chemical Facilities

(Both of these; New)

˃

Water



Keeping Raw S ewage and Contaminated S t ormwater Out of Our Nation’s Waters



Preventing Animal Waste from Contaminating S urface and Ground Water



Keeping Industrial Pollutants Out of the Nation’s Waters (New)

S

• urce: https:/ / www.epa.gov/ enforcement/ national-compliance-initiatives

24

OSHA Enforcement Stats FY 2017

Inspection Statistics FY 2017 Total Inspections 32,408 Total Programmed Inspections 14,377 Total Unprogrammed Inspections 18,301 Fatality/Catastrophe Investigations 837 Complaints 8,870 Referrals 6,286 Other Unprogrammed Inspections 2,659

Source: https://www.osha.gov/dep/2017_enforcement_summary.html

25

OSHA Top 10 Standards Violated

˃ 1926.501 - Fall Protection, Construction ˃ 1910.1200 - Hazard Communication ˃ 1926.451 – Scaffolding, General requirements ˃ 1910.134 - Respiratory Protection ˃ 1910.147 - Lockout/ Tagout ˃ 1926.1053 – Ladders, Construction ˃ 1910.178 - Powered Industrial Trucks ˃ 1910.503 – Fall Protection, Training ˃ 1910.212 - Machine Guarding ˃ 1926.102 – Eye and Face Protection

for Fiscal Y ear 2018 (Oct. 1, 2017, to S

• ept. 30, 2018)

S

• urce: https:/ / www.osha.gov/ Top_Ten_S

tandards.html

26

• Combustible Dust
• OSHA Instruction - CPL 03-00-008
• Hazardous Machinery
• OSHA Instruction - CPL 03-00-019 (2015)
• Hexavalent Chromium
• OSHA Instruction - CPL 02-02-076
• Lead
• OSHA Instruction - CPL 03-00-009
• Primary Metal Industries
• OSHA Instruction - CPL 03-00-018 (2014)

Note: This NEP does not set inspection goals nor does it require regional offices to develop emphasis programs, but it does provide uniform procedures for any unprogrammed inspection within these industries, and for any regional or State Plan emphasis program within these industries that may be voluntarily implemented.

• Process Safety Management
• OSHA Instruction - CPL 03-00-021 (2017)
• Shipbreaking
• OSHA Instruction - CPL 03-00-020 (2016)
• Trenching & Excavation
• OSHA Instruction - CPL 02-00-161 (2018)

Source: https://www.osha.gov/enforcement/directives/nep

OSHA National Emphasis Programs

Auditing Example

March 2019

Overall Auditing Structure

28

Tier III Audit Scope: Management Systems Auditors: External to the site Frequency: Every 3 years Tier II Audit Scope: Compliance Auditors: External to the site Frequency: Every 3 years Tier I Audit Scope: Compliance & Management Systems Auditors: Internal to the site Frequency: At least 9 program audits per year

Tier II Compliance Audit Example Team

Programs Auditor NESHAP Subpart FF (BWON) Hazardous Organic NESHAP (HON) Leak Detection and Repair (LDAR) Third Party Environmental Consultant Auditor Stack Testing and Continuous Emissions Monitoring Systems (CEMS) Corporate Environmental Auditor Title V Permit Compliance Management of Change (MOC) Review NSPS J/Ja Heaters Corporate Environmental Auditor NSPS Ja Flares CEMS Release Reporting Tanks Refinery Guest Auditor Hazardous and Solid Waste Spill Prevention Control Countermeasures (SPCC) Corporate Auditor from Auditing Group

29

Tier II Compliance Audit Example Protocol Air Emissions Inventory

 Review units included/list of equipment, basis of calculation, content  Cross reference to permit, examine new permits  Review changes at facility (e.g., tank change service, control device added)  Review emissions factors (e.g., are the factors still current, are they facility specific, are they used correctly, etc.)  Is testing data available to replace use of emissions factors  Are CEMS used correctly

30

Tier II Compliance Audit Example Protocol Air Emissions Inventory Continued

 Are units/conversions correct  Examine calculations based on material usage, other data  Compare calculations for like chemicals (organics, etc.)  Regulatory/facility changes incorporated  Examine and specific calculation issues identified for review  Review calculation of fees  Review recordkeeping for release calculation backup, submittal proof, and communication with regulators

31

Tier II Compliance Audit Findings Risk Ranking  High – Severity Level 3 – Findings of significant non-compliance and/or non-conformance to a required condition, regulation or rule applicability – Examples include: Falsification of documents, circumvention of regulatory requirement or missed regulatory applicability, and unreported major release

32

Tier II Compliance Audit Findings Risk Ranking  Moderate – Severity Level 2 – Findings of more frequent severity or

• ccurrence that, if not addressed appropriately,

could become significant non-compliance issues – Examples include: Records not being maintained for the required time period, using an improper laboratory procedure, and using unqualified people to perform inspections

33

Tier II Compliance Audit Findings Risk Ranking  Low – Severity Level 1 – Minor finding of single or low frequency incidents on non-compliance or non-conformance to a standard or requirement – Examples include: Expired visible emissions certification, failure to sign inspection reports, and failure to document annual training

34

Tier III Management System Audit  Team Members – 2 of the 3 team members are part of the Tier II Compliance audit team – The third team member is from the Corporate Auditing group  Methodology and Protocol – Assumes that every Tier II Compliance finding is a Tier III Management System finding

35

Tier III Management System Audit Example Finding

 Regulatory Language: The Title V air permit states that the compliance demonstration shall be based on the most recent performance test for the heater.  Example Tier II Finding: The Tier II Compliance audit found that an emission calculation did not incorporate the most recent performance stack testing data.  Tier III Audit Question: Why did the current management system not prevent this?  Example Tier III Finding: The Tier III Management System audit finding was that the existing management system for reviewing and maintaining Title V emission calculations does not seem to adequately verify compliance.

36

Overall Auditing Structure

37

Tier III Audit Scope: Management Systems Auditors: External to the site Frequency: Every 3 years Tier II Audit Scope: Compliance Auditors: External to the site Frequency: Every 3 years Tier I Audit Scope: Compliance & Management Systems Auditors: Internal to the site Frequency: At least 9 program audits per year

Tier I Program Audit  Objectives: – Evaluate compliance exposure risks. – Conduct a “deeper dive” into environmental programs since Tier II/III audits will only occur every 3 years. – Process should be efficient and manageable. – Capitalize on cross-training opportunities. – Be more of a field-based audit and not just a table top audit (recordkeeping/ reporting).

38

Tier I Program Audit

Audit Frequency: Audits are performed monthly, but

• nly 9 are required per calendar year.

Program Review Frequency –Priority programs will have audits performed every

• year. These are programs with a higher enforcement
• risk. The remaining environmental programs are

scheduled such that they will have at least one Tier I program audit every 3 years. –While every refinery will not review the same program each month, every refinery should review the same programs in a year.

39

Tier I Program Audit

40

Program 2019 2020 2021 CEMS/ Stack Testing X X X BWON/QQQ X X X Monitoring of Air Permit Limits X X X EI/ TRI or LDAR X X MISC (ODS, Old MACT, Asphalt MACT) X Waste Cost Tracking/ Non-Hazardous Waste X RSR: Maintenance Venting X Flare Requirements (RSR & NSPS J/Ja) X RSR: Fence-line Monitoring & CPMS X HON X Tanks X SARA & Release Reporting X NPDES/ WW Sampling X Hazardous Waste & Asbestos X Storm water Management (SWPPP) & SPCC X Greenhouse Gas Emissions (GHG) X Site Remediation & Soil Management Plan X Heaters/ Boilers (MACT DDDDD & NSPS J/Ja) X RICE MACT/ NSPS IIII/ NSPS JJJJ X FCC/ SRU/ Reformers/ Cokers (MACT CC, MACT UUU) X

Tier I Program Audit 2019 Audits

 Priority Programs: – CEMS – Monitoring of Air Permit Requirements – BWON  Additional Programs: – MISC (ODS, Asphalt MACT, or OLD MACT) – EI/TRI or LDAR – Waste Cost Tracking or Non-Hazardous Waste – RSR: Maintenance Venting – Flare Requirements (RSR & NSPS Ja) – RSR: Fence-line Monitoring & CPMS

41

Tier I Program Audit 2020 Audits

 Priority Programs: – CEMS – Monitoring of Air Permit Requirements – BWON  Additional Programs: – EI/TRI or LDAR – HON – Tanks – SARA & Release Reporting – NPDES & WW Sampling – Hazardous Waste & Asbestos

42

Tier I Program Audit 2021 Audits

 Priority Programs: – CEMS – Monitoring of Air Permit Requirements – BWON  Additional Programs: – Stormwater Management & SPCC – Greenhouse Gas Emissions – Site Remediation & Soil Management – Heaters/ Boilers (MACT DDDDD & NSPS J/Ja) – RICE MACT/ NSPS IIII/ NSPS JJJJ – FCC/ SRU/ Reformers/ Cokers (MACT CC & UUU)

43

Tier I Program Audit Example Protocol Benzene Waste Organic NESHAP

44

Program(s): Audit Month: Mar‐19 Lead Auditor: Katherine Field Audit Team: Records Audit Team: Areas or Units being Audited: Audit Team Auditor Responsible Audit Item Regulatory Citation or Environmental Guidance Yes/ No/ NA Observed Deficient Action Completed or Recommended Corrective Action Field Jon

Did you observe any deficient BWON or QQQ drains, which may include p-trap drains without a proper water seal or seal pot drains which did not have adequate water in the basin

• r which had the cap improperly installed?

Field Vernon

Did you observe any deficient junction boxes

• r sumps, which may include BWON boxes

which have an open vent pipe, QQQ boxes with more than one open vent pipe, QQQ boxes with an open vent pipe greater than 4-inches in diameter or less than 3-feet tall, or junction box covers with gaps, openings, or broken seals which could allow vapors to escape?

Records Rob

Were all noted deficiencies from inspections reported in the BWON annual and QQQ semi- annual deficiency reports, and were all reports (quarterly, semi-annual, annual) submitted to the Agency on time?

FCC & #5 Crude Jon, Ryan, Sandy, & Vernon Bill, Chris, Clay, & Rob Benzene Waste Operations NESHAPS & Subpart QQQ

Environmental Tier 1 Program

Tier I Program Audit Example Protocol Benzene Waste Organic NESHAP  Field Auditor Example Question: Did you

• bserve any deficient QQQ or BWON drains, which

may include p-traps without a proper water seal?  Records Auditor Example Question: Were all noted deficiencies from inspections reported in the BWON annual and QQQ semi-annual deficiency reports?

45

Tier I Program Audit Reporting & Analysis  A simple audit report shall be developed by the Audit Team Leader within one month after the audit is performed documenting the following: –Audit Scope –Findings (Compliance and Management System) –Opportunities for Improvement (OFIs) (Compliance and Management System)  The audit report will be stored on the Corporate Environmental website at a minimum to allow access to all of the refineries

46

Tier I Program Audit Reporting & Analysis  Lessons learned or findings can be shared through bulletins  Findings will be tracked in the Marathon MOC (Management of Change) database and closed within one year  OFIs will be tracked internal to each refinery  Annually, Corporate Environmental Support will provide and review an analysis of audit findings from previous years with the Environmental Supervisors

47

48

Auditing Issues and Trends

Auditing Issues

˃ Will be site specific ˃ Watch for EP

A ’s specific compliance initiatives

˃ Mergers/ acquisitions ˃ Look for programs:

 With recent rule updates  That are complex

49

Recent Regulatory Changes

˃ MACT

 35 rules to be revised/ issued final after Risk

and Technology Review (RTR) in 2020-2021

 Take time to review compliance when

evaluating rule updates/ changes

˃ RMP

 Updated RMP due in 2019 for those sites who

first submitted in 2004

 June 2017 rule amendments are effective

despite proposed delays/ vacature

50

Recent Regulatory Changes/ Triggers

˃ Ozone Depleting S

ubstances (ODS )

 Rules revised triggering new requirements which

are all currently effective as of 1/ 1/ 2019

 New applicability to substitutes, new leak rate

thresholds, additional recordkeeping and reporting

˃ RCRA

 Hazardous Waste Generator Rule updates in October

2016

 Look for proper:

♦Identification/ characterization of waste streams,

recordkeeping, labeling, waste handling procedures, use of manifests, waste reporting

51

Other Programs to Review

˃ Toxic Release

Inventory (TRI)

 Complex rule  EPCRA violations

make up >50%

• f

all eDisclosures

˃ Title V

 S

ignificant monitoring, recordkeeping, and reporting requirements

52

https://www.epa.gov/sites/production/files/2018‐ 05/documents/refreshannouncementfordisclosures.pdf

Other Programs to Review

˃ Clean Water Act Requirements

 NPDES

Permit or Construction S tormwater Permit

 Plans that are not submitted or approved by

agency

♦S

WPPP

♦S

PCC

♦Don’ t forget the 5 year review timeline!

 Recordkeeping and reporting, sampling

requirements under general permit

53

EPA’s Audit Policy & eDisclosure

Audit Policy & eDisclosure

˃ “ EP

A Announces Renewed Emphasis on S elf- Disclosed Violation Policies” (5/ 15/ 2018)

˃ Promotes use of eDisclosure for “ routine”

disclosures

 Relies on EP

A ’s April 2000 Audit Policy

˃ Promotes August 2008 “ New Owner Policy”

for acquisitions & “ S mall Business Compliance Policy”

˃ Re-emphasized the benefits

55

Purpose of the Audit Privilege

˃ To encourage facilities to voluntarily

discover, promptly disclose, and expeditiously correct violations of Federal environmental requirements

56

Incentives of the Audit Privilege

˃ Elimination or substantial reduction of gravity-

based penalties

˃ Allow EP

A to waive economic benefit penalty component if deemed insignificant

˃ Do not have to provide advance notice of any

audit and no time limit on audit completion

˃ Does not require affirmative admission that a

violation occurred

˃ Provides clarity:

 Obj ective time period for disclosing violations  Defines allowable violation correction time

periods

57

“EPA Announces Renewed Emphasis on Self Disclosed Violation Policies” (5/5/2018)

Requirements of the Audit Privilege

˃ Nine conditions, which must be followed

for a facility to be eligible for 100% mitigation of gravity-based penalties

˃ If only condition #1 is missed, the facility

can get 75% mitigation

˃ Repeat violators are not eligible for this

program

58

EPA Audit Policy Conditions

Conditions for eligibility for Audit Policy benefits:

1.

S ystematic discovery

2.

Voluntary discovery

3.

Prompt disclosure (Within 21 days at most)

4.

Independent discovery and disclosure

5.

Correction and remediation (Usually within 60 days)

6.

Prevent recurrence

7.

Repeat violations are ineligible

8.

Certain types of violations are ineligible

9.

Co-operation by the disclosing entity

59

AJ2

1 – Systematic Discovery

˃ The violation was discovered through an

environmental audit or a compliance management system (CMS ) that reflects the entity’s due diligence in preventing, detecting and correcting violations

˃ If only this condition is not met, then a

25% penalty and a recommendation for no criminal prosecution is available

60

2 – Voluntary Discovery

˃ The violation was discovered voluntarily

and not through legally required monitoring, sampling or auditing, e.g., continuous emission monitor, NPDES sampling, consent agreement

˃ If the discovery results from a CMS

required by a consent agreement, the audit privilege still applies

61

3 – Prompt Disclosure

˃ In writing, to EP

A within 21 days of discovery (unless a shorter time required by law)

˃ Discovery happens when any officer,

director, employee or agent of the facility has an obj ectively reasonable basis for believing that a violation has or may have occurred

62

4 – Independent Discovery and Disclosure

˃ Must have occurred before the EP

A would have discovered the violation on its own or through a third party (e.g., citizen suit/ complaint, “ whistleblower” , state agency)

˃ For multiple-facility entities, if one facility

is already the subj ect of an investigation, etc., EP A may allow other facilities to exercise the audit privilege

63

5 - Correction and Remediation

˃ In most cases, the violation is corrected within

60 calendar days from the date of discovery

˃ The regulated entity certifies in writing that

the violation has been corrected

˃ Appropriate measures, as determined by EP

A, are taken to remedy any environmental or human harm resulting from the violation

64

State Audit Policies

˃ S

tate audit policies can differ significantly from Federal

˃ May have special notice and reporting

requirements.

65

State Audit Policies

˃ Ohio –Audit Privilege Law

 ORC 3745.72 (S

eptember 1998)

 Audit Disclosure Response Protocol

♦ https:/ / www.epa.ohio.gov/ Portals/ 0/ general%

20pdfs/ audit.pdf

˃ Indiana – S

elf Disclosure and Environmental Audit Policy (April 1999)

♦ http:/ / www.state.in.us/ idem/ oe/ nrp/ self.html

˃ Kentucky – Evidentiary privilege for

environmental audit reports

 KRS

224.1-040

♦ https:/ / apps.legislature.ky.gov/ law/ statutes/ statute.aspx?

id=41572

66

EPA’s New eDisclosure

67

eDisclosure Workflow

68

Three-Step Process

• 1. Register to File With the Centralized

Web-Based Portal

• 2. S

ubmit Violation Disclosure Report

• 3. Certify Compliance (S

ubmit Compliance Report)

69

Step One: Register to File With the Centralized Web-Based Portal

˃ Register with EP

A Central Data Exchange (CDX) system

 Existing CDX registrants who are already identity-

proofed under the Cross Media Electronic Reporting and Recordkeeping Rule (CROMERR) would not be required to re-register with CDX

˃ Paper identity proofing is available if electronic

ID-proofing fails

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Step Two: Submit Violation Disclosure Report

˃ To be “ prompt” , must report online within 21 days of

“ discovery” that it may have violated a particular requirement and the date potential violations were discovered

˃ May submit disclosures to get time to determine

whether a violation actually occurred and to more specifically identify the particular violation(s)

˃ eDisclosure is not designed to receive or process any

CBI, so disclosers must submit sanitized (non-CBI) information through the portal



Any follow-up CBI that needs to be submitted must be done manually according to EP A procedures and the requirements of 40 CFR Part 2

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eDisclosure Checklist

˃ Violation Disclosure

˃

Date of discovery of violation.

˃

Facility name, address, city, state, zip code.

˃

Environmental law (e.g., the Clean Air Act) and section of violation

˃ S

haring

˃

e-mail addresses of individuals (e.g., counsel, EHS manager or staff) with whom you may wish to share your eDisclosure.

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https://www.epa.gov/compliance/edisclosure‐getting‐started‐checklist

eDisclosure –Add Violation

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Step Three: Certify Compliance

(Submit Compliance Report)

˃ Ordinarily submit a Compliance Report

 Within 60 days of submitting an initial online Audit

Policy disclosure

 Within 90 days of submitting an initial online S

mall Business Compliance Policy disclosure

˃ The Compliance Report must identify the

specific violations, certify corrections are complete, and that the Audit Policy or S mall Business Compliance Policy conditions have been met

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eDisclosure Checklist

˃ Compliance Certification

˃

NAICS

˃

Information about the latest regulatory inspection(s) (date(s), agency(ies), regulatory area(s)).

˃

Information about noncompliance (description(s), federal and/ or state citation(s), location and date(s)).

˃

Information about chemical/ pollutant(s) (name, CAS Number and amount involved).

˃

Information about correcting and preventing future violations

˃

Information to support requests for an extension of the Violation Correction Due date and corresponding Compliance Certification Due date

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https://www.epa.gov/compliance/edisclosure‐getting‐started‐checklist

Step Three: Certify Compliance

(Submit Compliance Report)

˃ The compliance reporting deadlines are

different from the deadlines to correct the violations:

 Violation correction deadline: runs from date

violations are discovered

 Compliance reporting deadline: runs from date

violations are disclosed (up to 21 days after discovery)

 Compliance reporting deadlines are subj ect to

limited reporting deadline extensions

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Post-Submission Follow-Up

˃ Category 1

 EP

A will spot check to ensure conformance with EPCRA, the Audit Policy, the S mall Business Compliance Policy, and eDisclosure requirements

˃ Category 2

 EP

A will screen for significant concerns (e.g., criminal conduct, imminent hazard)

 If and when EP

A decides to take an enforcement action for environmental violations, it will then make a determination as to whether the discloser is eligible for penalty mitigation

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eDisclosure Category 1 Disclosures

˃ EPCRA violations that meet all Audit Policy

conditions

˃ EPCRA violations that meet all S

mall Business Compliance Policy conditions After submittal, eDisclosure system issues eNOD confirming that the violations are resolved with no assessment of civil penalties, conditioned on the accuracy and completeness

• f the submitter’s disclosure

*EP A spot checks disclosures to ensure compliance

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eDisclosure Category 2 Disclosures

˃ All non-EPCRA violations ˃ EPCRA violations where the disclosure can only

certify Audit policy conditions 2-9

˃ EPCRA and CERCLA violations excluded from

Category 1 After submittal, the eDisclosure system issues an Acknowledgement Letter (AL) noting EP A ’s receipt

• f the disclosure and notifying the entity that EP

A will make a determination as to eligibility for penalty mitigation if and when it considers taking enforcement action for environmental violations.

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Tips for Submitting eDisclosure

˃ Ensure you have the correct discovery date ˃ If submitting missed Form Rs for a TRI

chemical for multiple years or revision that covers multiple years, one eDisclosure and

• ne compliance certification should be used

to represent each year.

˃ The Compliance Certification must be

certified by the person considered the certifying official for that program

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Questions and Comments

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Contact Information

Amanda Jennings Managing Consultant 110 Polaris Parkway, Suite 200 Westerville, OH 43082 614-433-0733

ajennings@trinityconsultants.com

˃ Questions and Comments