Presenting a live 90-minute webinar with interactive Q&A Environmental Audits: Navigating E-Disclosure, Privilege, Exceptions, Voluntary Disclosure and Other Issues Ensuring Compliance with Environmental Laws, Responding When Violations Are Discovered TUESDAY, JULY 7, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Joseph P. Koncelik, Counsel, Tucker Ellis, Cleveland Gregory F. Linsin, Partner, Blank Rome, Washington, D.C. Thomas J. P. McHenry, Partner, Gibson Dunn & Crutcher, Los Angeles The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. 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A link to the Attendance Affirmation/Evaluation will be in the thank you email that you will receive immediately following the program. For additional information about CLE credit processing call us at 1-800-926-7926 ext. 35. Program Materials FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: • Click on the ^ symbol next to “Conference Materials” in the middle of the left- hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon. Environmental Audits: Navigating E-Disclosure, Privilege, Voluntary Disclosure and Other Issues July 7, 2015– Strafford Webinar Thomas J.P. McHenry 333 South Grand Avenue Los Angeles, California 90071 [email protected] (213) 229-7135 <Presentation Title/Client Name> Program Overview . Key Issues in Environmental Auditing . EPA’s New E-Disclosure Program . State Audit Programs . Voluntary Disclosure . Privilege Issues . Responding to Enforcement Actions . Questions & Answers 6 <Presentation Title/Client Name> Key Issues in Environmental Auditing (1 of 2) . What? – Systematic, periodic and documented review of environmental practices and operations . Why? – Opportunity to proactively identify and address issues to ensure compliance – Reduced risk and exposure to civil and criminal liability (EPA and state audit policies) – Requirement of corporate, industry or other standards and certifications – SEC disclosure obligations – “What you don’t know, will hurt you!” 7 <Presentation Title/Client Name> Key Issues in Environmental Auditing (2 of 2) . When? – Regular program – Disclosure obligations may be triggered . Who? – Senior management oversight and support – Independent auditor (in-house or third party) . How? – Structured program and procedures – Reporting system – Corrective action – Follow-up 8 <Presentation Title/Client Name> Pros and Cons of Environmental Audits . Pros – Promotes a culture of compliance – Encourages self-policing and attention – Identification and correction prior to discovery by the regulators – Opportunity to fix problems and make a fresh start when new companies are purchased or acquired – Reduce or eliminate gravity based penalties – Limit likelihood of criminal prosecution – Combine with OSHA, social responsibility and other audit components – It’s the right thing to do! But only, if it’s done right. 9 <Presentation Title/Client Name> Pros and Cons of Environmental Audits . Cons – Significant investment of time and resources – Triggers possible legal obligation to report – Triggers costs of corrective or remedial action – Audit documentation can serve as basis of subsequent enforcement – Lack of understanding of privilege protections – Does not function as a “shield” from prosecution 10 <Presentation Title/Client Name> EPA’s New E-Disclosure Program -- Pilot . In August 2008, EPA launched a pilot program for an electronic self- disclosure system called “E-Disclosure” – Allowed online reporting of environmental violations – 6 states (AR, LA, NM, OK, TX) reported all violations – Remaining states limited to Emergency Planning Community Right to Know Act (EPCRA) violations . EPA also floated idea of doing away with self-disclosure program entirely 11 <Presentation Title/Client Name> EPA’s New E-Disclosure Program -- Webcasts . In June 2015, EPA hosted 2 webcasts describing the agency’s plan for expanding the full program nationwide . Intended to streamline the implementation of disclosures under the EPA Audit Policy and the Small Business Compliance Policy (issued in April 2000) . The webcasts were open to the public and allowed stakeholders to: – Learn how the new system will be designed and implemented – Share comments and ask questions about the approach – Prepare for the expected Fall 2015 launch 12 <Presentation Title/Client Name> E-Disclosure: Program Mechanics – Tier 1 . Tier 1 Disclosures – Includes EPCRA violations that meet all Audit Policy or Small Business Compliance Policy conditions – Excludes CERCLA 103/EPCRA 304 chemical release reporting violations or EPCRA violations with significant economic benefit – System automatically issues an electronic Notice of Determination (eNOD) confirming that violations are resolved with no assessment of civil penalties, conditioned on the accuracy and completeness of the submitter’s eDisclosure 13 <Presentation Title/Client Name> E-Disclosure: Program Mechanics – Tier 2 . Tier 2 Disclosures – Includes all non-EPCRA violations and EPCRA violations meeting only conditions 2-9 (i.e., discovery was not systematic) – System automatically issues an Acknowledgement Letter (AL) noting receipt of the disclosure and promising that EPA will make a determination as to eligibility for penalty mitigation if and when it considers taking enforcement action for environmental violations 14 <Presentation Title/Client Name> E-Disclosure: Program Mechanics – Flow Chart Most EPCRA eNOD Tier 1 violations EPA Disclosure E-Disclosure screening Portal & spot checks Tier 2 All other new AL disclosures 15 <Presentation Title/Client Name> E-Disclosure: Key Reporting Deadlines . Step 1: Register to file with the centralized web-based portal (CDX) . Step 2: Submit violation disclosure report – Within 21 days of discovery . Step 3: Certify compliance – Correct violations within 60 days of discovery for Audit Policy (within 90 days for Small Business Compliance Policy) • Tier 1 disclosures: No extensions • Tier 2 Audit Policy: 30 day extension upon request, 90 additional days with justification • Tier 2 Small Business Policy: 90 day extension upon request, 180 additional days with justification – Submit compliance report within 60 days of disclosure for Audit Policy (within 90 days for Small Business Compliance Policy) *Note the different deadlines for correcting violations (60 days after discovery) vs. reporting compliance (60 days after disclosure). Disclosure can occur up to 21 days after discovery. 16 <Presentation Title/Client Name> E-Disclosure: Additional Considerations (1 of 2) . Confidential Business Information (CBI) – Portal accepts only sanitized (non-CBI) data – Follow-up CBI must be submitted manually . New Owners – May use the portal to disclose violations – However, submissions and resolutions will continue to be processed manually 17 <Presentation Title/Client Name> E-Disclosure: Additional Considerations (2 of 2) . Pre-Existing Disclosures – Outstanding EPCRA violations can be resubmitted as Tier 1 within 90 days of launch – Disclosures subject to audit agreement or significant settlement negotiations will be resolved with NOD, CAFO, or CD – All others treated as Tier 2; Federal Register notice announcing E-Disclosure launch will serve as Acknowledgement Letter (AL) . All other disclosures (to EPA HQ and Regions) must come through portal 18 <Presentation Title/Client Name> E-Disclosure: Next Steps . Summer 2015 – Public comment and feedback – System build-out and testing . Fall 2015 – E-Disclosure launch – Federal Register notice . Within 90 days of launch: Resubmit outstanding EPCRA disclosures 19 <Presentation Title/Client Name> E-Disclosure: Helpful Links and Contact . EPA presentation slides: http://www2.epa.gov/sites/production/files/2015- 06/documents/edisclosurewebinarpresentation_0.pdf . 2 page information sheet: http://www2.epa.gov/sites/production/files/2015- 06/documents/edisclosureinformationsheet.pdf . EPA contact: Phillip Milton, [email protected], (202) 564-5029 20 <Presentation Title/Client Name> Thomas McHenry Contact: Tom is a partner in Gibson Dunn’s 333 South Grand Avenue Los Angeles office and a member of the firm's Environment and Natural Resources