[Federal Register Volume 59, Number 144 (Thursday, July 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18327]


[Federal Register: July 28, 1994]


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ENVIRONMENTAL PROTECTION AGENCY
[FRL-5021-5]


Restatement of Policies Related to Environmental Auditing

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: The EPA Environmental Auditing Policy Statement (``1986 
Policy'') was originally published in the Federal Register on July 9, 
1986 (51 FR 25004). The 1986 Policy states that ``(c)larification of 
EPA's position regarding auditing may help encourage regulated entities 
to establish audit programs or upgrade systems already in place.'' The 
goal of this notice is to clarify EPA's current policies on and 
approach to auditing. This notice summarizes salient points from the 
1986 Policy, which remains in effect. In addition, this notice updates 
the Agency's activities with respect to auditing and auditing policy 
and references pertinent language from other relevant policy documents, 
in anticipation of the public meeting on auditing scheduled for July 
27-28, 1994. This notice does not represent a new EPA policy or 
position on environmental auditing; all existing policies remain in 
effect.

I. Auditing Public Meeting: Change of Location

    The response to EPA's announcement (59 FR 31914, June 20, 1994) to 
hold a public meeting on auditing on July 27-28, 1994 has been 
overwhelming. Due to the expected size of the audience, therefore, the 
Agency has changed the location of this event. The new location is the 
Stouffer Mayflower Hotel in Washington, DC, at 1127 Connecticut Avenue, 
NW, Phone (202) 347-3000.

II. The Auditing Policy Reassessment

    In response to a request by Administrator Carol M. Browner, the 
Office of Enforcement and Compliance Assurance (OECA) is reassessing 
the Agency's current policy regarding environmental auditing and self-
evaluation by the regulated community. EPA has committed to 
investigating the perceived problems relating to auditing, self-
evaluation, and disclosure through an empirical, information-gathering 
effort. The Agency must develop an adequate information base to give 
serious consideration to any policy options and to ensure that any 
decision to either reinforce, change, or supplement existing policy is 
informed by fact.
    EPA hopes to collect such relevant data through the implementation 
of four actions this summer. First, the Agency will convene a public 
meeting on July 27-28, 1994, as an opportunity to obtain a wide variety 
of views and to sharpen the focus on these issues. The range of issues 
appropriate for discussion at the public meeting include: the 
implementation of the 1986 Policy; specific suggestions for auditing 
policy options; State audit privilege legislation; auditing in the 
context of criminal enforcement; and advances in the field of auditing 
since 1986. Interested parties are encouraged to read the Federal 
Register notice dated June 20, 1994 (59 FR 31914) for more details on 
the public meeting.
    Second, EPA published in the June 21, 1994 Federal Register (59 FR 
32062) a notice requesting proposals for Environmental Leadership 
Program (ELP) pilot projects. EPA expects that these pilot projects 
will generate useful data on auditing methodology and measures, and may 
also serve as vehicles for experimenting with policy-driven incentives.
    Third, EPA will encourage the private sector to collect data and 
survey auditing practices in order to gauge the effect of enforcement 
policies on self-evaluation and disclosure in the regulated community. 
The Agency will also seek input on auditing and related issues from 
States, environmental and public interest groups, and trade and 
professional associations.
    Finally, in this Federal Register notice, EPA is restating salient 
points from the 1986 Policy and reviewing its activities and other 
policies relating to environmental auditing. The goal of this notice is 
to clarify EPA's current policies on and approach to auditing, in order 
to ensure a well-informed policy debate.

III. Review of General EPA Policy on Environmental Auditing

A. EPA Encourages the Use of Environmental Auditing

    EPA has actively encouraged and participated in the development of 
environmental auditing and improved environmental management practices 
since the mid-1980s. In fact, the 1986 Policy has served as the basis 
for defining the practice and profession of environmental auditing. The 
1986 Policy clearly states EPA support for auditing:

    Effective environmental auditing can lead to higher levels of 
overall compliance and reduced risk to human health and the 
environment. EPA endorses the practice of environmental auditing and 
supports its accelerated use by regulated entities to help meet the 
goals of Federal, state and local environmental requirements.
* * * * *
    Auditing serves as a quality assurance check to help improve the 
effectiveness of basic environmental management by verifying that 
management practices are in place, functioning and adequate. 
Environmental audits evaluate, and are not a substitute for, direct 
compliance activities such as obtaining permits, installing 
controls, monitoring compliance, reporting violations, and keeping 
records. Environmental auditing may verify but does not include 
activities required by law, regulation, or permit (e.g., continuous 
emissions monitoring, composite correction plans at wastewater 
treatment plants, etc.). Audits do not in any way replace regulatory 
agency inspections. However, environmental audits can improve 
compliance by complementing conventional Federal, state and local 
oversight.
* * * * *
    Environmental auditing has developed for sound business reasons, 
particularly as a means of helping regulated entities manage 
pollution control affirmatively over time instead of reacting to 
crises. Auditing can result in improved facility environmental 
performance, help communicate effective solutions to common 
environmental problems, focus facility managers' attention on 
current and upcoming regulatory requirements, and generate protocols 
and checklists which help facilities better manage themselves. 
Auditing also can result in better-integrated management of 
environmental hazards, since auditors frequently identify 
environmental liabilities which go beyond regulatory compliance.

    The Agency clearly supports auditing to help ensure the adequacy of 
internal systems to achieve, maintain, and monitor compliance. By 
voluntarily implementing environmental management and auditing 
programs, regulated entities can identify, resolve, and avoid 
environmental problems.

    EPA does not intend to dictate or interfere with the 
environmental management practices of private or public 
organizations. Nor does EPA intend to mandate auditing (though in 
certain instances EPA may seek to include provisions for 
environmental auditing as part of settlement agreements, as noted 
below). Because environmental auditing systems have been widely 
adopted on a voluntary basis in the past, and because audit quality 
depends to a large degree upon genuine management commitment to the 
program and its objectives, auditing should remain a voluntary 
activity.

Because senior managers of regulated entities are ultimately 
responsible for taking all necessary steps to ensure compliance with 
environmental requirements, EPA believes they have a strong incentive 
to use reasonable means, such as environmental auditing, to secure 
reliable information about facility compliance status.

B. Definition of Environmental Auditing, Elements of Effective 
Environmental Auditing Programs

    The 1986 Policy also defines environmental auditing, and outlines 
what EPA considers to be the elements of an effective environmental 
auditing program. The 1986 Policy presents the following definition:

    Environmental auditing is a systematic, documented, periodic and 
objective review by regulated entities of facility operations and 
practices related to meeting environmental requirements. Audits can 
be designed to accomplish any or all of the following: verify 
compliance with environmental requirements; evaluate the 
effectiveness of environmental management systems already in place; 
or assess risks from regulated and unregulated materials and 
practices.

    An organization's auditing program will evolve according to its 
unique structures and circumstances. The 1986 Policy acknowledges this 
fact, and also states EPA's belief that effective environmental 
auditing programs appear to have certain discernible elements in common 
with other kinds of audit programs. EPA generally considers these 
elements important to ensure program effectiveness. This general 
description of effective, mature audit programs can help those starting 
audit programs, especially Federal agencies and smaller businesses. 
Regulatory agencies may also use these elements in negotiating 
environmental auditing provisions for consent decrees. Finally, these 
elements can help guide states and localities considering auditing 
initiatives.
    As stated in the 1986 Policy, an effective environmental auditing 
system will likely include the following general elements:

    I. Explicit top management support for environmental auditing 
and commitment to follow-up on audit findings. Management support 
may be demonstrated by a written policy articulating upper 
management support for the auditing program, and for compliance with 
all pertinent requirements, including corporate policies and permit 
requirements as well as Federal, state and local statutes and 
regulations.
    Management support for the auditing program also should be 
demonstrated by an explicit written commitment to follow-up on audit 
findings to correct identified problems and prevent their 
recurrence.
    II. An environmental auditing function independent of audited 
activities. The status or organizational locus of environmental 
auditors should be sufficient to ensure objective and unobstructed 
inquiry, observation and testing. Auditor objectivity should not be 
impaired by personal relationships, financial or other conflicts of 
interest, interference with free inquiry or judgment, or fear of 
potential retribution.
    III. Adequate team staffing and auditor training. Environmental 
auditors should possess or have ready access to the knowledge, 
skills, and disciplines needed to accomplish audit objectives. Each 
individual auditor should comply with the company's professional 
standards of conduct. Auditors, whether full-time or part-time, 
should maintain their technical and analytical competence through 
continuing education and training.
    IV. Explicit audit program objectives, scope, resources and 
frequency. At a minimum, audit objectives should include assessing 
compliance with applicable environmental laws and evaluating the 
adequacy of internal compliance policies, procedures, and personnel 
training programs to ensure continued compliance.
    Audits should be based on a process which provides auditors: all 
corporate policies, permits, and Federal, state, and local 
regulations pertinent to the facility; and checklists or protocols 
addressing specific features that should be evaluated by auditors.
    Explicit written audit procedures generally should be used for 
planning audits, establishing audit scope, establishing audit scope, 
examining and evaluating audit findings, communicating audit 
results, and following-up.
    V. A process that collects analyzes interprets and documents 
information sufficient to achieve audit objectives. Information 
should be collected before and during an on-site visit regarding 
environmental compliance (1) environmental management effectiveness 
(2) and other matters (3) related to audit objectives and scope. 
This information should be sufficient, reliable, relevant and useful 
to provide a sound basis for audit finds and recommendations.
    a. Sufficient information is factual, adequate and convincing so 
that a prudent, informed person would be likely to reach the same 
conclusions as the auditor.
    b. Reliable information is the best attainable through use of 
appropriate audit techniques.
    c. Relevant information supports audit findings and 
recommendations and is consistent with the objectives for the audit.
    d. Useful information helps the organization meet its goals.
    The audit process should include a periodic review of the 
reliability and integrity of this information and the means used to 
identify, measure, classify and report it. Audit procedures, 
including the testing and sampling techniques employed, should be 
selected in advance, to the extent practical, and expanded or 
altered if circumstances warrant. The process of collecting, 
analyzing, interpreting and documenting information should provide 
reasonable assurance that audit objectivity is maintained and audit 
goals are met.
    VI. A process that includes specific procedures to promptly 
prepare candid clear and appropriate written reports on audit finds 
corrective actions and schedules for implementation. Procedures 
should be in place to ensure that such information is communicated 
to managers, including facility and corporate management, who can 
evaluate the information and ensure correction of identified 
problems. Procedures also should be in place for determining what 
internal findings are reportable to state or Federal agencies.
    VII. A process that includes quality assurance procedures to 
assure the accuracy and thoroughness of environmental audits. 
Quality assurance may be accomplished through supervision, 
independent internal reviews, external reviews, or a combination of 
these approaches.

C. EPA Activities Related to Auditing Standards

    EPA is currently participating in two major non-regulatory efforts 
to develop voluntary standards for auditing and environmental 
management systems. First, the International Organization of Standards 
(ISO), based in Geneva, Switzerland, established in 1993 a Technical 
Committee for Environmental Management Standards (ISO-TC-207). 
Subcommittee Two of TC-207 is in the process of developing 
environmental auditing standards. The standards fall into three groups: 
Auditing Principles, Auditing Procedures, and Auditor Qualifications. 
Second, in the U.S., the National Sanitation Foundation (NSF) in Ann 
Arbor, Michigan, is developing environmental auditing standards that 
are intended to be compatible with and augment the ISO standards. Work 
is proceeding rapidly within ISO and NSF, with draft standards expected 
by the end of the year.
    The proposed NSF and ISO auditing standards are being developed 
within the framework of overall environmental management systems 
standards. Neither ISO nor NSF intends to establish specific 
environmental standards; instead both are seeking to provide management 
tools that include auditing schemes and standards. The EPA 1986 Policy 
has been a central reference document for both the ISO and NSF work. As 
these new documents develop, issues of auditor qualifications and 
explicit management commitment to audit follow-up will be of particular 
interest to EPA.

IV. Review of EPA Policy on Specific Environmental Auditing Issues

A. Agency Requests for Audit Reports

    EPA's 1986 Policy clearly states that:

    . . . EPA believes routine Agency requests for audit reports 
could inhibit auditing in the long run, decreasing both the quantity 
and quality of audits conducted. Therefore, as a matter of policy 
EPA will not routinely request environmental audit reports.

    The 1986 policy also acknowledges regulated entities' need to self-
evaluate environmental performance with some measure of privacy. 
However, audit reports may not shield monitoring, compliance or other 
information that would otherwise be reportable and/or accessible to EPA 
even if there is no explicit requirement to generate that data. Thus, 
the 1986 Policy does not alter regulated entities' existing or future 
obligations to monitor, record or report information required under 
environmental statutes, regulations or permits, or to allow EPA access 
to that information. Nor does the 1986 Policy alter EPA's authority to 
request and receive any relevant information--including that contained 
in audit reports--under various environmental statutes or in other 
administrative or judicial proceedings.

    EPA's authority to request an audit report, or relevant portions 
thereof, will be exercised on a case-by-case basis where the Agency 
determines it is needed to accomplish a statutory mission, or where 
the Government deems it to be material to a criminal investigation. 
EPA expects such requests to be limited, most likely focused on 
particular information needs rather than the entire report, and 
usually made where the information needed cannot be obtained from 
monitoring, reporting, or other data otherwise available to the 
Agency. Examples would likely include situations where: audits are 
conducted under consent decrees or other settlement agreements; a 
company has placed its management practices at issue by raising them 
as a defense; or state of mind or intent are a relevant element of 
inquiry, such as during a criminal investigation. This list is 
illustrative rather than exhaustive, since there doubtless will be 
other situations, not subject to prediction, in which audit reports 
rather than information may be required . . .

B. EPA Response to Environmental Auditing

1. General Policy
    The 1986 Policy states that ``EPA will not promise to forgo 
inspections, reduce enforcement responses, or offer other such 
incentives in exchange for implementation of environmental auditing or 
other sound environmental management practices.'' EPA is required by 
law to independently assess compliance status of facilities, and cannot 
eliminate inspections for particular firms or classes of firms. Certain 
statutes (e.g. RCRA) and Agency policies establish minimum facility 
inspection frequencies to which EPA will adhere. Environmental audits 
are in no way a substitute for regulatory oversight.
    As explained in the 1986 Policy, however, EPA will take into 
account a facility's efforts to audit in setting inspection priorities 
and in fashioning enforcement responses to violations:

    . . . EPA will continue to address environmental problems on a 
priority basis and will consequently inspect facilities with poor 
environmental records and practices more frequently. Since effective 
environmental auditing helps management identify and promptly 
correct actual or potential problems, audited facilities' 
environmental performance should improve. Thus, while EPA 
inspections of self-audited facilities will continue, to the extent 
that compliance performance is considered in setting inspection 
priorities, facilities with a good compliance history may be subject 
to fewer inspections.
    In fashioning enforcement responses to violations, EPA policy is 
to take into account, on a case-by-case basis, the honest and 
genuine efforts of regulated entities to avoid and promptly correct 
violations and underlying environmental problems. When regulated 
entities take reasonable precautions to avoid noncompliance, 
expeditiously correct underlying environmental problems discovered 
through audits or other means, and implement measures to prevent 
their recurrence, EPA may exercise its discretion to consider such 
actions as honest and genuine efforts to assure compliance. Such 
consideration applies particularly when a regulated entity promptly 
reports violations or compliance data that otherwise were not 
required to be recorded or reported to EPA.

    These principles have been incorporated into the Agency's 
enforcement response and civil penalty policies.
2. Audit Provisions as Remedies in Enforcement Settlements
    The 1986 Policy includes the following language on audit provisions 
as remedies in enforcement settlements:

    EPA may propose environmental auditing provisions in consent 
decrees and in other settlement negotiations where auditing could 
provide a remedy for identified problems and reduce the likelihood 
of similar problems recurring in the future. Environmental auditing 
provisions are most likely to be proposed in settlement negotiations 
when:
     A pattern of violations can be attributed, at least in 
part, to the absence or poor functioning of an environmental 
management system; or
     The type of nature of violations indicates a likelihood 
that similar noncompliance problems may exist or occur elsewhere in 
the facility or at other facilities operated by the regulated 
entity.

    EPA's enforcement office issued further guidance on this issue in 
1986 in a document entitled ``EPA Policy on the Inclusion of 
Environmental Auditing Provisions in Enforcement Settlements.'' This 
guidance has been consistently applied in enforcement actions as 
appropriate, and has formed the basis for the inclusion of audit 
agreements or provisions in numerous consent decrees. Selected text 
from this document, also still in effect, is included here:

    In recent years, Agency negotiators have achieved numerous 
settlements that require regulated entities to audit their 
operations. These innovative settlements have been highly successful 
in enabling the Agency to accomplish more effectively its primary 
mission, namely, to secure environmental compliance. Indeed, 
auditing provisions in enforcement settlements have provided several 
important benefits to the Agency by enhancing its ability to:
     Address compliance at an entire facility or at all 
facilities owned or operated by a party, rather than just the 
violations discovered during inspections; and identify and correct 
violations that may have gone undetected (and uncorrected) 
otherwise;
     Focus the attention of a regulated party's top-level 
management on environmental compliance; produce corporate policies 
and procedures that enable a party to achieve and maintain 
compliance; and help a party to manage pollution control 
affirmatively over time instead of reacting to crises;
     Provide a quality assurance check by verifying that 
existing environmental management practices are in place, 
functioning and adequate.
* * * * *
    It is the policy of EPA to settle its judicial and 
administrative enforcement cases only where violators can assure the 
Agency that their noncompliance will be (or has been) corrected. EPA 
. . . considers auditing an appropriate part of a settlement where 
heightened management attention could lower the potential for 
noncompliance to recur.
* * * * *
    In most cases, either (or both) of the following two types of 
environmental audits should be considered [in enforcement 
settlements]:
    1. Compliance Audit: An independent assessment of the current 
status of a party's compliance with applicable statutory and 
regulatory requirements. This approach always entails a requirement 
that effective measures be taken to remedy uncovered compliance 
problems, and is most effective when coupled with a requirement that 
the root causes of noncompliance also be remedied.
    2. Management Audit: An independent evaluation of a party's 
environmental compliance policies, practices, and controls. Such 
evaluation may encompass the need for: (1) A formal corporate 
environmental compliance policy, and procedures for implementation 
of that policy; (2) educational and training programs for employees; 
(3) equipment purchase, operation and maintenance programs; (4) 
environmental compliance officer programs (or other organizational 
structures relevant to compliance); (5) budgeting and planning 
systems for environmental compliance; (6) monitoring, record keeping 
and reporting systems; (7) in-plant and community emergency plans; 
(8) internal communications and control systems; and (9) hazard 
identification and risk assessment.
    Whether to seek a compliance audit, a management audit, or both 
will depend upon the unique circumstances of each case. A compliance 
audit usually will be appropriate where the violations uncovered by 
Agency inspections raise the likelihood that environmental 
noncompliance exists elsewhere within a party's operations. A 
management audit should be sought where it appears that a major 
contributing factor to noncompliance is inadequate (or nonexistent) 
managerial attention to environmental policies, procedures or 
staffing. Both types of audits should be sought where both current 
noncompliance and shortcomings in a party's environmental management 
practices need to be addressed.

C. Environmental Auditing and Criminal Enforcement Policy

    Following EPA's 1986 Policy, three significant developments mark 
the evolution and implementation of criminal enforcement policy 
governing the use of self-audits and the voluntary disclosure of 
environmental violations.
    First, on July 1, 1991, the Department of Justice issued a guidance 
entitled: ``Factors In Decisions On Criminal Prosecutions For 
Environmental Violations In The Context Of Significant Voluntary 
Compliance Or Disclosure Efforts By The Violator.'' The guidance sets 
the general DOJ policy on auditing:

    It is the policy of the Department of Justice to encourage self-
auditing, self-policing, and voluntary disclosure of environmental 
violations by the regulated community by indicating that these 
activities are viewed as mitigating factors in the Department's 
exercise of criminal enforcement discretion.

The guidance and the examples contained therein provide a framework for 
the determination of whether a particular case presents the type of 
circumstances in which lenience would be appropriate. The factors to be 
considered in exercising the Department's prosecutorial discretion, in 
cases where the law and evidence are otherwise sufficient for 
prosecution, include: voluntary disclosure; cooperation; preventive 
measures and compliance programs; pervasiveness of noncompliance; 
internal disciplinary action; and subsequent compliance efforts.
    Second, on November 11, 1993, the Final Draft Environmental 
Sentencing Guidelines provided for the mitigation of sentences where a 
court finds that the following factors for environmental compliance are 
satisfied: line management attention to compliance; integration of 
environmental policies, standards, and procedures; auditing, 
monitoring, reporting and tracking systems; regulatory expertise, 
training and evaluation; incentives for compliance; disciplinary 
procedures; continuing evaluation and improvement.
    Finally, on January 12, 1994, EPA's Director of Criminal 
Enforcement issued a guidance entitled: ``The Exercise of Investigative 
Discretion,'' that sets forth specific factors that distinguish cases 
meriting criminal investigation. With respect to corporations 
conducting environmental audits, the guidance states:

    Corporate culpability may be indicated when a company performs 
an environmental compliance or management audit, and then knowingly 
fails to promptly remedy the non-compliance and correct any harm 
done. On the other hand, EPA policy strongly encourages self-
monitoring, self-disclosure, and self-correction. When self-auditing 
has been conducted (followed up by prompt remediation of the non-
compliance and any resulting harm) and full, complete disclosure has 
occurred, the company's constructive activities should be considered 
as mitigating factors in EPA's exercise of investigative discretion. 
Therefore, a violation that is voluntarily revealed and fully and 
promptly remediated as part of a corporation's systematic and 
comprehensive self-evaluation program generally will not be a 
candidate for the expenditure of scarce criminal resources.

D. Audit Privilege Legislation

    Four States (Colorado, Indiana, Kentucky, and Oregon) have recently 
enacted legislation which, with some variations, creates a ``self-
evaluative'' privilege for audit reports. EPA has consistently opposed 
this approach, principally because of the risk of weakening State 
enforcement programs, the imposition of unnecessary transaction costs 
and delays in enforcement actions, and the potential increase in the 
number of situations requiring the expenditure of scarce Agency 
resources, including the ``overfiling'' of State enforcement actions. 
EPA urges States that are considering a privilege-oriented approach to 
actively participate in the comprehensive process described in the June 
20, 1994 Federal Register notice (59 FR 31914) before pursuing any 
legislative action. The Agency also encourages States that have passed 
such legislation to present documentary justification for this approach 
either at the public meeting on July 27-28, 1994, or in written 
comments.

E. Environmental Auditing at Federal Facilities

    The 1986 Policy also encourages all Federal agencies subject to 
environmental laws and regulations to institute environmental auditing, 
to help ensure the adequacy of internal systems to achieve, maintain 
and monitor compliance. Such Federal facility environmental audit 
programs should be structured to promptly identify environmental 
problems and expeditiously develop schedules for remedial action.
    Where appropriate, EPA will enter into agreements with other 
agencies to clarify the respective roles, responsibilities and 
commitments of each agency in conducting and responding to Federal 
facility environmental audits. Also, to the extent feasible, EPA will 
provide technical assistance to help Federal agencies design and 
initiate audit programs. Currently, the EPA Federal Facility 
Enforcement Office (FFEO) is co-chairing an inter-Agency work group to 
revise auditing guidelines and protocols for Federal agencies. In 
addition, FFEO is developing the Federal Government Environmental 
Challenge Program required by Executive Order 12856, which calls for 
the establishment of a Code of Environmental Principles and a Model 
Installation Program for Federal facilities. This program is likely to 
include environmental auditing components.
    The 1986 Policy states that:

    With respect to inspections of self-audited facilities and 
requests for audit reports, EPA generally will respond to 
environmental audits by Federal facilities in the same manner as it 
does for other regulated entities.
* * * * *
    Federal agencies should, however, be aware that the Freedom of 
Information Act will govern any disclosure of audit reports or 
audit-generated information requested from Federal agencies by the 
public.

    When Federal agencies discover significant violations through an 
audit, EPA encourages them to voluntarily submit the related findings 
and corrective action plans to the appropriate EPA Regional office and 
State agencies, even when not specifically required to do so. EPA will 
review the audit findings and action plans, and negotiate either a 
consent agreement or a Federal Facilities Compliance Agreement, 
pursuant to its enforcement authorities under the various environmental 
statutes. In any event, Federal agencies are expected to report to EPA 
pollution abatement and prevention projects involving costs necessary 
to correct compliance problems discovered through the audit, in 
accordance with OMB Circular A-106. Upon request, and in appropriate 
circumstances, EPA may assist affected Federal agencies through 
coordination of any public release of voluntarily submitted audit 
findings with approved action plans once agreement has been reached 
and/or appropriate enforcement actions have been taken.

V. Review of Relationship to State or Local Regulatory Agencies

    Effective Federal/state partnerships are critical to accomplishing 
the mutual goal of achieving and maintaining high levels of compliance 
with environmental laws and regulations. The greater the consistency 
between state and local policies and the Federal response to 
environmental auditing, the greater the degree to which sound auditing 
practices might be adopted and compliance levels improved. State and 
local regulatory agencies, of course, have independent jurisdiction 
over regulated entities. EPA encourages them to adopt these or similar 
policies on environmental auditing, in order to advance the use of 
effective environmental auditing in a consistent manner.
    The 1986 Policy emphasizes this point further:

    EPA recognizes that some states have already undertaken 
environmental auditing initiatives that differ somewhat from this 
policy. Other states also may want to develop auditing policies that 
accommodate their particular needs or circumstances. Nothing in this 
policy statement is intended to preempt or preclude states from 
developing other approaches to environmental auditing. EPA 
encourages state and local authorities to consider the basic 
principles that guided the Agency in developing this policy:
     Regulated entities must continue to report or record 
compliance information required under existing statutes or 
regulations, regardless of whether such information is generated by 
an environmental audit or contained in an audit report. Required 
information cannot be withheld merely because it is generated by an 
audit rather than by some other means.
     Regulatory agencies cannot make promises to forgo or 
limit enforcement action against a particular facility or class of 
facilities in exchange for the use of environmental auditing 
systems. However, such agencies may use their discretion to adjust 
enforcement actions on a case-by-case basis in response to honest 
and genuine efforts by regulated entities to assure environmental 
compliance.
     When setting inspection priorities, regulatory agencies 
should focus to the extent possible on compliance performance and 
environmental results.
     Regulatory agencies must continue to meet minimum 
program requirements (e.g., minimum inspection requirements, etc).
     Regulatory agencies should not attempt to prescribe the 
precise form and structure of regulated entities' environmental 
management or auditing programs.

VI. Conclusion

    All of the policies referenced in this notice remain in effect. The 
Agency intends, however, to re-examine these policies comprehensively 
and remains open to suggestions for changes and improvements regarding 
all aspects of existing auditing policy. The information presented here 
is intended for the convenience of interested parties, in preparation 
for the July 27-28, 1994 public meeting. The Agency hopes that this 
information will clarify EPA's current activities and policies related 
to environmental auditing.
    The Office of Compliance will respond to written requests for 
copies of the documents referenced in this notice. Send all requests 
to: U.S. EPA, Office of Compliance, Attn: Ira R. Feldman, Special 
Counsel, 401 M Street, NW (5503), Washington, DC 20460.
Steven A. Herman,
Assistant Administrator, Office of Enforcement and Compliance 
Assurance.
[FR Doc. 94-18327 Filed 7-27-94; 8:45 am]
BILLING CODE 6560-50-P