Prevent Regulatory Penalties with Environmental Self-Audit
authored by Linda C. Reese

If your business is not sure whether it is in compliance with Texas environmental, health and safety regulations, rather than having a regulatory agency determine that it is non-compliant and assessing potential penalties of thousands of dollars per day per violation, there is an available solution - an environmental self-audit.

This is a process by which an entity inspects its own facilities for compliance with environmental laws, as provided by the Texas Environmental, Health and Safety Audit Privilege Act (the "Audit Act").

There are two primary reasons why your business should conduct a voluntary audit. First, the resulting audit data is privileged information, and audit information may not be used against your business in civil or administrative proceedings. Second, the business becomes immune from administrative and civil penalties if certain violations are voluntarily disclosed and remedied.

In order to be granted immunity, you must provide a proper notice to the regulating agency that you are going to perform an audit. You must send a notice to the Texas Natural Resource Conservation Commission (TNRCC) that complies with the notice requirements of the Audit Act. These requirements are very specific.

During the audit, if you find a violation of the regulations, you must notify the TNRCC in a Disclosure of Violation letter that fulfills the notice requirements of the Audit Act.

In order to receive immunity, the disclosure of a violation must be preceded by a proper Notice of Audit and, it must by voluntary. There are specific requirements that must be met before a disclosure will be deemed voluntary.

The evidentiary privilege and the immunity from penalties pertain only to information compiled, and violations discovered and voluntarily disclosed during an authorized audit period.

If you need more time to complete your audit, you must send a Request for Extension letter. Facilities are cautioned that the continuation of an audit after the authorized period without prior written approval from the TNRCC may limit the availability of the privilege and immunity.

A properly performed environmental self-audit could prevent a regulatory agency from assessing penalties of thousands of dollars per day against your business.

However, the environmental regulations are extremely complex. Therefore, any business contemplating using the audit process should consult with an attorney with experience and expertise in environmental law.