EPA Tailors Incentives to New Owners of Facilities and Businesses under its Audit Policy

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LUEL Briefing, June 27, 2007

Under its Incentives for Self-Policing: Discovery, Disclosure, Correction, and Violations (“Audit Policy”), the

Environmental Protection Agency (“EPA”) is considering whether to offer tailored incentives to “new” owners

who acquire facilities or businesses discovered to be in violation of environmental regulations. Incentives

tailored towards new owners would encourage them to self-audit and report violations in recently acquired

facilities, possibly through the promise of a reduction or forgiveness of the penalties for economic benefit.

Through its new initiative, EPA seeks more self-reporting and correction of violations that result in actual

emissions of pollutants, as opposed to recordkeeping or reporting violations. EPA believes it may be productive to direct the incentives of its policy towards companies involved in large-scale mergers or acquisitions.

Some of the issues upon which EPA requests comment are:

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