The Environmental Protection Agency (EPA) announced this month the largest settlement ever under its audit policy, which was launched in 1995. The policy provides incentives to companies that voluntarily discover, promptly disclose and expeditiously correct environmental violations. Companies must also take steps to prevent future violations. EPA may reduce or waive certain penalties if the facility meets the policy conditions.
In August 2008, EPA announced a national interim audit policy for new owners designed to encourage them to make a “clean start” at their recently acquired facilities. Acting on the interim policy, Invista, a multinational manufacturer of a wide range of polymer-based fibers, including Lycra, Stainmaster, and Coolmax, disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations to EPA. Invista made the disclosures after auditing 12 facilities it acquired from DuPont in 2004.
Invista will pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct the self-reported environmental violations. Consistent with the audit policy, EPA waived a large portion of the penalty in this case.
The April 13, 2009, consent decree is subject to court approval after a 30-day public comment period and approval by the federal court. A copy is available on the Justice Department’s Web site.
Although Davis Wright Tremaine was not involved in this settlement, Lynn Manolopoulos, a Davis Wright Tremaine attorney who has experience successfully managing complex nationwide audits under this policy, has noted, "The commitment of EPA to make this work is continuing under the Obama administration, and with the increased risk of regulatory enforcement, regulated parties with compliance concerns should seriously consider engaging counsel to determine if an audit is right for their situation."