NYSDEC Finalizes Environmental Audit Incentive Policy

Environmental Law


The New York State Department of Environmental Conservation (“NYSDEC”) has finalized its Environmental Audit Incentive Policy. The Policy, which becomes effective November 18, 2013, encourages regulated entities to self-audit their operations and facilities with the goal of improving compliance with environmental laws and regulations, and protecting public health and the environment. After gathering comments and insight from business leaders, government officials, and other stakeholders over the past year, NYSDEC’s final policy invites eligible entities to review and investigate their current business practices and adopt internal approaches, including environmental management systems and pollution prevention, to prevent environmental violations.

The Policy provides NYSDEC with authority to reduce or waive civil penalties for violations when regulated entities discover violations through their internal audit and voluntarily disclose their findings to NYSDEC. Further, as NYSDEC states in its Policy, “[t]his Policy also identifies incentives for regulated entities to go ‘beyond compliance’ by agreeing to evaluate and incorporate environmental management and pollution prevention into their systems.”

The establishment of this Policy in no way limits the NYSDEC’s authority to regulate, inspect, and enforce the environmental laws of New York State and NYSDEC will continue its effort to protect human health and the environment. This Policy incentivizes entities for being proactive and taking affirmative steps to ensure environmental compliance. Many entities within the regulated community have already developed and implemented environmental management systems, and “[t]his Policy supports those efforts and encourages widespread use.”

The final policy does not apply to every entity and for every environmental violation. NYSDEC narrowly tailored its policy to only apply to eligible entities[1], for eligible violations[2], who notify NYSDEC in writing of the violation within 30 days from discovery[3] (or other time frame established as part of an environmental audit agreement). 

Voluntarily disclosing a violation is only one part of the process. Once NYSDEC is notified of the violation, the eligible entity must then “correct all disclosed violations expeditiously, consistent with any applicable time frame and protocol prescribed by law and regulation, and as may be directed by the Department in writing.”  The Department expects the violation to be corrected within 60 days of notification.

The benefits and incentives for complying with the policy are not unsubstantial. Typically, civil penalties for environmental violations include “an amount representing the gravity of the violation and an amount equal to the economic benefit of delayed compliance.”[4] For those eligible entities that voluntarily disclose violations, pursuant to this Policy, NYSDEC will waive the gravity component. For eligible entities that engage in environmental audits or have an environmental management system as part of its ordinary course of business, NYSDEC will further reduce the penalties, including reduction of the economic benefit component. Eligible entities that enter into formal audit agreements and make long-term commitment to an environmental management program are provided the highest level of incentives.

This Policy serves two necessary functions. First, NYSDEC does not have the resources or manpower to inspect, investigate, and fine every regulated facility in violation of New York State environmental law and regulations and this self-audit policy removes that heavy burden from the Department and enables the regulated community to go “beyond compliance” and be rewarded for it. Second, the Policy will lead to immediate response to environmental violations, assisting in the ultimate goal of further protections to human health and the environment.

While cynicism may remain in critics who foresee regulated entities taking advantage of the NYSDEC policy by only reporting minor violations to mask larger environmental issues, the overall consensus among both environmental groups and business leaders is that this policy creates public and private sector cooperation that will lead to environmental stewardship through efficient and cost-effective practices.

For more information on NYSDEC’s Environmental Incentive Audit Policy and environmental issues in business operations, please contact Miriam Villani or Jason Kaplan.

[1] Entities will not be eligible if, within the past five years, they received a Notice of Violation, Environmental Conservation Appearance Ticket, Notice of Hearing and Complaint, or an administrative or judicial order, and were uncooperative in remedying past violations. The Department defines uncooperativeness as including “failing to respond to Department correspondence, or failing to take good faith steps to remedy violations….” See NYSDEC, Commissioner Policy 59 – Environmental Audit Incentive Policy (Oct. 16, 2013) http://www.dec.ny.gov/regulations/93791.html.

[2] Eligible violations include “violations of New York State law and regulations discovered by an eligible regulated entity through an environmental audit, or discovered by the Department, its contractors, or other state, federal or local government agencies during pollution prevention or compliance assistance.” A full list of violations excluded from eligibility under the Policy can be found at http://www.dec.ny.gov/regulations/93791.html.

[3] “A regulated entity is deemed to have discovered the violation when any officer, director, employee, or agent of the facility knows or has reason to believe that a violation has, or may have, occurred.” See NYSDEC, Commissioner Policy 59 – Environmental Audit Incentive Policy (Oct. 16, 2013) http://www.dec.ny.gov/regulations/93791.html.

[4] See id.

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