On December 20, 2023, the Louisiana Department of Environmental Quality (“LDEQ”) issued regulations implementing the state’s first-ever voluntary environmental self-audit program. Pursuant to La. R.S. § 30:2044, the regulations provide for the reduction or elimination of civil penalties for certain violations disclosed to LDEQ as the result of a voluntary environmental self-audit. The regulations describe the types of violations that are eligible for penalty reduction; the pre-requisites that must be met for a 75% or 100% penalty reduction; and required notices, including notice prior to the self-audit, in order to qualify for the program. The regulations also provide for other miscellaneous provisions, such as those relating to confidentiality of documents and prescription of violations. Louisiana’s self-audit program is similar to others of its kind, including the EPA’s Audit Policy and Texas’s Environmental, Health, and Safety Audit Privilege Act. There are, however, key differences among the three programs regarding eligibility, incentives, and confidentiality.
Eligible Types of Violations. Discovered violations that are not excluded under the regulations may be eligible for penalty reduction under Louisiana’s program. The following types of violations are excluded from coverage:
- violations that result in serious actual harm to the environment;
- violations that may present an imminent or substantial endangerment to the environment or public health;
- violations discovered by LDEQ or EPA prior to written disclosure of the violation to LDEQ;
- violations detected through monitoring, sampling, or auditing procedures that are required by law, permit, or consent agreement;
- violations that are subject to the chemical accident prevention provisions of 40 C.F.R. Part 68 and LAC § 33:III.5901;
- deliberate or intentional violations; or
- those that are the same or closely related to prior violations at the same facility within the past three years.
LAC § 33:I.7007(A). EPA and Texas’s programs exclude similar violations. Texas’s program also excludes violations that result in a substantial economic benefit that give the violator a clear advantage over its business competitors.
Penalty Reduction Requirements. To qualify for a 100% penalty reduction under the regulations, the following nine conditions must be met:
- the violation was systematically discovered via an environmental audit;
- the violation was voluntarily disclosed to LDEQ;
- the violation was disclosed in writing within 45 days of discovery;
- the violation was independently discovered by the owner or operator before LDEQ would have identified the problem through investigation;
- the violation was corrected as expeditiously as possible and no later than 90 days from the date of discovery;
- measures were implemented to prevent recurrence of the violation;
- the same or closely related violations have not occurred at the same facility within the past three years;
- the violation is not excluded (as described above); and
- the owner or operator cooperates with LDEQ as needed.
Where the violation was not systematically discovered via an environmental audit, only a 75% reduction is available. LAC § 33:I.7009(E).
EPA’s Audit Policy mentions similar conditions and incentives, but it requires disclosure of the violation within 21 days of discovery (rather than 45 days) and requires corrective actions to be taken within 60 days from the date of discovery (rather than 90 days). Further, EPA’s Audit Policy merely allows for elimination of the gravity component of the penalty rather than the entire penalty, but it also allows for a determination not to recommend criminal prosecution of disclosing entities. Texas’s program requires disclosure of the violation “promptly after knowledge” and requires corrective actions to be taken “within a reasonable time,” with no specific timeline mentioned for either. Texas’s program also differs because it allows for immunity from administrative or civil penalties.
Notice Requirements. To participate in the program, the owner or operator must, prior to initiating a voluntary environmental audit, notify the LDEQ of its intent to perform the audit via submission of LDEQ’s approved notice of audit form located on LDEQ’s website. LAC § 33:I.7009(A)(1). Thereafter, LDEQ must acknowledge receipt of the notice of audit in writing. Id. If the owner or operator cannot complete the audit within six months after the date of initiation, it must submit in a written request for extension “at least 30 calendar days prior to the expiration of the audit period with sufficient information to justify an extension.” LAC § 33:I.7009(B)(1). The justification for an extension of time is “limited to factors beyond the control of the owner of operator.” Id. Texas’s program also requires prior notice describing when the audit will begin and the audit’s general scope, and Texas requires completion of the audit within six months after the date of initiation. EPA’s Audit Policy, however, does not specifically mention prior notice as a prerequisite for participation in its program, nor does it provide a timeline for completion of the audit.
Disclosure Requirements. Owners or operators must disclose any violations, and corrective actions, if applicable, to LDEQ upon discovery of such violations by submitting to the LDEQ an approved disclosure of violation(s) form located on its website. LAC § 33:I.7009(A)(2). LDEQ must then acknowledge receipt of the disclosure of violation(s) in writing, which will “include a concurrence or rejection of the proposed corrective actions.” Id.
Confidentiality Provision. Louisiana’s program also includes several miscellaneous provisions. Under the program’s confidentiality provision, LDEQ must hold the disclosure of violation(s) and other documentation containing the results of the voluntary self-audit confidential “until a final decision is made, or a period not to exceed two years from the receipt of the initial disclosure of violation, whichever occurs first.” LAC § 33:I.7009(F)(1). Texas’s program provides for a more robust privilege that generally makes any part of an audit report privileged, and not admissible as evidence or subject to discovery in a civil action or an administrative proceeding. EPA’s Audit Policy, however, does not contain a confidentiality or privilege section.
Prescription. Upon LDEQ’s receipt of the disclosure of the violation(s) in accordance with the voluntary self-audit regulations, Louisiana’s program suspends the prescriptive period (which is typically five years) for all audit claims related to violations under the Louisiana Environmental Quality Act. Suspension terminates “upon a final decision … or after a period of two years, whichever occurs first.” LAC § 33:I.7015(A). EPA and Texas’s programs do not provide for such a provision.
For states that have adopted their own audit policies in federally authorized, approved, or delegated programs, EPA will generally defer to the state’s penalty mitigation for self-disclosures as long as the state policy meets minimum requirements for federal delegation. Because Louisiana’s audit program has not been officially recognized by EPA, it would be prudent for operators to consult EPA’s Audit Policy in conjunction with Louisiana’s self-audit regulations.
For further information regarding this blog, contact Liskow attorneys Colin North, Emily von Qualen, Clare Bienvenu, and Greg Johnson.
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