Violations of environmental law, even minor violations, can have devastating impacts on a business. Violations cannot only tarnish the public image of a company, but an enforcement action can also subject the business to significant legal liability. If a company is the subject of an acquisition, the acquiring entity will require disclosure of past environmental violations.
Federal and state environmental agencies may seek to impose administrative or civil penalties for noncompliance. The Minnesota Pollution Control Agency (MPCA) has the authority to impose civil penalties of $10,000 per day per per violation. The MPCA may issue an Administrative Penalty Order (“APO”) where it may assess a penalty of up to $20,000 unilaterally.
In many instances businesses may attempt to remain willfully ignorant of minor violations of environmental law. However, minor violations, when ignored, can quickly become more substantial and expose businesses to even more negative publicity, legal liability, and drawn out legal actions. The Minnesota Pollution Control Agency’s (“MPCAs”) Environmental Audit Program (“Audit Program”) may be a good solution for a business that is unsure if it has, or suspects that it may have, a minor environmental violations.
The MPCA Audit Program allows a business to discover and correct minor violations before those violations become substantial and extremely costly. To participate in Audit Program a business must conduct an environmental audit or hire an outside firm to conduct the audit. Forty five days after conducting the audit the business submits a report inventory to the MPCA summarizing the results. After the report is submitted, the business has 90 days to correct the identified issues or submit a performance schedule to the MPCA.
Generally, if a minor violation is found and corrected within 90 days, there will be no penalty for the violation. Taking part in Audit Program has two major benefits for businesses. First, the problem was identified promptly and will likely not turn into a major environmental issue with all of the attached costs. Second, the business will in most cases be able to avoid paying any penalty for the minor violation. However, there are potential risks for participating in Audit Program. If the MPCA determines that the violation provided the business with “a substantial economic benefit, which gives the violator a clear advantage over its competitors,” an enforcement action can be taken due to the violations disclosed in the audit.
Confidentiality is a major concern for most businesses when deciding whether to disclose a violation to a government agency. However, with the Audit Program, confidentiality, while still a concern, is less of an issue than with other disclosures to government agencies. First and foremost, the MPCA is generally not entitled to a copy of the audit, unless there is probable cause that a crime has occurred. Second, additional confidentiality protections can be put into place in advance of the audit through the use of attorney client privilege.
Finally, if a business decides to participate in the Audit Program, successfully completes an audit, and conducts any required cleanup, it can be awarded the Minnesota Green Star certificate. The business can then display this emblem for two years, which indicates to the public and potential customers the business’s commitment to the environment.
The U.S. Environmental Protection Agency (“EPA”) has similar audit programs where companies without a history of violations may be eligible for audit protection provided they meet certain eligibility criteria.
Please see the disclaimer at the bottom of this page that relates to limitations on this blog and to legal advice. As an environmental attorney who serves as outside environmental counsel to many clients Joseph Maternowski can assist with providing advice as to conducting an audit and making appropriate audit submissions. Mr. Maternowski also advises clients who are subject to an enforcement action. In this capacity he responds to Alleged Violations Letters (AVL) and Notices of Violations (NOVs) and negotiates with federal and state agencies on behalf of clients. To determine if your business qualifies for the MPCA Environmental Audit Program and to determine if participating in the program is the right choice for your business, please contact:
Hessian & McKasy, P.A.