Environmental Auditing

Environmental auditing invariably raises important issues such as maintaining confidentiality and asserting legal privileges, accurately assessing audit results to identify noncompliance, evaluating the potential benefits and drawbacks of voluntary disclosures to regulatory agencies under "audit policy" programs, and negotiating resolutions with such agencies for voluntarily disclosed violations.

MGKF attorneys and technical consultants guide our clients through all facets of environmental auditing. We have performed environmental audits across a variety of industry sectors, including universities, railroads, chemical manufacturers, telecommunications companies, waste industries, and other businesses. We advise on relevant regulatory programs to be covered within audit scopes, design audit surveys and questionnaires, perform facility inspections, and review findings and draft reports generated by client or third-party auditors.

Because few compliance issues are clear-cut and determining compliance can present significant consequences for ongoing operations, company reputation, and future facility divestitures, we help clients determine if specific audit findings equate to regulatory violations and ensure that written audit reports reflect accurate legal conclusions. We also assist clients in developing environmental management systems and draft policies, procedures, and guidelines to help maintain future compliance while achieving business objectives.

Further, the firm has counseled several clients in deciding whether to make voluntary disclosures of audit results under the U.S. Environmental Protection Agency's (EPA) policy entitled "Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations" and analogous state audit policies.

For clients who choose to make voluntary audit disclosures to regulatory agencies, MGKF helps to ensure that the necessary timing, disclosure, future compliance, and other prerequisites will be achieved to allow companies to qualify under the applicable policies. In these cases, we prepare and submit audit results to EPA and state agencies, negotiate civil penalties, and draft the language of consent agreements or other documents formalizing settlement of the disclosed violations. Our frequent representation of clients before EPA and state personnel in a wide range of environmental programs, and MGKF attorneys’ previous work experience at EPA, provide a solid foundation for interacting with the agencies in audit disclosure contexts.

Where clients seek to protect audit results under the attorney-client privilege or other applicable protections, MGKF structures audit protocols and communication between audit team members to maximize the likelihood that such privileges or protections will be upheld.

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• Participated in an environmental audit for a large telecommunications company involving several hundred facilities nationwide. The audit resulted in voluntary disclosures under EPA and several state audit policies, negotiation of a greatly reduced EPA civil penalty, and entry into an EPA consent assessment. Working with the client and an outside consultant, together, we designed the audit protocol, evaluated findings to identify noncompliance, drafted the audit report, prepared compliance guidelines in a series of environmental regulatory areas, and performed compliance training for client personnel.
• The firm also counseled two Pennsylvania colleges during environmental audits performed under an agreement between EPA, the Pennsylvania Department of Environmental Protection, and the Association of Independent Colleges and Universities of Pennsylvania. MGKF reviewed draft audit reports, evaluated potential noncompliance findings, and prepared disclosures under EPA's audit policy.
• Assisted in-house personnel of a battery manufacturer in design and conduct of compliance audits for manufacturing plants at several locations. In addition to the standard audit components of reviewing documents and operations and determining compliance status, the firm collaborated in updating the company's environmental management system to assist in maintaining future compliance.
• Designed and implemented an environmental audit of a family-owned waste hauling firm, including reviewing environmental records, inspecting the facility, and preparing an audit report with recommended corrective actions.
• Served as environmental counsel to a health care system in the performance of environmental audits of several hospitals and outpatient facilities in multiple states. MGKF developed the audit scope, evaluated findings against regulatory requirements and best management practices, reviewed draft reports, and advised on compliance strategies.