Developing an In-House Audit Program

1. Developing an In-House Audit Program February 28, 2006 Judy B. Yorke Yorke Engineering, LLC 949-248-8490 x25 JYorke@YorkeEngr.com

2. Developing Your Audit Program • What is an audit program? • How do I put together an audit program? • strategies • audit team • checklists • auditing

3. Why do I need an audit program? • Annual Certification responsibilities • Citizen suits • Agency enforcement • subject to prosecution by both local and federal agencies • administrative, civil, and criminal

4. Preventing Problems… Make sure your responsible official is comfortable Avoid fines and citations Why do I need an audit program? Meet the compliance certification requirement Make sure your facility complies with regulations Plan corrections, additions, improvements to your permits

5. What’s the Bottom Line? • An great environmental audit will: • Improve plant profitability, by: • Lowering compliance costs, and • Increasing operating flexibility. • Lower compliance liability, by: • Correcting problems, • Assuring due diligence for certifications.

6. Confidential What an audit is – or is not! An audit is: • Systematic • Demonstrates compliance • Rigorous • Critical to planning improvements to your compliance program … But an audit is NOT Confidential

7. Select audit team Find applicable regulations Develop audit checklists Audit for compliance Develop corrective action plan Certify to compliance Setting up an Audit Program

8. Detached and objective Less familiar with plant Ask “Why?” Understands requirements Critical to day-to-day compliance Knowledgeable about plant Understands impacts of imposed requirements Has ideas about improvements or changes needed Putting Together an Audit Team Environmental Staff Plant Personnel

9. Finding Applicable Regulations Agency Policy Statements California Health and Safety Code Gas Company Audit Checklists Federal Register Local Agency Rule Books

10. Developing Audit Checklists - General Requirements Involve the audited facility Audit Checklist Involve the audit team Include verification methods Build in documentation methods

11. User-Friendliness • User’s knowledge of regulations • User’s access to regulations • Avoid jargon • Customize for your equipment, products Developing Audit Checklists - Content Audit Checklist

12. Items to Audit • MRR requirements • Permit conditions • Trouble spots – violations, breakdowns, etc. • Company policies • Who develops policies? • Who carries them out? • Operator knowledge Developing Audit Checklists - Content Audit Checklist

13. Audit Components • Specific equipment information • Compliance question and answer • Regulatory or other citation & date • Verification steps • Compliance plan Developing Audit Checklists - Content Audit Checklist

14. Developing Audit Checklists - Content Resources Needed • Text of regulations • Permits • Working knowledge of plant • Past compliance information • Company policies • Back-up resources • Legal • Technical Audit Checklist

15. Multiple Facilities • Modular format • Allows customization Developing Audit Checklists - Content Audit Checklist

16. Updating Checklists • Who’s responsible? • How often are they updated? • How are regulatory changes incorporated? Developing Audit Checklists - Ongoing Audit Checklist

17. Conducting an Audit –The Process Get familiar with plant Check paperwork Test conclusions Interview plant personnel

18. Conducting an Audit – The Process • Build rapport • Use everything: monitoring data, reports, interviews, inspections, instincts • Exhaust all lines of inquiry • Verify major findings • Document what you checked, what results were • Document what allows you to determine compliance

19. Visually inspect plant Confirm possession of permits Review permit conditions Review emission limits Review rule com- pliance Snoop Around! • Rule 219 Exempt • RECLAIM • Title V • NOVs/NTCs • Source Tests • Variances • Abatement Orders • Audit Reports • Complaints • Interviews Conducting an Audit – Items to Check

20. Briefing the responsible official • Build rapport • Focus on facts • May need to explain regulations • Develop solutions together

21. How should past noncompliance be treated? • EPA policy • Certify to ongoing, not intermittent, compliance • Some historical violations have current implications

22. Must a source disclose noncompliance? • Compliance plan required with permit application - so audit early! • May need variance to make ongoing certification • Other reporting requirements • breakdown conditions • reporting requirements • may need a permit or variance

23. Preparing a Compliance Plan • Need for a compliance plan • Helps avoid “smoking gun” • Required by Title V • What to include • Specific regulatory citation • What actions will be taken to achieve compliance • Date at which compliance will be achieved • May need to get variance • May need permit application

24. Revisit audit team selection Update applicable regs Update audit checklists Audit for compliance Develop corrective action plan Certify to compliance Ongoing Compliance Assurance

25. Ongoing Compliance Assurance • Frequency • Meet Title V requirements • consider results of past audits • complexity of operation/likelihood of problems • may want to do “spot” audits • consider EPA audit policy • Updating checklists • make sure regulations haven’t changed • first one after Title V application is completed: make sure all your permit conditions are included

26. Making Compliance Second Nature • Build Auditable Systems • consider setting up internal systems to make auditing easier • regular recordkeeping • regular inspections and logging of inspections • Management Attitude • Audit protects company, employees • Avoid scape-goating

27. Making Compliance Second Nature recognize and reward “clean” audits educate staff on Title V recognize/reward identification and correction of noncompliance responsibleofficialobligations Get plant people on board recognize and reward just doing audits! explain penalties give staff training and time to maintain compliance give them time to audit Staff responsibilities

28. Commitment to Assistance The Gas Company is Committed to Assisting Our Customers Throughout the Title V Process Call for Questions or Assistance! 562-803-7428