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“VOLUNTARY ENVIRONMENTAL SELF-AUDIT” mentioning the U.S. Dept. of Justice was published in the Senate section on pages S5494-S5496 on June 11, 1997.
The publication is reproduced in full below:
VOLUNTARY ENVIRONMENTAL SELF-AUDIT
Mr. LOTT. Mr. President, yesterday Senator Kay Bailey Hutchison, my colleague and friend, introduced S. 866, legislation that provides a necessary Federal standard regarding voluntary environmental self-
auditing for states. There are nearly two dozen States which are experimenting with laws to encourage self-audits. These laws are aimed at increasing environmental protection and directing scarce enforcement resources toward the real bad actors. We need Federal legislation to make these state laws work, and Senator Hutchison has a balanced, fair approach.
I want to take this opportunity today to share with my colleagues how this legislative proposal will strengthen America's environmental policies. I will join Senator Hutchison as an active cosponsor to S. 866.
First, I would like to explain what voluntary environmental self-
auditing is all about.
In the past 10 years, the number of environmental statutes and regulations that impose compliance obligations, and the corresponding civil and criminal penalties and sanctions for violations, have dramatically increased. In response to these developments, more and more companies are using environmental self-audit programs as a tool to ensure compliance.
Generally, an environmental audit is a means of reviewing a business in order to get a snapshot of its overall compliance with environmental laws and to troubleshoot for potential future problems. EPA defines an audit as ``a systematic, documented, periodic and objective review by regulated entities of facility operations and practices related to meeting environmental requirements.'' Audits can include inspections of equipment to insure that permit requirements are being met; review of future and present risks of regulated and unregulated materials used at the facility; and surveys of the day-to-day operation of environmental management structure and resources. Some companies have compliance management systems that include day-to-day, even shift-to-shift, voluntary activities to assure compliance.
No State or Federal law requires companies to undertake comprehensive environmental self-auditing. This is just a good business practice initiated by companies that are taking extra steps to be in full compliance with environmental law.
There are no guidelines or standard practices--audits vary considerably because they must accommodate the individual needs of companies or specific facilities to be most effective. They are typically much more extensive than an inspection by a State or Federal regulator because they are done more often and because companies simply know much more about their operations and permit obligations than regulators do. A company conducting its own audit can identify and correct a much wider range of potential environmental violations.
Mr. President, doesn't this sounds like a great idea?
Unfortunately, many companies do not perform voluntary self-audits because the information contained in the audit documents can be obtained by Government regulators, prosecutors, citizens' groups, or private citizens and used to sue the company. Companies completing environmental audits develop documentation of their instances of noncompliance or areas of potential concern. These documents, if made public, are a roadmap for third parties or governments to sue even if the problem has already been corrected and no environmental harm has occurred.
Remember, we have an incredibly complex compliance system. Last year a survey conducted by Arthur Anderson and the National Law Journal found that nearly 70 percent of 200 corporate attorneys interviewed said that they did not believe total compliance with the law was achievable. This is due to the complexity of the law, the varying interpretations of the regulators and the ever-present role of human error and the cost.
Because of this complexity, it is possible and logical that companies which take on the task of self-evaluation will find violations--and that is what we want them to do. Find problems and fix them without waiting a year for a Government inspection.
Companies are already vulnerable to extensive liability under environmental laws. Under the Clean Air Act Amendments of 1990, for example, the maximum civil penalty that may be assessed is now
$25,000 per day per violation. EPA's fiscal year 1994 enforcement and compliance assurance accomplishments report shows that 166 civil judicial penalties were brought in 1994 totaling $65.6 million. On average, that is about $400,000 a case. There were 1,433 administrative penalty orders for the same year totaling $48 million.
Mr. President, that's a lot of money. A pretty powerful disincentive to self-auditing.
Yet, nearly two dozen states have recognized this disincentive to self-auditing and have enacted laws to fix the problem. These states and their citizens want more companies to conduct self-audits. Mississippi is one of the States that has acted on this issue.
These State laws typically do three things: First, provide qualified evidentiary protection for internal company audit documents; second, grant penalty immunity to companies that conduct audits and voluntarily disclose all violations they discover in their audit; and third, require prompt cleanup of the violation.
In other words, the States are saying that responsible, self-auditing companies that find and report problems to State authorities are rewarded. The companies do not have to pay a fine and are protected from any court action on an internal company audit.
Mr. President, this is a fair deal. We get more environmental protection--which should be the goal of environmental laws--not just freedom from sanctions and penalties. Senator Hutchison's legislation brings better environmental compliance with a voluntary flexible component.
Mr. President, this is basic common sense--companies have an incentive to find and fix their problems right away. What could be better for the environment?
State officials also benefit because they can establish cooperative relationships with companies instead of the current adversarial enforcement system. Taxpayers get a better return from their tax dollars because enforcement resources can be redirected toward the bad guys who are not following the law. And, most importantly, we all benefit from greater compliance with our environmental laws.
Some will say that these State laws are about secrecy and letting polluters off the hook. Opponents say that these laws make it more difficult to prosecute and that they will interfere with enforcement actions or compromise the public's right to know.
Mr. President, this is just not true. These laws protect only the voluntary self-audit document. They do not protect any information required by law to be collected, developed, maintained, reported or otherwise made available to a Government agency. The opponents are saying that protection of the audit document will allow bad actors to hide violations and endanger human health. Of course, that is not true. Any action that causes an imminent threat is not protected and must be immediately reported to authorities. Companies gain nothing from these laws if they are using an audit for a fraudulent purpose, or if they find a violation and don't fix it. If they're cheating, they're out.
These laws present a new way of doing business. No safeguards are removed. The State legislature is just as eager as the Federal Government to protect its citizens. Senator Hutchison's legislation has the same safeguards.
Twenty-one States think this is a better way to get things done. Twenty-five other State legislatures are considering this voluntary self-audit legislation. Let me give you those numbers again: 21 states have enacted a voluntary audit law and 25 are considering one.
Mr. President, that is a grand total of 46 States. I'd say this is a definite trend. The Federal Government ought to open its eyes and join the parade.
We need to enact similar legislation on the Federal level to complement and assist those States with a full and effective implementation of this concept. That is what this bill is all about. No rollback of standards. No removal of any environmental law. Yes, a different approach, but one already tested in States where 95 million Americans are currently living. It is time for EPA to see the wisdom of 95 million Americans.
Why not let the States continue to show us innovative ways to achieve environmental progress? I frequently ask that question. The answer is EPA wants to retain the right to enforce the law after it delegates program authority to a State. This means that without a Federal law granting a qualified exception for voluntary self-audits, the EPA can take separate enforcement actions--or overfile--regardless of any State action.
The sad consequence is that a company that wishes to take advantage of a State audit law is not protected from Federal enforcement actions--even though the Federal inspectors didn't find the problem and the company has fixed it.
Why would a company voluntarily disclose violations to a State when the Federal Government can come after them for the same thing?
EPA has been very clear about its intent to scrutinize companies in States that have enacted laws and that are currently addressing audit bills in their legislatures. EPA has set up a task force to monitor the approval of State delegated programs under the Clean Air Act for States with voluntary environmental audit statutes. The agency has indicated that approval of certain State programs may be delayed or denied because of their State audit privilege statutes. EPA has used this threat to withhold Federal program delegation in order to influence pending State legislation. Does this sound like an agency whose charter is to clean up the environment or does this sound like a bureaucracy that focuses on punishment first? Is this a constructive environmental approach?
Why--in the face of such Federal challenges--did the 21 States enact legislation? Because 95 million citizens want a cleaner environment. The States know it is the right thing to do. Americans want an approach that cleans the environment first. That is also why 25 other States want to consider alternatives. These States have shown great environmental courage.
I firmly believe that States can design and implement effective and successful environmental laws. In fact, States have proven that the Federal Government does not always know best and does not always get the job done.
I hope that EPA does not continue to minimize the independent sovereign rights of States to adopt and enforce environmental laws that protect the environment and add to our quality of life. Perhaps EPA needs to get a copy of the Constitution.
Full use of these State laws will never happen as long as EPA continues an adversarial approach. And Americans miss an opportunity to achieve creative and cost-effective solutions to environmental problems.
Even the Clinton administration has recognized the value of promoting environmental self-auditing when it issued a policy statement in December of 1995. It was a good first step forward, but in 2 years, we've seen only intimidation.
Basically, the administration policy says that if companies come forward and voluntarily disclose violations, then EPA will not prosecute them as aggressively as they could otherwise. Not a real bonus. No evidentiary protection, no protection against citizen suits, and it is only a policy, not a rule, so it does not have the force of law nor does it have any impact on what the Justice Department or the FBI can do. And this policy can and will vary from State to State and company to company.
It is now time for legislation. Senator Kay Bailey Hutchison has accepted the challenge and introduced a sound bill yesterday. This bill fully recognizes the sovereignty of the State. Mr. President, Senator Hutchison's bill, S. 866, will encourage environmental self-auditing by setting up incentives at the Federal level for those States with the provision. Nothing more.
Americans get better environmental compliance. I urge my colleagues to give serious consideration to the proposal being advanced by Senator Hutchison.
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