[Congressional Record Volume 143, Number 81 (Wednesday, June 11, 1997)]
[Senate]
[Pages S5494-S5496]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   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

[[Page S5495]]

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.

[[Page S5496]]

  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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