States, EPA Clash Over Environmental Audit Confidentiality

Published July 1, 1997

In what promises to be a protracted struggle over who can best enforce the nation’s environmental laws and provide for a cleaner environment, EPA and a growing number of state environmental agencies are at loggerheads over state efforts to introduce innovative new programs.

Laws already enacted in 20 states and pending in 20 more provide privilege and/or immunity for voluntarily conducted audits and any discovered violations so long as they are disclosed and corrected.

“Audit laws represent a state-initiated improvement in environmental protection over the flawed central planning approach that has thus far dominated the field,” said Ben Lieberman, environmental research associate at the Washington-based Competitive Enterprise Institute (CEI). Lieberman is the author of a new study, “Environmental Audits: State Carrots Versus Federal Sticks in Environmental Enforcement.”

Environmental audits shift the focus away from Washington and towards state governments. By providing incentives for companies to uncover, disclose, and correct their violations of environmental statutes, audits have opened up lines of communication between state regulatory agencies and the entities they monitor. And, as state regulatory officials are quick to point out, companies carrying out voluntary audits are much more efficient at uncovering violations than an army of inspectors.

Audits replace the red tape and litigation inherent in the command-and-control model of environmental protection with a more streamlined, results-oriented, and cooperative approach. “Audits are good for the environment, but bad for many career environmentalists,” says Lieberman.

The Clinton administration opposes state audit laws and Congressional efforts to adopt a federal counterpart. According to Lieberman, EPA has engaged in an intimidation campaign against states with audit laws. The federal government (EPA and the Department of Justice) argues that the laws, specifically the privilege they extend to audit reports, fail to deter violations and protect the environment, interfere with its own enforcement efforts, and are unnecessary to encourage audits. None of these arguments stands up to scrutiny, Lieberman says. Moreover, he notes, the real-world experience with audits is positive, as several states report they are already resulting in additional environmental cleanup.

PF: For a copy of Ben Lieberman’s report, “Environmental Audits: State Carrots Versus Federal Sticks in Environmental Enforcement,” released by the Competitive Enterprise Institute in March 1997, call PolicyFax at 847/202-4888. Request document #2392409 (Part 1, 13 pages) and #2392410 (Part 2, 9 pages). For model environmental audit legislation, request #2392603, the Michigan Environmental Audit Privilege and Immunity (14 pages) and its companion legislative analysis, #2392604 (14 pages).