Statement By Senator John H. Chafee
Chairman, Senate Environment & Public Works Committee
Hearing on Environmental Audit Privileges and Immunities
October 30, 1997

Good Morning. The purpose of today's hearing is to receive testimony on the topic of environmental audit legislation. This is a topic that we touched on during the hearing the Committee held on enforcement issues in June, 1997.

At the outset, it might be useful to briefly describe what environmental audit laws do. Audit laws typically include one or both of the following features: an evidentiary privilege against disclosure of information discovered in the course of an audit; and some form of immunity from criminal or civil fines or penalties for any violations discovered, disclosed and corrected incident to an audit.

It is timely to hear about developments on environmental audits. While there is no legislation currently pending before the Committee on this topic, two bills have been introduced in the Senate and we will hear from the sponsors of each bill. Senator Kay Bailey Hutchison of Texas, sponsor of S.866, the "Environmental Protection Partnership Act," who will be join us shortly to discuss the need for her bill. The approach in Senator Hutchison's bill is to create a privilege and immunity under federal law.

We will also hear from Senator Mike Enzi of Wyoming, who yesterday introduced the "State Environmental Audit Protection Act." Senator Enzi, during his service in the Wyoming State Senate, was the principal sponsor of Wyoming's environmental audit law. The approach in Senator Enzi's draft bill is to create a safe harbor for qualifying state audit laws that would prevent federal interference. We welcome both Senators.

State legislatures have been very active on environmental audit legislation. Since 1994, approximately 24 states have enacted legislation that either establishes a privilege for information discovered during an environmental audit, or provides some form of immunity for violations of law discovered during an audit. Some states provide both a privilege and an immunity. I note that the two states that enacted legislation most recently on environmental audits are Rhode Island and Montana. Today, we will hear from representatives from Texas and Colorado on the topic.

It is apparent from the testimony that this is a controversial topic. EPA and the Department of Justice strongly oppose the creation of any federal audit privileges or immunities. Further, they oppose federal or state action to enact such privileges. EPA believes that its administrative policies, which feature discretionary penalty reductions and immunities, are a success and provide sufficient incentive for regulated entities to conduct audits. EPA recognizes that, despite its policy position, 24 states have acted. EPA has therefore adopted a legal position on the minimum requirements of a state audit law where a state also enforces a delegated federal statute, such as the Clean Water Act. This is a position that has caused tension between EPA and many states. Steve Herman, head of EPA's Enforcement Office, will present EPA's views.

We will also hear today from a representative of the business community to describe why federal legislation is needed on the topic, why the states that have acted to create audit laws, and what they advise the Congress to do to make state audit laws work better. We will also hear from a representative of a group of over 120 organizations or individuals who oppose the creation of statutory audit privileges or immunities.

I look forward to hearing from our witnesses.