When I got to Washington, several states that had audit laws were meeting with the EPA. The EPA was using threats of overfiling and delaying approval of state enforcement programs because of the state laws. Overfiling means the EPA could come in and use audit information as a road map for prosecution and levying fines. They can do this after a person has conducted an audit according to a state law after a business has taken on the expense and exposure in order to be sure they are not harming the environment. The EPA wanted us to change the Wyoming law -- in spite of repeated assertions from our own State Attorney General that the law did not compromise our enforcement authority.
want to point out that the Wyoming law is not extreme. In crafting it, studied examples and results from other states that had gone through the process. I worked closely with our State Department of Environmental Quality and with members of the regulated community. I worked with various resource and conservation groups in Wyoming and we crafted a bill that provides very reasonable incentives for people to review their -operations-and clean up the problems they find. We provided no criminal immunity or criminal privilege. We defer-red to federal laws wherever conflicts existed. And there was a consensus.
Not only did people have a chance to be involved in the process, but the debate itself raised the importance of a cleaner environment. It forced people to focus on the fact that our objective is to have a cleaner, safer environment -- not to levy big fines.
Wyoming's scenario is not unique. It has happened in many other states and that has led me to offer this piece of legislation.
do want to thank you, Mr. Chairman, and the Environment and Public Works Committee for holding this hearing today because the issue deserves Congressional attention. To date, twenty-four states have chosen to enact some form of environmental audit law and legislation is pending in sixteen other state legislatures. I would point out that eleven members who sit on this Committee come from states that have enacted audit laws. Another five members come from-states where some form of legislation is pending.
Mr. Chairman, I did not want to -spend a lot of time explaining the intricacy of audit laws because you have an expert panel of witnesses here today who can do a good job of that. But I do need to outline the process so I can discuss concepts for resolving the problems.
The purpose of audit laws are to provide incentives for regulated entities to search for and disclose environmental violations and to clean them up. The EPA argues that these entities are already required to be in compliance so we should not offer them incentives to clean up their violations. The point is that people conducts audits to find things they do not already know about. Many of them will never look for problems if they are threatened with fines for their good will.
Entities that can conduct audits range from businesses to schools, to hospitals, towns, and counties. The incentives can range from relief from penalties to protection of voluntarily gathered information. It is important to keep in mind a carefully crafted audit law ensures that audit protections apply only to good faith efforts -- efforts that are voluntary, or "above and - beyond" what is otherwise required by law. If we ensure that, then any disclosures are a net gain above traditional enforcement. They are a net gain for a safer, cleaner and healthier environment.
Consider for a moment the decisions a small business faces with regard to its environmental performance. Many small businesses are already required to monitor and report certain emissions. Audit protections do not cover those reports because they don't apply to any monitoring that is required by law. But consider a business that is not on an inspection schedule and has no required emissions reporting. If that entity wants to review its environmental performance, it would have to conduct a study. It would have to pay an auditor to come in and review its operations -- that would be voluntary and it costs money. If it finds a violation, it must pay to clean it up. (Because if they find it and don't clean it up, they risk criminal activity). Once they report it, without audit protections, they could be fined and even taken to court.
So in deciding to conduct an audit, a person takes on a big risk. It is big enough so that most small businesses won't voluntarily undertake it. These folks choose-instead to "take their chances" and wait for.the inspectors. After all, only two percent of all regulated entities are on inspection schedules anyway. Just two percent, Mr. President.
How do we encourage the other ninety-eight percent to really think about their environmental performance when we reward good will with fines? That is the principle of audit laws. They recognize good faith efforts to make a cleaner, healthier environment. They encourage people to look for problems and know with certainty that they won't be penalized for their efforts.
The EPA has formulated an environmental audit policy that is working for some very large companies. It works well for companies with big legal departments that are used to negotiating with the EPA. It is often far easier for big business to use EPA's audit policy than to negotiate consent agreements, besides many of these companies use audits anyway. In fact, the EPA often cites the widespread use of audits as one of the reasons why we don't need state audit incentives. But they are missing the point. The objective of state audit laws is to increase the use of audits to make them worthwhile for small entities as well a$ large ones.
The fact is, that small businesses and towns won't use the EPA's audit policy because it provides no certainty. Small businesses cannot afford costly environmental litigation from the EPA. (And I define small businesses as those with less than 100 employees). These people don't trust the EPA. They see the EPA Office of Compliance Assistance trying to help them out, while Criminal Enforcement across the hall is concocting ways to put them in jail -- and they think those offices work together!
The principle of audit incentives is simple and reasonable. It is no surprise to me that so many state legislatures have chosen to enact some form of audit legislation. It is a positive tool that helps people understand and comply with environmental laws. It gives people a chance to ask questions without being penalized. It gives them the chance to figure out what they are doing wrong and fix it without adding steep penalties to the cost of compliance.
Mr. Chairman, small business owners don't take time to read the thousands of pages of Byzantine regulations constructed here in Washington. They don't have time to read every law. They try to do what is right and avoid doing what is wrong. I know because my wife and I were small-business owners for twenty-six years. In a small business, the owner is the same one who counts the change, helps the customers and vacuums the floor.
He or she has to stay in business, make payroll, and keep up with constantly evolving mandates from a never-ending supply of federal attorneys. And while the small business owner has many jobs, these attorneys have only one job, to create and modify mandates and to investigate citizens. There are over 17,000 employees at the EPA and now, in spite of the rhetoric about reinventing regulations, the EPA wants funds for another 200 enforcement police.
We don't need more police to improve compliance -- we need translators to interpret the regulations.
I would like to take a minute to explain my approach to the issue. The legislation I have introduced would provide a "safe-harbor" for state laws that fit within certain limits. It would not give authority to any state unless they go through the full legislative process, including all of the local discussion and debate that entails. That is a critical part of this process and something of value we should recognize. Keep in mind that state legislators and their families live in the places these laws will affect.
This bill would allow Congress to set the boundaries of the "safe-harbor" and determine what state laws may provide, such as:
-- Limited protection from discovery for audit information -- but only information that is not required to be gathered. All legal reporting requirements and permitting disclosures remain in effect and could not be covered by an audit privilege.
-- A state audit law may provide limited protection from penalties if violations are promptly disclosed and cleaned up. Note, the protection will not cover criminal actions, and the law must preserve the ability of regulators to halt activities that pose imminent danger to public health.
-- Third, if a state law falls within the "safe-harbor," the EPA would be prohibited from withholding state enforcement authority or overfiling against individuals simply because of the state's audit law.
-- Lastly, the bill would require an annual state performance report that will help measure the success of different laws, so we can see what works and what does not.
I want to point out that this legislation will not dilute enforcement. There are safeguards to ensure that state audit laws always act to supplement -- not to supplant existing enforcement. It is important to note that. Audits are an affirmative tool. Used properly, they can only be used to achieve an environment that is safer and healthier than the status quo. They do not protect any entity from regular inspection, sampling requirements or monitoring.
Some form of federal legislation is necessary to provide the certainty our state laws need to be effective. I think it is a tragedy that the EPA has been so obstructive in giving states a chance to test reasonable and innovative solutions to a cleaner environment. instead of promoting reinvention, the EPA is perpetuating an environmental race to mediocrity.