OCTOBER 30, 1997

Thank you Mr. Chairman for the opportunity to present testimony on the important issue of voluntary environmental audit.

Environmental protection as we have known it in this country for the last quarter century is based on the command-and-control model and we have greatly improved our environment as a result. Our rivers are cleaner, we breathe cleaner air.

But it is precisely this progress that makes it necessary for us to reconsider our present regime. Experience shows that we can increase environmental protections even more if, in addition to existing enforcement tools, we partner with businesses by encouraging them to voluntarily assist oar state and federal agencies in protecting the environment. We must institute policies that accommodate this broader effort so we can target enforcement resources where they will be most effective.

Many companies have developed sophisticated environmental compliance systems to determine not only whether their operations are complying with existing standards, but how they can avoid future problems. These companies have invested in cutting-edge technology and expert personnel to search for ways to improve their environmental performance. They are way ahead of the regulators in finding potential problems and avoiding environmental harm. Clearly, it is to everyone's advantage to encourage these efforts.

Nevertheless, under present Federal law, we almost always treat companies that voluntarily audit their compliance worse than companies that violate the law and hide the violations. The law punishes a company that "comes clean" and reports violations that it finds and fixes. Meanwhile, a company that fails to investigate or otherwise hides violations could likely go scot free. In addition, the law discourages companies from producing detailed reports beyond those required by law, since they thereby increase their potential liability to third parties in an era of billion-dollar lawsuit awards.

This situation is worse in States with audit protection laws. Right now in Texas, if a company in good faith finds, fixes and reports a violation to the State, it is not punished by the State. Unfortunately, the Federal government has the authority to use this same information the company willingly turned over to the State to fine the company for Federal violations of the very same law. this hardly creates an atmosphere of cooperation -- between the regulated community and government or between states and the Federal Government.

The notion that voluntary audits should be encouraged is not ground breaking. Even back in 1990, Congress strongly encouraged voluntary audits in the conference report on the Clean Air Act amendments, noting that substantial benefits could be achieved.

Yet here we are at the close of 1997, and Congress still has not acted to give companies the go-ahead to conduct voluntary environmental audits.

States have, however. States have boldly -- and bipartisanly -- adopted laws that ensure companies that they will not be punished for cultivating thoroughness and vigilance in environmental compliance. 23 States have these laws so far.

What I propose is that Congress take its cue from the States and adjust Federal law to encourage companies to search for possible variations of environmental regulations. Together with Majority Leader Trent Lott, I introduced the "Environmental Protections Partnership Act of 1997", S. 866.

Under my bill, if a regulated entity voluntarily audits its compliance with environmental laws, the government may not turn around and use the audit report against the company in an enforcement action.

In addition, if a company does an audit, promptly corrects any violations, and reports the violations to EPA, no punitive action will be taken against the company for the violations. By ensuring companies that they will not be dragged into court for being honest, the bill encourages companies to find and fix violations and report them to EPA.

In order to ensure that these laws do not protect bad actors, I have included several protections: 1. No one gets the benefits of this bill who does not promptly correct and disclose violations uncovered in an audit. 2. Repeat violators do not get any benefits of my bill. 3. Willful and intentional violators are in no way protected by my bill. 4. The Federal Government is not prohibited from getting an injunction against a violator if it is necessary to protect public health or the environment, nor is that government prohibited from inspecting or monitoring compliance with existing law. 5. My bill protects audit information but does not excuse the regulated community from any other information that is required by law to be reported.

Our old-world model of environmental protection will not serve us in the next century. An the new model -- a public/private joint venture to find and fix violations -- is already in place in 23 States. Congress should resign its role as the ball and chain of environmental enforcement and start working with the States to increase environmental protection through voluntary audit programs.