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Environmental Audits: State Carrots Versus Federal Sticks In Environmental Enforcement

Issue Analysis

Title

Environmental Audits: State Carrots Versus Federal Sticks In Environmental Enforcement

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Environmental regulation has experienced tremendous growth in the last quarter century, resulting in a heavily centralized, command-and-control bureaucracy overseeing all aspects of environmental protection, including enforcement. While not without its successes, this approach is widely acknowledged to have numerous deficiencies. It is inflexible, inefficient, costly, unduly adversarial, and does not maximize environmental protection. Nonetheless, the federal government has proven resistant to new ideas for improving environmental compliance.

Promising innovations in environmental protection are coming from the states, however. One example is environmental audits. Without any encouragement from Washington, almost every state has either passed or considered an environmental audit bill since 1993. These laws facilitate self-enforcement by removing disincentives for regulated entities to investigate their own operations and proactively correct any discovered violations. The state laws differ from federal policy largely in that they provide privilege and immunity for the audit report so long as any discovered violations are disclosed and corrected. The EPA and DOJ, on the other hand, insist on retaining the right to use audit reports in subsequent legal actions, a factor that discourages many firms from undertaking audits in the first place.

The Clinton Administration continues to oppose state audit laws and Congressional efforts to enact a federal counterpart. The EPA has engaged in an intimidation campaign against several states with audit laws as well as those considering audit bills. The agency has threatened several states with revocation of federally-delegated authority under the Clean Air Act and Clean Water Act. Both the EPA and DOJ have also stated that they will step up federal enforcement in states with audit laws not to their liking.

The EPA argues that the laws, in particular 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. The DOJ echoes these views. But none of these arguments stand up to scrutiny:

· the legal protections only apply for violations that are disclosed to the appropriate authorities and promptly and permanently remedied, ensuring that all environmental benefits are attained;

· there are exceptions for serious, life-threatening, or deliberate violations;

· federal and state enforcement is unhindered by state audit laws, the only exception being that the audit report cannot be used against firms;

· the privilege extends only to voluntarily undertaken audit reports, and not to any other information required by law;

· the lack of legal protections has indeed had a chilling effect on both the number and scope of audits, according to many regulated entities.

In addition, the federal environmental bureaucracy may oppose audits for self-interested reasons. Environmental audits shift the focus away from Washington, D.C., and replace red tape and confrontation with a streamlined and cooperative approach. In contrast, the EPA and DOJ measure success (and attempt to justify budget increases) by the number of convictions and penalties assessed. Those who see environmental enforcement as an end in itself view audits as something of a threat, regardless of their potential for improving compliance with environmental regulations.