27 ELR 10151 | Environmental Law Reporter | copyright © 1997 | All rights reserved

Promise and Reality in the Enforcement of the Amended Clean Air Act Part II: Federal Enforceability and Environmental Auditing

Editors' Summary: This Article is the second in a two-part series that examines the promise and reality of Clean Air Act enforcement by reviewing four central enforcement issues: (1) the development of the "any credible evidence" rule; (2) the evolution of the compliance assurance monitoring proposal; (3) the controversy over the requirement of federal enforceability of limitations on a source's potential to emit pollutants for purposes of determining its status as a "major source" under the Act; and (4) the tension between state-law voluntary disclosure, immunity, andenvironmental audit privileges and EPA's enforcement policy for state Title V operating permit programs.

This Article briefly reviews some of the new enforcement tools created by Congress through the 1990 Clean Air Act Amendments. It then discusses the requirement of federal enforceability with respect to determination of a source's potential to emit under the Act. Next the Article reviews the controversy over the environmental-audit privilege and voluntary-disclosure policy that has erupted largely in response to the prospect of heightened enforcement of the Act. It concludes that although EPA probably has the legal authority to achieve its enforcement objectives, the Agency must adopt a pragmatic approach to maintain the partnership with the states that is critical to successful clean-air enforcement.

Mr. Van Cleve's firm specializes in environmental law and general litigation in Washington, D.C. He is also a former Deputy Assistant Attorney General, U.S. Department of Justice, Environment and Natural Resources Division. He received his B.A. from the University of Chicago in 1973 and his J.D. from Harvard Law School in 1977. Mr. Holman is an attorney at Jones, Day, Reavis & Pogue in Washington, D.C., specializing in environmental law. He is also a former Assistant Regional Counsel, U.S. Environmental Protection Agency, Region 4. He received his B.A. from the University of Washington in 1983 and his J.D. from Northwestern School of Law of Lewis & Clark College in 1988. The authors wish to thank Robert Knop, an American University law student, for his invaluable research assistance. The opinions expressed in this Article are solely those of the authors.

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Introduction

One of Congress' key objectives in amending the Clean Air Act (CAA) in 1990 was to strengthen its enforcement. At this writing, after a process that took much longer than Congress had anticipated, the amended Act's major enforcement provisions are moving toward implementation by the U.S. Environmental Protection Agency (EPA) and the states. This is a good time to consider the size of the gap between the Act's original promise of strengthened enforcement and the reality of the new enforcement framework that has taken shape.

At the time of the 1990 CAA Amendments, EPA envisioned that two new features of the Act would dramatically increase clean-air enforcement: first, the Title V program for federal operating permits, requiring "major sources" of air pollution to periodically certify their compliance with all applicable Act requirements;¹ and second, the enhanced-monitoring program, requiring most "major sources" to perform continuous or nearly continuous monitoring of their air emissions. The compliance certifications and the results of enhanced monitoring would also be available for review by the public, strengthening citizen enforcement of the Act.²

In several respects, however, the amended Act's enforcement framework has not developed precisely as EPA expected. To begin with, the states took longer than anticipated to adopt the Title V program, delaying EPA's time-table for using Title V permits as the vehicle for increased CAA enforcement. Second, tension has developed between the desire of EPA and states to help companies understand and comply with the amended Act and the need to take vigorous enforcement action against violators. Several states have responded by enacting broad protections for companies that voluntarily evaluate their environmental compliance and agree to correct violations. Unfortunately, these protections are often in conflict with Congress' requirement that a state must have authority to take enforcement action against any CAA violation and to recover substantial penalties.

Third, industry has successfully challenged EPA's longstanding policy that restrictions a facility takes on its emissions to avoid being classified as a "major source" must be federally enforceable. State and local permitting authorities may soon have much more discretion to allow facilities to avoid being "major sources," thereby avoiding regulation under Title V and other Act programs, resulting in less regulatory scrutiny and, consequently, in less enforcement.

The Courts Reverse EPA's Policy That Limitations on a Source's Potential Emissions Must Be Federally Enforceable

The Significance of "Potential to Emit" in the CAA Scheme

Evaluating a facility's potential air emissions is the critical factor in determining whether EPA classifies the facility as a "major" source or a "minor" source. The distinction between major and minor sources is critically important, because many CAA programs, such as the Title V program, the New Source Review (NSR)/Prevention of Significant Deterioration (PSD) program, and the § 112 program for hazardous air pollutants (HAPs), apply only to major sources.³ Moreover, the CAA typically imposes far greater regulatory requirements on major sources than it does on minor sources.⁴ To the extent that a facility can be classified as minor, rather than major, it can avoid most of the Act's regulatory requirements, and is much less likely to become an enforcement target.

Since 1980, EPA has defined "potential to emit" (PTE) for determining major source status as:

The maximum capacity of a stationary source to emit a pollutant under its physical and operational design. Any physical or operational limitation on the capacity of the source to emit a pollutant, including air pollution control equipment and restrictions on hours of operation or on the type or amount of material combusted, stored, or processed, shall be treated as part of its design if the limitation or the effect it would have on emissions is federally enforceable.⁵

EPA has long taken the view, at least implicitly, that restrictions on PTE must be made federally enforceable to ensure that facilities will actually comply with the restrictions. From EPA's perspective, the threat of federal enforcement (as well as citizen enforcement under CAA § 304) is necessary, over and above the state or local enforcement threat, to "hold facilities' feet to the fire" and ensure that they do not violate agreed-upon PTE restrictions.⁶

Under EPA's PTE definition, the PTE calculation begins with an estimate of the uncontrolled maximum physical and operational capacity of a source to emit pollutants. In most cases, calculating the emissions of a facility operating 8,760 hours per year at full throttle and without emission controls yields a very high potential emissions number. That PTE number is the means for determining whether [27 ELR 10153] facility emissions meet or exceed established major source thresholds.⁷

To illustrate, the Act requires a Title V permit for any facility that has potential emissions of 100 tons per year of a criteria pollutant such as particulate matter.⁸ A metal-grinding operation may have the potential to emit far more than 100 tons of particulate matter in a year, even though dust collectors and filters keep its actual yearly emissions below the Title V threshold. Under EPA's PTE definition, if the grinding operation does not have a federally enforceable requirement to operate the air-pollution control equipment or to lower emissions by limiting operating hours, throughput, raw materials, etc., the high theoretical maximum emissions must be used as its PTE, subjecting the facility to regulation as a Title V major source.

To complicate matters, in the past it was often difficult for facilities to obtain federally enforceable PTE restrictions. Since the early 1980s, EPA has taken the position that an operating restriction or requirement for control equipment is not federally enforceable unless the requirement is authorized under an EPA-approved state implementation plan or is contained within a currently effective state preconstruction permit. PTE restrictions contained in state operating permits were usually considered not to be federally enforceable. Accordingly, facilities have had to either try to ensure that PTE restrictions in preconstruction permits remained valid after they subsequently received their state operating permit, or they have had to wait for EPA to approve PTE restrictions into SIPs.

Facilities often have been unable to get EPA to consider PTE restrictions in state or local permits to be federally enforceable. As a result, some companies with low actual emissions but a high PTE have found themselves designated as major sources who must comply with expensive and burdensome programs such as Title V or NSR. When a facility's emissions have been historically well controlled, or when operating parameters serve to keep actual emissions far below major thresholds, there is little or no environmental benefit gained by forcing the facility to comply with major-source requirements.⁹

An End to the Federal-Enforceability Requirement?

Although industry has long been frustrated with the federal-enforceability requirement, EPA was able to defend it until recently. Following the 1990 Amendments, the expansion of the federal-enforceability requirement to PTE calculations made under the Title V and HAP programs created a new opportunity to challenge EPA's PTE definition. In three separate cases decided between July 1995 and June 1996, the U.S. Court of Appeals for the District of Columbia Circuit held that EPA failed when promulgating its PTE definition to adequately demonstrate why limits on a facility's PTE must be federally enforceable, as opposed to being enforceable by a state or local agency alone, in order to be considered "effective" in limiting PTE.¹⁰ In the wake of these cases, the future of the federal-enforceability requirement is in serious doubt.

Following the 1990 Amendments to the Act, EPA promulgated numerous rules to implement the requirements of § 112, the program to control emissions of HAPs.¹¹ One of these rules, the so-called General Provisions rule, was designed to provide a general set of procedures and criteria that would apply to specific § 112 rules regulating particular industries and processes.¹² Among other things, the general provisions rule contained a definition of a "major source" for § 112 purposes:

Major source means any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants….¹³

The general provisions rule repeated EPA's 1980 definition of PTE, including the language that any limitation on PTE such as air-pollution control equipment or restrictions on hours of operation would be treated as part of the source's design only if "the limitation or the effect it would have on emissions is federally enforceable."¹⁴

In National Mining Ass'n v. U.S. Environmental Protection Agency,¹⁵ a coalition of industry representatives challenged the general provisions rule, arguing that, among other things, EPA had exceeded its authority under the Act by requiring PTE limitations used for § 112 purposes to be federally enforceable. The National Mining Ass'n court began its analysis of the industry challenge by reviewing the history of EPA's PTE definition. The court noted that the controversy between EPA and industry concerning the federal-enforceability requirement had its roots in the late 1970s.

Following enactment of the CAA Amendments of 1977, EPA promulgated regulations implementing the new PSD program, and defined "potential to emit" for determining PSD major source status. This 1978 PTE definition required facilities to add up the emissions of a source operating around the clock at full capacity, without taking into account [27 ELR 10154] the effect of any pollution-control equipment such as baghouses, scrubbers, filters, etc.¹⁶ The D.C. Circuit rejected this definition in Alabama Power Co. v. Costle, concluding that:

When determining a facility's potential to emit air pollutants, EPA must look to the facility's "design capacity"—a concept which not only includes a facility's maximum productive capacity (a criterion employed by EPA) but also takes into account the anticipated functioning of the air pollution control equipment designed into the facility.¹⁷

Based on this conclusion, the court remanded the PTE definition to EPA for reconsideration. EPA responded to the Alabama Power decision by promulgating a new PTE definition in 1980 that not only considered the effect of air-pollution control equipment, but also took into account operational restrictions such as limits on operating hours, usage of raw materials, throughput, etc., as long as the operational restrictions were federally enforceable.¹⁸ EPA explained that federal enforceability is "necessary, as a practical matter, to ensure that sources will perform the proper operation and maintenance for the control equipment."¹⁹

This revised PTE definition was itself challenged because of the federal-enforceability requirement, and in 1983, pursuant to a settlement agreement with industry, EPA proposed amending the PTE definition to consider emission limitations that were "enforceable under federal, state or local law and discoverable by the Administrator and any other person."²⁰ When EPA issued the final PTE rule in 1989, however, the federal-enforceability requirement had again been included in the PTE definition. As the National Mining Ass'n court noted:

By the time the final rule was issued, in 1989, the agency had apparently decided to abandon the terms of the settlement. The final regulations reverted to the former position of requiring federal enforceability as the sine qua non for crediting operational restraints…

Congress thus acted in 1990 against a backdrop of over a decade of skirmishing between the agency and affected companies, during which the issue of whether and to what extent state and local controls were to be credited in calculating a source's "potential to emit" was very much in the forefront.²¹

It is clear from the D.C. Circuit's characterization of the long-standing PTE controversy that the court has grown impatient through the years with EPA's refusal to either drop the federal-enforceability requirement altogether or to justify its continued existence.

The court's impatience and frustration with EPA over the PTE issue is evident in the court's analysis in the National Mining Ass'n case. The industry petitioners had asserted that EPA's interpretation of the federal-enforceability requirement supported agency policy objectives having nothing to do with ensuring the effectiveness of state controls. EPA's real objective in maintaining the federal-enforceability requirement, industry argued, is to compel states to keep EPA actively involved in state emissions policies. The court noted that EPA's interpretation of the Act for that purpose is impermissible, "since it subordinates the effectiveness of controls to other considerations not approved by Congress."²²

The D.C. Circuit further observed that in drafting § 112, Congress had specifically directed EPA to consider controls in determining which facilities were major sources, but "conspicuously did not limit controls to those that are federally enforceable."²³ The court reasoned that while it was permissible for EPA to refuse to take into account ineffective controls, it was far from clear that EPA could simply refuse to consider controls on other grounds:

What EPA has not explained is how its refusal to consider limitations other than those that are "federally enforceable" serves the statute's directive to "consider[] controls" when it results in a refusal to credit controls imposed by a state or locality even if they are unquestionably effective. Under EPA's regime, even a state program of unassailable effectiveness would not qualify in computing a source's capacity to emit unless it had been submitted not only for EPA approval, but also for inclusion in the SIP.²⁴

The court also rejected EPA's arguments that through the 1990 Amendments Congress implicitly delegated to EPA the authority to ignore state or local controls, and that Congress implicitly ratified EPA's prior rejection of control requirements that were not federally enforceable.²⁵ The court observed that EPA's core justifications for the federal-enforceability requirement are the administrative burden associated with evaluating the effectiveness of state and local controls on a case-by-case basis, and the desire for national consistency in environmental enforcement.²⁶ The court found both justifications unpersuasive, and concluded that EPA had not demonstrated that federal enforceability is required to ensure that controls on emissions are effective. Accordingly, the court remanded the § 112 PTE definition to EPA for reconsideration.

In Chemical Manufacturers Ass'n v. U.S. Environmental Protection Agency,²⁷ which followed on the heels of the National Mining Ass'n decision, the D.C. Circuit also remanded the PTE definition for the PSD/NSR program to EPA for reconsideration. The D.C. Circuit took the further step of actually vacating the PSD/NSR PTE regulations pending the outcome of EPA's reconsideration of the federal-enforceability requirement. The court subsequently considered the definition of PTE for Title V purposes, and in Clean Air Implementation Project v. U.S. Environmental Protection Agency,²⁸ the D.C. Circuit summarily vacated EPA's Title V PTE definition and remanded it to the Agency for reconsideration.

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In the wake of the three decisions, EPA was left with the choice of (1) amending the § 112, PSD/NSR, and Title V rules to recognize state and local limits as reducing a facility's PTE, or (2) justifying to the court why federal enforceability is required to ensure that PTE limits will be effective. Unless EPA can convince the D.C. Circuit that state and local limitations on a source's potential to emit can never be effective, EPA will probably have to accept at least some restrictions contained in state or local permits or other enforceable documents as effective limits that reduce a facility's potential to emit air pollutants.

EPA's Response to the Federal-Enforceability Challenges

It is fair to say that EPA was taken somewhat by surprise by the decisions and their consequences for the federal-enforceability requirement. In the months that followed Chemical Manufacturers Ass'n's vacatur of the PTE definition for the PSD/NSR program, EPA issued an Interim Policy on the federal-enforceability issue.²⁹ The Interim Policy announced that EPA intended to hold discussions with stakeholders and propose new PTE definitions in the spring of 1997.³⁰ EPA also solicited comment on two separate approaches to the question of federal enforceability. The first approach would recognize "effective" state-enforceable limits as an alternative to federally enforceable limits on PTE. The burden would be placed on the facility seeking the limit to demonstrate that the state-enforceable limit is enforceable as a practical matter and is being regularly complied with. The second approach would retain the federal-enforceability requirement, but simplify the procedures necessary to obtain federal enforceability of controls.³¹

EPA further explained its evolving position on federal enforceability in a discussion paper issued January 31, 1996.³² Addressing the National Mining Ass'n decision and the Agency's upcoming revision of the PTE definition, EPA stated that:

The NMA case makes clear that EPA has the authority and the obligation to ensure that only those limits that are "effective" in limiting emissions are considered in determining PTE. However, the meaning of the term "effective," as the Court used it, is not self-evident. EPA believes that the primary purpose of this [PTE] rulemaking should be to incorporate the notion of "effectiveness" into the regulatory scheme in a manner that provides clear guidance to States and the regulatory community.

….

This rulemaking presents an opportunity to reexamine EPA's historical policy on PTE in its totality, to carry forward those elements of it that still make sense, and to explore innovative ideas for achieving this goal.³³

In focusing on practical ways to determine the "effectiveness" of state and local controls for PTE purposes, EPA noted that it believes three overarching considerations govern "effectiveness": (a) enforceability as a practical matter, that is, the ability to verify compliance with a limit and to document violations that should trigger an enforcement response,³⁴ (b) effectiveness of compliance incentives, or the strength of a facility's incentive to comply with a state limitation, and (c) state program effectiveness, or the adequacy of a state's enforcement program and willingness to pursue sources that violate state-issued limits.³⁵

If EPA is ultimately required to accept state- and local-enforceable limits on PTE, a central issue arises regarding the procedures EPA would use in evaluating the effectiveness of state programs. In its discussion paper, EPA noted that "theAgency historically has required that state programs meet minimum criteria—for legal authority, resources, and substantive and procedural aspects of permitting programs—in order for the limits they create to be recognized as limiting PTE."³⁶ EPA suggests that it may need to evaluate a state program before the state creates limits that a facility relies on (so-called front-end review), and also needs to be able to deem a state program generally "ineffective" at any time if EPA concludes that the program has "identifiable deficiencies" (back-end review).³⁷ If EPA deems a state program ineffective, PTE limits previously granted to facilities by the state could be rendered invalid.

Public Comments

EPA solicited public comment on which of the two approaches to federal enforceability it should adopt, as well as on the proper approach to establishing criteria for state program effectiveness, and the procedures that should be used in evaluating state programs. Through written comments and statements made at an April 26, 1996, stakeholders' meeting, industry representatives generally supported: (a) replacing the federal-enforceability requirement with a PTE definition that considers state and local limits on PTE; (b) presuming that state programs have the authority and the capability to issue PTE limits that are effective; (c) limiting EPA's oversight of state programs to "back-end" reviews involving clear deficiencies, rather than delaying state implementation efforts with "front-end" reviews; (d) giving proper consideration to facilities with inherent physical limitations on PTE (e.g., a production process that can physically accommodate only a limited number of units per day and whose emissions are minor); and (e) allowing facilities to be presumptive minor sources if their actual emissions are maintained at levels below 50 percent of [27 ELR 10156] major-source thresholds.³⁸ Commenters representing states added their general support for the removal of the federal-enforceability requirement.³⁹

By contrast, commenters representing environmentalists strongly supported the retention of the federal-enforceability requirement, arguing that experience has repeatedly demonstrated that state-issued limits are not always effectively enforced, and that federal enforceability is the most reliable guarantor that limits will be observed.⁴⁰ These commenters further noted that abandoning the federal-enforceability requirement would curtail citizens' ability to enforce PTE limitations under the Act. Since many states lack independent citizen-suit provisions allowing for enforcement of PTE limits, the commenters contended that removing the federal-enforceability requirement would bar most direct citizen enforcement of PTE limits.⁴¹

Looking Ahead

At present, some factions within EPA unquestionably wish to retain the federal-enforceability requirement for PTE limits. In order to argue that retaining the federal-enforceability requirement is a reasonable interpretation of the Act, however, EPA must be able to make some demonstration that federal enforceability is necessary to ensure that state limits are practically effective. EPA might argue that if it can demonstrate that state limits are ineffective in the absence of federal enforceability at least some of the time, or in at least some of the states, the federal-enforceability requirement is a reasonable interpretation of the Act and should be upheld under the Chevron doctrine.⁴² Industry would take the contrary position that EPA must demonstrate that state-issued limits, by themselves, can never be effective limits on PTE; otherwise, EPA's interpretation must be held unreasonable and impermissible. Given the long history of the controversy in the D.C. Circuit, and the court's apparent impatience with EPA and dissatisfaction with EPA's rationale for preserving the federal-enforceability requirement, it seems unlikely that the court will allow it to remain an element of the PTE definition.

The proposed rule revising the PTE definition was scheduled to be released in February 1997; the final rule is not expected until sometime in 1998. The final PTE rule should allow state (and local) limits to be taken into account in reducing a facility's potential emissions, unless there is strong evidence that a state is unable to issue effective limits. The criteria for determining that a state is incapable of issuing effective limits should be analogous to the criteria EPA uses to evaluate state programs for Title V purposes. Of course, the same factors that serve to make EPA's disapproval or withdrawal of a Title V program so difficult will also operate to minimize the number of states with ineffective PTE limits. Finally, EPA should develop a clearer policy recognizing inherent physical limitations as limiting a facility's PTE.

When EPA's PTE rule is finalized, facilities with low actual emissions who can use state/local programs to restrict their potential emissions below federal regulatory thresholds should find that their potential contact with EPA is minimized. These facilities will be less likely to have their operations ever scrutinized by EPA, will be able to avoid many federal permitting programs, and will be less likely to ever hear from EPA in an enforcement action.

The Dilemma of Enforcement Under Title V of the CAA and the Environmental Audit/Voluntary Disclosure Controversy

The congressional decision to strengthen CAA enforcement, while relying heavily on states and citizens for major aspects of implementation and enforcement, has set the stage for one of the major debates concerning the implementation of the CAA Amendments: whether EPA can or should approve Title V programs in states that by statute limit environmental enforcement against companies that have conducted voluntary environmental audits and then disclosed and acted on the results. In order to understand this issue, it is necessary to provide some additional background on the history of EPA's enforcement policy, and the role Congress provided for the states in the implementation of the Act under the 1990 Amendments.

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Congressional Ratification of EPA's Penalty Policy: Recovering Economic Benefit and Imposing Gravity Deterrence Penalties

In enacting the 1990 Amendments to strengthen the enforcement process, Congress can also be fairly said to have ratified EPA's existing approach to imposing penalties for CAA violations. Indeed, the CAA itself contains provisions that make clear that Congress supported EPA's penalty approach.⁴³ Basically, EPA's established policy for imposing penalties for violations of air-quality laws provided that when EPA sought penalties for violations it would attempt to recover two components: "economic benefit" and "gravity."⁴⁴

The purpose of recovering economic benefit in an enforcement proceeding under EPA's penalty policy was to remove all profit from the environmental violation. It is critical to understand the purpose of this aspect of EPA's penalty policy. Laws such as the CAA often require facilities to make large investments in pollution-control equipment. These investments can be large enough that they may materially affect decisions concerning the construction of new facilities; the sale or purchase of businesses; the decision to continue or discontinue a line of business; the competitive position of a company within an industry; and so on. If all companies within an industry can avoid making necessary pollution-control investments, because they are not penalized for delaying such investments, then the industry is receiving an environmental subsidy which results in the overproduction of the industry's products at the expense of society. This, of course, is also economically damaging and unfair to makers of substitute products if they are required to invest in pollution controls themselves.

If, however, only some companies within an industry are permitted to evade such control requirements, for example because they operate in jurisdictions where the law is not as vigorously enforced as it is in other areas, the evaders can unfairly obtain an advantage over their competitors, who will in response quickly resist making continued or additional pollution-control investments themselves.⁴⁵

Therefore, EPA's ability to recapture economic benefit in imposing penalties is the cornerstone of its effort to obtain compliance, since companies that do not face the threat of benefit recapture (or more draconian sanctions such as jail time) have no incentive to comply with the law in a timely fashion. At the time of the 1990 Amendments, Congress was well aware of EPA's need to recapture economic benefit if environmental enforcement was to be effective, and of EPA's established policy of insisting on recovering economic benefit in enforcement actions. This established principle of economic benefit recapture is especially important because the 1990 Amendments effectively mandate massive new pollution-control investments by various industries on an aggressive schedule that is in many cases dictated by Congress itself, thus creating incentives for large-scale noncompliance by industry unless the law could be effectively enforced.

EPA's purpose in recovering a "gravity" component as part of an environmental penalty, by comparison, is to create a deterrent against other violations. In estimating the relative seriousness of the environmental violation, and imposing a gravity penalty proportionate to its seriousness, EPA has a means of telling other potential violators in graphic terms exactly how damaging it believes their conduct to be.⁴⁶ This component ofEPA's enforcement activity is essential to EPA's ability to enforce the law with limited resources, since it creates an in terrorem effect by imposing penalties that are not necessarily related to immediately provable damages and that are therefore potentially punitive in nature. Here again, Congress was well aware in 1990 that recovery of a gravity component was a key part of EPA's long-standing policy in air enforcement.

Indeed, the principal focus of controversy with respect to EPA air-enforcement penalty issues in 1990 was not about the amount or manner in which civil penalties were assessed by EPA, but rather about the increasing criminalization of environmental law. Yet, after considerable debate, Congress toughened the criminal sanctions under the CAA in 1990, again adopting the Federal Water Pollution Control Act (FWPCA) as a model. Rather than refusing to increase potential criminal sanctions, Congress instead made clear in an unusual—indeed virtually unprecedented—provision that in some cases it wanted individuals to be subject to differing, and in some cases no, penalties depending on their position in corporate organizational hierarchies.⁴⁷

The Role of the States in the New Clean-Air Enforcement Regime

Congress specifically sought to require inclusion of the states as participants in the new clean-air enforcement regime, by mandating that each state submit to EPA a permit program to allow the state to issue Title V permits.⁴⁸ Congress provided for substantial sanctions against a state that failed to submit an approvable permit program.⁴⁹ At the same time, however, Congress made clear that to be approvable, each state's permit program must meet certain minimum requirements to be established by the EPA Administrator.⁵⁰

Congress also dictated the contents of various minimum state program requirements. One of the minimum requirements any state must meet is that a state program must provide that

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the permitting authority [shall] have adequate authority to:

(A) issue permits and assure compliance by all sources required to have a permit under this subchapter with each applicable standard, regulation or requirement under this chapter;

….

(E) enforce permits, permit fee requirements, and the requirement to obtain a permit, including authority to recover civil penalties in a maximum amount of not less than $ 10,000 per day for each violation, and provide appropriate criminal penalties.

The amended Act further provided that

the permitting authority shall have:

(8) Authority, and reasonable procedures consistent with the need for expeditious action by the permitting authority on permit applications and related matters, to make available to the public any permit application, compliance plan, permit, and monitoring or compliance report under section 7661(b)(e) of this title, subject to the provisions of section 7414(c) of this title.⁵¹

In short, Congress clearly mandated that in order to administer Title V permit programs, states had to have adequate legal authority to assure compliance by all sources, including the ability to impose large civil and criminal penalties for noncompliance. Congress also mandated that most information concerning sources' compliance be publicly available, to enhance the ability of the public to participate in the permit granting and enforcement process. Thus, even though Congress intended to administer Title V enforcement through the states, it did not grant individual states unfettered discretion to decide how they would enforce the law. Instead, Congress made clear that the states must meet strict, uniform minimum standards established by EPA before they would be allowed to engage in Title V enforcement.

Because the CAA explicitly granted the EPA Administrator authority to approve proposed state Title V permit programs in whole or in part, it is apparent that Congress did not want EPA to have to bargain with states about their Title V programs as a whole, since bargaining over programs as a whole could have forced EPA to accept compromises on certain issues in the context of an otherwise approvable state permit program. If a state submits a permit program that does not contain adequate enforcement authority, but is otherwise fully acceptable, EPA is free to reject it, and, as discussed below, may well be legally compelled to do so.

EPA and State Programs to Encourage Environmental Auditing and Voluntary Disclosure in the Face of Strengthened Environmental Enforcement⁵²

[] The Tension Between Voluntary Auditing and Disclosure and Strengthened Environmental Enforcement. There is no general federal legal requirement that companies conduct environmental audits.⁵³ In addition, unlike the case of the results of financial audits, even public companies often regard environmental data obtained through an internal audit as nonpublic information.

Although EPA has chosen not to attempt to mandate environmental auditing in most contexts, for a number of years EPA and various states have been interested in encouraging companies' environmental auditing and voluntary disclosure of environmental violations to regulatory authorities.⁵⁴ EPA first established a formal policy on these issues in the mid-1980s, well before the CAA was amended.⁵⁵

From the outset, it has been apparent that there is a tension between voluntary auditing and disclosure, on the one hand, and stronger environmental enforcement, on the other. The tension results from the fact that stronger enforcement is likely to lead to increased penalties for violations, so that if a company performs a voluntary audit and subsequently discloses the results but receives no penalty mitigation, the penalties may well be greater than the penalties the company would have risked if it had not made a disclosure at all, as discounted by its chances of having the violations discovered.⁵⁶ This tension became especially acute as fine levels for environmental violations increased dramatically and the government began the first serious environmental criminal prosecutions in the 1980s. From the outset, policies designed to encourage voluntary auditing and disclosure needed to [27 ELR 10159] address this tension in order to have any hope of success, and the 1980s' government policies did not do so successfully, at least in industry's view.⁵⁷

Indeed, the tension between broader auditing and disclosure and strengthened enforcement was no secret during the debates on the 1990 CAA itself. During those debates, there were concerted industry efforts to include in the amended law some form of evidentiary privilege, immunity from prosecution, or defense to prosecution, in circumstances where voluntary disclosure of environmental violations occurred. These efforts were unsuccessful, as is apparent from the fact that in lieu of any such statutory amendment, purely hortatory language on this issue appeared in the conference committee report on the 1990 Amendments. In substance, the Conference Report language, which has no legal force, urged prosecutors not to criminally prosecute individuals or entities that voluntarily reported environmental violations and acted promptly to correct them.⁵⁸ The Conference Report further urged that knowledge obtained solely from conducting an audit, the audit report itself, or related remedial action should not form the basis of a determination of criminal intent.⁵⁹

[] Actions Taken by EPA and the States to Encourage Auditing and Disclosure. Despite the considerable tension between stronger enforcement and encouragement of voluntary auditing and disclosure, both EPA and the states have sought to establish policies designed to encourage such auditing and disclosure. EPA's policies have evolved over time, but only EPA's current policy is analyzed here. While there are numerous differences among various state policies, they generally follow two broad models, which will be described here as well.

In early 1996, EPA established a voluntary disclosure policy as a guide to its exercise of its prosecutorial discretion.⁶⁰ First, EPA continued its prior assurances that it will not routinely request environmental audits during enforcement actions, and will not seek to initiate an enforcement action based solely on environmental audit information.⁶¹ Second, EPA has made clear that it will be willing to waive most if not all of the gravity component of any proposed penalty and will often not recommend criminal prosecution where there is a voluntary disclosure followed by prompt remedial action. Thus, EPA is proposing to limit the sanction it will seek in many cases to the recovery of economic benefit if there is voluntary disclosure and corrective action that meets EPA's criteria.

From industry's perspective, EPA's 1996 Voluntary Disclosure Policy suffers from several practical deficiencies. First and foremost, EPA is not bound by the policy, since it is not a regulation. Thus, there is no assurance that EPA will follow the policy in any particular case. This is particularly important given the virtually unlimited discretion available to prosecutors as a matter of both general law and under the environmental statutes. Industry's view is that if EPA is not bound by its policy, industry will have no legal protection against EPA's failure to follow the policy in any particular case. Among other things, industry will thus have no legal protection against a decision by EPA that violations that industry believes should be subject only to civil penalties will instead be treated as criminal violations.⁶²

Second, EPA excepts certain types of criminal conduct, as well as conduct with a potential for "serious" environmental harm, from the disclosure policy. Of course, because of the potential penalties associated with such violations, these are the violations for which industry has the strongest interest in receiving penalty mitigation or nonprosecution. From the industry perspective, the exception for criminal conduct is particularly troublesome because many environmental crimes are either strict-liability or general-intent crimes, where prosecution can occur even though ordinary care was exercised and even though corporate officials were unaware that the law was being violated.⁶³ Thus, industry [27 ELR 10160] fears that environmental audits may disclose—and be treated as an admission of—a potentially wide range of criminal offenses even though a company was in fact trying to obey the law. Although EPA's 1996 Voluntary Disclosure Policy appears to indicate that EPA intends to limit its criminal conduct exclusion to blatant criminal conduct, industry uncertainty is heightened by the fact that it is unclear exactly how broad EPA's exclusion of criminal conduct is intended to be. The 1996 Voluntary Disclosure Policy states that EPA reserves the right to criminally prosecute individuals, and that the policy does not apply to violations that present an "imminent and substantial endangerment" to health or the environment, so that a decision by EPA not to prosecute a corporation or other entity could be a pyrrhic victory, if EPA instead prosecutes enough individuals in the company and employs a relaxed definition of imminent and substantial endangerment comparable to that employed in Resource Conservation and Recovery Act cases.

Third, as a practical matter, in some cases industry has found that it is difficult—if not impossible—reliably to calculate in advance how large a penalty EPA will seek in voluntary disclosure situations. The most famous example is the Chevron enforcement proceeding, where Chevron made a voluntary disclosure concerning what it believed to be relatively minor Toxic Substances Control Act violations, only to be faced with an EPA penalty demand of $ 17 million. This figure was computed after EPA credited Chevron for voluntary disclosure and prompt action.⁶⁴ This unpredictability is significant from the point of view of company environmental officials (and some inside corporate counsel). Given their relatively low status and potentially conflict-ridden position in corporate organizations, where it often appears to management that they are pursuing activities inimical to the company's central profit-seeking mission, company officials are reluctant to counsel in favor of voluntary disclosures if they cannot predict what type of penalties will result from the disclosure.

Fourth, since audit documents often are not privileged, EPA can use and has used them in criminal enforcement cases to show an intent to violate the law.⁶⁵ The most obvious example is a situation in which a company performs an audit that discloses substantial violations of the law, but because the violations would be expensive to remedy, decides to take no remedial action. EPA's supporters in the debate over the privilege issue assert that audits have been used only infrequently in criminal enforcement matters.⁶⁶ Indeed, EPA asserted in the Final Voluntary Disclosure Policy that it had never recommended prosecution of a regulated entity based on voluntary disclosure of violations that were discovered through audits and disclosed to the government before an investigation was already under way.⁶⁷ However, industry is well aware of the fact of and potential for the government's use of audits in criminal prosecutions, and for this reason industry defense lawyers have often counseled against even conducting audits.⁶⁸

Despite industry's repeatedly expressed concerns about EPA's new disclosure policy, however, EPA claims the policy has been a success. According to EPA, in the first six months of 1996, 76 companies made voluntary disclosures to EPA under the new policy; this is a significant increase over disclosures under EPA's earlier policy. EPA has also stated that it intends to publish information concerning voluntary disclosure program participants and their offenses.⁶⁹

Largely in response to industry complaints about the limitations of EPA's Voluntary Disclosure Policy, 18 states have now enacted legislation that purports to encourage voluntary auditing, disclosure, and corrective action.⁷⁰ [27 ELR 10161] There are two basic patterns followed in the state legislation: the "Oregon" or "privilege" model and the "Colorado" or "privilege and immunity" model.

Essentially, the Oregon law creates a qualified privilege covering environmental audits, so that neither the audit, nor related documents, can be admitted as evidence in any civil or criminal proceeding. Documents covered by the audit privilege are limited to those "prepared as a result of an environmental audit."⁷¹ The Oregon audit privilege does not protect from disclosure information required to be reported to the government. The burden of proving that the privilege applies is to be borne by the party asserting the privilege. The privilege is qualified, in the sense that a company must show it initiated and pursued with reasonable diligence timely steps to correct any violations of law disclosed in the audit. This judgment is left to the discretion of the court. The privilege is also qualified by a provision that in certain criminal cases, the state may obtain the audit if it shows compelling need and unavailability of the information by other means without unreasonable cost and delay.

The Oregon privilege legislation does not expressly preclude testimony concerning the environmental audit, though it would seem to follow that such testimony would be inadmissible. It is unclear from the statute whether the legislature also intended to preclude testimony about the underlying environmental facts. The statute does provide that the privilege does not apply to "information obtained from a source independent of the environmental audit," but it is uncertain whether this includes individuals with knowledge of facts contained in the audit who are asked to testify about their knowledge independent of any work on the audit.⁷²

The Colorado statute goes beyond the Oregon statute, because in addition to creating a qualified privilege, it also creates a qualified immunity from any type of penalty. Essentially, if a company can show that it has made a voluntary disclosure of an environmental violation found during an environmental "self-evaluation," and the company has taken steps to address the violation within a reasonable time, sufficient to allow compliance or necessary permit applications, then there is a rebuttable presumption that the company is "immune" from civil, criminal, or administrative penalties "associated with the issues disclosed."⁷³ The only issue subject to rebuttal is whether the disclosure was voluntary (which includes whether timely corrective action was initiated). The agency has the burden of rebutting the presumption of voluntariness.⁷⁴

Texas has a privilege and immunity statute similar to that adopted by Colorado.⁷⁵ In Texas, however, companies that plan to conduct audits for whose results they wish to obtain immunity must notify the state of their intent to conduct audits, provide information about the audit to the state, and cooperate with state officials in remedying violations. Information concerning the notice of intent to audit and the violations found is available to the public. Texas officials claim that as of between mid-1995, when the Texas statute went into effect, and July 1996, some 239 companies have given notice of intent to audit.⁷⁶ There have been claims by Texas officials and industry that many of the violations disclosed in the audits actually conducted to date would not have been discovered by Texas officials if they had not been voluntarily disclosed to the state.⁷⁷

In 1994, EPA was somewhat slow in formally responding to the first wave of state legislation on environmental audit privilege and immunity issues, and purposely sidestepped these issues in granting interim approval to Title V programs in Colorado and Oregon. In 1995, EPA announced that it opposed both privilege and immunity provisions of the various state laws.⁷⁸ EPA's reasons follow.

EPA opposed privilege legislation on the grounds that: [27 ELR 10162] (1) there is a general legal policy against expansion of privileges, because they derogate from the search for truth in the judicial process; (2) establishment of a qualified privilege would require costly and burdensome "mini-trials" to resolve claims of privilege; (3) the proposed privileges are broader in scope than the attorney-client privilege, since they cover both opinions and underlying facts; and (4) the creation of a privilege excludes the public from the enforcement process, and undermines public trust and confidence in environmental enforcement.⁷⁹

EPA opposed immunity statutes on the grounds that: (1) they shield criminal conduct; (2) they eliminate the government's ability to recapture the economic benefit of environmental noncompliance; and (3) they shield conduct that would cause serious damage to the environment or public health (such as pollution of a public water supply). EPA notes that no other comparable criminal law or agency voluntary disclosure policy, including the Federal Aviation Administration's oft-cited policy,⁸⁰ shields criminal conduct. EPA also noted that eliminating the recapture of economic benefit would seriously damage federal efforts to obtain uniform compliance with environmental laws.⁸¹

Although EPA stated its opposition in 1994 and 1995 to state privilege and immunity legislation, it has been a classic paper tiger on this issue, and has yet to take any concrete action to vindicate its position in dealing with states that exceed the limits in EPA's 1996 Voluntary Disclosure Policy and Audit Memorandum. In the spring of 1996, environmental groups threatened to sue EPA if it gave approval to Title V permit programs in states that had statutes creating environmental audit privileges or voluntary disclosure immunities. Not long thereafter, EPA announced that it would be willing to give interim approval to most state programs—an approval that under the CAA is valid for up to two years—and would reconsider the effect of audit legislation on the final approvability of the state permit programs at the end of that period.⁸²

At the same time, EPA issued a memorandum that provided guidelines for the approvability of Title V permit programs in states that had privilege or immunity legislation.⁸³ Broadly speaking, the EPA Title V Audit Memorandum provides that if a state has legislation that immunizes criminal conduct or deprives the government of the ability to recapture economic benefit, EPA will not approve the state's Title V permit program. This is a much different tack on the issue of state privilege legislation than EPA had taken a year earlier. In the Audit Memorandum, EPA states that only certain-features will make various state privilege legislation objectionable. In particular, EPA notes that provisions that allow a violator not to disclose prior criminal conduct or that deny the state access to information needed to verify compliance with respect to a violation disclosed by an audit would be objectionable. But EPA's exclusion of certain specific provisions by negative implication amounts to a concession that creation of a qualified privilege (like, apparently, that created by the Oregon statute) directed primarily at audits disclosing substantial civil environmental violations would not lead EPA to deny Title V approval to a state program.

In June 1996, EPA announced it would grant interim approval to the Texas Title V permit program, despite the fact that EPA and the environmental community had previously attacked the Texas privilege and immunity legislation as being particularly lenient in granting amnesty to environmental violators. In granting interim approval, EPA served notice that if the Texas privilege and immunity law did not change to conform with the views announced in EPA's Audit Memorandum, EPA would not give final approval to the Texas Title V program.⁸⁴

[] Reconciling the Conflict Between Strengthened Federal Enforcement and the States' Desire to Encourage Auditing and Disclosure. Despite the 1996 changes liberalizing EPA's Voluntary Disclosure Policy and the recent shift in EPA's position on the types of state audit privilege legislation that are acceptable as part of a state's Title V permit program, it is clear there is still a substantial conflict between the laws now on the books in many states—and under consideration in many others—and EPA's views of appropriate enforcement policy where audits and voluntary disclosure are concerned. This section discusses whether and how this conflict can be reconciled.

For the reasons previously discussed, the conflict between EPA and the states over audit policy is not one over a technical legal issue, but is instead a conflict over the basic nature of federal environmental enforcement. Enforcement policy in the 1980s had moved steadily in the direction of providing the government with an ever-larger "stick" with which to force companies into compliance with increasingly stringent statutes and regulations. As discussed previously, Congress generally gave strong support to this push for more federal enforcement leverage in the 1990 CAA Amendments, and industry was unsuccessful in limiting the new enforcement authority by creation of a privilege or immunity for audits and voluntary disclosure at that time. The move by certain states toward more lenient enforcement policy is an industry-supported "end run" around this strengthened federal enforcement authority.⁸⁵

EPA is correct on the merits to oppose state immunity legislation. The most significant reason for this is that recovering economic benefit from violators must be at the heart of environmental enforcement if the government is to achieve compliance with stringent environmental control requirements.

[27 ELR 10163]

EPA may, in any event, not have any choice but to deny Title V program approval in states that have such immunity legislation, because such legislation is inconsistent with the clear requirements of the CAA Amendments. The CAA requires that states have adequate authority to assure compliance and to enforce permit requirements.⁸⁶ Neither EPA nor any state will ever have the necessary resources to fully inspect all permitted industrial facilities to determine their compliance with environmental laws on a regular basis. Therefore, an essential element of the government's ability to assure environmental compliance is the existence of enforcement tools that can create a substantial in terrorem effect. Granting immunity either from prosecution for criminal conduct or from recapture of economic benefit would destroy the in terrorem effect of the law in many cases and is fundamentally inconsistent with the basic concepts behind environmental law enforcement. Congress recognized this fundamental principle when it strengthened the CAA in 1990 to enhance the use of criminal sanctions and permit-based enforcement. If such immunity from serious civil and criminal sanctions for violations is granted, the states and EPA will lose power to deter many violations of law.

If a state were free to determine as a matter of prosecutorial discretion that it preferred to immunize some violations in some circumstances, its use of discretion might be defensible if accompanied by clear increases in compliance. The state immunity legislation that has been adopted to date, however, deprives state prosecution officials of any discretion concerning enforcement policy, because it immunizes conduct on the basis that disclosure has occurred and that violations have been remedied. The state immunity statutes therefore make it impossible for state environmental officials to determine the proper balance between increased voluntary compliance and enforcement that can employ the most serious sanctions available. Since the state audit immunity legislation deprives the state of any discretion, and statutorily confers an immunity that is inconsistent with basic federal environmental enforcement principles, the legislation deprives the state of adequate enforcement authority, and EPA probably could not approve a Title V program for a state with such legislation in force even if it wanted to do so.

Whether adoption of qualified privilege statutes by states should lead EPA to deny those states Title V permit program approvals—and whether the CAA itself requires EPA to do so—are much closer questions. For the purposes of this discussion, we assume that a privilege statute is narrowly drawn, in the sense that it is clear that the privilege only covers documents created during and for the purposes of an audit; that the burden of obtaining the privilege is on the party asserting it; that the privilege does not cover underlying facts; that persons with knowledge of underlying facts may testify about their independent knowledge, and so on.

In the case of such a narrowly drawn privilege statute, the government may have a harder time proving its case than it would have otherwise, but can nevertheless obtain the necessary information to successfully prosecute through its existing enforcement tools. In such a situation, it is appropriate to look at the marginal costs and benefits to society from the proposed privilege. Because the privilege is qualified, it can serve as an incentive to companies to conduct audits only if they are willing to correct violations identified in the audit. At the same time, the audit privilege is likely to make prosecutions in certain situations somewhat more difficult. And precisely because in these cases violations have been or will be corrected, courts may be less willing to impose penalties even where such prosecutions are successful.

EPA is certainly correct in asserting that the expansion of legal privileges is heavily disfavored in the law. EPA is also correct that an audit privilege is likely to be more expensive to litigate about than certain other privileges (though all privileges cause substantial increases in litigation expenses). EPA is probably correct that many companies conduct audits for reasons wholly independent of whether or not the audit results are privileged. Finally, EPA is probably correct in believing that increased environmental standards such as the International Organization for Standardization 14000 series of environmental management standards,⁸⁷ and developments in other areas of law such as the federal environmental crimes sentencing guidelines, are likely to provide incentives for additional auditing even if no separate privilege exists for audits.

At the same time, it is understandable and legitimate that some states seek to move away from the traditional adversary model of environmental law enforcement toward a more cooperative model in which states assist businesses with environmental compliance in order to enhance overall compliance. It seems clear that just as the attorney-client privilege undoubtedly enhances client candor in communications with attorneys, an audit privilege would increase somewhat (though perhaps marginally) the frequency and accuracy of environmental auditing. The states are also correct in observing that a qualified privilege that depends on remedying the identified violations is far narrower than the attorney-client privilege, which is not conditional if its requirements are met. Finally, EPA's position in its Audit Memorandum than an acceptable privilege statute cannot shield criminal conduct or conduct involving serious environmental harm ignores the fact that the attorney-client privilege can shield both past criminal conduct and conduct involving past serious environmental harm from disclosure. EPA has never suggested that the attorney-client privilege should be invalidated because it can shield undesirable conduct, even though the attorney-client privilege can shield such conduct in circumstances where no effort whatsoever is made to remedy the past harm.

Because the desirability of a qualified audit privilege is a much closer issue (at least if one accepts the premise of most current discussion that not all environmental information is public), it is difficult to argue that a narrowly drawn audit privilege statute would clearly impair state enforcement authority to the point that EPA could not legally [27 ELR 10164] approve Title V programs in states that had such statutes. It is certainly understandable, however, why EPA might want to withhold such approval. In any event, EPA seems inclined to grudgingly accept some form of audit privilege in the Title V context.

The clear danger that must be avoided if states are to be allowed to create audit privileges, however, is the "race to the bottom." States that have particularly limited enforcement resources or that are already resistant to the need for environmental compliance by powerful local industries could use an overly broad privilege statute to defeat basic enforcement of environmental laws. In an economic climate where states often compete aggressively against each other for new corporate business with large tax subsidies, it would be tempting indeed for states to use lax law enforcement as a substitute for scarce budget resources.

In theory, EPA has several means of combatting state decisions to adopt overly broad privilege statutes. EPA could deny Title V permit program approval to such states altogether, but it would then face the difficulty of administering the Title V programs in these states, something EPA would clearly prefer not to do, even if the Agency were not confronted by growing resource limitations. This would be a particularly difficult course for EPA to pursue in states that have statutes that create only an evidentiary privilege for audits.

As an alternative, EPA could decide that it will consistently "overfile"—that is, bring separate federal prosecutions—in cases where claims of privilege are made. Despite some claims to the contrary, there is no indication that EPA is in some manner enforcing state law when it overfiles during or after a state prosecution under the CAA.⁸⁸ Therefore, any privilege created under state law will be unlikely to apply in an EPA overfiling prosecution in federal court.⁸⁹ However, overfiling involves a sensitive political judgment, since it appears to call into question the judgment or good faith, or both, of state enforcement officials. EPA has historically been reluctant to overfile in any situation, and even the limited overfiling EPA has done to date has been the subject of criticism in Congress and the courts. It is unlikely the states or Congress would enthusiastically embrace, or even tolerate, an EPA decision to dramatically expand overfiling activity in states that adopt privilege statutes.

As a result, the most practical solution to the dilemma facing EPA would be for EPA to support federal legislation limited to creation of a narrowly drawn audit privilege. Such legislation would have the benefit of providing a national forum for a comprehensive resolution of the disputes among EPA, the environmental community, industry, and the states over the audit and voluntary disclosure issue. The issue has been the subject of enough debate that it should be possible to resolve it within one Congress, and thus limit the potential interference with EPA's implementation of the CAA.

EPA might prefer not to propose any legislation on this issue, for fear of reopening debate on the CAA or setting a precedent in other areas, despite Administrator Browner's pledge to work with the states on model privilege legislation.⁹⁰ However, if EPA chooses instead to fight a piecemeal, rear-guard action against the state privilege and immunity legislation through the Title V implementation process, it is likely to be deprived of some of its most important allies in this dispute. EPA will lose its allies in a piecemeal implementation dispute because there will be a dissipation of interest and effort on the part of the environmental community and members of Congress concerned about environmental enforcement, and because the issue will be decided not in the context of the overall requirements of national environmental law enforcement but rather in the context of EPA's views of—and numerous conflicting pressures to approve—varying state Title V programs.

EPA needs to appreciate that the 1995-1996 legislative activity on the part of the states on this issue means that the privilege and immunity issue is quite unlikely to disappear. To the contrary, the future pressure on the states will be to expand the scope of the immunity statutes, thus sharpening the potential conflict between the states and EPA not just in the Title V context, but across the board in connection with numerous other federal environmental statutes that rely on delegated state authority for implementation and enforcement. For these reasons, the best solution for EPA would be to support a narrowly drawn privilege statute that would effectively preempt any conflicting state legislation on either the privilege or the immunity issue.

Conclusion

EPA had great expectations for the new enforcement authorities it received in the 1990 CAA Amendments. There is little doubt that EPA's regulations implementing the Amendments will provide a basis for sharply strengthened CAA enforcement by EPA, states, and citizens. However, EPA's implementation of several of these requirements has met with concerted opposition from industry and the states.

While EPA has the legal authority to achieve many of its ambitious goals for enforcement, EPA must also consider the practical legal and institutional realities of its situation. It is clear from the actions of the states, and from certain recent court decisions, that EPA does not have as strong a constituency for some of its enforcement policies as it did a few years ago. EPA needs to rebuild this constituency. To assist this rebuilding, EPA should adopt a pragmatic approach in dealing with these enforcement controversies, focusing in each case on those aspects of its policy that are central to environmental protection and that will provide real environmental benefits, rather than insisting on an approach that represents a simple reiteration of the full reach of EPA's nominal legal authority.

At the same time, it behooves industry to appreciate that in adopting the FWPCA model for clean-air enforcement, and by broadening the role of citizens in enforcement, Congress made a clear and decisive choice in favor of replacing paper compliance with measurable actual compliance. In the long run, industry stands to gain little, and lose much, by fighting costly battles whose sole purpose is to delay or procedurally hobble such reforms.

1. 42 U.S.C. §§ 7661-7661f, ELR STAT. CAA §§ 501-507. See 40 C.F.R § 70.6(c) (1996).

2. 42 U.S.C. §§ 7414, 7661c, ELR STAT. CAA §§ 114, 504.

3. See id. § 7475(a), ELR STAT. CAA § 165(a) (new source review), id. § 7661a(a), ELR STAT. CAA § 502 (Title V permits), id. § 7412(a)(1), ELR STAT. CAA § 112 (hazardous air pollutants).

4. For example, major sources may be subject to enhanced-monitoring/compliance certification requirements, which are not imposed on minor sources. See id. § 7414(a)(3), ELR STAT. CAA § 114(a)(3). Similarly, reasonably available control requirements apply to major, but not minor, sources of volatile organic compounds (VOCs) in areas that fail to meet the National Ambient Air Quality Standard for VOCs. See id. § 7511a(b)(2), ELR STAT. CAA § 181(b)(2).

5. 40 C.F.R. § 52.21(4) (1996) (emphasis added).

6. 42 U.S.C. § 7604, ELR STAT. CAA § 304.

7. Most of the CAA regulatory programs have applicability thresholds that are compared to a facility's annual potential emissions of regulated pollutants. For example, the major source threshold for the PSD program is 250 tons per year for most sources. 40 C.F.R. § 52.21(b)(1)(i)(b) (1996). The Title V major source threshold is 100 tons per year of any "criteria" pollutant (e.g., sulfur dioxide, VOCs, particulate matter, and oxides of nitrogen) or 10 tons per year of any single hazardous air pollutant, or 25 tons per year of any combination of hazardous air pollutants. 42 U.S.C. §§ 7412(a)(1), 7602(j), 7661(2), ELR STAT. CAA §§ 112(a)(1), 302(j), 501(2).

8. 42 U.S.C. § 7661(2), ELR STAT. CAA § 501(2).

9. EPA has attempted to alleviate the burden of the federal-enforceability requirement by allowing states to establish EPA-approved "Federally Enforceable State Operating Permit" (FESOP) programs that cover non-Title V facilities. See EPA, Limitation of Potential to Emit with Respect to Title V Applicability Thresholds (Sept. 18, 1992) (available from the ELR Document Service, ELR Order No. AD-3109). A facility whose units have low actual emissions can attempt to obtain a FESOP permit and use FESOP limits to avoid major-source status. Not all states have made FESOP programs available yet, however.

10. National Mining Ass'n v. EPA, 59 F.3d 1351, 25 ELR 21390 (D.C. Cir. 1995); Chemical Mfrs. Ass'n v. EPA, No. 89-1514, 1995 U.S. App. LEXIS 31475 (D.C. Cir. Sept. 15, 1995), Clean Air Implementation Project v. EPA, No. 96-1224, 1996 U.S. App. LEXIS 18402 (D.C. Cir. June 28, 1996).

11. 42 U.S.C. § 7412, ELR STAT. CAA § 112.

12. 59 Fed. Reg. 12408 (Mar. 16, 1994).

13. Id. at 12433-34.

14. Id. at 12433.

15. 59 F.3d 1351, 25 ELR 21390 (D.C. Cir. 1995).

16. See 40 C.F.R. §§ 51.24(b)(3), 52.21(b)(3) (1978).

17. 636 F.2d 323, 353, 10 ELR 20001, 20007 (D.C. Cir. 1979) (emphasis added).

18. 45 Fed. Reg. 52676, 52746 (Aug. 7, 1980).

19. Id. at 52676, 52688.

20. 48 Fed. Reg. 38742, 38748, 38755 (Aug. 25, 1983).

21. National Mining Ass'n v. EPA, 59 F.3d 1351, 1362-63, 25 ELR 21390, 21396 (D.C. Cir. 1995).

22. Id. at 1362, 25 ELR at 21396.

23. Id.

24. Id. at 1364, 25 ELR at 21397.

25. Id.

26. Id.

27. No. 89-1514 (D.C. Cir. Sept. 15, 1995).

28. No. 96-1224 (D.C. Cir. June 28, 1996).

29. EPA Memorandum from John S. Seitz to Robert I. Van Heuvelen, Release of Interim Policy on Federal Enforceability of Limitations on Potential to Emit (Jan. 22, 1996) (available from the ELR Document Service, ELR Order No. AD-3104).

30. Id. at 2.

31. Id. at 3.

32. EPA, "Effective" Limits on Potential to Emit: Issues and Options (Jan. 31, 1996) (available from the ELR Document Service, ELR Order No. AD-3108).

33. Id. at 2-3.

34. EPA would require that any state or local emission limitations used to limit a source's PTE must be "enforceable as a practical matter." To EPA, practical enforceability means that a limitation must: (1) be permanent; (2) contain a legal obligation for the facility to adhere to the limitation; (3) not allow a relaxation of any SIP requirement; (4) be technically accurate and quantifiable; (5) identify an averaging time that allows at least a monthly compliance check for most facilities; and (6) require sufficient recordkeeping, reporting, and monitoring to demonstrate compliance with the limit. Id. at 11-12.

35. Id. at 3-4.

36. Id. at 13.

37. Id.

38. See, e.g., Chemical Mfrs. Ass'n, Comments on "'Effective' Limits on Potential to Emit: Issues and Options" (Apr. 1, 1996); American Petroleum Inst., Comments Regarding January 31, 1996, Options Paper on Potential to Emit (Apr. 1, 1996); Eli Lilly & Co., Comments on "'Effective' Limits on Potential to Emit: Issues and Options" (Mar. 29, 1996).

On January 25, 1995, EPA issued an interim "transition" policy explaining various methods that facilities could use to limit their PTE while the states obtained EPA approval for FESOP programs. EPA, Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Jan. 25, 1996) (available from the ELR Document Service, ELR Order No. AD-800). The transition policy allowed facilities with actual emissions of less than 50 percent of the major-source threshold to be treated as minor sources, and sources with actual emissions between 50 percent and 100 percent of the major-source threshold to be treated as minor sources if they met state-enforceable limits "that are enforceable as a practical matter." The minor-source transition policy, which was set to expire on January 25, 1997, was recently extended to July 31, 1998. EPA Memorandum from John S. Seitz to Robert I. Van Heuvelen, Extension of January 25, 1995, Potential to Emit Transition Policy (Aug. 27, 1996) (available from the ELR Document Service, ELR Order No. AD-3105).

39. See, e.g., California Air Resources Board, Comments Regarding the United States Environmental Protection Agency's January 31, 1996 Proposal "'Effective' Limits on Potential to Emit: Issues and Options" (Mar. 27, 1996).

40. See, e.g., Natural Resources Defense Council, Comments on EPA's "Potential to Emit" Options Paper (Apr. 3, 1996). Environmental groups could also argue that states with broad audit privilege/immunity statutes should not be presumed to have adequate enforcement authority, and therefore cannot issue fully "effective" limits on PTE.

41. Id.

42. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 14 ELR 20507 (1984). EPA has argued that because the word "controls" was not defined by Congress, EPA was free to define the term for § 112 purposes. National Mining Ass'n v. EPA, 59 F.3d 1351, 1354, 25 ELR 21390, 21392 (D.C. Cir. 1995). The court's review of the PTE definition, EPA would argue, is limited by Step II of Chevron. The court could only reject EPA's definition if it is unreasonable. Of course, the court has already concluded that EPA's federal-enforceability requirement is unreasonable and impermissible if EPA cannot demonstrate more persuasively that federal enforceability is absolutely necessary to ensure the effectiveness of controls. If EPA fails to meet the threshold for that demonstration, wherever that threshold actually is in the court's collective judgment, the federal-enforceability requirement will not survive.

43. See 42 U.S.C. § 7413(a), ELR STAT. CAA § 113(a), listing penalty factors to be considered by EPA and the courts. Chief among them are the economic benefit to the violator, and the seriousness of the violation. "These criteria are generally the same as those set forth in the pre-1990 CAA section 113(b), which governed enforcement suits by the United States. These criteria were not controversial." David T. Buente, Citizen Suits and the Clean Air Act Amendments of 1990: Closing the Enforcement Loop, 21 ENVTL. L. 2233, 2249 (1991).

44. See, e.g., EPA, Clean Air Act Stationary Source Civil Penalty Policy, Mar. 25, 1987 (available from the ELR Document Service, ELR Order No. AD-738).

45. Craig N. Johnston, An Essay on Environmental Audit Privilege: The Right Problem, the Wrong Solution, 25 ENVTL. L. 335, 339 (1995).

46. See id. (analysis of RCRA penalty policy).

47. 42 U.S.C. § 7413(h), ELR STAT. CAA § 113(h). This provision essentially creates a defense for certain lower level organizational employees that their violation of law was the result of a company policy.

48. Id. § 7661a(d), ELR STAT. CAA § 502(d).

49. Id. § 7661a(i), ELR STAT. CAA § 502(i), referring to id. § 7509, ELR STAT. CAA § 179.

50. Id. § 7661a(b), ELR STAT. CAA § 502(b). See 40 C.F.R. pt. 70 (1996).

51. 42 U.S.C. § 7661a(b)(5), (b)(8), ELR STAT. CAA § 502(b)(5), (b)(8) (emphasis added). Essentially, this provision calls for releasing all environmental information obtained from companies that is not trade secret information, since the CAA also provides that all information that is not trade secret information shall be available to the public. Id. § 7414(c), ELR STAT. CAA § 114(c).

52. The debate over this issue has implications far broader than CAA enforcement. Because of the timing of the approval of various state Title V programs, Title V implementation is the current focus of this dispute, but it ultimately affects all CAA-delegated programs (PSD, toxic substances, etc.) as well as delegated programs under other statutes (e.g., RCRA and FWPCA). In short, a fundamental issue concerning federal environmental enforcement policy is being fought out in the clean-air context, and we have discussed the issue with this in mind.

53. See generally George Van Cleve, The Changing Intersection of Environmental Auditing, Environmental Law and Enforcement Policy, 12 CARDOZO L. REV. 1215-40 (1991) (survey of law related to environmental auditing; compares environmental auditing to financial auditing and other forms of mandatory data disclosure under environmental laws). In certain contexts, such as when historic waste disposal has occurred, the fact that environmental audits are not mandatory can be very significant. For a time, as Congress and EPA continued to mandate broadened disclosure of environmental data through statutes such as the Emergency Planning and Community Right-To-Know Act, 42 U.S.C. §§ 11001-50, ELR STAT. EPCRA §§ 301-330, it appeared that the fact that audits were voluntary would become progressively less significant. However, if Congress chooses to lessen environmental data disclosure requirements, or cuts EPA enforcement funding, audits would become progressively more important.

54. EPA has increasingly chosen to mandate the performance of environmental audits as an adjunct to enforcement settlements over the past few years. As time has gone on, the requirements of such audit provisions in consent decrees have become increasingly elaborate, imposing far more formal audit requirements, adding detailed reporting provisions, and broadening the geographic and substantive scope of required audits. See Van Cleve, supra note 53 (giving numerous examples of EPA audit requirements in settlements); see also United States v. Louisiana Pac. Corp., 58 Fed. Reg. 34591 (June 28, 1993) (consent decree).

55. EPA Environmental Auditing Policy Statement, 51 Fed. Reg. 25004 (July 9, 1986).

56. This became an even more significant calculus when the D.C. Circuit Court of Appeals held that 28 U.S.C. § 2462, the general federal five-year statute of limitationsfor civil actions, applied in the absence of any specific provision of the environmental statute itself. 3M Co. v. Browner, 17 F.3d 1453, 1461, 24 ELR 20544, 20549 (D.C. Cir. 1994). In that case, EPA had contended there was no statute of limitations with respect to the Toxic Substances Control Act offenses involved in the case.

57. Lynn L. Bergeson & Courtney B. Sandifer, EPA Ponders Its Environmental Audit Policy While States and the Judiciary Move Ahead 9 TOXICS L. REP. (BNA) 559-63 (1994) (1986 policy a "source of much industry consternation").

58. H.R. CONF. REP. No. 952, 101st Cong., 2d Sess. 335-55 (1990). Conference Report language, which is not part of the statutory text, has no binding legal effect. Here, the report language does not even really purport to clarify or interpret any of the Act's provisions, and so cannot even fairly be employed as an interpretive device by a reviewing court. The audit language in the 1990 Amendments Conference Report is an effort to instruct prosecutors on how to exercise their discretion. Yet Congress was well aware that the courts have repeatedly held that prosecutorial discretion cannot be limited except by creation of a statutory defense or exemption. In short, whatever comfort proponents of the Conference Report language may have drawn from it, prosecutors were and are legally free to disregard it.

59. The Conference Report stated:

Nothing in subsection 113(c) is intended to discourage owners or operators of sources subject to this Act from conducting self-evaluations or self-audits and acting to correct any problems identified. On the contrary, the environmental benefits from such review and prompt corrective action are substantial and section 113 should be read to encourage self-evaluation and self-audits.

Owners and operators of sources are in the best position to identify deficiencies and correct them, and should be encouraged to adopt procedures where internal compliance audits are performed and management is informed. Such internal audits will improve the owners' and operators' ability to identify and correct problems before, rather than after, government inspections an other enforcement actions are needed.

The criminal penalties available under subsection 113(c) should not be applied in a situation where a person, acting in good faith, promptly reports the results of an audit and promptly acts to correct any deviation. Knowledge gained by an individual solely in conducting an audit or while attempting to correct any deficiencies identified in the audit or the audit report itself should not ordinarily form the basis of the intent which results in criminal penalties.

Id. at 348.

60. EPA, Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations (Dec. 18, 1995) (effective Jan. 1996), ELR ADMIN. MAT. I 35369 [hereinafter Voluntary Disclosure Policy].

61. However, the Voluntary Disclosure Policy is equally clear that if EPA has an independent basis for believing that environmental violations have occurred, it reserves the right to seek audit information as part of its investigation, to "establish the extent and nature of the problem and the degree of culpability." Id. § D.4.

62. Of course, it seems clear that the real problem here is that Congress had deliberately written the environmental statutes so broadly that in many cases it has not drawn any meaningful distinction between conduct that should be punished civilly and conduct that should be punished criminally. If Congress is willing to grant discretion this broad in the first instance, it is hardly surprising that the agency to whom broad discretion is committed is unwilling to limit it.

63. United States v. Weitzenhoff, 1 F.3d 1523, 23 ELR 21332 (9th Cir. 1993), reh'g denied, 35 F.3d 1275 (9th Cir. 1994), cert. denied sub. nom. Mariani v. United States, 115 S. Ct. 939 (1995) (upholding felony conviction against defense of lack of knowledge that permit was being violated by discharge).

64. This action appears to have been settled recently under EPA's new disclosure policy for a small fraction of EPA's initial penalty demand. Unfortunately, this does not at all alter the force of the observations here about the detrimental effects of the uncertainty caused by EPA policy on industry's willingness to make voluntary disclosures.

65. United States v. Ashland Oil, Inc., 705 F. Supp. 270, 20 ELR 20399 (W.D. Pa. 1989); United States v. Pennwalt, No. MS 85-68 (T) (W.D. Wash. 1988). As a theoretical matter, one or more common-law privileges, such as the attorney-client privilege, may apply to audits in the same manner as they would apply other documents. However, as a practical matter, the courts appear reluctant to accord audits privileged treatment in the face of government information requests. In particular, there does not appear to be any reported case where an audit was treated as privileged against the government based on a claimed self-critical analysis privilege. Peter A. Gish, The Self-Critical Analysis Privilege and Environmental Audit Reports, 25 ENVTL. L. 73, 84, 85 n.77 (1995).

66. Audit-privilege opponents have asserted that there have been only two prosecutions where audits have been used as a basis for criminal enforcement. Letter from Atlantic States Legal Foundations to EPA Administrator Carol Browner (Feb. 6, 1995) (available from the ELR Document Service, ELR Order No. AD-3100). These two cases are: United States v. Dexter Corp., 132 F.R.D. 8 (D. Conn. 1990); United States v. Weyerhauser, No. CR90-298S (W.D. Wash. Nov. 16, 1990). In both cases, the companies were aware of violations and either deliberately chose not to remedy the violation or lacked diligence in doing so. Actually, there may have been at least two other cases where audits played a substantial role in criminal prosecution. See Van Cleve, supra note 53. However, it is clear that the number of such audit-based prosecutions has been small. This fact does nothing, however, to allay industry concerns of prosecution on facts like those in Weyerhauser and Dexter.

67. Voluntary Disclosure Policy, supra note 60, § D.3.

68. See Van Cleve, supra note 53, at 1227.

69. 76 Companies Disclosed Violations Under EPA Audit Policy, Official Says, DAILY ENV'T REP. (BNA), July 30, 1996, at A-1.

70. As of early 1997, 12 states had enacted privilege and immunity legislation: Colorado, COLO. REV. STAT. ANN. §§ 13-25-126.5, 13-90-107(j), 25-1-114.5 (West Supp. 1994); Idaho, IDAHO CODE §§ 9-801 to -811 (1996); Kansas, KAN. STAT. ANN. §§ 60-3302 to -3309 (1995); Kentucky, KY. REV. STAT. ANN. § 224.01-040 (Michie/Bobbs-Merrill Supp. 1994); Michigan, MICH. COMP. LAWS §§ 324.14801 to .14810 (1996); Minnesota, 1995 Minn. Laws 168 (to be codified at MINN. STAT. ANN. §§ 115B.17, .175, and .178, and § 116.02); New Hampshire, N.H. REV. STAT. ANN. § 147-E:1 to -E:9 (1996); Ohio, Ohio S.B. 138 (121st Leg., 1995-1996 Sess.) (to be codified at OHIO REV. CODE ANN. §§ 3745.70 to .73; South Carolina, S.C. CODE ANN. § 44-56-310 to -330 (1984); Texas, TEX. REV. CIV. STAT. ANN. § 4477cc (West 1995); Virginia, VA. CODE ANN. §§ 10.1-1198 to -1199 (Michie 1995); and Wyoming, WYO. STAT. §§ 35-11-1105 to -1106 (1995). Additionally, six states had enacted privilege-only legislation: Arkansas, ARK. CODE ANN. §§ 8-1-301 to -312 (Michie 1995); Illinois, ILL. REV. STAT. ch. 5, para. 52.2 (Supp. 1995); Indiana, IND. CODE ANN. §§ 13-10-13-1 to -12 (Burns Supp. 1994); Mississippi, MISS. CODE ANN. § 49-2-51 (1996); Oregon, OR. REV. STAT. § 468.963 (1995); Utah, UTAH CODE ANN. §§ 19-7-101 to -108 (1995). Two states had enacted immunity-only legislation: New Jersey, N.J. STAT. ANN. § 13:1D-125 (West Supp. 1996); and South Dakota, S.D. CODIFIED LAWS § 140-33 to -37 (1996). Currently, three state legislatures have proposed privilege or immunity legislation: Alaska, S. 41 (20th Leg., 1997-1998 Sess.); California, S. 423 & S. 598 (1997-1998 Sess.); and New York, A03154 & A01183 (220th Leg., 1997-1998 Sess.) and 18 states have seen proposed legislation fail or die without action: Alabama, Arizona, Delaware, Florida, Georgia, Iowa, Maryland, Massachusetts, Missouri, Montana, Nebraska, North Carolina, Oklahoma, Rhode Island, Tennessee, Washington, West Virginia, and Wisconsin.

The controversy over audit legislation shows no signs of quieting in 1997. In his 1997 State of the State address, Idaho Governor Philip Batt announced that he would not extend Idaho's privilege and immunity legislation beyond the end of 1997, when it will lapse under a sunset provision. Governor Philip E. Batt, State of the State Address (Jan. 6, 1997) (transcript on file with author). This decision should remove the major obstacle facing Idaho as that state seeks EPA approval of its CAA Title V program. Meanwhile, EPA Region VI has announced formal proceedings to consider whether EPA should withdraw the Texas underground injection control (UIC) program because of concerns that the state's audit privilege provisions interfere with enforcement of the UIC program. Letter from Jane N. Saginaw, EPA Region VI Regional Administrator to Dan Pearson, Executive Director, Texas Natural Resource Conservation Commission Regarding Review of Texas' Underground Injection Control Program (Jan. 15, 1997) (available from the ELR Document Service, ELR Order No. AD-3109). Finally, EPA headquarters recently issued a statement of principles outlining the minimal enforcement components of an approvable state program where privilege/immunity laws exist. Memorandum from Steven A. Herman, Assistant Administrator EPA OECA, to Regional Administrators Regarding Statement of Principles—Effect of State Audit Immunity/Privilege Laws on Enforcement Authority for Federal Programs (Feb. 14, 1997).

71. A later part of this subsection of the Oregon statute contains somewhat looser language, as it refers to documents "collected or developed for the primary purpose and in the course of an environmental audit." OR. REV. STAT. § 468.963 (1995) (emphasis added). Theoretically, therefore, preexisting documents containing evidence of environmental violations could be collected and sheltered by the audit privilege, but the better view is that the drafters did not intend this result. The Colorado statute contains language that specifically excludes preexisting documents from the coverage of the audit privilege it creates. See COLO. REV. STAT. ANN. §§ 13-25-126.5, 13-90-107(j)(I), 25-1-114.5 (West Supp. 1994).

72. The Oregon statute does not limit or affect preexisting common-law privileges that may apply, such as the attorney-client or work-product privileges. OR. REV. STAT. § 468.963 (1995).

73. COLO. REV. STAT. ANN. § 25-1-114.5(4) (West Supp. 1994).

74. There has also been federal legislation introduced to create evidentiary privileges for environmental audits and provide qualified immunities for voluntary disclosures of environmental violations. See, e.g., H.R. 1047, 104th Cong., 1st Sess. (1995) (Rep. Hefley). EPA has been critical of this legislation. See Letter from Steven Herman, EPA Assistant Administrator for Enforcement and Compliance Assurance, to Rep. Joel Hefley, Apr. 20, 1995 (available from the ELR Document Service, ELR Order No. AD-3098). The Hefley bill did not become law during the 104th Congress.

75. The Texas law does not cover environmental violations that cause substantial off-site harm to persons or the environment. Texas, TEX. REV. CIV. STAT. ANN. § 4477cc (West 1995).

76. 76 Companies Disclosed Violations Under EPA Audit Policy, Official Says, supra note 69, at A-2.

77. Kurt Fernandez, Violations Disclosed Under Immunity Law Would Have Eluded Texas, Observers Agree, DAILY ENV'T REP. (BNA), Apr. 24, 1996, at AA-1.

78. EPA has, however, promulgated a Small Business Policy, which contains considerably more lenient rules where enforcement against small businesses is concerned. See EPA, Interim Policy on Compliance Incentives for Small Businesses, 60 Fed. Reg. 32674 (June 13, 1995) (available from the ELR Document Service, ELR Order No. AD-1209); see also Memorandum from Steven Herman, EPA Assistant Administrator for Enforcement and Compliance Assurance to EPA Assistant Administrators and Others Re: Enforcement Response Policy for Treatment of Information Obtained Through CAA § 507 Small Business Assistance Programs (Aug. 12, 1994) (available from the ELR Document Service, ELR Order No. AD-837). Basing a distinction in enforcement policy of this type solely on the size of the business involved is questionable as a matter of environmental policy.

79. Letter from Steven Herman, supra note 74.

80. Federal Aviation Administration Office of Chief Counsel, Compliance/Enforcement Bulletin Reporting and Correction Policy and Implementing Guidance 90-6 (1990) (available from the ELR Document Service, ELR Order No. AD-3103).

81. Id.

82. EPA to Okay "Interim" Permit Programs Despite Audit Privilege Laws, ENVTL. POL'Y ALERT, Apr. 10, 1996, at 15.

83. Memorandum from Steven Herman, EPA Assistant Administrator for Enforcement and Compliance Assurance & Mary Nichols, Assistant Administrator for Air and Radiation, to Jackson Fox, Region X Regional Counsel, Apr. 5, 1996 re: Effect of Audit Immunity/Privilege Laws on States' Ability to Enforce Title V Requirements (available from the ELR Document Service, ELR Order No. AD-3102).

84. Clean Air Final Interim Approval of Operating Permits Program; the State of Texas, 61 Fed. Reg. 32693 (June 25, 1996).

85. The move toward more lenient treatment of audits and disclosure is not uniform. The Attorneys General of 14 states have announced that they oppose any privilege for environmental audits, and it is likely they would also oppose immunity for voluntarily disclosed violations. Attorneys General of Alabama et al., Comments on Environmental Auditing Policy,July 27, 1994. In addition, several state legislatures have rejected proposed privilege legislation.

86. 42 U.S.C. §§ 7502, 7511a, ELR STAT. CAA §§ 172, 182.

87. The ISO 14000 series includes, for example, standards for environmental management (ISO 14001) and standards relating to environmental auditing (ISO 14010-12). INTERNATIONAL ORGANIZATION FOR STANDARDIZATION, ENVIRONMENTAL MANAGEMENT SYSTEMS—SPECIFICATION WITH GUIDANCE FOR USE NO. ISO 14001:1996 (1996); INTERNATIONAL ORGANIZATION FOR STANDARDIZATION, GUIDELINES FOR ENVIRONMENTAL AUDITING—GENERAL PRINCIPLES NO. ISO 14010:1996 (1996); INTERNATIONAL ORGANIZATION FOR STANDARDIZATION, GUIDELINES FOR ENVIRONMENTAL AUDITING—AUDIT PROCEDURES—AUDITING OF ENVIRONMENTAL MANAGEMENT SYSTEMS NO. ISO 14011:1996 (1996); INTERNATIONAL ORGANIZATION FOR STANDARDIZATION, GUIDELINES FOR ENVIRONMENTAL AUDITING—QUALIFICATION CRITERIA FOR ENVIRONMENTAL AUDITORS NO. ISO 14012:1996 (1996).

88. See James Edwards, Environmental Audits and Voluntary Disclosure Issues, Presentation at the ABA Keystone Conference (Mar. 1996) at 11 (on file with authors). See also Sierra Club v. Public Serv. Co. of Colo., 894 F. Supp. 1455, 1456, 25 ELR 21461 (D. Colo. 1995); Unitek Envtl. Servs., Inc. v. Hawaiian Cement, 27 ELR 20483, 20486 (D. Haw. Aug. 7 1996).

89. While F.R.E. 501 makes it possible for the federal courts to create new evidentiary privileges, as the U.S. Supreme Court recently did in recognizing a therapist-patient privilege, there is no requirement that federal courts apply state-law privileges not recognized in the federal courts when hearing federal question cases.

90. Browner Pledges to Work With Governors on Model Environmental Audit Legislation, DAILY ENV'T REP. (BNA), Feb. 6, 1996, at AA-1.

27 ELR 10151 | Environmental Law Reporter | copyright © 1997 | All rights reserved