The fine print of state environmental audit privileges.

Author:Stensvaag, John-Mark
 
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I.

INTRODUCTION

For the past five years, scholars, legislators, regulated entities, and environmental advocates have debated the merits of an abstract concept: the environmental audit privilege. Proponents of the privilege have urged that compliance with environmental laws will be enhanced when the promise of confidentiality induces regulated entities to engage in searching self-audits. Opponents have decried the secrecy inherent in the establishment of such a privilege.

Much has been written at an abstract level about this topic. Many articles discuss whether shielding adverse environmental compliance information is a good(1) or a bad(2) idea, and whether it will actually induce the desired results.(3) Proceeding on the assumption that confidentiality is desirable, numerous authors have examined alternative approaches,(4) such as the attorney-client privilege, the work product rule, and an embryonic common law "self-evaluation" (or "self-critical analysis") privilege.(5) Most of these confidentiality proponents have concluded that adverse environmental compliance discoveries cannot be shielded sufficiently under alternative theories, and that only a formal environmental audit privilege will provide the reliable protection necessary to induce widespread auditing.(6)

The United States Environmental Protection Agency is not convinced.(7) The United States Department of Justice remains unpersuaded.(8) Congress has not yet been moved.(9) But state legislators have listened, and they have been mightily impressed. In the past four years, legislative enactments in nineteen states have transformed the abstract concept of an environmental audit privilege into reality.(10) In these jurisdictions, the environmental audit privilege is no longer an idea, but fully formed law, enshrined in the statute books.

This move from the ideal to the real requires a new kind of scrutiny. To be sure, arguments about the abstract virtues and demerits of the privilege will continue. But from Alaska to Virginia -- and in seventeen states in between -- regulated entities and those seeking to obtain environmental audit materials must now grapple with the first principle of modern environmental law: the fine print matters.

I have explored elsewhere the extraordinary importance of statutory and regulatory minutiae in the present era of "microenvironmental law,"(11) suggesting that "fine print" -- or "not so fine print" -- has three attributes: (1) it is hidden and difficult to detect; (2) it has been crafted by someone who seeks to use it to his or her advantage; and (3) it leads to unexpected outcomes.(12) The previous article concluded with the following observations:

The fine print is here to stay. As a result, modern environmental law is

seldom what it appears to be. The rise of microenvironmental law has

profound ramifications for persons who study, practice, and implement

this law, as well as those who seek to shape and reform its content.

Students must be forced to confront the likelihood that their initial

understanding of each environmental control scheme is misleading,

because the scheme will be shown to be vastly different once the fine

print has been explored. Practitioners must likewise shed their

simplistic first impressions....

Ultimately, however, the task of clarifying microenvironmental law

will fall disproportionately on the shoulders of the academy.

Environmental law scholars must continue to bring all of their

analytic powers to bear on what has become a truly frightening

tangle of materials, illuminating the fine print and flushing

it out for public scrutiny ....(13)

The purpose of this article, therefore, is to confront the texts of the statutory environmental audit privileges enacted in those states where proponents of the privilege have at least temporarily won the day. What do those texts provide? What types of interpretive issues will they pose? What are the implications of the texts for regulated entities and parties seeking to obtain allegedly privileged information?(14) By illuminating the fine print for public scrutiny, this article demonstrates that each state's environmental audit privilege -- like much modern environmental law -- is seldom what it appears to be.

II.

THE REALITY OF STATE ENVIRONMENTAL AUDIT PRIVILEGES

On July 22, 1993, Oregon's environmental audit privilege statute became the "first legislative measure ... ever enacted in the nation to create a privilege for any type of voluntarily initiated reports used for a company's self-evaluation."(15) In the forty-seven-month period commencing with that enactment, a total of eighteen additional states adopted environmental audit(16) privilege statutes, bringing the total number of statutory environmental audit privilege jurisdictions to nineteen.(17) Table 1 shows the order in which the various states have enacted environmental audit privilege statutes, and the dates of their adoption:(18)

Table 1 Chronology of State Environmental Audit Privilege Enactments Date of State Date of Enactment State Enactment Oregon 7/22/93 Indiana 3/8/94 Kentucky 4/11/94 Colorado 6/1/94 Illinois 1/24/95 Arkansas 2/17/95 Wyoming 2/18/95 Utah 2/28/95 Rule of 3/20/95 Evidence Statute Idaho 3/22/95 Virginia 3/24/95 Mississippi 4/7/95 Kansas 4/22/95 Texas 5/23/95 Michigan 3/18/96 New Hampshire 3/18196 Minnesota(*) 4/3/96 South Carolina 6/4/96 Ohio 12/12/96 Alaska 5/11/97 (*) The Minnesota environmental improvement pilot program includes a partial environmental audit privilege for qualified program participants only. See infra p. 98.

There is no reason to believe that the number of environmental audit privilege states will be limited to the foregoing nineteen. As indicated in Table 2, legislators in at least twenty-four additional states have introduced environmental audit privilege bills in the past two years.(19) Indeed, research suggests that the legislatures of only six states -- Connecticut, Louisiana,(20) Montana, Nevada, New Mexico, and North Dakota -- have thus far ignored the privilege.

Table 2 Proposed State Environmental Audit Privilege Legislation State Bill(s) Date of Introduction Alabama 1997 Ala. S.B. 388 2/13/97 Arizona 1996 Ariz. S.B. 1381 1/30/96 California(21) 1997 Cal. S.B. 423 2/18/97 Delaware 1997 Del. H.B. 32 1/21/97 Florida 1997 Fla. S.B. 1480 3/4/97 1997 Fla. H.B. 1153 3/6/97 Georgia 1997 Ga. H.B. 701 2/21/97 Hawaii 1997 Haw. H.B. 1245 1/21/97 Iowa 1997 Ia. H.F. 216 2/12/97 1997 Ia. H.F. 681 3/18/97 Maine 1997 Me. H.P. 816 2/18/97 Maryland 1996 Md. H.B. 1057 2/6/96 1996 Md. S.B. 682 Massachusetts 1995 Mass. H.B. 3593 2/16/95 Missouri 1997 Mo. S.B. 48 1/8/97 1997 Mo. S.B. 125 Nebraska 1995 Neb. L.B. 731 1/19/95 New Jersey 1996 N.J. S.B. 384 1/11/96 1996 N.J. S.B. 385 1996 N.J. H.B. 273 New York 1997 N.Y. A.B. 1183 1/13/97 1997 N.Y. A.B. 3154 1/30/97 North Carolina 1997 N.C. H.B. 247 2/17/97 Oklahoma 1997 Ok. H.B. 1814 2/3/97 Pennsylvania 1997 Pa. S.B. 381 2/6/97 Rhode Island 1997 R.I. S.B. 526 2/11/97 Tennessee 1997 Tenn. S.B. 33 1/15/97 1997 Tenn. S.B. 394 2/5/97 Vermont 1996 Vt. S.B. 314 1/3/96 Washington 1996 Wash. H.B. 2377 1/10/96 West Virginia 1997 W.Va. H.B. 2154 2/19/97 1997 W.Va. S.B. 99 2/21/97 Wisconsin 1995 Wis. S.B. 185 5/10/95 1995 Wis. A.B. 1088 3/27/96 III.

EXPLORING THE FINE PRINT OF THE ENVIRONMENTAL AUDIT PRIVILEGE STATUTES

  1. Expressed Purposes and Goals

    The environmental audit privilege statutes of thirteen states set forth express purposes or goals, or contain legislative findings articulating the purposes of the privilege.(22) In those states in which the legislature has spoken on the subject, the wording may vary. Nevertheless, the expressed purposes of the privilege are almost always to encourage regulated entities to engage in two activities:

    1. To conduct voluntary internal environmental audits of their compliance programs, and

    2. To assess and improve compliance with environmental laws.(23)

    It is pointless to linger on the precise wording of each state's statute on this topic; wording about purposes is rarely likely to rise to the level of "fine print," significantly affecting the outcomes of analyses in unexpected ways.

  2. Effective Date

    Because the various state environmental audit privilege statutes were enacted at different times,(24) they obviously take effect on different dates. A less obvious aspect of the fine print is that these statutes have considerably varying approaches to defining their effective dates.

    The statutes of two states are simply silent about their effective dates.(25) Statutes in seventeen other states provide (sometimes in rather convoluted ways) that they take effect on specified dates.(26) What does it mean, however, for a privilege statute to "take effect" on a given date? Several statutes present unique twists on this matter. An examination of the fine print highlights a number of unresolved interpretive issues and illustrates the importance of carefully reviewing and considering the significance of any given statute's effective date.

    1. Defining the Effective Date by Reference to the Dates of Certain Proceedings

      The statutes of three states -- Oregon, South Carolina, and Utah -- link the effective dates of their respective privileges to the pendency or non-pendency of the legal proceedings in which the privilege is being invoked. The Utah environmental self-evaluation privilege applies to "all administrative and judicial proceedings commenced on or after March 21, 1995."(27) Similarly, the Oregon statute provides that the portion of the statute creating the environmental audit privilege "shall apply to all legal actions or administrative proceedings, whether civil or criminal, that commence after the effective date of this 1993 Act."(28)

      Read literally, the Utah and Oregon statutes (and the Utah Rule of Evidence) suggest that a qualifying environmental investigation need not have been commenced or completed after their effective dates. Accordingly, a report resulting from an...

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