The Danger of Audit Privilege Laws

An Open Letter from Ohio & Colorado Petitioners to USEPA Administrator Browner

November 10, 1997

Ms. Carol Browner,
Administrator U.S. Environmental Protection Agency
401 M Street S.W.
Mail Code 1101
Washington, D.C. 20460

Re: Audit Privilege Law

Dear Administrator Browner:

There are three legs underpinning federal environmental enforcement: 1) federal action 2) state action, and 3) citizen action. The Audit Privilege Laws ("APL") of Ohio and Colorado fracture the third leg of the enforcement substructure by splintering citizen access to the very information which citizen neighbors need to monitor environmental compliance of industrial neighbors and to, where necessary, file notice letters which meet the increasingly rigorous requirements imposed by federal courts. Notice letters are the key to the federal court house door. Proper citizen suit notices give the federal court jurisdiction to enforce environmental laws and these notices often define the limits of that jurisdiction. The information that is needed for citizen suit notices almost always comes from public information and state agency files. If the public does not have access to full and fair information at the state level, the citizens' federal right to enforce environmental laws is illusory. Industry contends that these APLs will have just this effect. It is up to the U.S. EPA to make sure for federal enforcement purposes that the vast amount of information that falls under the new definition of "audit" found in both the Ohio and Colorado laws is neither edited out of nor withheld from agency files.

Further, even where a citizen files a suit for obvious violations, these APLs undermine and actually discourage disclosure of the full scope of any federal violations. Hence, multimedia problems that would have been disclosed under the Federal Rules of Civil Procedure, will go undiagnosed and unaddressed.

On behalf of the citizens of Ohio and Colorado, we implore you to stop your deputy "enforcers" from embracing a defacto repeal (via APLs) of our federal right to know and our federal right to enforce environmental laws.

We ask you to do this because you share our view that the Congress knew, full well, that there would be a gap between..." the number of significant environmental violations and the federal and state resources available to address these violations ('In view of government's limited and overburdened enforcement authority, citizen suits are essential to assure compliance with the law')" . Citizens who seek to enforce federal environmental laws should have the same access to information that the federal government would have as if it were enforcing the law. The U. S. EPA has sought to recognize the multimedia aspect of environmental violations and neighbors of the violators have always sought holistic enforcement of these laws.

For example, citizens like Marvin Duren (a small business owner and a Bronze Star and Purple Heart-decorated veteran) have sought full disclosure of information such as a neighboring Major Stationary Source's Hazardous Air Pollutants ("HAPs"). The violator withheld full information about these HAPs by declaring that they were not "required to be disclosed" to anyone, even in the company's Title V application. Mr. Duren uncovered the identity of 28 HAPs (e.g., TDI, styrene, and MDI) only through discovery in his Clean Air Act citizen suit.

Citizens like Nancy Helter (a mother of two, who lived in a small rental property on the edge of a large steel plant) sought full disclosure of information such as the nature and extent of her neighboring industry's coke oven gas releases. Even though these releases almost killed her son on a night in January, 1996, the company said that the releases did not amount to a reportable quantity and, therefore, the information sought would not be "available" to her. She got partial disclosure of the information she sought only after filing an EPCRA/RCRA citizen suit and invoking the authority of the Federal Rules of Civil Procedure.

Citizens like Cheryl Hopkins (a mother whose son played in the creek which ran next to their home and bordered a neighboring industry) have sought full disclosure of information such as the duration and extent of groundwater contamination that polluted her drinking water well. Only after filing a citizen's suit under RCRA did she get past disposal information from the violator.

Disclosure of vital facts in these three cases all took place before the APL was passed as a state law. Under prior law, there was never a serious question that this information would have to be disclosed under the Federal Rules of Civil Procedure and there is no dispute that the information was vital to preparing to try each case and/or help to resolve each citizen suit. Now the very information vital to each of these cases would fall behind the veil of secrecy fashioned by the new state laws. Thus, it may be too late to correct this situation in Michigan and Texas, but it is not too late to make corrections in Ohio and Colorado.

Some may say that any major company would be too embarrassed to accept the gift of secrecy presented by these APLs. Such people should look no further than Waste Management, Inc. which sought to use a pending APL to keep historic and current information about landfill gas migration from thousands of low income people who were and are exposed to the gas. When these citizens sought an injunction under a RCRA citizen suit to remedy the resulting endangerment, WMI continued to deny full disclosure of the complete audits. The information in the audits is vital to show what was known about the migration and how long it has been known. Such information is of no small use in determining the nature and extent of the violation, verifying exposure information, fashioning a remedy for the violation and issuing penalties consistent with the federal law and the violations.

With these issues in mind, we would like you to review the following which supports our challenge to state authority to continue to act to enforce federal law on your behalf.

THE ROLE OF CITIZEN SUITS

The United States District Court for the District of Colorado summarized the role of citizen enforcement of federal law by observing the citizens' role under the Clean Air Act (CAA) the first Federal environmental statute to contain such a provision:

The purpose of the Clean Air Act, as expressed by Congress, is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population." 42 U.S.C. § 7401. Recognizing the importance of attaining the remedial goal of the Clean Air Act and the magnitude of the task at hand, Congress armed citizens with an independent means to require compliance with the Act. 42 U.S.C. § 7604... If the state agency fails for any reason to carry out its duties under the Act, citizens may bring suit directly against the violator. 42 U.S.C § 7604. Debate surrounding amendments to the Clean Air Act evidences that citizen suits are an intricate part of the Act's enforcement scheme.
The citizen enforcement provisions of the Act reflect congressional recognition that neither federal nor state governments have the resources to ensure that generators of air pollutants are consistently in compliance with the Act. Therefore, to supplement governmental enforcement of the Clean Air Act citizen suits provide interstitial means for enforcement of environmental standards in furtherance of the remedial purpose of the Act.

Sierra Club v. Public Service Co. of Colorado, Inc., 41 ERC 1823, 1826-1827, 894 F.Supp. 1455 (DC Colo, 1995).

THE REQUIREMENT TO PROVIDE INFORMATION TO THE PUBLIC

Moreover, the same court stressed that citizen suits are dependent upon information being made available to the public;

To aid citizen enforcement, access to information necessary to prove that an entity is violating the Act is provided by § 7414 of the Act. That section states that any records, reports, or information required to be filed [or otherwise obtained] by the Administrator under subsection (a) must be made available to the public unless the information involves trade secrets. 42 U.S.C. § 7414(c).

Id. Citizens would therefore have access to all documents gathered by the Administrator pursuant to her broad sweeping authority to require facilities to: maintain records, make reports, install monitoring equipment, submit compliance certificates, and provide such other information as the Administrator may reasonably require. See 42 U.S.C.S. § 7414(a) (1996). This most certainly includes all past and present internal documentation of violations or environmental releases i.e. audits. All such non-trade secret information obtained by the Administrator or obtainable by the Administrator must also be made available to the public upon request.

As a further illustration, the legislative history of SMRCA documents the fact that well-informed citizens participating in the regulatory process are critical to have a successful regulatory scheme. Government agencies have limited resources to inspect, regulate and enforce. Ensuring that the public has the right (and, therefore, access) to information is essential throughout all "phases of the regulatory scheme" to help "insure that the decisions and actions of the regulatory authorities are grounded upon complete and full information."

MINIMUM STATE PROGRAM REQUIREMENTS

The requirement that such vital enforcement information be made available to the public is paralleled in all the major federal environmental laws. This right to have and use information cannot be compromised just because a state is implementing the federal law pursuant to its own approved program. The federal laws themselves make this abundantly clear. For example, RCRA expressly states that, where a State is implementing its hazardous waste rules under an authorized program, citizens are entitled to have access to information in substantially the same form and to the same degree as it would be available under the federal law. In fact section 6926(f) of RCRA clearly states:

No state program may be authorized by the Administrator under this section unless:

  1. such program provides for the public availability of information obtained by the State regarding facilities and sites for the treatment, storage, and disposal of hazardous waste; and
  2. such information is available to the public in substantially the same manner and to the same degree as would be the case if the Administrator was carrying out the provisions of this subchapter in such state.

42 U.S.C. § 6926(f) (1994). Where states have adopted broad privileges preventing access to information contained in internal audits, those states have divested the public of their right to access information under the federal laws. In addition, provisions of the Ohio and Colorado laws obliterate the right to information envisioned under these federal laws and, in doing so, restrict the ability of the state and, subsequently, the citizens, to verify information submitted by sources, to acquire injunctions against polluters, and even to file notice in citizen suit actions in the first instance.

VERIFICATION REQUIRES COMPLETE INFORMATION

To maintain their programs under federal environmental laws such as RCRA, the CAA, and the CWA, states must have the authority to verify information submitted by polluters. RCRA specifically provides that states must have adequate inspection authority designed to allow them to: i.) determine compliance, ii.) verify the accuracy of information submitted by the permittee, and iii.) verify the accuracy of sampling, monitoring, and other methods used to develop the information required to be submitted. See 40 C.F.R. § 271.15(c). (Emphasis added.) Under Audit Privilege Laws the states and citizens can no longer obtain information which is not required to be submitted by law (see eg. Ohio's petition attached). Therefore, those states will be unable to verify the accuracy of information submitted by sources, as required under federal law. See generally Amended Petition for Withdrawal of the Authorization of the RCRA Subtitle C and the Approval of CAA Title V and FWPCA NPDES and General Permit Programs of the State of Ohio, p. 9 (1997) (providing a complete discussion of the issue). In addition, citizens' federal rights will be impermissibly limited to the information available under state (not federal) law. It is not only access to, but actual use of this information which is vital for the meaningful exercise of citizen suit rights. For example, Texas' new version of the Audit Privilege Law, which allows access to information but not the use of that information in an enforcement action, destroys the states' and Citizens' ability to act once they review an audit and discover a violation. The "fruits of the poison tree" provision compounds this problem by providing a comprehensive "exclusionary" rule which reaches all "facts" derived from information in the audit.

INJUNCTIONS REQUIRE COMPLETE INFORMATION

Federal environmental laws also require states to have the ability to secure injunctive relief against violations in progress. RCRA specifically requires states to have the ability to sue to enjoin any threatened or continuing violation of any program requirement. See 40 C.F.R. § 271.16(2). The Ohio and Colorado audit privilege laws prevent those states from effectively securing injunctive relief by restricting their ability to gather and present usable evidence to prove the existence of the violation in court. See Ohio Petition, p. 12 and Colorado Petition p. 4. Texas' "solution" of allowing access to information but not use of the information is no solution at all. This type of exclusionary rule will prevent states from securing the relief mandated in the federal laws. Even though the Federal law envisions that citizens will then be able to step up and enforce the law by securing the injunction and penalties via a citizen suit-because of the far reaching effects of audit privilege, citizens will not be able to act.

In addition, the U.S. EPA requires that state programs foster both prompt and complete enforcement:

"'In determining whether program requirements are met in states with laws pertaining to voluntary auditing, EPA will be particularly concerned, among other factors, with whether the state has the ability to obtain immediate and complete injunctive relief.'

Further, the audit privilege legislation would undermine the requirements under RCRA Section 6972, which allows district courts to enjoin any person in violation, in that they would restrict access to information that would enable citizens to bring such actions for injunctive relief. For example, how will citizens be able to obtain the "evidence" required under Section 6973, to enable the Administrator to bring suit for injunctive relief. Prior to the passage of state audit privilege laws, such information was available to the public in substantially the same manner and to the same degree as would be the case if the Administrator was carrying out the provisions of the Act in each state. See RCRA [S]ection 6926(f). However, if citizens are unable to obtain the evidence that would trigger an enforcement action by the Administrator under RCRA Section 6973, their only option is to bring an enforcement action themselves under Section 6972 with evidence that was too weak to spur the Administrator into action.

Finally, the U. S. EPA must consider evidentiary issues in deciding state adequacy. The Clean Water Act (CWA), for example, explicitly gives the U. S. EPA authority to consider evidentiary issues in determining the adequacy of a State program. See 40 CFR 123.26(d). As the U. S. EPA itself acknowledges in its July 3, 1997 letter to the State of Colorado re: the Petition to Withdraw Colorado's Clean Water Act Permits Program, p.9-10, the NPDES State program requirements specify that:

Investigatory inspections shall be conducted, samples shall be taken and other information shall be gathered in a manner (e.g. using proper "chain of custody" procedures) that will produce evidence admissible in an enforcement proceeding or in court.
The broad exclusionary rules which accompany state audit privilege laws, by definition, violate this requirement.

CITIZEN SUITS REQUIRE COMPLETE INFORMATION

One of the most important provisions of the federal environmental laws is the authorization of citizen suits to enforce environmental regulations. The Colorado and Ohio audit privilege laws effectively paralyze citizen suits by prohibiting both access to information and use of that information as evidence in court. The Texas law makes a hollow testimonial to the idea of disclosure by authorizing disclosure of audits, but prohibiting their use and the use of facts derived therefrom as evidence in court. The EPA's solution to this problem enacted in Texas actually renders Citizen Suits meaningless. The Texas law requires courts to suppress evidence offered in any civil or administrative proceeding that arises or is derived from review, disclosure, or use of the privileged information. See Title 71, Article 4447cc, Sec. (9)(d). Thus Texas' broad exclusionary rule prohibits the use not only of privileged information, but also of any other fact acquired through the review and/or use of that information. The Colorado and Ohio laws similarly restrict the disclosure and use of information because their broad definition of the term "audit," which includes information gathered prior to the effective date of the law. See Ohio Petition, fn.1, p. 3, (providing a definition of the term "audit" as contained in the Ohio law.) Colorado Rev. Stat. §13-25 - 126.5(2)(b). Information covered under the privilege includes any information declared by the generator of pollution to be part of an audit. The privilege is broadened even further by the fact that both Colorado's and Ohio's laws bar almost all scrutiny of the determination that any information is actually part of an audit.

In the face of federal mandates requiring disclosure to citizens, state laws which effectively repeal such provisions of federal law cannot be sanctioned. Nor can state laws deprive citizens of other rights conferred under those federal laws. The US EPA must seek clarification 1) that these privileges do not apply to the gathering of information which is a necessary prelude to the filing of notice in a citizen suit, and 2) these privileges cannot apply to the federal rules of discovery and evidence which are necessary to reveal the full nature and extent of violations.

Further, since these new state privilege laws clearly apply to state actions brought in state court, the U. S. EPA must find that the states with laws such as those in Ohio, Texas, and Colorado can no longer effectively carry out federal mandates via authorized programs. Virtually all enforcement in states such as Texas, Colorado, and Ohio is carried out in state court by state agencies. Similarly, each state or local health department or other local unit of government will usually be pursuing its environmental protection role in state court. Hence, the audit privilege laws will impede the ability of the entire states' network to fulfill its duty of effectively enforce federal environmental laws.

As a result of the cloud over state enforcement of federal programs, the integral role of the federal citizen suit becomes even more important to the federal enforcement mechanism. The U. S. EPA needs to assure the complete protection of the full federal enforcement rights of citizens, while it holds hearings on each state's decision to abandon the full scope of protection envisioned by the federal laws under the guise of "audit privilege".

Very truly yours,

D. David Altman
Attorney for Ohio Petitioners

Ohio Environmental Council
Ohio Citizen Action
Rivers Unlimited
Ohio Chapter Sierra Club

Mark Hughes
Attorney for Colorado Petitioners

Sierra Club
The Oil, Chemical & Atomic Workers International Union
Western Colorado Congress
High Country Citizen Alliance