ALEC'S PRIVILEGED
BUSINESSES, PUBLIC'S "RIGHT TO KNOW NOTHING" ACT
Introduction
For the past decade, the American Legislative Exchange Council
(ALEC) has been promoting an “Environmental Audit Privilege
and Qualified Disclosure Act” to state legislators. The
bill’s ignominious history belies its do-gooder rhetoric.
Supporters of the Act say it’s needed to ensure that well-meaning
companies attempting to remedy environmental problems aren’t
prosecuted for their efforts, and to level the playing field between
small and large businesses.(1)
But Coors Brewing Company drafted the legislation in response
to a more than $1 million fine (later negotiated down to $237,000)
that the Colorado Public Health and Environment Department levied
against the company for releasing smog-forming volatile organic
compounds in the late 1980s to early 1990s.(2)
ALEC’s model legislation was revised in 1995 by its National
Task Force on Energy, Environment, and Natural Resources, including
Coors executive Allan E. Auger and Cindy Goldman, the wife of
another Coors executive.(3)
The federal Environmental Protection Agency, which has its own
voluntary audit policy, has slammed the ALEC-inspired state bills
as “unnecessary” measures that “undermine law
enforcement, impair protection of human health and the environment,
and interfere with the public’s right to know of potential
and existing environmental hazards.”(4)
What the EPA and environmental and community groups (some of which
have nicknamed the bill the “Right to Know Nothing Act”
or the “Corporate Secrecy Law”) object to in ALEC’s
legislation is its combination of relying on companies to report
their own environmental violations and granting confidentiality
to all company records related to internal environmental, health,
and safety audits.
The ALEC environmental audit privilege legislation says its goal
is “to give industry greater incentive to comply with environmental
laws.” The corporate bias of the Act is apparent in its
extensive safeguards for “privilege,” the ability
of self-auditing companies to keep their records from public and
government scrutiny. State officials may request, subpoena, or
“seize” these documents, but only after going through
a lengthy process including private hearings that would take at
least several months. Even then, a court or administrative law
judge can only order the company to release the records in question
if it is found that the company fraudulently claimed privilege,
the information is not subject to privilege, or the records document
violations that the company failed to correct “within a
reasonable time.” Noticeably absent from the Act is a definition
of what a “reasonable” time frame would be. The ALEC
bill also includes harsh penalties for whistleblowers –
misdemeanor, contempt, and other possible charges, along with
a fine of up to $25,000.
This near-total secrecy is granted to companies in the hope that
they will perform voluntary internal environmental, health, and
safety audits, and correct and report any violations they find.
Yet the Act contains no language regarding what must be included
in these audits to ensure their rigorousness (besides the definition
that they be “designed to identify and prevent noncompliance
or to improve compliance” with relevant regulations), or
even specifying how often audits must be carried out. But, contrary
to ALEC’s claims, environmental audit privilege bills do
not increase the frequency of audits or the reporting of environmental,
health, and safety violations.(5)
The ALEC bill does state that any company disclosing a violation
discovered during an audit will, with few exceptions, be “immune
from any administrative, civil, or criminal penalties.”
And, even in the rare instance when a company may be held liable,
the Act states that the penalty levied should “be mitigated
due to factors relating to the nature of the disclosure, efforts
of the disclosing person or entity to prevent violations or harm
to the environment, or other relevant considerations.” These
generous provisions led the EPA to remark: “Taxpayers whose
payments are late expect to pay interest or a penalty; the same
principle should apply to corporations and other regulated entities
that have delayed their investment in compliance. Second, collecting
economic benefit is fair because it protects law-abiding companies
from being undercut by their noncomplying competitors, thereby
preserving a level playing field.”(4)
Other notable shortcomings of the ALEC legislation include its
vague exemption of “intentional and willful” violators
and companies with “a history of continuous or repeated
violations” from the audit privilege system. Exactly what
might constitute proof that a company is guilty of either of these
behaviors is unclear.
Since 1993, 26 states have passed environmental audit privilege
laws similar to the ALEC bill. Alarmed, the EPA threatened to
revoke states’ federally delegated powers if they did not
amend these laws to bring them into compliance with federal standards.
Twenty-three states have done so; Illinois, Kansas, and Idaho
are holding out, to the detriment of their citizens and the environment.
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Talking Points
- ALEC’s environmental audit privilege legislation sacrifices
the public’s right to know and hinders enforcement of
environmental, health, and safety standards without increasing
the frequency of company self-audits or improving the reporting
of violations.
- The ALEC bill grants near-total secrecy to companies carrying
out audits, without setting minimum standards regarding the
quality or frequency of audits.
- In nearly all situations, the ALEC legislation protects companies
from any administrative, civil, or criminal penalties for environmental,
health, and safety violations. This inability to fine or otherwise
punish polluters gives unscrupulous companies an economic incentive
to ignore environmental regulations.
- The EPA’s federal audit policy contains many important
safeguards not in the ALEC bill, including definitions for prompt
disclosure of violations (within 21 days) and repeat violators
(same or similar violation at a facility within the past three
years); mitigation of punitive fines but not of penalties based
on economic gain the company realized by polluting; requirements
for audits to be ongoing and systematic; necessitating that
self-reporting violators take action to correct problems, remediate
environmental damage, and prevent future violations; and no
secrecy for corporate polluters.
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Links to Relevant
Bills
Illinois
415
ILCS 5/52.2
Kentucky
Section
1 KRS 224.01-040 (HB143 2001)
Mississippi
SB
2001 (2003)
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Press Clips
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