II

105TH CONGRESS

1ST SESSION S. 1332

To amend title 28, United States Code, to recognize and protect State

efforts to improve environmental mitigation and compliance through the

promotion of voluntary environmental audits, including limited protection

from discovery and limited protection from penalties, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 29, 1997

Mr. ENZI introduced the following bill; which was read twice and referred to

the Committee on Environment and Public Works

A BILL

To amend title 28, United States Code, to recognize and

protect State efforts to improve environmental mitigation

and compliance through the promotion of voluntary environmental audits, including limited protection from discovery and limited protection from penalties, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘State Environmental

5 Audit Protection Act’’.
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1 SEC. 2. FINDINGS.

2 Congress finds that—

3 (1) consistent with the purpose of voluntary en4 vironmental audits of enhancing United States envi5 ronmental mitigation efforts, it is in the interest of

6 the United States to allow and encourage States to

7 enact and implement such incentive programs as are

8 consistent with the specific and respective needs and

9 situations of the States;

10 (2) State environmental incentive laws should

11 be allowed and encouraged by the Federal govern12 ment as a means of enabling regulated entities to set

13 minimum requirements in environmental mitigation

14 efforts by the entities;

15 (3) a strong regulatory enforcement effort is

16 necessary to ensure compliance with Federal, State,

17 and local laws that protect the environment and

18 public health;

19 (4) the use of voluntary environmental audits,

20 in accordance with respective State laws, is intended

21 to supplement, not supplant, regulatory enforcement

22 efforts to improve the environmental compliance of

23 regulated entities;

24 (5) the protections offered by the amendments

25 made by this Act do not relieve regulated entities

26 from the need to comply with otherwise applicable
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1 requirements to disclose information under Federal,

2 State, or local environmental laws; and

3 (6)(A) law and regulatory policies provide

4 ample precedent for the constructive use of vol5 untary audits;

6 (B) the final policy on the use of environmental

7 audits (60 Fed. Reg. 66706) issued by the Adminis8 trator of the Environmental Protection Agency—

9 (i) provides incentives for conducting au10 dits; and

11 (ii) includes limited protection from discov12 ery and disclosure of audit information and dis13 cretionary relief from an enforcement action for

14 voluntary disclosure of violations;

15 (C) Advisory Circular 120–56, issued by the

16 Administrator of the Federal Aviation Administra17 tion, commits to a policy of cooperative problem-solv18 ing and use of self-evaluation incentives as a means

19 of enhancing aviation safety in the commercial air20 line industry; and

21 (D) the Equal Credit Opportunity Act (15

22 U.S.C. 1691 et seq.) provides discovery protection

23 for information developed by creditors as a result of

24 self-tests that are voluntarily conducted to determine

25 the level of compliance with that Act.
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1 SEC. 3. VOLUNTARY AUDIT PROTECTION.

2 (a) IN GENERAL.—Part VI of title 28, United States

3 Code, is amended by inserting after chapter 176 the fol4 lowing:

5 ‘‘CHAPTER 177—VOLUNTARY AUDIT

6 PROTECTION

‘‘Sec.

‘‘3601. Recognition of State efforts to provide voluntary environmental audit incentives.

‘‘3602. Performance Report.

‘‘3603. Definitions.

7 ‘‘§ 3601. Recognition of State efforts to provide vol8 untary environmental audit incentives

9 ‘‘(a) VOLUNTARY ENVIRONMENTAL AUDIT INCEN10 TIVE LAWS.—

11 ‘‘(1) LIMITED PROTECTION FROM DISCOV12 ERY.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subparagraph (C), a State law may provide that

15 a voluntary environmental audit report, or a

16 finding, opinion, or other communication relat17 ed to and constituting part of a voluntary envi18 ronmental audit report, shall not be—

19 ‘‘(i) subject to discovery or any other

20 investigatory procedure governed by Fed21 eral, State, or local law; or
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1 ‘‘(ii) admissible as evidence in any

2 Federal, State, or local judicial action or

3 administrative proceeding.

4 ‘‘(B) TESTIMONY.—Except as provided in

5 subparagraph (C), a State law may provide that

6 an entity, or an individual who performs a vol7 untary environmental audit on behalf of the en8 tity, shall not be required to give testimony in

9 any Federal, State, or local judicial action or

10 administrative proceeding concerning the vol11 untary environmental audit.

12 ‘‘(C) INFORMATION NOT SUBJECT TO PRO13 TECTION.—The protections described in sub14 paragraphs (A) and (B) shall not apply to any

15 information that is otherwise required to be dis16 closed under a Federal, State, or local law.

17 ‘‘(2) LIMITED PROTECTION FOR DISCLOSURE.—

18 ‘‘(A) IN GENERAL.—Except as provided in

19 subparagraph (B), a State law may provide

20 that an entity that promptly discloses informa21 tion about noncompliance with a covered Fed22 eral law, that is discovered as a result of a vol23 untary environmental audit or through a com24 pliance management system, to an appropriate

25 Federal, State, or local official may be pro-
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1 tected, in whole or in part, from an enforcement

2 action in a Federal, State, or local judicial or

3 administrative proceeding.

4 ‘‘(B) DISCLOSURE NOT SUBJECT TO PRO5 TECTION.—A State law described in subpara6 graph (A) shall not apply to noncompliance

7 with a covered Federal law that is—

8 ‘‘(i) not discovered voluntarily; or

9 ‘‘(ii) the result of a willful and know10 ing violation or gross negligence by the en11 tity disclosing the information.

12 ‘‘(b) PROHIBITED FEDERAL ACTIVITIES.—A Federal

13 agency shall not—

14 ‘‘(1) refuse to delegate enforcement authority

15 under a covered Federal law to a State or local

16 agency or refuse to approve or authorize a State or

17 local program under a covered Federal law because

18 the State has in effect a voluntary environmental

19 audit incentive law;

20 ‘‘(2) make a permit, license, or other authoriza21 tion, a contract, or a consent decree or other settle22 ment agreement contingent on a person waiving any

23 protection under a State voluntary environmental

24 audit incentive law; or
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1 ‘‘(3) take any other action that has the effect

2 of requiring a State to rescind or limit any protec3 tion of a State voluntary environmental audit incen4 tive law.

5 ‘‘§ 3602. Performance report

6 ‘‘(a) IN GENERAL.—Section 3601 shall not apply to

7 a State voluntary environmental audit incentive law unless

8 the appropriate State agency compiles and submits to ap9 propriate Federal agencies an annual report in accordance

10 with this section on the performance of the State vol11 untary environmental audit incentive law during the pre12 vious calendar year.

13 ‘‘(b) PROVISIONS OF REPORT.—The performance re14 port shall include—

15 ‘‘(1) the number of noncompliance disclosures

16 that were received by the State pursuant to the

17 State voluntary environmental audit incentive law,

18 with an indication of the noncompliance disclosures

19 that were made by—

20 ‘‘(A) regulated entities that are normally

21 inspected; and

22 ‘‘(B) regulated entities that are not on in23 spection schedules;

24 ‘‘(2) the categories and sizes of regulated enti25 ties that disclosed noncompliance problems pursuant
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1 to the State voluntary environmental audit incentive

2 law and a description of the noncompliance problems

3 that were disclosed;

4 ‘‘(3) the status of remediation undertaken by

5 regulated entities in the State to correct noncompli6 ance problems that were disclosed pursuant to the

7 State voluntary environmental audit incentive law;

8 and

9 ‘‘(4) a certification from the State attorney gen10 eral that the State maintains the necessary regu11 latory authority to carry out administration and en12 forcement of delegated programs in light of the

13 State voluntary environmental audit incentive law.

14 ‘‘(c) ADDITIONAL INFORMATION.—In addition to the

15 information required under subsection (b), the State agen16 cy may include additional information in the annual per17 formance report that the State agency considers important

18 to demonstrate the performance of a State voluntary envi19 ronmental audit law.

20 ‘‘§ 3603. Definitions

21 ‘‘In this chapter:

22 ‘‘(1) COVERED FEDERAL LAW.—

23 ‘‘(A) IN GENERAL.—The term ‘covered

24 Federal law’ means—
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1 ‘‘(i) the Federal Insecticide, Fun2 gicide, and Rodenticide Act (7 U.S.C. 136

3 et seq.);

4 ‘‘(ii) the Toxic Substances Control Act

5 (15 U.S.C. 2601 et seq.);

6 ‘‘(iii) the Federal Water Pollution

7 Control Act (commonly known as the

8 ‘Clean Water Act’) (33 U.S.C. 1251 et

9 seq.);

10 ‘‘(iv) the Oil Pollution Act of 1990

11 (33 U.S.C. 2701 et seq.);

12 ‘‘(v) the Safe Drinking Water Act (42

13 U.S.C. 300f et seq.);

14 ‘‘(vi) the Noise Control Act of 1972

15 (42 U.S.C. 4901 et seq.);

16 ‘‘(vii) the Solid Waste Disposal Act

17 (42 U.S.C. 6901 et seq.);

18 ‘‘(viii) the Clean Air Act (42 U.S.C.

19 7401 et seq.);

20 ‘‘(ix) the Comprehensive Environ21 mental Response, Compensation, and Li22 ability Act of 1980 (42 U.S.C. 9601 et

23 seq.);
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1 ‘‘(x) the Emergency Planning and

2 Community Right-To-Know Act of 1986

3 (42 U.S.C. 11001 et seq.);

4 ‘‘(xi) the Pollution Prevention Act of

5 1990 (42 U.S.C. 13101 et seq.);

6 ‘‘(xii) the Endangered Species Act of

7 1973 (16 U.S.C. 1531 et seq.);

8 ‘‘(xiii) chapter 51 of title 49, United

9 States Code;

10 ‘‘(xiv) section 13 or 16 of the Act en11 titled ‘An Act making appropriations for

12 the construction, repair, and preservation

13 of certain public works on rivers and har14 bors, and for other purposes’, approved

15 March 3, 1899 (commonly known as the

16 ‘River and Harbor Act of 1899’) (33

17 U.S.C. 407, 411);

18 ‘‘(xv) the Surface Mining Control and

19 Reclamation Act of 1977 (30 U.S.C. 1201

20 et seq.); and

21 ‘‘(xvi) any other law enacted after the

22 date of enactment of this chapter that ad23 dresses subject matter similar to a law

24 listed in clauses (i) through (xv).
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1 ‘‘(B) INCLUSIONS.—The term ‘covered

2 Federal law’ includes—

3 ‘‘(i) a regulation or other binding

4 agency action issued under a law referred

5 to in subparagraph (A);

6 ‘‘(ii) the terms and conditions of a

7 permit issued or other administrative ac8 tion taken under a law referred to in sub9 paragraph (A); and

10 ‘‘(iii) a State law that operates as a

11 federally enforceable law under a law re12 ferred to in subparagraph (A) as a result

13 of the delegation, approval, or authoriza14 tion of a State activity or program.

15 ‘‘(2) ENFORCEMENT ACTION.—

16 ‘‘(A) IN GENERAL.—The term ‘enforce17 ment action’ means a civil or administrative ac18 tion undertaken for the purpose of imposing a

19 penalty or any other punitive sanction, includ20 ing imposition of a restriction on providing to

21 or receiving from the United States or any

22 State or political subdivision a good, material,

23 service, grant, license, permit, or other approval

24 or benefit.
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1 ‘‘(B) EXCLUSION.—The term ‘enforcement

2 action’ does not include an action solely for the

3 purpose of seeking injunctive relief to remedy a

4 continuing adverse public health or environ5 mental effect of a violation.

6 ‘‘(4) ENVIRONMENTAL COMPLIANCE MANAGE7 MENT SYSTEM.—The term ‘environmental compli8 ance management system’ means the systematic ef9 fort of a person or government entity, appropriate to

10 the size and nature of the person or government en11 tity, to prevent, detect, and correct a violation of a

12 covered Federal law through—

13 ‘‘(A) a compliance policy, standard, or pro14 cedure that identifies how an employee or agent

15 shall meet the requirements of the law;

16 ‘‘(B) assignment of overall responsibility

17 for overseeing compliance with policies, stand18 ards, and procedures, and assignment of spe19 cific responsibility for ensuring compliance at

20 each facility or operation;

21 ‘‘(C) a mechanism for systematically en22 suring that compliance policies, standards, and

23 procedures are being carried out, including—
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1 ‘‘(i) a monitoring or auditing system

2 that is reasonably designed to detect and

3 correct a violation; and

4 ‘‘(ii) a means for an employee or

5 agent to report a violation of an environ6 mental requirement without fear of retalia7 tion;

8 ‘‘(D) an effort to communicate effectively

9 the standards and procedures of the person or

10 government entity to employees and agents of

11 the person or government entity;

12 ‘‘(E) an appropriate incentive to managers

13 and employees of the person or government en14 tity to perform in accordance with any compli15 ance policy or procedure of the person or gov16 ernment entity, including consistent enforce17 ment through an appropriate disciplinary mech18 anism; and

19 ‘‘(F) a procedure for—

20 ‘‘(i) the prompt and appropriate cor21 rection of any violation of law; and

22 ‘‘(ii) making any necessary modifica23 tions to the standards or procedures of the

24 person or government entity to prevent fu25 ture violations of law.
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1 ‘‘(5) FEDERAL AGENCY.—

2 ‘‘(A) IN GENERAL.—The term ‘Federal

3 agency’ has the meaning given the term ‘agen4 cy’ in section 551 of title 5, United States

5 Code.

6 ‘‘(B) INCLUSIONS.—The term ‘Federal

7 agency’ includes any agency or instrumentality

8 of an Indian Tribe with authority to administer

9 or enforce a covered Federal law.

10 ‘‘(6) REGULATED ENTITY.—

11 ‘‘(A) IN GENERAL.—The term ‘regulated

12 entity’ means a person regulated under a cov13 ered Federal law, including an officer, agent, or

14 employee of the person.

15 ‘‘(B) EXCLUSIONS.—The term ‘regulated

16 entity’ does not include an entity owned or op17 erated by a Federal or State agency.

18 ‘‘(7) STATE AGENCY.—The term ‘State agency’

19 means an agency or instrumentality of the executive

20 branch of a State or local government with the au21 thority to administer or enforce any covered Federal

22 law, including an agency or instrumentality of 2 or

23 more States or local governments, whether or not

24 the localities are in different States.
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1 ‘‘(8) VOLUNTARY ENVIRONMENTAL AUDIT.—

2 The term ‘voluntary environmental audit’ means an

3 assessment, audit, investigation, or review that is—

4 ‘‘(A) initiated voluntarily by a regulated

5 entity, including an officer, agent, or employee

6 of a regulated entity, but not including a regu7 lated entity owned or operated by a State or

8 Federal agency;

9 ‘‘(B) carried out by an employee of the

10 person, or a consultant employed by the person,

11 for the purpose of carrying out the assessment,

12 evaluation, investigation, or review; and

13 ‘‘(C) carried out in good faith for the pur14 pose of determining or improving compliance

15 with, or liability under, a covered Federal law,

16 or to assess the effectiveness of an environ17 mental compliance management system.

18 ‘‘(9) VOLUNTARY ENVIRONMENTAL AUDIT RE19 PORT.—

20 ‘‘(A) IN GENERAL.—The term ‘voluntary

21 environmental audit report’ means a document

22 prepared as a result of a voluntary environ23 mental audit.

24 ‘‘(B) INCLUSIONS.—The term ‘voluntary

25 environmental audit report’ includes—
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1 ‘‘(i) a field note, draft, memorandum,

2 drawing, photograph, computer software,

3 stored or electronically recorded informa4 tion, map, chart, graph, survey, analysis

5 (including a laboratory result, instrument

6 reading, or field analysis), and other infor7 mation pertaining to an observation, find8 ing, opinion, suggestion, or conclusion, if

9 the information is collected or developed

10 for the primary purpose and in the course

11 of creating a voluntary environmental

12 audit;

13 ‘‘(ii) a document prepared by an audi14 tor or evaluator, which may describe the

15 scope of the evaluation, the information

16 learned, any conclusions or recommenda17 tions, and any exhibits or appendices;

18 ‘‘(iii) an analysis of all or part of a

19 voluntary environmental audit or issues

20 arising from the audit; and

21 ‘‘(iv) an implementation plan or track22 ing system that addresses an action taken

23 or to be taken by the owner or operator of

24 a facility as a result of a voluntary envi25 ronmental audit.’’.
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1 (b) CONFORMING AMENDMENT.—The table of chap2 ters of part VI of title 28, United States Code, is amended

3 by inserting after the item relating to chapter 176 the fol4 lowing:

‘‘177. Voluntary Audit Protection ........................................................ 3601’’.

5 SEC. 4. ASSISTANCE FROM SMALL BUSINESS DEVELOP6 MENT CENTERS.

7 Section 21(c)(3) of the Small Business Act (15

8 U.S.C. 648(c)(3)) is amended—

9 (1) in subparagraph (Q), by striking ‘‘and’’ at

10 the end;

11 (2) in subparagraph (R), by striking the period

12 at the end and inserting ‘‘; and’’; and

13 (3) by adding at the end the following:

14 ‘‘(S) assisting small businesses in comply15 ing with the requirements necessary to receive

16 protections provided by any applicable State

17 voluntary environmental audit incentive law.’’.

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