HB0338 Kreider, Jim et al

C O M M I T T E E

HB 338 -- ENVIRONMENTAL AUDIT PRIVILEGE

SPONSOR: Kreider

COMMITTEE ACTION: Voted "do pass" by the Committee on Energy and Environment by a vote of 10 to 3.

This bill creates an audit privilege for owners of facilities regulated by environmental law. Owners may conduct a voluntary internal audit designed to determine compliance with environmental laws. Information obtained in the audit is privileged and not admissible as evidence in any legal action. A court or administrative body may require disclosure if the privilege is asserted for fraudulent purposes, or if the audit indicated noncompliance with environmental law and the owner did not reasonably pursue compliance. The privilege does not apply to data collected as required by law, or to data collected by a regulatory agency or independent source. Public employees who divulge information subject to the privilege are guilty of a class A misdemeanor.

The bill also provides immunity from administrative, civil, and criminal penalties to anyone who voluntarily discloses an environmental violation discovered in an environmental audit. To qualify, the owner must make the disclosure promptly and correct the violation within 2 years. Immunity is not extended to those who have committed serious, repeated violations within the last 3 years.

FISCAL NOTE: Estimated Partial Net Cost to General Revenue Fund of $458,334 to $916,667 in FY 96, $563,750 to $1,127,500 in FY 97, & $577,844 to $1,155,688 in FY 98. Other DNR Funds - This proposal could result in unknown fiscal impact to other DNR funds due to the necessity of DNR's increased enforcement efforts resulting from this proposal.

PROPONENTS: Supporters say that this bill encourages industries to seek voluntary compliance with environmental laws. Voluntary compliance is more cost effective for both government and industry than compliance achieved through enforcement. Many companies want to audit their compliance, but are fearful that such information could be used against them. This bill provides appropriate protection for industry and contains safeguards that prevent abuse of the audit privilege.

Testifying for the bill were Representative Kreider; Associated Industries of Missouri; Missouri Environmental Audit Privilege Work Group; Missouri Chamber of Commerce; Mining Industry Council of Missouri; Chemical Council of Missouri; Anheuser Busch; Monsanto; Burlington Northern Railroad; Missouri Society of Professional Engineers; St. Louis Regional Commerce and Growth Association; and the Missouri Railroad Committee.

OPPONENTS: Those who oppose the bill say that this bill is unnecessary because voluntary audit information has never been used in Missouri to penalize violators, and statutes already provide for resolution through conference, conciliation, and persuasion. Creating an evidentiary privilege is an extraordinary legal measure that would hinder the Attorney General's ability to enforce laws. The bill would also increase public distrust of industry and government and may jeopardize state primacy in environmental law enforcement.

Testifying against the bill were David Shorr, Director, Department of Natural Resources; Sierra Club; Office of the Attorney General; Missouri Association of Prosecuting Attorneys; Conservation Federation of Missouri; and the Audubon Society.

Terry Finger, Research Analyst