Business advocates say environmental self-reporting laws about certainty more than immunity


Image credit: West Virginia Department of Environmental Protection

RALEIGH – When the Senate version of House Bill 765 was unveiled as a broad environmental amendments bill in the Senate Finance committee Tuesday, criticism at the environmental self-audit provision came swiftly. The state’s environmental agency said it might limit its ability to enforce clean-up orders, and environmental groups complained that it would protect polluters.

But business advocates say that the Senate provision may actually provide less immunity than the current self-audit policy that has been in force at the Department of Environment and Natural Resources since Jim Hunt (D) was governor. Most businesses still favor the provision, though, because the DENR policy leaves wide discretion to the agency while the Senate’s plan would put the policy in law.

“The provision in the bill gives more certainty, but the scope of immunity from administrative or civil penalties under the bill appears to be more limited than the current DENR policy,” said Benne Hutson, a Charlotte lawyer who represents businesses in environmental matters. Hutson is the former chairman of the state’s Environmental Management Commission.

Hutson also said that while he has only just started to read through the provision, one difference between the current policy and the bill’s provision is clear. The bill would eliminate DENR’s ability to decline to pursue an investigation of possible environmental crimes, as is allowed in the current policy. Other business advocates say that they like that change, since they have no interest in protecting any entity from criminal actions.

Preston Howard of the N.C. Manufacturers Alliance, said that the Senate provision simply codifies a longstanding practice in DENR to encourage companies, school systems, and other entities to bring forward problems and address them rather than giving them a perverse incentive to hide the problem.

“It doesn’t protect any permitted facility from violations of its permit,” Howard said. “The bill very clearly defines what a voluntary disclosure is and how quickly you have to make that disclosure, who you have to make that disclosure to, that you’ve initiated an action to resolve the problem. It does all those things the DENR policies since the ’90s have set out to do.”

Howard says he expects that the provision will be used most frequently to deal with smaller discoveries of abandoned tanks or small barrel dumps.

“I think what’s happening today is that people are finding these things, cleaning them up and never saying anything about it. What this does is encourage an open communication between the regulated community and the regulator that we all benefit from,” Howard said.

Interest in self-reporting provisions is widespread and bipartisan. According to the Environmental Protection Agency, more than half of U.S. states had some sort of audit privilege or immunity law enacted as long ago as 2003. Almost all states that do not have a statute have some policy on the matter, a group that includes North Carolina.

In 1994, Rep. Brad Miller (D) sponsored a bill to establish a self-audit immunity law. The bill went nowhere, possibly because the state’s environmental agency was working on its own policy, which was instituted the next year.