Environmental agencies used to consider beer brewers good people. The EPA thought brewers emitted only tiny amounts of volatile organic compounds (VOCs), an air pollutant. But Coors Brewing Co. discovered otherwise. Coors conducted an 18-month, $1.5 million environmental audit that found that the beer-making process is about 17 times more polluting than the government thought it was. The VOC emissions Coors found weren't addressed in the permits of any major American brewer.
Coors voluntarily revealed this information to the Colorado Department of Health, which promptly fined the company more than $1 million for violating state air pollution laws. The fine was later reduced to $237,000.
Contrary to popular belief, many environmental problems are neither readily apparent nor well understood; it's not as if VOCs exude an eerie, yellow glow. And yet, companies are afraid of prosecution or citizen lawsuits if they do the very audits needed to find environmental problems. According to a Price Waterhouse survey of the companies that do environmental audits, more than 45 percent said that they don't want to expand their auditing program because the information could be used against them. As one senior official with the EPA put it, "No good deed goes unpunished."
Coors's experience paved the way for one of the first "environmental audit privilege" laws in the country. Under a typical environmental audit privilege law, audit reports can't be used as evidence in judicial or administrative proceedings as long as violations are reported to the authorities and promptly corrected. Fourteen states--Arkansas, Colorado, Idaho, Illinois, Indiana, Kansas, Kentucky, Minnesota, Mississippi, Oregon, Texas, Utah, Virginia, and Wyoming--have audit privilege laws, and bills are pending in most other states. At the federal level, two audit privilege bills, S. 582 and H.R. 1047, are hanging out in committees.
The EPA opposes the laws because they make life tougher for environmental law enforcement. EPA Administrator Carol Browner says the agency may increase enforcement in states that have audit privilege laws and take back some of the environmental programs delegated to state governments.
The EPA's own policy is to be lenient with companies that audit themselves and attempt to fix the problems. But the policy isn't binding on the agency--or on the Department of Justice or the U.S. attorneys' offices, which do the actual prosecutions. Nor does it protect companies from citizen suits. And it doesn't prohibit the taking of testimony about the audit report--which makes the protection of the actual report more or less irrelevant.