You're thinking about starting an environmental audit, but you're not sure that you want to know what's there. If you start and find something you didn't want to find, do you have to tell? More important, do you have to pay fines and penalties? What about the possibility of criminal indictments arising from unauthorized releases or spills you discover?
As you would expect, there's more to it than that. Sure, there are endless possibilities of things that can happen if you stick your head in the sand. But what you're trying to do is avoid all of those consequences, and you want to find out what's out there on your property, in the water, air, sewer, storm water and waste streams. Before those people who control the consequences find out.
It's better to start looking, and start now. How do you look and avoid those consequences at the same time? Use your favorite attorney and your favorite environmental consultant, and invoke "the privileges." That way, you can get things corrected beforehand, avoiding the consequences altogether, while remaining a good corporate citizen. The privileges vary in form, so check locally.
Approximately 26 states have audit privileges. Some of those statutes are based on the "Environmental Audit Privilege" bill, originally written by Coors corporation and circulated by the American Legislative Exchange Council (ALEC) to the state legislatures. California has a policy, which became final in July 1996 and was later amended in 1998, essentially requiring self-disclosure. The self-disclosure agreements with California and the USEPA dramatically reduce fines and penalties if you undertake self-disclosure, including the wavier of gravity-based penalties (see Section D of the USEPA policy for the requirements).
There are a number of bandwagons you can jump on, including the ISO 14000 one. Keeping it simple, however, there's the attorney work-product privilege, which in conjunction with several other privileges, allows an outside attorney to retain an outside environmental consultant to perform an environmental audit, as long as certain conditions are met. The consequences are what's important: the information discovered is protected from disclosure, unless you are required by an environmental statute to report a release.
The conditions? Conduct the audit "in anticipation of litigation," if appropriate. Perform the audit at the written request of your company’s outside attorney. Use an outside consultant engaged through and under the supervision of an attorney. Involve the attorney in all audit-related meetings between the consultant and company. Label each draft as “Draft” on every page, and destroy the draft as soon as the final report is finished. Label each page of reports with “Attorney-client Privileged,” “Attorney-work Product,” "Self-evaluation Privilege" [Bredice v. Doctors Hospital, 50 F.R.D. 249 (D. D.C. 1970), Webb v. Westinghouse Electric Corp., 81 F.R.D. 431 (E.D. Pa. 1978) and Reichhold Chemicals, Inc. v. Textron, Inc., 157 F.R.D. 522 (N.D. Fla. 1994)] and, if appropriate, “Prepared in Anticipation of Litigation.” Check your local state listings for language that may be appropriate in your state. This language should work in California.
Otherwise, keep the report as general as possible. Segregate factual data from recommendations. Generate any analysis in a separate document. Limit access to the report to the audit team. Give managers responsible for compliance a separate list of items that may need their attention without any factual data or analysis. Provide only limited disclosure to the Board of Directors, and keep that description as basic and general as possible. Secure the final report and do not leave copies available within the company, preferably keeping the information on a database available only through the company's consultant.
The self-disclosure benefits are worth a look, and your consultant and attorney can advise you on the merits of those programs. In the meantime, keep your head out of the sand and your eyes on the ball.