KGOU

Oklahoma Becomes 30th State To Adopt Environmental 'Audit Privilege' Law

May 1, 2019

Gov. Stitt signed a bill allowing companies to self-audit their compliance with environmental regulations and seal the records.

It’s called an “audit privilege” law, and according to the EPA, 29 other states also have them. They became popular in the 1990s, after model legislation was introduced by the American Legislative Exchange Council, or ALEC.

The Oklahoma Environmental, Health and Safety Audit Privilege Act allows companies to report environmental problems, such as pollution, to the appropriate government agency and take corrective steps. Those reports then become exempt from open records laws, inadmissible in non-criminal legal proceedings and off-limits to regulators when they conduct inspections. The companies also gain immunity from penalties and prosecution.

 

In theory, the information gleaned from these audits cannot be used against the company in a lawsuit, though there may be some discrepancy between state and federal law. The Environmental Protection Agency and Department of Justice retain the right to use self-audit reports to take legal action.  

When the legislation was debated on the House Floor, Republican Rep. Mark  McBride, who authored the bill, listed some exceptions to the privilege granted by the new law.

“There's no immunity for parties that repeatedly or continually commit significant violations that have not attempted to bring the facility into compliance,” McBride said. “There’s no immunity if violations result is substantial economic benefit, giving clear business advantage. No immunity if a violation was committed willfully, knowingly and recklessly and resulted in an injury.”

Colorado was one of the first states to pass an audit-privilege law in 1993. It came after state regulators fined the Coors Brewing Company for smog-inducing air emissions at several plants. Coors was and still is one of ALEC’s corporate members, and one of the company’s executives at the time, Allan Auger, had previously served as ALEC’s chairman.

McBride said Oklahoma’s audit privilege law was modeled after Texas’, which passed in 1995. He brought forth the bill at the request of Oklahoma Secretary of Energy and Environment Ken Wagner, who worked with Scott Pruitt at the EPA. Wagner says the law incentivizes good behavior, but local environmentalists argue there is no evidence to back up Wagner’s claim.