Region 5 - Office of Regional Counsel

Bertram C. Frey and Jennifer K. Harr

Introduction

States are beginning to experiment with environmental "grace period" and "amnesty" laws. Grace period and amnesty laws contain several novel features, however, which, compared to environmental audit privilege and immunity laws and bills, have not received much attention. This article seeks to accomplish two things. First, it provides a synopsis of these laws in table format, which should be useful for legal practitioners who are concerned with their content. Second, it attempts to highlight a few of the policy issues raised by the enactment of these laws, although it does not attempt to reach any conclusions regarding their desirability. The first approach provides a grace period for companies to come into compliance if a "minor" violation is discovered. The second approach provides amnesty to violators for violations discovered during compliance or technical assistance visits, or to those who participate in officially sponsored voluntary pollution prevention activities.

Grace Period & "Minor Violation" Laws

The idea that limited agency resources should be devoted to redressing those violations that present the greatest risk is increasingly being prescribed in policy and law. For example, President Clinton’s "Reinventing Environmental Regulations," dated March 1995, encourages agencies to target enforcement to violations that present the most serious threat to human health and the environment. Justice Stephen Breyer’s popular book, Breaking the Vicious Circle,(1) cites "random agenda selection" as one of the "systematic problems" which currently impedes effective risk regulation. In other words, there is no detailed "governmental list that prioritizes health or safety risk problems so as to create a rational, overall agenda — an agenda that would seek to maximize attainable safety or to minimize health-related harms."(2)

The United States Environmental Protection Agency (EPA) has recognized the importance of "risk-based" enforcement, that is, targeting enforcement towards problems which present the greatest risk to human health and the environment. For example, the agency’s RCRA Enforcement Response Policy (ERP) provides for formal enforcement against "Significant Non-Compliers" who present a serious risk to human health, safety, and the environment, or who are chronic violators.(3) For less serious violations, the policy provides for an informal enforcement response, such as a "Notice of Noncompliance" (NON). A NON contains a list of violations and a schedule for returning the facility to full compliance. Failure to correct the violations can, of course, result in the assessment of penalties.(4)

Similarly, New Jersey’s "grace period" law is designed to "more sharply focus limited public resources on serious violations."(5) New Jersey and California have enacted laws which are very similar in structure to the RCRA ERP, but, unlike the RCRA ERP, mandate a grace period if the requirements of the laws are met. When a "minor" violation is discovered, the relevant environmental agency must provide the violator with a "notice to comply" or a "notice of violation." The notice must identify the violation, and provide a period of time in which the violator can come into compliance. If the violation is corrected within this "grace period," the agency will not impose a civil(6) or administrative(7) penalty. Connecticut’s law is nearly identical; however, like the RCRA enforcement policy, its use is discretionary rather than mandatory.

Missouri has promulgated a "grace period" regulation within its Clean Water program. Rather than providing the violator with written "notice," the Department of Natural Resources must begin a "conciliation" process upon discovery of a "minor" violation. An employee must make at least two "communications," one of which must be in writing. During this process, the Department and violator must agree on a compliance period which cannot exceed six months.(8)

Amnesty Laws

Environmental "amnesty" laws are designed to encourage businesses to request technical assistance, and/or to voluntarily engage in pollution prevention activities. We understand "amnesty" to mean the act of a government authority by which, for a defined class of persons who have committed a certain crime or offense, the crime or offense is abolished and forgotten. In the environmental context, state administrative agencies will ignore or "forget" a committed offense if the violator requests technical assistance or participates in officially sponsored voluntary pollution prevention activities.

Although "amnesty" and "pardon" are today often used interchangeably, the terms historically had different meanings. The Supreme Court once distinguished them by observing that while pardon is normally granted to an individual, amnesty usually applies to a class of persons or to an entire community.(9) Additionally, while pardon usually follows a conviction and eliminates any penalty, amnesty generally precedes trial and conviction. Amnesty’s effect is to "leave no trace of the offense, and to place the offender in exactly the position which he occupied before the offense was committed, or in which he would have been if he had not committed the offense."(10) In other words, "amnesty" involves forgetfulness (i.e., "burying the hatchet"), as opposed to "pardon," which entails forgiveness. While the Court later observed that the choice between terms does not make any difference from a legal standpoint,(11) the word amnesty seems to better describe the character of these state environmental laws.

Amnesty laws are often targeted towards smaller businesses, which may not have the resources or expertise to conduct a thorough environmental audit or self-evaluation. The idea that small businesses should receive special attention was first endorsed by Congress when it enacted Section 507 of the Clean Air Act, mandating that states establish small business stationary source technical and compliance assistance programs (SBAPs). States expressed concern, however, that SBAPs would not succeed unless small businesses could seek assistance without being subject to enforcement action. In response, EPA issued a policy for Clean Air Act Section 507 Small Business Assistance programs on August 12, 1994. This approach was also encouraged by the Clinton/Gore administration in a 1995 memo concerning "Regulatory Reform," which directed agencies to reduce or waive penalties for small businesses under certain circumstances.(12)

More recently, Congress passed the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996.(13) The Act calls for more accessible sources of information on regulatory requirements for small businesses. It also requires agencies to establish policies providing for the reduction or waiver of civil penalties for small businesses. Consistent with the purposes of SBREFA, EPA has established "one stop shopping" Small Business Compliance Assistance Centers.(14) These communication centers provide comprehensive, industry-based information on regulatory requirements, via the Internet and toll-free telephone numbers.(15)

EPA’s Policy on Compliance Incentives for Small Businesses(16) also implements certain provisions of SBREFA, by expanding its Clean Air Act Section 507 policy. Very generally, EPA will reduce or eliminate civil penalties for first time violators in cases where businesses receive technical assistance or conduct voluntary environmental audits, and then correct any violations discovered within six months. The policy does not apply, however, to violations which cause actual serious harm to public health, safety, or the environment, present "imminent and substantial endangerment," or involve criminal conduct. Also, EPA may seek the full amount of any significant economic benefit associated with the violations. Finally, EPA’s policy applies only to small businesses, defined as those with fewer than 100 employees. (The two federal laws and the EPA policy are summarized in the chart below.)

Some or all of these features can be seen in parallel state legislation. For example, eight states have enacted laws which, very generally, specify that no enforcement action will be taken for violations which are discovered during technical assistance visits or participation in pollution prevention activities.(17) The legislatures in Colorado and Missouri have expressed their desire that state technical assistance programs not be used for enforcement.(18) Interestingly, out of the eight, only Washington’s law carves out an exception for repeat violations.(19)

Wisconsin’s approach is somewhat different. Ten regulated entities may participate in an "environmental cooperation" pilot program. As a condition of participation, the entity must conduct comprehensive "performance evaluations," which examine environmental performance and compliance with the terms of the pilot program. Nonetheless, for any violations which are documented by the performance evaluation and reported, the entity will have a grace period of 90 days to come into compliance.(20) (Of course, the pilot program could also be classified as a "grace period" law; it is included here since amnesty is based upon participation in a state program, rather than on the fact that the violation is "minor.")

Finally, Wyoming’s Department of Environmental Quality has issued a "Small Business Voluntary Disclosure Incentive" which is very similar to EPA’s small business policy, discussed earlier.(21) The department will generally not seek civil penalties in cases where small businesses receive compliance assistance or disclose violations voluntarily. There are numerous exceptions, however, including violations which cause actual serious harm to public health, safety or the environment, present "imminent and substantial endangerment," or involve criminal conduct. Furthermore, the penalty waiver is unavailable if the small business: realized a significant economic advantage from the violation, is a repeat violator, violates an administrative order, or was already under investigation by the department when the violation was disclosed. Like the EPA policy, Wyoming’s policy applies only to small businesses, defined as those with fewer than 100 employees.

Conclusion

At present, several other states are considering grace period and amnesty laws. There is concern, however, that the present and proposed laws could interfere with enforcement of environmental laws and result in harm to the environment. The EPA and several states have expressed a strong interest in preserving enforcement discretion in cases of criminal conduct, repeat violations, actual harm to the environment, significant economic benefit, imminent and substantial endangerment, or violation of an administrative order or decree. According to EPA policy, grace periods and amnesty are only appropriate outside of those contexts. The agency may not have the legal authority to authorize, approve, or delegate new or amended federal programs to states with grace period or amnesty laws that are not carefully drafted to preserve enforcement discretion to address the above referenced situations.

In addition, grace period laws which make minor violations less costly may interfere with deterrence. In other words, businesses may be less careful since they have less to worry about if they get caught. Moreover, EPA policies are very careful to not reward "bad actors." On the other hand, a key premise of the grace period laws is that some businesses and agencies may be able to devote more time and money to reducing greater human health and environmental risks, and therefore get more "return" on their investment in environmental protection.

Lastly, our review of the amnesty laws shows that those laws that ignore violations discovered during a compliance or technical assistance visit seem more specifically targeted at getting more companies into compliance. Unless these laws require prompt correction of any violations discovered, however, the benefits of increased detection may not outweigh the costs in terms of the need for subsequent state and federal enforcement.

Guide to Terms Used

Table I: Grace Period and "Minor Violation" Laws and Regulations

Table II: Amnesty Laws and Policies (Federal Entities)

Table II: Amnesty Laws and Policies (States: Alaska - Missouri)

Table II: Amnesty Laws and Policies (States: New Hampshire - Vermont)

Table II: Amnesty Laws and Policies (States: Washington - Wyoming)

Notes

1. Stephen Breyer, Breaking the Vicious Circle (1993).
2. Id. at 20. For example, one study suggests that a better allocation of current heath and safety expenditures could save 60,000 additional lives at no increased cost; alternatively, we could save the same number of lives with $31 billion in annual savings. Harvard Group on Risk Management Reform; Reform of Risk Regulation: Achieving More Protection at Less Cost 16 (1995). In contrast, neither Justice Breyer nor the Harvard Group directly addresses the issue of risks of harm to the environment.
3. EPA’s Hazardous Waste Civil Enforcement Response Policy, March 15, 1996.
4. Id.
5. N.J. Stat. § 13:1D-125 (1997).
6. Cal. Health & Safety Code §§ 39150-39153 (1997), Cal. Water Code §§ 13399-13399.3 (1997), Cal. Health & Safety Code §§ 25117.6, 25187.8 (1997).
7. N.J. Stat. § 13:1D-129 (1997).
8. Mo. Code Regs. tit. 10 § 20-3.010 (1997).
9. Ex Parte Garland, 71 U.S. 333 (1866).
10. Id.
11. Knote v. United States, 95 U.S. 149, 152 (1877).
12. Executive Memorandum on Regulatory Reform, 60 Fed. Reg. 20,621 (1995).
13. Small Business Regulatory Enforcement Fairness Act of 1996, March 29, 1996.
14. See Notice of New Program, 62 Fed. Reg. 18,115 (1997).
15. Currently, there are Compliance Assistance Centers for the printing, metal finishing, automotive services, and agriculture industries.
16. EPA Policy on Compliance Incentives for Small Businesses, June 10, 1996.
17. Alaska, Illinois, New Hampshire, Ohio, Oregon, Vermont, Washington, and West Virginia.
18. Colo. Rev. Stat.§ 25-16.5-107 (1997), Mo. Rev. Stat. § 643.173 (1996).
19. Wash. Rev. Code § 43.05.050 (1997).
20. Wis. Stat. § 299.80 (1997).
21. Chapter VIII Small Business Voluntary Disclosure Incentive, June 16, 1997.
22. The Department may establish categories of minor violations which, "for public health and safety reasons," must be corrected in less than 30 days. The Department also has discretion to extend the compliance period by up to 90 days. N.J. Stat. Ann. § 13:1D-127 (1997).
23. A notice to comply "shall not be issued for any minor violation that is corrected immediately in the presence of the inspector," however. Cal. Health & Safety Code §§ 39152, 25187.8; Cal. Water Code § 13399.2 (1997).
24. It has proven extremely difficult to promulgate a definition of "small business" which is appropriate in all contexts and takes all relevant factors into account. To date, the EPA has not adopted a final policy on SBREFA. Therefore, different entities may be considered "small businesses" in the context of different programs.
25. "Substantial and imminent danger" is defined as "a danger with a likelihood of serious or irreversible harm." Ill. Rev. Stat. § 415 5/31(c)(3)(B) (1997).
26. "Performance evaluation is defined as "a systematic, documented, and objective review, conducted by or on behalf of the owner or operator of a facility, of the environmental performance of the facility, including an evaluation of compliance with the cooperative agreement covering the facility." Wis. Stat. § 299.80(1)(g) (1997).