The following articles are excerpts from the newsletter:

EPA'S Environmental Audit Policy Turns Five!,
Elizabeth Glass Geltman

Audits and EPA Overfiling after Harmon Industries, Inc. V. Browner,
Asimakis P. Iatridis and Eugene J. Riordan, Vranesh and Raisch, LLP

ISO 14000 Update,
Ira Feldman, gt strategies+solutions and Jason Hart, CEEM Inc.

EPA'S ENVIRONMENTAL AUDIT POLICY TURNS FIVE!

Elizabeth Glass Geltman

EPA's 1995 environmental audit policy, announced at 60 Fed. Reg. 66705 (December 22, 1995), will soon turn five. Like most five year-olds, the policy is receiving marks on its first tests and examinations.

When EPA announced its audit policy in 1995, the agency committed to evaluating its effectiveness. See 60 Fed. Reg. at 66712. To meet this commitment, EPA initiated two separate means of evaluation. In the first, the National Conference of State Legislatures (NCSL) through its consultant, Abt Associates of Cambridge, Massachusetts, was commissioned by EPA to "to design a survey to determine what motivates regulated entities to self-audit their activities, and whether state regulatory agencies have seen increased audit activity as a result of audit legislation or policies." In the second, "using an empirical, fact-based approach, EPA developed and utilized the Audit Policy Internal Survey (Internal Survey) and the Audit Policy User's Survey (User's Survey)." See 64 Fed. Reg. 26745, 26747 (May 17, 1999).

As a result of the data acquired through these two surveys, U.S. EPA has proposed changes to both the 1995 audit policy, see id, and its Policy on Compliance Incentives for Small Businesses. See, e.g., 64 Fed. Reg. 41116 (July 29, 1999). EPA has also continued its policy of contesting approval of federal programs in states with environmental audit statutes containing immunity provisions. See, e.g., 64 Fed. Reg. 48618 (September 7, 1999) (Colorado § TSCA 402/404 program).

Following is a brief discussion of each of the studies.

The NCSL Survey

Published in October 1998, the NCSL study announced the results of telephone interviews conducted with (1) 988 randomly selected manufacturing facilities and (2) environmental regulatory agencies and offices of the attorneys general in 28 states. "Specifically, NCSL sought to determine whether the existence of an environmental audit privilege and immunity law - or of an environmental audit policy - encourages facilities to conduct more audits, and to disclose more compliance violations discovered during an audit, than facilities in states that have no law or policy." In addition, NCSL "sought to determine the level of awareness among state agencies of environmental activity by regulated entities."

The NCSL survey revealed that eighty percent of facilities were conducting audits. NCSL concluded that there "was no difference in the responses based on whether the state in which the facility operates has an audit law, an audit policy, or no law or policy." Moreover, the study concluded that the presence or absence of an audit law or policy did not appear to influence disclosure of violations. Of 988 facilities represented in the survey, about 1/4 to 1/3 had disclosed a violation.

NCSL concluded that most state agencies had no way of evaluating the level of auditing activity. Most agencies only became aware of environmental auditing by virtue of facility disclosure of a violation. Three-fourths of the states with audit laws or policies had received voluntary notices pursuant to the law or policy. The number of disclosures naturally varied.

According to NCSL, "the violations disclosed typically are minor violations that are quickly corrected and are granted immunity from fine or penalties."

Questions Raised by the NCSL Survey

While an important first step in exploring the efficacy of audit laws and policies, the NCSL study raises as many questions as it answers. For example, the study was limited to only 19 states - those states that passed a law by the end of the 1996 session. NCSL limited the study in this manner because it "felt that at least two years of time had to elapse between the enactment of the law and the survey of state agencies." As a result, some of the later laws were left unexplored. These laws were drafted with the benefit of experience from the earlier states and were perhaps more sophisticated laws.

A second flaw in the study is the list from which the NCSL randomly extracted its survey subjects. NCSL selected survey subjects from EPA's Toxics Release Inventory (TRI). While this is a valid list, it is not necessarily representative of all industry in the United States. Many studies indicate that US industry under reports on the TRI. Much of industry (especially small businesses) are still not aware of their reporting requirement under the law. Those who are reporting on the TRI are more likely to have more sophisticated environmental programs in place. Thus, it is not surprising that the study found that 80 percent of those reporting on EPA's TRI had audit programs in place before any laws or policies were enacted. Nor is it surprising that the existence of an audit policy or law has no statistical difference for those on the EPA TRI list on whether the facility conducts an audit.

Use of the TRI list as the basis for random selection is akin to using a list of infant car seat purchasers as the basis for randomly selecting car owners to survey whether or not they comply with recently enacted seat belt laws. One could expect that people who purchase infant car seats are more likely to use seat belts (and probably air bags as well). Thus, a survey of infant car seat users would likely skew the survey results. These people have a predisposition of safety concerns. They are more likely to have used seat belts before it was law to do so; and, thus, there is more likely to be no statistically significant increase in seat belt use once a law is enacted. This group, however, is not necessarily reflective of society as a whole.

The same is true of the TRI list. EPA itself acknowledges (and the NCSL study also confirms) that the majority of violations discovered in audits are "paperwork" problems, such as filing the required permits and EPCRA reports. A very typical audit discovery is failure to make necessary reports to the TRI. Thus, choosing the TRI as the list from which to make random selection is likely to dramatically skew results since these parties are likely to have made necessary TRI filings due to existence of a sophisticated environmental protocol - including audits.

Another problem with the study design is the questions NCSL asked. The survey asked only if audits were conducted before and after the law or policy was put into place. Since there was no statistical difference between states with and states without an environmental audit law or policy, NCSL concluded that the presence of a law or policy had no effect on auditing. Yet the survey question missed an important point. Auditing procedures may have changed due to the enactment of a law or promulgation of a policy. A better question would be whether industry had changed the manner in which audits were conducted after audit laws or policies went into effect. It is no secret that the majority of those advocating audit laws already conducted audits, but they asserted that the extent of the audit conducted and the persons to whom the audit would be circulated would change if a law or policy was put into effect. Quite simply, the survey measured the wrong issue. It asked if auditing was being done rather than is the auditing being done better and more effectively.

Finally, the survey did not distinguish between states with privilege and those with immunity laws. This data is especially important since EPA continues its policy of contesting approval of federal programs in states with environmental audit statutes. See 64 Fed. Reg. 48618 (September 7, 1999)(Colorado TSCA § 402/404 program); 64 Fed. Reg. 47807 (September 1, 1999)(Illinois TSCA § 402/404 program); 64 Fed. Reg. 40791 (July 28, 1999)(Montana Sulfur Dioxide SIP); 64 Fed. Reg. 47670(September 1, 1999)(Virginia I/M program). It would be interesting to determine if there is a statistical difference between auditing practices in states with privilege and those with immunity laws. NCSL did not explore this question, nor could the question be examined by data extracted from the NCSL survey since many of the states with immunity provisions were excluded from the survey process altogether because they were enacted after 1996.

The EPA Survey

In October 1998, EPA set up a two phased evaluation of the 1995 audit policy. First, EPA sent questionnaires to the regions asking about regional experience with the policy. Second, EPA sent out a "customer satisfaction survey" designed to evaluate corporate experience with the EPA audit policy. EPA sent the survey to the 252 companies that had voluntarily self-disclosed under EPA's 1995 policy. Audit Policy Evaluation & Proposed Revisions Near Completion: Preliminary Findings & User Survey Responses Highlighted, 4 Audit Policy Update (EPA 300-N-99-001 Spring 1999), reprinted on the Internet at es.epa.gov/oeca/ore/audit3.pdf

The results of the User's Survey are based on responses from 50 respondents whose identities were allegedly not known to EPA. "The results include information about user satisfaction, the extent to which the Policy encourages improvements in corporate compliance programs, motivations for using the Policy, and suggestions for improvements to the Policy and its implementation." 64 Fed. Reg. at 26747. Copies of the User's Survey results are available in the Audit Policy Docket.

EPA also held several informal meetings and conference calls with industry, environmental groups and state representatives to obtain input on the evaluation. Participants included environmental and community groups, trade associations, small and large business representatives, academics, and state, local and tribal representatives. OECA also published a Federal Register Notice soliciting comments on how EPA can further protect and improve public health and the environment through new compliance and enforcement approaches. 64 Fed. Reg. 10,144 (March 2, 1999). Conference summaries and a copy of the Federal Register Notice are available at OECA's website at http://www.epa.gov/oeca/polguid/oeca5sum.html.

Results of the EPA Survey

EPA announced the preliminary results of its evaluation of the effectiveness of the Audit Policy in May 1999. The results are as follows:

1) Discovery and correction of violations under the policy have removed pollutants from the air and water, reduced health and environmental risks and improved public information on potential environmental hazards.

2) EPA has consistently applied the policy.

3) Use of the policy has made EPA aware of new environmental issues.

4) Use of the policy has been widespread (as of March 1, 1999, 455 entities have disclosed violations at approximately 1850 facilities), including significant multi-facility disclosures (16 parent companies disclosed the same types of violations at over 900 facilities).

5) Users of the policy report a very high satisfaction rate with 88% of the respondents stating that they would use the Policy again and 84% stating that they would recommend the Policy to clients/counterparts.

6) Most disclosures involve monitoring and reporting violations in federally-run programs (i.e., not in programs that states are authorized or approved to administer and enforce).

7) The policy encourages specific improvements in auditing programs and environmental management systems.

8) The most frequently suggested change to the policy is expansion of 10-day disclosure period.

9) The most frequently suggested change to policy implementation is shortening the time to process cases. 64 Fed. Reg. at 26746.

As a result of these findings, EPA also determined there was ample evidence that the 1995 Policy has worked well as guidance and that a formal rulemaking was unnecessary. 64 Fed. Reg. at 26747.

Critique of EPA Methodology

It is not surprising that EPA reached the conclusions it did given the methodology of the study. The data came from two primary sources: US EPA itself and the 252 users of the policy. Of the later group only 50 returned the survey. Thus, only one-fifth of the user group even participated in the survey.

It is not surprising that 80% of those that returned the survey were happy with the process following revelation pursuant the policy. It is not clear, however, that based on this small sample it can fairly be determined that industry users of the policy are satisfied with the policy. Looking at the very high percentage of audit policy users who refused to complete the survey, one is reminded of the old maxim "if you don't have anything nice to say don't say anything at all." Since fully four-fifths of a group already predisposed to a favorable view of the policy (since they elected to use it in the first place) failed to comment on it at all, it may indicate less of a pleasure in the policy than EPA reports. More significantly, the small selection of group makes extrapolating to industry at large completely unreliable.

EPA Proposed Changes

Nonetheless, U.S. EPA did discover, and in some cases concurred, with industry that the 1995 audit policy was in need of certain revisions. As a result, EPA proposed certain revisions to the Audit Policy. First, EPA agreed with industry that the period for "prompt disclosure" should be expanded from 10 to 21 days. In parallel to extending the amount of time industry has to disclose violations, EPA determined that it would also make a commitment to reduce the time to process Audit Policy cases by, for example, encouraging disclosers to use disclosure checklists. In so suggesting, EPA could reduce industry frustration with the disparity between length of time EPA requires industry to assimilate information and disclose it to the agency with the time it takes EPA to respond after acquiring the data. EPA developed standard disclosure checklists to help EPA "receive all of the information it needs to determine policy applicability and resolve cases in a timely fashion." Id. at 26747.

Second, EPA stated it would clarify the availability of the audit policy relief in multi-facility contexts. In other words, EPA expects to clarify that a facility in many circumstances may satisfy the "independent discovery" condition of the audit policy even where inspections or investigations have commenced at, or information requests have been issued to, other facilities owned by the same parent. EPA plans "to encourage disclosures at multi-facilities because such disclosures effectively leverage resources of the Agency, allow regulated entities to review their operations holistically, and benefit the environment." This is a particularly important revelation because EPA announced that sector-based initiatives involving the Audit Policy will continue to figure prominently in the future of EPA's enforcement and compliance program. Id.

Third, EPA stated that entities meeting all of the Policy conditions except for "systematic discovery" will not be recommended for criminal prosecution. Id.

Conclusion

EPA's two studies are a good starting point for evaluating the effectiveness of EPA 1995 audit policy. They should not, however, be the end of the discussion. Both studies were limited in scope. Serious questions exist as to usefulness of both studies.

Nonetheless, EPA has gleaned some useful information from both studies. Some of the recommendations from the studies have evolved into EPA proposals for reform. Many of these will bring welcome aid to the regulated community.

AUDITS AND EPA OVERFILING AFTER HARMON INDUSTRIES, INC. V. BROWNER

Asimakis P. Iatridis and Eugene J. Riordan
Vranesh and Raisch, LLP

A recent U.S. Court of Appeals decision in Harmon Industries, Inc. v. Browner may have a significant impact on a client's consideration of whether to perform a self-audit and self-report the results to a state. Harmon Industries, Inc. v. Browner, No. 98-3775, 1999 WL 718443, to be reported at 191 F.3d 894 (8th Cir. Sept. 16, 1999) (Harmon), aff'g 19 F.Supp.2d 988 (W.D. Mo. 1998), petition for rehearing en banc due Nov. 15, 1999. Harmon held that EPA cannot "overfile" pursuant to RCRA. This means, at a minimum, that EPA cannot file its own enforcement action against a regulated person who has resolved a state enforcement action under an EPA-authorized hazardous waste management program regarding the same violation.

Overfiling is controversial for several reasons. First, it discourages persons from conducting environmental self-audits and voluntarily reporting violations to a state pursuant to a state audit law that confers privileges or immunity from enforcement for certain violations. EPA disapproves of these laws and has, on occasion, sought penalties against some self-reporters through overfilings. Second, it leads to double penalties for the same violation; one set of penalties from the state and one from EPA. Third, it creates uncertainty for the regulated entity when it negotiates settlement agreements with the state because it may not be known if EPA will accept the terms of the state settlement or initiate its own federal enforcement action. Fourth, it strains federal-state relations to a degree that reduces the efficiency and cost-effectiveness of federal and state environmental enforcement programs. These costs are borne by taxpayers and the regulated community.

This article describes the Harmon decision and outlines the decision's potential impact under a state's hazardous waste program and two other EPA-delegated programs: the air quality and water quality programs.

Factual and Procedural Background

Harmon Industries, Inc., assembles circuit boards in a plant in Missouri. During the 1970s and 1980s, maintenance workers dumped waste solvents on the ground on Harmon's property. In 1987, management discovered the practice, terminated it, and changed the manufacturing process to use nonhazardous cleaning materials. Harmon spent $800,000 to convert the manufacturing process and spends $125,000 annually to maintain it. In 1988, Harmon voluntarily reported its violations to the Missouri Department of Natural Resources (MDNR).

In 1991, while MDNR and Harmon were negotiating the details of a consent decree and establishing a voluntary compliance plan, EPA filed an administrative enforcement action against Harmon. In 1993, with the EPA administrative action pending, a consent decree between MDNR and Harmon was entered in Missouri state court to resolve the state's enforcement action. In the decree, MDNR acknowledged full accord and satisfaction and released Harmon from any claim for monetary penalties. The decision to not assess monetary penalties was based on Harmon's prompt self-reporting and its full cooperation.

In 1994, after the state consent decree was entered, the Administrative Law Judge (ALJ) in the EPA administrative action assessed a penalty of $586,716 against Harmon. EPA had requested a penalty of $2,343,706. The Environmental Appeals Board affirmed the ALJ's decision. However, the United States District Court for the Western District of Missouri reversed the administrative decision. Harmon Industries, Inc. v. Browner, 19 F.Supp.2d 988 (W.D. Mo. 1998).

The District Court held that since RCRA dictates that an authorized state program operates "in lieu of" the federal program and with the "same force and effect" as EPA action, RCRA precluded EPA from assessing its own penalty against Harmon after the state had completed its enforcement action. In addition, EPA's overfiling was barred by reason of res judicata and the Missouri state court consent decree. The District Court's opinion is discussed at some length, along with relevant administrative cases, in Bryan S. Miller, Harmonizing RCRA's Enforcement Provisions: RCRA Overfiling in Light of Harmon Industries v. Browner, 5 Environmental Law. 585 (1999).

The Eighth Circuit Decision

The Court of Appeals affirmed the District Court decision. The appellate court explained that when RCRA is read as a whole, the plain "in lieu of" language reveals a Congressional intent that an authorized state program is "to supplant the federal hazardous waste program in all respects including enforcement." Harmon at *4 (emphasis added). In an authorized state, the court explained, EPA has a "secondary" enforcement right which is triggered only under two conditions. First, EPA may enforce if the state fails to initiate an enforcement action in response to a violation which EPA has brought to the States attention. Second, EPA may enforce after it rescinds the state's authorization to implement the state program "in lieu of" the federal program.

The Eighth Circuit also explained that RCRA's legislative history clearly supports the conclusion that EPA's right "to pursue an enforcement action under the RCRA attaches only when a state's authorization is revoked or when a state fails to initiate any enforcement action." Id. at *6. The court acknowledged that two separate sovereigns can generally initiate two separate enforcement actions. However, since these actions can cause vastly different and potentially contradictory results, authorizing such dual actions under RCRA would run "afoul of the principles of comity and federalism so clearly embedded in the text and history of RCRA." Id. at *7.

As an alternative basis to bar EPA overfiling in the Harmon case, the court relied on the principles of res judicata. Res judicata requires federal courts to give preclusive effect to the judgments of state courts whenever the state court from which the judgment emerged would give such an effect. Id. The court concluded that all but one of the elements of res judicata under Missouri law were clearly satisfied in the Harmon case. The only questionable element was whether there was an identity of parties since the United States is not the State of Missouri.

In finding identity of the parties, the Eighth Circuit again focused on the statutory language of RCRA. Since the state's action had the "same force and effect" as an action initiated by EPA, the court found that Missouri and the United States "stand in the same relationship to one another." Id. at *8. Further, the court held that the privity between the United States and Missouri is not dependent upon their respective subjective interests. Rather, it is dependent solely on whether the "legal right" is the same. Thus, EPA's claim that its "enforcement interests" were different from the state's enforcement interests was irrelevant. Both the United States and the state were advancing the same legal right under RCRA.

In an effort to avoid the res judicata effect of the state's action, EPA argued that under the doctrine of sovereign immunity it could not be bound unless it was an actual party in the prior lawsuit. The court rejected this argument, explaining that EPA could be bound by the state judgment if it had a "sufficient laboring oar" in the prior state action. The court found EPA's "laboring oar" to be EPA's grant to the state, pursuant to RCRA, of the power to enforce the federal government's interests through the state's hazardous waste program.

Potential Impact of Harmon under State Hazardous Waste Programs

EPA contends that the Harmon decision is "limited to enforcement of RCRA hazardous waste programs in EPA-authorized states in the Eighth Circuit." See EPA May Seek Further Review of Decision by Eighth Circuit, 30 Environment Reporter (BNA) 972 (Sept. 24, 1999). When faced with similar arguments in other cases and in other jurisdictions, EPA will likely attempt to limit Harmon to its facts, particularly the state consent decree that was lodged with a state court prior to the conclusion of the federal action.

Notwithstanding these EPA-expressed limitations, Harmon may well provide persuasive arguments to defend against EPA overfilings under RCRA in other jurisdictions on several grounds. First, the Eighth Circuit opinion provides alternative bases for its statutory interpretations: the "plain meaning" and legislative history of RCRA. Second, the alternative holding of res judicata in Harmon will be relevant in many states since Missouri res judicata law is similar to other state laws.

Third, Harmon provides a basis to preclude overfiling regardless of the type of enforcement mechanism used by the state, such as judicial or administrative enforcement. The type of state enforcement mechanism played no part in the "plain meaning" portion of the Eighth Circuit's decision. Nor does the statute itself suggest a different result should obtain if the state's enforcement action is in the form of an administrative order as opposed to a state court consent decree. Such a conclusion would be contrary to the flexibility EPA is given in its own program to enforce violations of RCRA and it would encourage the excessive and unnecessary filing of cases in busy state courts.

With regard to the applicability of the res judicata portion of the Harmon decision, the impact of the type of enforcement mechanism is less clear. However, res judicata has been applied to administrative decisions. See, e.g., United States v. Pennsylvania Environmental Hearing Board, 584 F.2d 1273, 1276 n. 15 (3d Cir. 1978) (res judicata may preclude litigation in court of administrative determinations); The Old Timer, Inc. v. Blackhawk-Central City Sanitation Dist., 51 F.Supp.2d 1109, 1117 (D.Colo. 1999) (negotiated administrative civil penalty settlement agreement bars Clean Water Act citizen suit pursuant to res judicata); Restatement (Second) of Judgments § 83 (1980).

Potential Impact of Harmon on Overfilings in Other Delegated Environmental Programs

Two other prominent EPA programs are delegated to states pursuant to the Clean Air Act (CAA) and the Clean Water Act (CWA). While the express statutory provisions of the CAA and the CWA differ from RCRA, making the wholesale application of Harmon to a "plain meaning" interpretation of the CAA and the CWA difficult, some parallels among the programs exist such that the general rationale of Harmon could have some persuasive weight in the context of defending against an overfiling case under the CAA or the CWA. That is, even without the specific "in lieu of" language in the CAA and CWA, the federal-state relationship in the CAA and CWA context are virtually the same as in the RCRA context. The state adopts a program which EPA reviews for consistency with the federal acts and regulations and, if the state program is approved, it is implemented by the state instead of the federal program. In short, the principles of cooperative federalism are just as embedded in the CAA and the CWA. As such, these statutes could, under the Harmon analysis, be "interpreted" to preclude overfiling.

Additionally, since the interests of the federal and delegated-state governments are aligned, the Harmon res judicata analysis could rebuff EPA overfiling in the CAA and CWA context. For example, in United States v. ITT Rayonier, Inc., res judicata barred an EPA overfiling enforcement action under the CWA. 627 F.2d 996, 1002-1003 (9th Cir. 1980). In that case, the federal court held that a judgment by a Washington state court, regarding the effect of a National Pollutant Discharge Elimination System (NPDES) permit issued by the Washington Department of Ecology (Washington), was binding on EPA in later litigation. Despite the fact that EPA had not participated directly in the state court litigation, EPA was held to be in privity with Washington for purposes of res judicata because they were "so closely aligned" that the state's actions in the state litigation were taken to be the actions of the EPA as well. Id.

In applying res judicata in Rayonier, the Ninth Circuit held that the CWA did not abrogate principles of res judicata. While Congress contemplated concurrent enforcement actions by states and EPA, the court explained, the enforcement actions were based on permits issued under a single system: "Although the NPDES state permit program is established under state law and functions 'in lieu' of federal authority, the source of the federal/state 'partnership' can be traced to a single act of Congress." 627 F.2d at 1002 (italics added, quotes in original).

Similarly, the Sixth Circuit stated in Buckeye Power, Inc. v. EPA that res judicata would apply in the CAA context. "In view of the fact that both federal and state courts acquire jurisdiction by a single act of Congress, we do not think that Congress ever intended that the parties defendant to enforcement proceedings would be subject to double penalties, i.e. penalties in each jurisdiction." 481 F.2d 162, 167 n.2 (6th Cir. 1973).

Conclusion

Environmental practitioners who are considering self-audits for clients should consider the potential impact of Harmon on the threat of EPA overfiling not only for RCRA issues, but also for issues under other delegated environmental programs. The decision may also impact negotiations between enforcement agencies and target entities, including the form in which the resolution of state enforcement actions are memorialized.

 

ISO 14000 UPDATE

Ira Feldman
gt strategies+solutions
Jason Hart
CEEM Inc.

ISO 14000 is the global, voluntary, consensus series of standards on environmental management. ISO 14001, the certification standard on environmental management systems (EMS), is by far the best-known member of the ISO 14000 "family," but the series includes guidance standards and technical reports on a range of other environmental management tools. International subcommittees of ISO Technical Committee 207 have been working over the past six years to produce documents on environmental management systems, environmental auditing, environmental performance evaluation (performance metrics), eco-labeling and product claims, life cycle analysis, and guidance for product standards writers.

ISO 14001 on Environmental Management Systems

ISO 14001 was published three years ago. Implementation around the world continues to gain momentum; it is believed that over 10,000 certificates have been issued worldwide by independent third-party auditors or "registrars." Nearly 500 certificates have been issued across various industry sectors in the US. See the chart below for a list of the leading nations in terms of numbers of ISO 14001 registrations.

ISO 14001 (EMS) Certifications -- the top 12 countries

*(information compiled as of June 1999)

Japan 2043

Germany 1400

UK 800

Sweden 645

Taiwan 492

Korea 463

USA 460

Netherlands 400

Switzerland 360

Denmark 350

Australia 300

France 241

A range of drivers for ISO 14001 implementation are recognized - extending beyond the basic international trade or "competitiveness" rationale, which has been long-understood as a first order incentive for companies engaged in export activities.

Organizations are also seeing the "internal efficiency" value added of an environmental management system, not only as a way of restructuring corporate environmental programs, but also in integrating and aligning such activities with broader management systems approaches such as ISO 9000 on quality management.

Both industry and government are exploring the role of EMS in next generation environmental regulation, with the dual goals of more effective use of the regulator's resources along with the possibilities of "regulatory flexibility" for the organization if the EMS facilitates superior environmental performance.

An "external financial" driver is now also in play as lenders and insurers begin to evaluate environmental management in the context of access to capital and potential reduction of insurance premiums. The recent introduction of a Dow Jones "Sustainability Index" suggests a further role for the EMS framework established by ISO 14001.

Recent milestones for other ISO 14000 series standards

A summary list of the status of the full ISO 14000 series is provided below. This list includes standards that have been published, standards that have been completed and balloted, and standards still in the development process. Note that ISO 14001 itself has just embarked on its first revision cycle, though many believe there is not yet enough empirical data or implementation experience yet to justify any changes.

Among the significant developments over the past year, the completion of the guidance document on Environmental Performance Evaluation (EPE) looms large. The ultimate importance of EPE is as fundamental as the need to track environmental performance metrics. The EPE standard will help guide and evaluate the environmental performance of their environmental management systems. The ISO 14031 document was expected to be published as of November 15, 1999. Its companion document, ISO 14032, a Technical Report that includes a collection of 17 case studies outlining how organizations have used EPE, was published simultaneously.

Some believe that EPE will find greater receptivity among environmental regulators and financial analysts who may be more comfortable with the performance metrics concepts in ISO 14031 than management systems-level approach of ISO 14001. One of the challenges ahead will be to bridge the "internal to the organization" perspective of ISO EPE with the increasingly visible "external disclosure" perspective on environmental metrics taken by such initiatives as Coalition for Environmentally Responsible Economies (CERES) and the Global Reporting Initiative (GRI). Fortunately, such collaborative efforts are underway to ensure at least the use of common terminology and methodology.

Environmental labeling also moved forward within the ISO process this year. ISO 14025 is structured as a technical report covering "Type 3"or "eco-profile" labeling of products. Despite months of debate on the theories of eco-profile labeling, the ISO delegates passed Technical Report ISO 14025 in October 1999. The approval was a surprise to some experts, as delegates weighed contentious issues until the closing ballot at the end of June. The document is expected to be published by the end of 1999.

ISO 14000 in the Policy World

ISO 14000 is well-established enough to have attracted attention from policymakers internationally and domestically on a number of different levels. For example, as the Kyoto Protocol process continues, international delegates are exploring options for mitigation projects and emission reduction credits to tackle the problem of global climate change. The United Nations Framework Convention on Climate Change (UNFCCC) most recently convened COP-5 in Bonn, Germany. One item on the agenda was the notion that the ISO 14000 series of environmental management systems standards may provide a framework to achieve some of the goals of the Kyoto Protocol. The Bonn talks were successful in raising awareness on the ISO 14000 standards for climate change negotiations through the presentation of a set of selected case studies.

In the United States, the use of the EMS framework continues to gain ground as a policy tool. The Clinton administration is expected to issue an executive order in late 1999 that would require all federal agencies to begin environmental management system pilot projects by March 31, 2002, and to establish an effective EMS at all federal facilities by 2005. The federal mandate will directly affect all 16 departments in the Executive branch - which includes more than 15,000 federal facilities, plus other agencies as well, such as the Tennessee Valley Authority, the Government Printing Office and the U.S. Postal Service. The draft order, tentatively titled "Greening the Government Through Leadership in Environmental Management" will require a system based on the U.S. Environmental Protection Agency's Code of Environmental Management Principles (CEMP) or other appropriate existing EMS standards, such as ISO 14001.

Other significant policy initiatives embracing the EMS framework include reinvention activities at EPA, and the final report of the U.S. President's Council on Sustainable Development. EPA issued a report in August 1999 titled, "Aiming for Excellence: Actions to Encourage Stewardship and Accelerate Environmental Progress." The report includes a strong commitment to utilizing environmental management systems approaches, the first such clearly proactive statement on EMS from EPA, and a further Agency commitment to develop a performance track or alternate regulatory pathway. Such an initiative will likely rely heavily on EMS implementation and third party certification.

The PCSD report, "Towards a Sustainable America," was issued in May 1999. The report includes the recommendations developed by the environmental management task force of PCSD. These recommendations lay the groundwork for the next generation of environmental policy and regulation in the U.S. Thus, it is not surprising that there is a heavy emphasis on the EMS framework and such tools as environmental performance metrics.

Implementation in the US - Voluntary and Mandatory

Building on experience gained in earlier settlements with, among others, United Technologies and ASARCO, EPA continues to view EMS as a useful device in enforcement settlements, usually in combination with other compliance-oriented requirements. Similarly, state and local regulators are beginning to recognize the potential uses of EMS implementation in the enforcement context.

Perhaps the highest profile example of an agreement to implement an EMS as part of a settlement package in the past year is the case of BP Exploration (BPXA). BPXA, a subsidiary of BP Amoco, admitted in U.S. District Court in Anchorage that in 1995 it failed to immediately notify authorities that one of its contractors injected hundreds of barrels of waste, including paint, paint thinner, oil and solvents, into oil wells near Alaska's Beaufort Sea. Under the terms of the plea agreement, BPXA agreed to a settlement that will cost the firm a total of $22 million in criminal and civil penalties, and BPXA also will be required to implement the ISO 14001 international standard as its environmental management system at all BP Amoco's facilities throughout the United States and the Gulf of Mexico that engage in the exploration, drilling or production of oil.

Another interesting settlement incorporating EMS implementation involved hotels agreeing to certify to the ISO 14001 environmental management system standard as part of a settlement with the City of San Diego. The San Diego Quality Inn & Suites Hotel and the Comfort Inn, both owned and operated by Narvan Enterprises in San Diego, will be required to obtain a three-year, third-party certification to the voluntary EMS standard for an alleged asbestos violation during recent renovations at both locations.

Last year, a General Motors plant in Delaware and an ASARCO mining facility in Montana both agreed to implement an EMS as part of their court agreements. In addition, Royal Caribbean Cruise Lines agreed to implement and certify certain parts of its business to ISO 14001 earlier this year, as a result of a $9 million in fines for more than a dozen environmental crimes.

But voluntary action remains the predominant mode of ISO 14001 implementation, and there were many positive examples in the U.S. over the past year. For example, in September 1999 Ford Motor Co. became the first U.S. company to issue an ISO 14001 mandate to its supply base. Third-party certification to the ISO 14001 environmental management systems standard will be required from all of its production and non-production suppliers worldwide by 2003. Additionally, Ford will demand that its suppliers certify at least one manufacturing site to ISO 14001 by the end of 2001 to demonstrate their commitment to the program and to overall environmental performance improvement. The mandate, issued from Ford's purchasing division, will immediately affect more than 5,000 companies directly, and will likely generate a wave of secondary certifications as the new requirement floods the marketplace. Other multinational companies, including General Motors, have now issued similar plans following Ford's lead.

Another significant U.S. company, Anheuser-Busch, the largest brewer of beer in the world, was expected to achieve certification to the international environmental management system standard at its Fairfield, California, brewery by mid-November 1999 as a prelude to company-wide implementation.

Ira Feldman, Esq. is the president of gt strategies+solutions, a multidisciplinary "strategic environmental management" group based in Potomac, Maryland. An active participant in the ISO, GRI, and PCSD initiatives, Ira serves as the Section's co- liaison to the ISO 14000 process and is co-chair of the ISO 14000 Legal Issues Forum. He can be reached at (301) 294-1686 or bigeye@erols.com.

Jason Hart is the editor and publisher of International Environmental Systems Update, the leading publication on ISO 14000 and environmental management. He can be reached at CEEM Inc. in Reston, Virginia at (800) 745-5565.

The complete ISO 14000 series workproduct currently planned by ISO TC 207:

ISO 14001 (SC 1)

Environmental Management Systems Specification with Guidance for Use

SC 1 will continue discussions concerning ISO 14001 revisions.

ISO 14004 (SC 1)

Environmental Management Systems ù General Guidelines on Principles, Systems and Supporting Techniques

SC 1/WG 2 will continue its revisions process in Washington in November 1999, focusing on aspects and impacts, and prevention of pollution.

ISO 14010 (SC 2)

Guidelines for Environmental Auditing: General Principles on Environmental Auditing

The Joint Working Group (JWG) met

Sept. 13-17 in San Francisco to advance the common auditing standard. The group produced the first Committee Draft. Publication is expected in 3rd quarter 2001.

ISO 14011/1 (SC 2)

Guidelines for Environmental Auditing: Audit Procedures/ Auditing of Environmental Management Systems

The JWG met Sept. 13-17, 1999 in San Francisco to advance the common auditing standard. The group produced the first Committee Draft. Publication is expected in 3rd quarter 2001.

ISO 14012 (SC 2)

Guidelines for Environmental Auditing: Qualification Criteria for Environmental Auditors

The JWG met Sept. 13-17 in San Francisco to advance the common auditing standard. The group produced the first Committee Draft. Publication is expected in 3rd quarter 2001.

ISO 14015 (SC 2 WG 4)

Environmental Assessments of Sites and Organizations

Work continued in Seoul on the "EASO" documents. Experts finalized a 2nd CD for comment. It will be published in 1st quarter 2001.

ISO 14020 (SC 3 WG 3)

Goals and Principles of All Environmental Labeling

ISO 14020 was published as an International Standard in late 1998. The document is available through national standards bodies.

ISO 14021 (SC 3 WG 2)

Environmental Labels and Declarations: Self-Declaration Environmental Claims/ Terms and Definitions

ISO 14021 passed as an International Standard in September, 1999. The document is available through national standards bodies.

ISO 14024 (SC 3 WG 1)

Environmental Labels and Declarations: Type I Guiding Principles and Procedures

This document circulated for voting last year as an Final Draft International Standard (FDIS). It has been published and is available through national standards bodies.

ISO 14025 (SC 3 WG 1)

Type 3 Eco-Profile Labeling Technical Report

ISO 14025 passed as a Type 2 Technical Report in July.

ISO 14031 (SC 4)

Environmental Performance Evaluation: Guidelines

ISO 14031 passed unanimously at the FDIS stage and is now an International Standard. It is available through national standards bodies.

ISO TR 14032 (SC 4)

Environmental Management and Environmental Performance Evaluation: Case Studies Illustrating the Use of ISO 14031

ISO 14032, the Technical Report, passed unanimously at the FDIS stage and is now available through national standards bodies.

ISO 14040 (SC 5 WG 1)

Environmental Management: Life Cycle Assessment/ Principles and Framework

This standard was published in June 1997.

ISO 14041 (SC 5 WG 3)

Environmental Management Life Cycle Assessment / Goal and Scope Definition and Inventory Analysis

ISO 14041 was published as an International Standard Oct. 1, 1998.

ISO 14042 (SC 5 WG 4)

Environmental Management: Life Cycle Assessment/ Impact Assessment

SC 5 raised ISO 14042 to the FDIS stage in Seoul in June. It should become an international standard in early 2000.

ISO 14043 (SC 5 WG 5)

Environmental Management: Life Cycle Assessment / Interpretation

SC 5 raised ISO 14043 to the FDIS stage in Seoul in June. It should become an International Standard in early 2000.

ISO 14048 (SC 5 WG 2)

Environmental Management: Life Cycle Indicator Format

SC 5 continued work on this document in Seoul in June 1999. The Technical Report was given to WG 2 on Life Cycle Inventory Analysis for further work.

ISO 14050 (SC 6)

Terms and Definitions: Guide on the Principles for Terminology Work

SC 6 continued its work in Seoul to ensure accuracy and compatibility in definitions and language of standards.