State Laws Mandating p2 -Thanks and Reply

[Tim Greene <greenett@ctrvax.Vanderbilt.Edu>]

p2techers:

Thanks to all for great replies.  I think I have enough information to give
the law class a good intro to the topic.  I also wanted to reply to Melissa
Malkin's  message, since it addresses a feeling that several respondents
mentioned (her message is attached at the bottom).

I agree that there is a clear distinction between a compliance audit and a
p2 audit/opportunity assessment.  I also agree with Melissa that the
incentives for performing each type of audit are dramtically different--p2
can save money while compliance can generate an enforcement action.
However, I had in mind a larger context for the discussion which I did not
fully explain in my initial request.

A half a dozen or so studies have come to my attention in the last year that
all reach a similar conclusion: publication of environmental performance
information has a material effect on firm financial performance.  The
measures used vary from study to study--stock price, intangible asset value,
cost of capital, debt ratings, etc.  If one believes the findings of these
business school and economics profs. (which I guess I tend to), then it
seems like an effort should be made within the company to examine two
things: (1) the mechnaisms which make environmental information public
and/or how the company can keep information private (2)opportunities to
manage that flow of information where it cannot be made private.

As to the former, the mechanisms are familiar.  The firm has little choice
about completing Form R and reporting TRI emissions.  Nor does it have a
choice about reporting accidents and releases that make their way into the
ERNS.  But the firm, its counsel, and its managers must be aware of the
differeing requirements from state to state that govern compliance audits
and p2 opportunity assessments.  Where there is no protection for either
audit type, investors could access the information and, in line with the
studies mentioned, could affect the firm's market value.  In other states
(such as Oregon), both p2 and compliance audits are protected, so one would
presume a more limited market effect.  My original request for information
was aimed simply at brushing up on the p2 issues.

As to the latter issue of how to manage the information flow, this is not a
can of worms I wish to open at this time although it is certainly a fertile
area for discussion.

Again, thanks to all who replied. Although these comments are necessarily
brief, I hope that they give a little insight.

Tim Greene


Melissa's message:
>In the audit privledge arena, I draw the distinction between what a
>facility is likely to find out when they do a P2 audit required by a
>state P2 planning law vs. what they are likely to find out when they do
>a environmental compliance audit or other broad environmental audit. A
>P2 audit is much less likely to identify regulatory compliance
>violations than a typical compliance audit. 
>
>The potential for uncovering violations can be a big disincentive for a
>company to do these environmental compliance audits in the first place
>(discovery of violations may turn subsequent violations into "knowing
>violations" & may trigger reporting requirements).  It's important for
>your audience to realize that P2 audits carry a much lower risk of
>exposure to legal/regulatory liability than a compliance audit. Plus, P2
>audits have the potential to uncover cost/liability savings. So your
>future-lawyers should not hesitate to recommend a P2 audit, whereas they
>will want to be well prepared before recommending a compliance audit
>(i.e., they should make sure that the resources are in place to quickly
>address any problems that are found). 
>
>Some folks at Preston, Gates in Seattle did a good presentation on the
>topic of audit priviledge a while back -- contact me off list if you
>want a copy.
>
******************************************************
Timothy T. Greene
Vanderbilt Center for Environmental Management Studies
1207 18th Avenue South
Nashville, TN  37212
(615) 343-0739  Fax: (615) 343-7408
greenett@ctrvax.vanderbilt.edu 
http://www.vanderbilt.edu/VCEMS
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