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	Macquarie Business Law Journal

SUMMARY OF STATE OF LOUISIANA LEGISLATIVE AUDIT OF THE DEPARTMENT OF ENVIRONMENTAL QUALITY AND PROPOSED SOLUTIONS TO CORRECT THOSE PROBLEMS

DANIEL G KYLE[*]

The primary state agency concerned with the environment’s protection and regulation is called The Louisiana Department of Environmental Quality (LDEQ). The results of the 2002 Legislative Audit are detailed in the following report.

The audit concluded that LDEQ’s monitoring functions do not provide accurate information about which it regulates: 66% of the water permits were not issued as was committed to the EPA and many facilities are functioning under expired permits; 65% of water facilities and 73% of solid waste facilities are working under expired permits. There are 26% of the self-monitoring reports for water and 22% of the air reports could not be located by the LDEQ.

Enforcement functions found that some violations did not receive enforcement actions and some enforcement actions were not escalated when the facilities continued to have the same violations: 80% of the formal water enforcement actions were issued over 150 days after the violations occurred. LDEQ has not collected $4.5 million or 75% of the penalties in the fiscal years of 1999, 2000, and 2001. One third of the complaints were not handled within five days from when LDEQ received the complaints. Some of these complaints appeared to involve violations, but no enforcement actions were taken.

Most vital documents just could not be located. Some were misfiled or indexed wrong. Nearly $11 million in fees remain uncollected because of poor billing and collection practices.

Statute 9 RS 24:513(D)(2) of the Louisiana Revised Statute directs the Legislative Auditor to conduct performance audits and other study evaluations to enable the Legislature and its committees to evaluate the efficiency, effectiveness, and operations of state programs such as the LDEQ. A few of the concerns are as follows:

An audit of the La. DEQ was conducted under the provisions of Title 24 of the Louisiana Revised Statutes of 1950. Louisiana RS 30:2011 makes LDEQ the primary agency concerned with environmental protections and regulations. There are three main offices to carry out their activities.

The LDEQ’s budget for the year 2001 was approximately $113 million. Less than 1% of LDEQ’s revenues comes from state general funds. The remainder of their budget comes from federal funds, self-generated revenues, and fees. Their staff consists of over 1000 employees.

There are four main Medias that the LDEQ regulates that was the main focus of the audit (water, air, hazardous waste, and solid waste) during the years of 1999, 2000, and 2001. The audit focused on these activities:

LDEQ regulates many areas, such as: Air, Hazardous Waste, Solid Waste and Waster. LDEQ issues permits to facilities that discharge wastewater and other pollutants into state water. They are classified into two categories, major and minor facilities. Major facilities discharge over one million gallons per day and minor facilities discharge less than a million gallons per day. Also, LDEQ issues permits which cover such things as oil and gas facilities and sanitary discharges. Finally, LDEQ acts on behalf of the EPA.

There are three types of air facilities located in Louisiana. They are: ones that emit 99.5 tons per year of any one pollutant (major); ones that emit 24.5-99.4 tons per year (minor); and ones that emit 24.4 or less tons per year (small).

These are the five types of air permits that are issued:

The EPA approved Louisiana Title V ‘umbrella’ permits in 1995. Facilities, which treat, store and dispose of hazardous waste, are also issued permits by LDEQ. Also, LDEQ oversees generators of hazardous waste; these facilities do not have to have permits. One facility generally has several different units such as container, storage area, storage tank, and incinerators. Though each facility has an operating permit each unit can be permitted at different times.

Solid waste is a state program which has no oversight from EPA. LDEQ issues standard permits to those facilities. Permits are issued by the LDEQ as follows:

The LDEQ received information on handling one contaminated site. This involved a water body contaminated with high amounts of metal and other pollutants. The LDEQ let this facility conduct its own risk management on the degree of contamination and how they were going to remediate this site, but instead of fixing the problem, all the facility agreed to do was monitor the contaminated site.

I LDEQ IS NOT PROTECTING THE RESIDENTS AND ENVIRONMENTAL RESOURCES OF LOUISIANA THROUGH ITS MONITORING FUNCTIONS?

Louisiana leads the nation with almost 30% of all production-related hazardous wastes, according to the EPA’s Toxic Release Inventory for 2000.[1] The annual report on hazardous materials shows Louisiana ranks No 11 in terms of toxic pollution released into the air, water and land.[2] But Louisiana’s lower ranking is in part because the Toxic Release Inventory began including other polluting industries, primarily mining.[3] In terms of the original polluting industries, Louisiana still ranks: No 4 in total off-site and on-site releases; No 2 in total on-site releases; and No 3 in total releases within Louisiana.[4] Polluting industries reported 154,522,635 pounds of toxic materials released into the environment.[5] Once again, Cytec Industries of Westwego, which makes petroleum-based chemicals and sulfuric acid, was the top polluter in Louisiana, with 17,138,644 pounds released on-site and off.[6]

‘It’s pretty easy to come to the idea you don’t want to be in Louisiana ... As we try to show Louisiana is a great place to invest in, coming in No 1 on these toxic chemical releases, it’s not good,’ said Aaron Viles of the US Public Interest Group.[7]

To try and make sure the residents and the environment is protected through its monitoring functions, these actions were completed:

To make sure the residents and the environment is protected through its monitoring functions these actions were completed for water facilities:

According to a national report on power plant pollution, Louisiana had the third largest increase in nitrogen oxide emissions from power plants during 1995-2000. Emissions from Louisiana power plants jumped by 13,533 tons, or 17%, to 94,554 tons in 2000 compared to five years earlier, according to ‘Darkening Skies’, a report released by the US Public Interest Research Group, the Clean Air Task Force and the National Environmental Trust.[8] Contributing to the nitrogen oxide increase were the Big Cajun 2 power plant in New Roads and the Rodemacher plant north of Alexandria, which ranked No 6 and No 31 respectively.[9]

To make sure the residents and the environment is protected through its monitoring functions, these actions were completed for air facilities:

Randomly selected samples of 20 major source facilities, 20 minor facilities, and 5 small source facilities to perform a file review to determine if self-monitoring reports were submitted, if inspections were shown and if violations were revealed and what actions were taken against the facilities. To determine the frequency of inspections, a list of all inspections from January 1996 to November 2001 were audited from the Compliance Data System. Hazardous waste obtained a list of all hazardous waste treatment facilities and issue dates of permits, so they can determine how many permits have expired. A random sample was taken to do a file reviewing the electronic records system to determine if inspections revealed violations and to see if those violations were enforced and to see if annual reports submitted, and to see if DEQ conducted all required inspections. Solid waste also obtained a list of all solid waste facilities and issue dates to see how many permits have expired, and to review files to see if inspections revealed violations, and if those violations received enforcement action, and to see whether annual reports and groundwater monitoring reports were submitted.

To make sure that the state’s health and environmental resources are protected each permit will include the following information:

Various problems occur while attempting to obtain accurate and complete information on facilities. The (RCRAInfo) contains errors and there is no formal method to track solid waste permits. Many facilities in the state are operating under expired permits. Therefore, many facilities in the state may be operating under regulations that are less stringent. There seems to be a backlog of permits to issue and because of this many permits have already expired. The LDEQ issued solid waste facilities orders to close but has not tracked these facilities to ensure that they were closed.

Self-monitoring reports are not always an assurance that these facilities will submit and maintain there reports. It was found that many required self-monitoring reports are either not submitted or can not be located, and because of this the LDEQ does not know if these facilities are in compliance or not.

Most inspections done by the LDEQ are done as scheduled, except for the solid waste and minor water facilities: 18% of the inspections done at the solid waste facilities and 31% for minor water facilities were not completed and because of this, these facilities may not be operating according to their permit.

Fifteen Louisiana parishes received failing grades in a report on air quality released the week of 4 May 2001 by the American Lung Association.[10] The 2001 ‘State of the Air’ report, added Baton Rouge, which ranked 24th, to its list of the 25 worst ozone-polluting metropolitan areas in the country.[11]

‘It is bad news, but not surprising, because industry has tried to get the government to believe the ozone problems (in Louisiana) are caused by swamp gases or winds from Houston, without trying to reduce emissions as much as they should’, said Marylee Orr of the Louisiana Environmental Action Network.[12]

Industry groups challenged the tougher 1997 ozone standards implemented by the EPA as overly stringent.[13] The US Supreme Court ruled that the tougher standards were justified but that the implementation policy went too far. The Court ordered the EPA to develop a more reasonable implementation plan.[14]

LDEQ usually does not compare annual emissions statements submitted by air permitted facilities, therefore, they do not know if these facilities are in compliance with their permits, and some residents may not be fully protected from unpermitted levels of pollution. The monitoring system is so lax that the facilities may not be fully protecting the health and environmental resources of the state. These are six recommendations made by the Legislative Auditor:

According to a report from the Trust for America’s Health, Louisiana is one of 27 states that does not track or monitor asthma, despite its status as a state with very high air pollution.[15] Asthma affects an estimated quarter of a million people in Louisiana at an estimated cost of $184 million, according to the Asthma and Allergy Foundation of America.[16] The legislature should consider revising RS 30:2012 to modify the annual inspection requirement and consider the EPA’s inspection guidelines in revising this statute. Without any changes, the state’s air pollution will only get worse.

When the Auditor tried to gather accurate and complete information on permitted facilities, LDEQ could not easily provide reliable information. LDEQ’s response was that they were implementing a new data management system called Tools for Environmental Management and Protection Organizations (TEMPO). TEMPO will merge all data currently kept in LDEQ’s various databases into one centralized system. Specific problems for each media are listed below:

WATER: Major and minor permitted facilities information is kept in two databases. Permit Compliance System (PSC). PSC is used to track the compliance of water permits. Permit Tracking System (PTS). PTS contains permit level information that is used to bill facilities for fees. At times these two systems do not always reconcile with each other. For example, Major facilities PSC reported 252 permits and PTS reported 249 permits issued. Minor facilities: PSC reported 4,586 permits and PTS reported 6,246 permits issued. A combination of databases and conversations with regional and headquarter staff was used to reconcile the differences.

EPA records indicated that 20% of major industrial facilities and 44% of municipal wastewater treatment facilities in Louisiana were in significant noncompliance with water pollution permits during one quarter in 2001 and the first quarter of this year.[17] Major facilities with water discharge permits, both industrial and municipal, 71 of them experienced at least one quarter between January 2001 and 30 March 2002, when there was a significant failure to comply with the permit or compliance deadline.[18] Of 96 major municipal wastewater treatment systems, 43 had at least one quarter of failing to meet their permit limit.[19]

Bruce Hammatt, LDEQ’s assistant secretary for environmental compliance, said Louisiana is No 2 in the number of industrial water permits issued but 25th in percentage not in compliance with their permits.[20] Even with the mounting evidence of repeat offenders, Hammatt recently closed the agency’s criminal investigation division.[21] ‘It is outrageous that, with nearly one in three polluting facilities breaking the law, the Bush Administration is proposing to slash enforcement budgets’, said Johanna Neumann of PIRG’s Gulf Coast office in New Orleans.[22] Louisiana ranks eighth in the nation in the number of facilities with water discharge permits in significant noncompliance, Neumann said.[23]

In October, 11 environmental groups filed a petition with EPA requesting the EPA to take back regulation of water pollution from LDEQ.[24] The groups claimed 34% of the major discharges and most of minor discharges have not been inspected since LDEQ took over water pollution permitting from EPA in 1996.[25] The group also charged LDEQ with taking no enforcement action on 373 water quality violations.[26] LDEQ Secretary Dale Givens said he was not surprised by the figures and that they are primarily a result of his agency not having adequate resources.[27] One would question the Secretary’s statement when his department fails to sanction violators and when they do sanction them, fail to collect the fines imposed.

More than a quarter of the state’s industrial plants and municipal wastewater plants that dump waste into waterways exceeded pollution limits in their environmental permits 635 times during three years in Louisiana.[28] The US Public Interest Research Group found in its study that Louisiana ranked No 9 in the total times the permit’s limits were exceeded for ‘high hazard chemicals’, and No 16 in the number of companies committing these violations.[29] Fifty-six of those violations involved chemicals that went into the Mississippi River, USPIRG said.[30] In 82 instances, the industries and municipalities released five times more toxic chemicals than their Clear Water Act permits allowed.[31] On average, these polluters exceeded their permitted limits by 686% for ‘high-hazard’ chemicals, defined by USPIRG as pollutants suspected or known to cause cancer, birth defects and other illnesses.[32]

‘Even though municipal and industrial polluters continue to break the law and threaten public health, the Bush Administration wants to take environmental cops off the beat’, said Kellan Hayes, an official with USPIRG, referring to the proposed EPA budget cuts.[33]

‘Louisiana waters deserve cleanup, not cover-up’, said Jen Brock, a spokeswoman for the Gulf Restoration Network.[34]

LDEQ and EPA are under a federal consent decree requiring them to identify polluted water bodies within seven years and adopt plans to reduce those pollutants.[35] One example is Conoco’s Lake Charles refinery, which exceeded its permit for the chemical 1,2 dichloroethane, a known cancer-causing pollutant, by 303% in January 2001, discharging the cancer-causing chemical into the already-polluted Bayou Vedine.[36]

Earlier this year, LDEQ took that segment of Bayou Vedine off a list of polluted waterways.[37] Brock said LDEQ acted too early because the reduction plan hasn’t been implemented and violators such as Conoco have violated their permits.[38]

Air: There were no problems found in the permitted facilities.

Solid Waste: For standard permits they had established the universe using information from Permit Division, Surveillance staff, and regional offices. Three different lists had to be reconciled to get the temporary permits.

Hazardous Waste: The data received from RCRA is questionable, the report released by the internal auditors in October 2001 found many inaccuracies. In March 2001 there were 3000 errors. These errors were the results of a lack of available codes. Some errors include showing that a permit is inactive when it is not and entering a site as closed before it even applied for a permit. Many facilities may be operating without the proper permits because LDEQ has failed to issue permits, 66% of water permits and 38% of air permits were not issued. LDEQ agreed to issue 20% of the universe of permits each year, but according to the EPA’s federal fiscal year, LDEQ has never issued 20% of its permitting universe in any year. EPA has expressed strong concern over LDEQ’s effective administration of the water-permitting program.

The Clean Air Act Title V permits program was approved by the EPA in 1995. Originally EPA requested all states to issue Title V permits within three years of obtaining approval. This would have been in 1998 for LDEQ. The LDEQ has 315 initial Title V permits left to issue and has verbally agreed to issue these permits by December 2003. One reason for the backlog in issuing permits is the high turnover experienced by its Permit division.

The Gulf of Mexico is the most distressed of the nation’s rapidly deteriorating coastal regions, and most of the blame is the heavily polluted Louisiana waters, according to an EPA report.[39] Along the Louisiana coast, problems include: Sediments contaminated with high levels of toxic heavy metals and pesticides in the Mississippi, Atchafalaya and Calcasieu rivers.[40]

Samples of fish tissue along the Louisiana coast from Pearl River to the Atchafalaya River was found to be contaminated with arsenic, mercury and other toxic materials.[41] In several locations, fish consumption warnings have been necessary to try and warn people of the contaminated seafood.[42] State and federal officials have been studying sediment deposited in the Calcasieu River that has been contaminated with several toxic industrial chemicals believed to have been dumped in the river over the past 70 years by the oil and gas industry.[43]

Despite being first in the nation for waters that should be able to support shellfish, the Gulf of Mexico ranks last in the nation in its approval as safe for use for harvesting oysters and other shellfish.[44]

The National Coastal Condition Report points to growing concerns about the way the LDEQ is protecting our state’s waters.[45] Despite the fact that many waterways such as the Calcasieu River are well-established ‘toxic gumbos’, LDEQ has inappropriately proposed to remove documented polluted water bodies from the state’s 2002 list of polluted waters.[46] This is significant, because once the waters are removed from this list; they will not be targeted for cleanup.[47] For instance, LDEQ proposed to remove nine water bodies in the Calcasieu and Ouachita River Basins, despite bacteria levels of 40 times the safe limit were measured in these waters. Even though the waters in this region are some of the most contaminated in the nation, once removed from the list, the problem will only get worse and the people in the region will suffer.[48]

Also, mercury contamination at some drilling rigs in the Gulf of Mexico appears to be so severe that these rigs could easily qualify for the National Priorities List, a list of the nation’s most hazardous contaminated sites.[49] Placement on this list, which requires approval by federal agencies, can lead to federal ‘Superfund’ cleanup effort.[50] A rating of 28.5 qualifies a contaminated site for the list.[51] The most conservative calculations yielded a rating of 42 for the most of the contaminated rig sites.[52]

Although most of these rig sites are highly contaminated, these rigs lie in some of the most productive seafood waters of the Gulf of Mexico.[53] The seafood caught from these contaminated areas end up at fish markets or restaurants across the country.[54] Even though the seafood from these areas are caught from some of the most contaminated sites in the nation, the Food and Drug Administration does not conduct any widespread mercury testing of these fish.[55] Not surprising, the oil industry and the Minerals Management Service have repeatedly insisted that the mercury is not a concern, so leave everything alone and stop trying to dip into the oil and gas industries profits.[56]

Many water permits, solid waste permits and hazardous waste permits have expired. The backlog of issuing permits is a critical issue. A large percentage of state waters are reported as impaired while facilities may not have current and effective permits that establish conditions to protect these waters from further impairment.

Over 18% of hazardous waste units operate under interim status. After analyzing permits issued for 66 facilities that treat, store, or dispose of hazardous waste, the 66 facilities had a total of 431 permitted units. Interim status is generally granted when new regulation is promulgated and allows facilities to operate until LDEQ issues permits.

Many solid waste facilities that are ordered to close or upgrade are still open, 293 temporary permits to solid waste facilities were issued from 1993 until the time of this audit. These facilities are either ordered to upgrade or to close.

Many facilities have been ordered to close but have failed to do so. Eighteen percent of the units within facilities were issued orders to close and are still operating. Ninety-four percent of these units within these facilities have been open over three years. The units that are closed took an average of 3.9 years to close.

Some facilities that were ordered to upgrade have not yet done so. Fifty-four percent of the units within facilities were issued orders to upgrade and are still not upgraded. Ninety-four percent of these units were ordered to upgrade three years ago. The units upgraded took 3.2 years to upgrade.

Based on reviews and attempts to obtain data on temporary permits, the audit found that the LDEQ does not have a formal method of tracking these permits. The lack of a formal tracking mechanism for these permits results in no one at LDEQ knowing the status of these temporary permits. Therefore, there may be facilities that have been ordered to close but are still open and operating with little oversight from LDEQ. If LDEQ ordered sites to close, then it should at least track these sites to ensure that they are closed or working toward closure.

Water facilities are required to sample their discharges and submit the results to LDEQ. They must show that their discharge does not exceed limits specified in the permit.

Air self-monitoring requirements are permit specific. Most facilities are required to submit an annual emissions inventory. Permits may require a facility to submit additional self-monitoring reports.

Hazardous waste facilities are required to submit annual disposal reports that describe the amount of waste disposed of for the year.

Some of the questions that need to be answered from the LDEQ Enforcement Division are as follows:

LDEQ has collected nearly $4.5 million or 75% of the penalties that it has assessed during fiscal year 1990, 2000 and 2001. Effective enforcement should include the following elements:

II LDEQ IS NOT PROTECTING THE RESIDENTS AND ENVIRONMENTAL RESOURCES OF LOUISIANA THROUGH ITS ENFORCEMENT FUNCTIONS

Facilities continue to commit violations because LDEQ did not appear to issue enforcement actions. Formal enforcement actions require that the facility correct the violations or prevent subsequent violation. Specific findings are as follows: After reviewing 18 minor water files, it was found that 31% of inspections that appeared to have violations did not have evidence of enforcement actions. Therefore, not addressing these violations some facilities continue to violate the terms of their permits. Reviewing 45 permitted air facility files; it was found that only 34 inspection reports were filed. Sixty percent of their reports were missing. Fifteen files sampled for solid waste facilities lead to a total of 99 inspections. Four percent had violations which LDEQ did not appear to issue actions for these violations. Reviewing 74 facilities requiring water permits that had two or more enforcement actions issued between July 1998 and June 2001 it was determined that 37 had more than one enforcement action for the same violation and 57% of the cases were not escalated when the facility continued to commit the same violation. One hundred twenty-one facilities requiring air permits were reviewed that had two more enforcement actions issued between July 1998 and June 2001, it was determined that 21 had more than one enforcement action to the same or similar violations. The audit found that 76% were not escalated. Of the 12 facilities requiring hazardous waste permits that had two or more enforcement actions between July1998 and June 2001, five had more than one enforcement actions for the same or similar violation and 42% were not escalated. Of the 49 solid waste facilities that had two or more enforcement actions issued between July 1998 and June 2001, 31 had more than one enforcement action for the same or similar violation and 29% were not escalated.

LDEQ had not collected nearly 75% of monetary penalties assessed in fiscal year 1999, 2000 and 2001. LDEQ assessed nearly 171 penalties totaling approximately $6 million in fiscal years 1999, 2000 and 2001. They have not collected nearly $4.5 million. Many settlements that are negotiated do not appear to penalize the facilities that commit violations. An emergency rule went into effect in April of 2000, stating which categories may or may not be approved for negotiation. Louisiana RS 30:2050.7 allows LDEQ to enter settlement agreements with violating facilities. In many cases it does not effectively penalize facilities that violate the laws. To summarize:

Most negotiated settlements do not penalize the facility, which commits the violation. BEPS (Beneficial Environmental Projects) are in lieu or part of a penalty payment. To start with, these facilities were supposed to do improvements before any penalty were imposed.

All media should have a uniform and consistent way of addressing certain types of violations. One should not penalize one violation and turn its back on the same violation elsewhere. Penalties collected are deposited in the Hazardous Waste Site clean-up Fund (RS 30:2205) unless it is over $6 million. If it is over $6 million it is deposited into the Environmental Trust Fund, which funds LDEQ.

Some cases go uncollected because the facility is appealing the decision. Some facilities settled for a lesser penalty or the penalty was rescinded altogether.

III LDEQ’S COMPLAINT PROCESS DOES NOT INSTILL PUBLIC CONFIDENCE THROUGH TIMELY AND THOROUGH RESOLUTION OF COMPLAINTS

We completed the following to determine whether LDEQ’s process for responding to complaints results in timely and thorough resolutions:

LDEQ does not process timely and thoroughly resolve complaints. LDEQ had not addressed 120 complaints. All complaints should be resolved quickly by LDEQ. Violations should be addressed properly by the LDEQ.

The (SPOC) Single Point of Contact is staff, which is responsible for receiving all complaints. They enter the incidence into a database and fax the incident to the best facility to handle the problem. From 1999-2001, there were 6,601 complaints filed.

They are categorized as follows:

There were 17,146 incidents involving releases and discharges into air, water and soil for the years 1999-2001 reported to LDEQ. Of those incidents, 34% of the 354 complaints were addressed six days or more after the complaint was received. The objective for the fiscal year 2001 was to address 95% of all incidents. However, only 66% were addressed within five days. Because only 66% of the complaints had been addressed the department was unsuccessful in meeting its objective. A delayed response may allow violators to continue for longer periods of time. After viewing 60 complaints a determination was made as follows:

Some complaints with violations were not even issued enforcement actions. Thirty-three percent of complaints appeared to have violations and were not issued any enforcement actions. Sixty complaints were investigated it was found that 54 of the 60 were investigated. Of the 54, 18 appeared to have violations. Of the 18 the following was found:

LDEQ says it is easier for the facilities to correct the violations than to issue enforcement actions. Thirty-three percent of the complaints seemed to have violations but were not issued any enforcement actions and as a result these facilities may still be running with previous violations not corrected.

Most of the complainants are dissatisfied with LDEQ handling of complaints. A sample of 10 complaints out of 60, the audit found the following:

Most of the facilities that were contacted were dissatisfied with the handling of complaints.

IV OTHER ISSUES ADDRESSED BY THE AUDIT

Finally, limited audit work was performed on these two issues:

LDEQ should keep a better eye on all records management to make sure that all files are stored in both physical and electronically and are easily accessible. LDEQ should make sure that all billing and collections are done uniformly to make sure all companies are billed properly and that they make payments.

Public documents are not easily accessible at LDEQ. In some instances documents were either not received or created or they were just lost.

Affiliated Computer Services (ACS) has been contracted to run its file rooms. Files were consistently not located. It was found that 82% of the misfiled air documents were dated after ASC took over the file room. They attributed this to poor training to personal.

While studying solid waste enforcement actions 22% of the documents 153 were not able to be located. This was out of 706 enforcement actions. The results are as follows:

During hazardous waste inspections, 117 inspections were conducted. They were only able to find 78 of the inspections done. Therefore, 33% of these inspections were not found. Of the inspections that were found, they were found under document type inspections report or outgoing correspondence. Many documents in the file room were misfiled.

Thirteen percent of the air files could not be found. According to the LDEQ, these documents should have been in the files: 13% of the self-monitoring reports, 60% of the inspections reports and 18% of the permits. In 45 air files reviewed, a large number of documents were misfiled. Approximately 82% of the misfiled documents were dated after ACS took over LDEQ file rooms. Looking through all the files can take from a few hours to several days.

Problems also were found in the water files. Some files could not be found or they were misfiled. Five percent of all documents requested could not be found.

Nearly $11 million in fees are past due. The LDEQ, as of December 2001, have not collected $10.8 million in various fees. Many of these cases were the results of over or under billings; many companies filed bankruptcy or were no longer in business. LDEQ does not assess late fees on past due accounts because, believe it or not, its billing system does not have the capability to assess late fees. The LDEQ has no centralized billing process. Each has its own type of procedure and there is little supervisory review. Many different databases are used for billing purposes.

Louisiana Administrative Code 33:V.5117 requires facilities treating hazardous waste or stores or disposing of wastewater pay an annual monitoring and maintenance fee, which many do not.

The EPA specifically states that inspections are intended to identify areas of regulatory concern and violations one way or the other and violators should not be stated. Inspectors should not make any compliance conclusions. Inspectors must only witness fact and are objective observers. This is because of legal ethics. If the inspector makes a determination two things may happen, one, it puts the inspector with the same authority as a cop as well as a judge. Two, it opens the door for emotional and personal bias. If a violation determination was made and it was inappropriate when you may have caused unjust expense to the facility that has to respond to these allegations.

Due process under law is a vital instrument when dealing with penalties in accordance with the Environmental Quality Act. These include the following: The respondent may request adjudicator hearing. If the hearing is not granted the respondent is entitled to a review by the Secretary’s action in the 19th Judicial District Court of Appeals. If he is dissatisfied with the decision, he can appeal to the 1st Circuit Court of Appeals. If he doesn’t request a hearing, the penalty is due within five days of the assessment. If he fails to pay the final assessment, an attorney for the LDEQ will file a motion with the 19th JDC to have the assessment made executor.

A BEP provides for environmental mitigation in which the respondent agrees to undertake as a component of a settlement of a violation or penalty assessment an environmental project. To date 17 BEP’s totaling $9,600,000 has provided a variety of benefits to the environment, according to LDEQ.

The Louisiana Department of Environmental Quality and the efforts of all employees in the department need to manage the environment of the state effectively. They need to be committed to continuous improvement of the environment and meeting the needs of the citizens of Louisiana.

V REINSTATE PUNITIVE DAMAGES TO GIVE CITIZENS THE POWER TO TAKE ON LOUISIANA ENVIRONMENTAL KILLERS!!

Whether or not to allow punitive damages is one of the most dramatic legal issues in Louisiana politics today. Proponents of punitive (or exemplary) damages assert that the mere legal possibility of a punitive damage award can serve as a sufficient (and effective) deterrent threat to potential ‘defendants’.[57] When actually awarded, punitive damages are also effective in lowering litigation costs[58] to all parties and in law enforcement (eg, by providing ‘incentive to private citizens to advance their claims and enforce the law’).[59]

In Louisiana, the issue of punitive damage (as well as associated political irresponsibility) is best illustrated by Governor Foster’s ‘politically’ motivated repeal in 1996 of Civil Code Art 2313.5, allowing for punitive damages in ‘toxic torts’ cases[60], Louisiana (along with New Hampshire, Nebraska, Washington and Massachusetts) is one of few states[61] who have unnecessarily strict standards for allowing punitive damages.

Why the fuss over a seemingly minor and flawed point of law from a nearly seven-year-old legislative session? Simply put, the aftershocks of 2315.5’s repeal are being felt to this day. As recently as January of this year, Governor Foster’s camp put out its own press release concerning a US Chamber of Commerce study with a lot of things to say about Louisiana. According to the study, based on a consultation of corporate counsels nationwide, Louisiana ranks as having among the worst performances rates in areas like class actions, judicial impartiality and confidence and yes, punitive damages. Despite this poor record, Foster’s camp comes to its own conclusion- that Louisiana businesses need to be educated about Louisiana laws, and then cites that because of his various tort reforms, Louisiana’s laws have become more ‘business-friendly’ under his watch.[62]

More troubling is a recent case, Anderson v Avondale Industries[63] where a retroactive claim to punitive damages under 2315.3 was struck down. The plaintiff’s widow brought about the case after her husband died of lung cancer brought on by asbestos exposure at Avondale. The court’s decision was that after compensatory damages were awarded, awarding punitive damages retroactively would ‘attach an important new legal burden’. Therefore, while punitive damages under the article are technically allowed if exposure to hazardous substances occurred between 1984-1996,[64] the decision in this case could become part of a body of jurisprudence to strike down even thousands of latent exposure claims[65] on the parts of hard working Louisiana men and women.

The generally agreed purpose of punitive damage- the regulation and deterrence of those who recklessly, negligently and even malevolently seek profit – seems to have been lost on Louisiana’s strange bedfellows – Big Business, state judges and Governor Foster.

Part of the problem is that politicians DEPEND on corporations, especially ‘senior officials’ within these corporations, for support. This creates unwillingness (beyond the usual crookedness) on the part of politicians (and in states like Louisiana where Judges are elected, Judges) to place constraints upon the very business that play a role in keeping the power structure in place.[66] Equally as appalling is that the repeal sends out the message that profits made from sheer capitalistic greed should NOT be put back into society to right the malfeasants’ wrongs (toxic cleanups, etc) and instead, yet again, be the burden of Louisiana taxpayers because, after all, the defendants (!) earned this money.

Several safeguards are already in place (or could easily be implemented) within the state and federal judicial infrastructures to alleviate the so-called concerns over punitive damages. At the federal level, Justice O’Connor has commented on statutory ‘standards’ of punitive damages awards[67] such as monetary caps (although caps serve a better purpose as guidelines rather that the rule, as explained below). Other possibilities include employing higher standards for the burden of proof (‘clear and convincing’ evidence)[68] and appellate review of jury decisions.[69]

During the hearing on House Bill 20 on March 26, 1996 to have Article 2315.3 repealed, Professor William Crawford of Louisiana State University testified that punitive damages were foreign to the civil code.[70] Representative Glenn Ansardi of Kenner pointed out that Governor Foster should also use the same rationale to repeal the Civil Code articles for drunk drivers.[71] Senator James Cox of Lake Charles stated: ‘I think what you all are trying to do is make Louisiana the protector of big business for big business profits’.[72]

Before the 1996 repeal of 2315.3, punitive damages had only been available in Louisiana since 1984 for violations of 2315.3.[73] During 1984-1996, however, only one punitive damages award was made under the article, in Chinigo v Gesmar Marine Inc.[74] The case involved a police officer who, upon being injured while inspecting a leaky tanker truck, was awarded $21,000 in compensatory damages (after appeal) with punitive damages (upheld at appeal) of $100,000.[75]

Despite this, one rationale given by lawmakers on the repeal were the ‘increased costs’ to business[76] again showing the legislature’s preference of big business over the safety of the average Louisiana citizen.

One of the rare, and therefore high-profile cases of punitive damages in Louisiana, a $1.06 billion judgment (appealed down) against Exxon in 2001[77] highlights some of the ‘lucky’ plaintiffs in situations where all too often corporations either secretly, unknowingly, or with the tacit approval of politicians silently destroy the environment and endanger citizens.[78] In this case radioactive deposits in oil well pipes polluted soil in the Harvey area for a number of years, some say going back to 1951.[79] The amount of the award, far from the norm, is equally as notable for the rarity of such cases.[80] Given the state of post – 1996 punitive damages in Louisiana (only available under a restricted series of statutes,[81] including under 2315.3 if proof of wrongdoing can be made between 1984 and 1996[82]) corporations can now make safe bets on the complete disregard of safeguards and pollute to the point of permanent damage with little chance of getting caught. When and if they are caught, compensatory damages (the legalized version of hush money to people whose lives could be irreparably changed) are the only things to factor into the costs-benefits spreadsheet.

In the case of excessive punitive damages awards, several courts at the federal level have placed limits on ‘unreasonable’ awards. In the Supreme Court case BMW North Am. Inc v Gore, the Court indicated that ‘grossly excessive’ punitive damages awards violate due process.[83] The Court, however, articulated three ‘guideposts’ to define a violation of the defendant’s right to due process:

(a) the defendant’s level of reprehensibility;

(b) the ratio between compensatory and punitive damages; and

(c) the ‘civil or criminal penalties that could be imposed for comparable misconduct’,[84]

also noting that the Fourteenth amendment provides constitutional protection against due process in the absence of suitable laws.[85]

As stated in the Landry article, two more principles can be used to ‘guide’ a perhaps overzealous jury. The first is that the state’s system should include objective and reasonable criteria. These include instructing the jury on the purposes of punitive damages and providing standards[86] for establishing ‘the character and the degree of the wrong as shown by the evidence and necessity of preventing a similar wrong’.[87]

Secondly is the concept of judicial review, be it through appeals[88] or even by placing the judgment of award to the judge after the jury has awarded punitive liability.[89] Other reforms can be enforced to allay fears of unnecessary punitive damages at the hands of a potentially prejudiced jury. One of these is a heightened burden of proof where evidence against the defendant is ‘clear and convincing’.[90] Not present in Louisiana law, the heightened burden of proof standard is already in place in 28 states and the District of Columbia.[91] Another is the bifurcation of trials, available in four states,[92] something recommended by Supreme Court Justice O’Connor.[93]

Also, one must remember that compensatory damages and the criminal justice system do not (and should not be expected to) do enough to curtail bad behavior.[94] Government regulatory agencies, in the case of hazards materials as per the Department of Environmental Quality, don’t always fail,[95] but are often faced with lacking manpower, funding and time to regulate every company working within a given jurisdiction. For example the LDEQ has three staff members for 561 hazardous materials sites.[96]

Again, however, in questions of punishment and deterrence, one quick point should be made. From a cost-benefits standpoint, even if punitive damages exist as a deterrent threat, placing caps on punitive damage awards works in FAVOR of big business.[97] For example, if the state sets a $50,000 award cap on punitive damages, that cost is minimal to larger corporations. To be an effective tool in deterrence and punishment, large amounts of money are needed and the maximum must not be known in advance.[98]

Otherwise the presence of punitive damages becomes a number on a spreadsheet that businesses use to factor in the weights and merits of not so ‘clean’ behavior. Also, caps hurt smaller businesses. Not that small businesses should be exempt from toxic regulatory standards, but considering that a $50,000 award would be less likely to hurt an Exxon or an Enron, this means that Big Business gets, the harder it is to control, at the expense of smaller business owners and the everyday worker.

The most appalling trend in ‘tort litigation reform’ is the concept of self-audits, especially by environmental corporations. The legislative agenda of Big Business is two told; first, voluntary internal audits conducted by corporations should be privileged or secret from workers, communities and government regulatory agencies; second, allowing companies who self-audit and self-disclose non-compliance immune from most civil and criminal penalties.[99] Proponents of this idea in so-called tort reform argue that it would help companies better establish a routine in its auditing system, thereby helping to assess problems at the source. The reality is that self-audit allows negligent or wantonly reckless actors to cover up or hide from regulators and make themselves immune from any litigation.[100] In this way, these companies gain a comparative advantage over companies who promote environmentally sound policy.

In closing, why would the Louisiana Legislature choose to repeal a measure like 2313.5 when Louisiana is number one in the world in property damage losses from refinery accidents in the past 30 years?[101] Why punitive damages aren’t now considered an appropriate deterrent threat to reckless groups when 15 major explosions (Kaiser Aluminum, Eunice train derailment, Union Pacific ...) have happened SINCE 1996? Why is there the public indignation over punitive damages that isn’t present when (a) aberrations in these cases are few and far between; and (b) the same indignation isn’t present when dealing with the shady meanderings of men in Baton Rouge.

Part of the explanation may lie in the current government’s ties to Big Business interests in the state. House Bill 2085, one of the self-audit propositions introduced by the legislator, had as corporate advocates the Louisiana Chemical Association and the Mid-Continent Oil and Gas Association, representatives of two of the most toxic industries in the state.[102] Looking further into HB 2085, as well as the legislative repeal of 2315.3, one should note that conflicts in business interest sometimes incite policy changes. To this day, Mike Foster receives $200,000 per annum in royalties from Exxon. Governor Foster’s company, Bayou Sale Construction Company, did ‘major work’ for Marine Shell Processors, heavily fined in 1988 under Governor Roemer’s tenure for water and air violations. During Governor Foster’s time in the Senate, he approached an LSU professor at the time working for the LDEQ to help him get people ‘off Marine Shell’s back’. The professor replied, ‘I don’t fix tickets’.[103] Indeed, professors and researchers seem to suffer their honesty the most when it comes to politics Louisiana style. Not only are major sources of funding in the state linked to big business interests, this funding seems to come and go at will, especially for those researchers and scientists who find links between cancer and other health problems in the state and toxic pollution of the land, water and air.[104]

What are the implications in other areas of lawmaking? For example, as big business attains primacy in the era of globalization and as campaign finance reform lags, will groups be able to ‘buy’ judges, legislators and thereby repeals of legislation protection victims rights form the profit of a few? More troubling is the idea that the legislature in 1996 either lacked the skills or self- analysis to make intellectually sound policy, or they did so willingly, knowing the full implications to Louisianans and intentionally putting them at risk.[105]

VI MAYBE THE HEAD OF LDEQ SHOULD BE AN ELECTED OFFICIAL!

Finally, if need be, maybe the Head of LDEQ should be an elected official so that the office can be accountable to the citizens of Louisiana. These unaccountable, uncaring individuals are allowing Big Business to continue to destroy our precious environment. Sadly, many of these polluters are repeat offenders, maybe because they know there is nothing now that can make them stop the destruction- NO PUNITIVE DAMAGES!!!! What the hell, let’s do whatever to whomever that will allow us to make the MOST PROFIT!!

[*] Ph D, CPA, CFE, Legislative Auditor; State of Louisiana Legislative Auditor, Department of Environmental Quality, Baton Rouge, Louisiana; Performance Audit (March 2002).

[1] Mike Dunne, ‘La high in release of toxic wastes State’s ranking drops in some areas’, The Baton Rouge Advocate, 24 May 2002.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Keith Darce, ‘La power plant emissions increase 17 percent; Change 3rd largest in nation, report says’, The Times-Picayune, 6 April 2002.

[9] Ibid.

[10] American Lung Association, ‘15 La parishes fail to make grade in air quality report’, The Times-Picayune, 4 May 2001.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.

[15] Laurie Smith Anderson, ‘La urged to track asthmatics’, The Baton Rouge Advocate, 24 July 2001.

[16] Ibid.

[17] Mike Dunne, ‘Despite permits, ‘La wastewater facilities lacking’, The Baton Rouge Advocate, 7 August 2002.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] Ibid

[24] Ibid.

[25] Ibid.

[26] Ibid.

[27] Ibid.

[28] ‘La ranks high in pollution report’, The Baton Rough Advocate, 18 October 2002.

[29] Ibid.

[30] Ibid.

[31] Mark Schleifstein, ‘Pollution report hits La Plants; Some firms exceed toxic release permits’, The Times-Picayune, 18 October 2002.

[32] Above n 28.

[33] Schleifstein, above n 31.

[34] Ibid.

[35] Ibid.

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Mark Schleifstein, ‘Befouled Gulf waters ranked worst in US; La gets much blame in report from EPA’, The Times-Picayune, 2 April 2002.

[40] Ibid.

[41] Ibid.

[42] Ibid.

[43] Ibid.

[44] Ibid.

[45] Cynthia Goldberg, ‘State must clean up its polluted bodies of water’, The Times-Picayune, 5 April 2002.

[46] Ibid.

[47] Ibid.

[48] Ibid.

[49] Ben Raines, ‘Gulf rigs might qualify for hazard list; Mercury levels meet federal cleanup specs’, The Times-Picayune, 22 April 2002.

[50] Ibid.

[51] Ibid.

[52] Ibid.

[53] Ibid.

[54] Ibid.

[55] Ibid.

[56] Ibid.

[57] David G Owen, ‘A Punitive Damages Overview: Functions, Problems, and Reform’ 39 Vill L Rev 363, 373.

[58] Ibid 379.

[59] Ibid 380.

[60] Philip Ackerman, Comment, ‘Some Don’t Like It Hot: Louisiana Eliminates Punitive Damages for Environmental Torts’ 72 Tul L Rev 327.

[61] Owen, above n 57, 367.

[62] ‘Foster Facts’ 28 January 2002. Available at http://www.gov.state.la.us.

[63] LEXIS 2854 (La, 16 Oct 2001).

[64] Campbell E Wallace and Edmund LaTour, Feature, ‘Louisiana Tort Reform: Are “Happy Days” Here Yet for Defendants in Louisiana?’ 46 La BJ 396, 398.

[65] Raymond P Ward, ‘Legal News’ (2001) available http://www.sessions-law.com.

[66] Drew Ranier, ‘Pro and Con, Pro: Exemplary Damages: Checks and Balances on Corporate American’ 43 La BJ 256.

[67] Pacific Mut Life Ins Co v Haslip, 499 US 58, 111 S. Ct 1032, 113 L. Ed 2d 1 (1991) 1064.

[68] SD Codified Laws 21.1.41

[69] In Anferon v Martin, 649 So 2d 40, 43 (La App 1 Cir 1994) and Demarest v Progressive American Ins Co, 552 So 2d 1329, 1334 (La App 5 Cir 1989) these to Courts determined that in awarding punitive damages to the plaintiff, the jury’s finding is a question of fact, not to be set aside in the absence of manifest error.

[70] Exemplary damages, Hearing on HB 20 Before the House Civil Law Comm, 1st Spec Sess (La 1996), testimony of Prof. William Crawford.

[71] Ibid, testimony of Rep Glenn Ansardi.

[72] See Exemplary Damages, Hearing on HR 20 Before the Senate Judiciary Comm, 1st Spec Sess (La 1996) testimony of Sen James Cox.

[73] Ackerman, above n 61, 340.

[74] 512 So 2d 487 (La Ct App 1987).

[75] Ibid 493.

[76] Ackerman, above n 60, 347.

[77] 5/24/01, The Times-Picayune.

[78] See also In Re: New Orleans Train Car Leakage Fire Litigation, 702 So 2d 677 (La 1997) 697 So 2d 239 (La 1997).

[79] 5/22/01, The Baton Rouge Advocate.

[80] ‘Punitive Damages- Rand Institute Study’, ATLA Advocate, May 1995.

[81] Donald C Massy and Martin A Stern, ‘Punitive Damages Symposium: Punitive Damages and the Louisiana Constitution: Don’t Leave Home Without It’ 56 La L Rev 744, 745.

[82] Wallace and Latour, above n 63, 338.

[83] 517 US 559, 574-575 (1996).

[84] Ibid 573-583.

[85] Raymond B Landry, ‘Punitive Damages and Jury Trials’ 43 La BJH 264, 265.

[86] James E Bolin, Jr, ‘Enter Exemplary Damages’ La BJ 216, 220.

[87] Landry, above n 84.

[88] Ibid 266.

[89] Owen, above n 57, 412.

[90] Ibid.

[91] See Massy and Stern, above n 80, 760-761 (citations omitted).

[92] Ackerman, above n 60, 338.

[93] Pacific Mut Life Ins Co v Haslip 499 US 58, 111 S Ct 1032, 113 L Ed 2d 1 (1991) 1064.

[94] Daniel J Shapiro, ‘Punitive Damages’ 43 La BJ 252.

[95] Ranier, above n 65, 258.

[96] Ackerman, above n 60, 347.

[97] Ranier, above n 65, 259.

[98] Ibid 260.

[99] Christopher Bedford, ‘Dirty Secrets: The Corporations’ Campaign for an Environmental Audit Privilege’. Available at http://gnf.enviroweb.org/dirtyl.html.

[100] Ibid.

[101] Cited in Ackerman, above n 60, 349.

[102] Bedford, above n 98.

[103] Ibid.

[104] Barbara Koeppel, ‘Cancer Alley, Louisiana’, The Nation, 8 November 1999.

[105] Ackerman, above n 60, 349.