74R9485 E
By Chisum, Duncan, Stiles, Talton,
Uher, et al. H.B. No. 2473
Substitute the following for H.B. No. 2473:
By Jackson C.S.H.B. No. 2473
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to audits to determine compliance with certain laws,
1-3 rules, and regulations; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. SHORT TITLE. This Act may be cited as the Texas
1-6 Environmental, Health, and Safety Audit Privilege Act.
1-7 SECTION 2. PURPOSE. The purpose of this Act is to encourage
1-8 voluntary compliance with environmental and occupational health and
1-9 safety laws.
1-10 SECTION 3. DEFINITIONS. (a) In this Act:
1-11 (1) "Audit report" means an audit report described by
1-12 Section 4 of this Act.
1-13 (2) "Environmental or health and safety law" means:
1-14 (A) a federal or state environmental or
1-15 occupational health and safety law; or
1-16 (B) a rule, regulation, or regional or local law
1-17 adopted in conjunction with a law described by Paragraph (A) of
1-18 this subdivision.
1-19 (3) "Environmental or health and safety audit" means a
1-20 voluntary evaluation, review, or assessment of compliance with
1-21 environmental or health and safety laws or any permit issued under
1-22 those laws conducted by an owner or operator, an employee of the
1-23 owner or operator, or an independent contractor of:
1-24 (A) a regulated facility or operation; or
2-1 (B) an activity at a regulated facility or
2-2 operation.
2-3 (4) "Owner or operator" means a person who owns or
2-4 operates a regulated facility or operation.
2-5 (5) "Penalty" means an administrative, civil, or
2-6 criminal sanction imposed by the state to punish a person for a
2-7 violation of a statute or rule. The term does not include a
2-8 technical or remedial provision ordered by a regulatory authority.
2-9 (6) "Person" means an individual, corporation,
2-10 business trust, partnership, association, and any other legal
2-11 entity.
2-12 (7) "Regulated facility or operation" means a facility
2-13 or operation that is regulated under an environmental or health and
2-14 safety law.
2-15 (b) A person acts intentionally for purposes of this Act if
2-16 the person acts intentionally within the meaning of Section 6.03,
2-17 Penal Code.
2-18 (c) For purposes of this Act, a person acts knowingly, or
2-19 with knowledge, with respect to the nature of the person's conduct
2-20 when the person is aware of the person's physical acts. A person
2-21 acts knowingly, or with knowledge, with respect to the result of
2-22 the person's conduct when the person is aware that the conduct will
2-23 cause the result.
2-24 (d) A person acts recklessly or is reckless for purposes of
2-25 this Act if the person acts recklessly or is reckless within the
2-26 meaning of Section 6.03, Penal Code.
2-27 (e) To fully implement the privilege established by this
3-1 Act, the term "environmental or health and safety law" shall be
3-2 construed broadly.
3-3 SECTION 4. AUDIT REPORT. (a) An audit report is a report
3-4 that includes each document and communication, other than those set
3-5 forth in Section 8 of this Act, produced from an environmental or
3-6 health and safety audit.
3-7 (b) General components that may be contained in a completed
3-8 audit report include:
3-9 (1) a report prepared by an auditor, monitor, or
3-10 similar person, which may include:
3-11 (A) a description of the scope of the audit;
3-12 (B) the information gained in the audit and
3-13 findings, conclusions, and recommendations; and
3-14 (C) exhibits and appendices;
3-15 (2) memoranda and documents analyzing all or a portion
3-16 of the materials described by Subdivision (1) of this subsection or
3-17 discussing implementation issues; and
3-18 (3) an implementation plan or tracking system to
3-19 correct past noncompliance, improve current compliance, or prevent
3-20 future noncompliance.
3-21 (c) The types of exhibits and appendices that may be
3-22 contained in an audit report include supporting information that is
3-23 collected or developed for the primary purpose of and in the course
3-24 of an environmental or health and safety audit, including:
3-25 (1) interviews with current or former employees;
3-26 (2) field notes and records of observations;
3-27 (3) findings, opinions, suggestions, conclusions,
4-1 guidance, notes, drafts, and memoranda;
4-2 (4) legal analyses;
4-3 (5) drawings;
4-4 (6) photographs;
4-5 (7) laboratory analyses and other analytical data;
4-6 (8) computer-generated or electronically recorded
4-7 information;
4-8 (9) maps, charts, graphs, and surveys; and
4-9 (10) other communications associated with an
4-10 environmental or health and safety audit.
4-11 (d) To facilitate identification, each document in an audit
4-12 report should be labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT,"
4-13 or labeled with words of similar import. Failure to label a
4-14 document under this section does not constitute a waiver of the
4-15 audit privilege or create a presumption that the privilege does or
4-16 does not apply.
4-17 SECTION 5. PRIVILEGE. (a) An audit report is privileged as
4-18 provided in this section.
4-19 (b) Except as provided in Sections 6, 7, 8, and 9 of this
4-20 Act, any part of an audit report is privileged and is not
4-21 admissible as evidence or subject to discovery in:
4-22 (1) a civil action, whether legal or equitable;
4-23 (2) a criminal proceeding; or
4-24 (3) an administrative proceeding.
4-25 (c) A person, when called or subpoenaed as a witness, cannot
4-26 be compelled to testify or produce a document related to an
4-27 environmental or health and safety audit if:
5-1 (1) the testimony or document discloses any item
5-2 listed in Section 4 of this Act that was made as part of the
5-3 preparation of an environmental or health and safety audit report
5-4 and that is addressed in a privileged part of an audit report; and
5-5 (2) for purposes of this subsection only, the person
5-6 is:
5-7 (A) a person who conducted any portion of the
5-8 audit but did not personally observe the physical events;
5-9 (B) a person to whom the audit results are
5-10 disclosed under Section 6(b) of this Act; or
5-11 (C) a custodian of the audit results.
5-12 (d) An employee of a state agency may not request, review,
5-13 or otherwise use an audit report during an agency inspection of a
5-14 regulated facility or operation, or an activity of a regulated
5-15 facility or operation.
5-16 (e) A party asserting the privilege described in this
5-17 section has the burden of establishing the applicability of the
5-18 privilege.
5-19 SECTION 6. EXCEPTION: WAIVER. (a) The privilege described
5-20 by Section 5 of this Act does not apply to the extent the privilege
5-21 is expressly waived by the owner or operator who prepared the audit
5-22 report or caused the report to be prepared.
5-23 (b) Disclosure of an audit report or any information
5-24 generated by an environmental or health and safety audit does not
5-25 waive the privilege established by Section 5 of this Act if the
5-26 disclosure:
5-27 (1) is made to address or correct a matter raised by
6-1 the environmental or health and safety audit and is made only to:
6-2 (A) a person employed by the owner or operator,
6-3 including temporary and contract employees;
6-4 (B) a legal representative of the owner or
6-5 operator;
6-6 (C) an officer or director of the regulated
6-7 facility or operation or a partner of the owner or operator; or
6-8 (D) an independent contractor retained by the
6-9 owner or operator;
6-10 (2) is made under the terms of a confidentiality
6-11 agreement between the person for whom the audit report was prepared
6-12 or the owner or operator of the audited facility or operation and:
6-13 (A) a partner or potential partner of the owner
6-14 or operator of the facility or operation;
6-15 (B) a transferee or potential transferee of the
6-16 facility or operation;
6-17 (C) a lender or potential lender for the
6-18 facility or operation; or
6-19 (D) a governmental official or a state or
6-20 federal agency; or
6-21 (3) is made under a claim of confidentiality to a
6-22 governmental official or agency by the person for whom the audit
6-23 report was prepared or by the owner or operator.
6-24 (c) A party to a confidentiality agreement described in
6-25 Subsection (b)(2) of this section who violates that agreement is
6-26 liable for damages caused by the disclosure and for any other
6-27 penalties stipulated in the confidentiality agreement.
7-1 (d) Information that is disclosed under Subsection (b)(3) of
7-2 this section is confidential and is not subject to disclosure under
7-3 Chapter 552, Government Code. A public entity, public employee, or
7-4 public official who discloses information in violation of this
7-5 subsection commits an offense. An offense under this subsection is
7-6 a Class B misdemeanor.
7-7 SECTION 7. EXCEPTION: DISCLOSURE REQUIRED BY COURT OR
7-8 ADMINISTRATIVE HEARINGS OFFICIAL. (a) A court or administrative
7-9 hearings official with competent jurisdiction may require
7-10 disclosure of a portion of an audit report in a civil, criminal, or
7-11 administrative proceeding if the court or administrative hearings
7-12 official determines, after an in camera review consistent with the
7-13 appropriate rules of procedure, that:
7-14 (1) the privilege is asserted for a fraudulent
7-15 purpose;
7-16 (2) the portion of the audit report is not subject to
7-17 the privilege under Section 8 of this Act; or
7-18 (3) the portion of the audit report shows evidence of
7-19 noncompliance with an environmental or health and safety law and
7-20 appropriate efforts to achieve compliance with the law were not
7-21 promptly initiated and pursued with reasonable diligence after
7-22 discovery of noncompliance.
7-23 (b) A party seeking disclosure under this section has the
7-24 burden of proving that Subsection (a)(1), (2), or (3) of this
7-25 section applies.
7-26 (c) Notwithstanding Chapter 2001, Government Code, a
7-27 decision of an administrative hearings official under Subsection
8-1 (a)(1), (2), or (3) of this section is directly appealable to a
8-2 court of competent jurisdiction without disclosure to the
8-3 administrative tribunal.
8-4 SECTION 8. NONPRIVILEGED MATERIALS. (a) The privilege
8-5 described in this Act does not apply to:
8-6 (1) a document, communication, datum, or report or
8-7 other information required by a regulatory agency to be collected,
8-8 developed, maintained, or reported under a federal or state
8-9 environmental or health and safety law;
8-10 (2) information obtained by observation, sampling, or
8-11 monitoring by a regulatory agency; or
8-12 (3) information obtained from a source not involved in
8-13 the preparation of the environmental or health and safety audit
8-14 report.
8-15 (b) This section does not limit the right of a person to
8-16 agree to conduct and disclose an audit report.
8-17 SECTION 9. COURT REVIEW AND DISCLOSURE. (a) If there is
8-18 reasonable cause to believe a criminal offense has been committed
8-19 under an environmental or health and safety law, the attorney
8-20 representing the state may obtain an audit report for which a
8-21 privilege is asserted under this Act under a search warrant,
8-22 criminal subpoena, or discovery as allowed by the Code of Criminal
8-23 Procedure and the Texas Rules of Criminal Procedure.
8-24 (b) On receipt of the audit report, the attorney
8-25 representing the state shall seal the report and may not review or
8-26 disclose the contents of the report.
8-27 (c) Not later than the 30th day after the date an audit
9-1 report is received under Subsection (a), the owner or operator who
9-2 prepared the report or for whom the report was prepared may file
9-3 with a court of competent jurisdiction a petition requesting an in
9-4 camera review to determine whether all or a portion of the report
9-5 is privileged or is subject to disclosure under this Act. An owner
9-6 or operator who fails to file a petition under this subsection
9-7 within the period specified by this subsection waives the
9-8 privilege.
9-9 (d) On the filing of a petition under Subsection (c) of this
9-10 section, the court shall issue an order that:
9-11 (1) schedules the in camera review for a date not
9-12 later than the 45th day after the date the petition is filed; and
9-13 (2) authorizes the attorney representing the state to
9-14 remove the seal from the report to review the report, subject to
9-15 appropriate limitations on distribution or disclosure of the report
9-16 that are specified in the order to protect against unnecessary
9-17 disclosure.
9-18 (e) The attorney representing the state may consult with
9-19 enforcement agencies regarding the contents of the report as
9-20 necessary to prepare for the in camera review.
9-21 (f) Information used in preparation for the in camera review
9-22 under Subsection (e) of this section:
9-23 (1) is confidential;
9-24 (2) may not be used in any investigation or legal
9-25 proceeding; and
9-26 (3) is not subject to disclosure under Chapter 552,
9-27 Government Code.
10-1 (g) Subsection (f) of this section does not apply to
10-2 information a court finds to be subject to disclosure.
10-3 (h) On the motion of a party, a court or the appropriate
10-4 administrative official shall suppress evidence offered in any
10-5 civil, criminal, or administrative proceeding that arises or is
10-6 derived from review, disclosure, or use of information obtained
10-7 under this section if the review, disclosure, or use is not
10-8 authorized under this section. A party allegedly failing to comply
10-9 with this section has the burden of proving that the evidence
10-10 offered did not arise and was not derived from the unauthorized
10-11 review, disclosure, or use.
10-12 (i) The parties may stipulate to entry of an order directing
10-13 that specific information contained in an audit report is or is not
10-14 subject to the privilege.
10-15 (j) A court may compel the disclosure of only those portions
10-16 of an audit report relevant to issues in dispute in the proceeding.
10-17 (k) A person commits an offense if the person:
10-18 (1) discloses information in violation of Subsection
10-19 (b) or (f) of this section; or
10-20 (2) knowingly discloses information provided to the
10-21 person in violation of this section.
10-22 (l) An offense under Subsection (k) of this section is a
10-23 Class B misdemeanor.
10-24 (m) A court may find a person who discloses information in
10-25 violation of this section in contempt of court and may order other
10-26 appropriate relief.
10-27 SECTION 10. VOLUNTARY DISCLOSURE; IMMUNITY. (a) Except as
11-1 provided by this section, a person who makes a voluntary disclosure
11-2 of a violation of an environmental or health and safety law is
11-3 immune from an administrative, civil, or criminal penalty for the
11-4 violation disclosed.
11-5 (b) A disclosure is voluntary only if:
11-6 (1) the disclosure was made promptly after knowledge
11-7 of the information disclosed is obtained by the person;
11-8 (2) the disclosure was made in writing by certified
11-9 mail to an agency that has regulatory authority with regard to the
11-10 violation disclosed;
11-11 (3) the violation was not independently detected by an
11-12 agency with enforcement jurisdiction before the disclosure was
11-13 made;
11-14 (4) the disclosure arises out of a voluntary
11-15 environmental or health and safety audit;
11-16 (5) the person who makes the disclosure initiates an
11-17 appropriate effort to achieve compliance, pursues that effort with
11-18 due diligence, and corrects the noncompliance within a reasonable
11-19 time; and
11-20 (6) the person making the disclosure cooperates with
11-21 the appropriate agency in connection with an investigation of the
11-22 issues identified in the disclosure.
11-23 (c) A disclosure is not voluntary for purposes of this
11-24 section if it is a report to a regulatory agency required solely by
11-25 a specific condition of an enforcement order or decree.
11-26 (d) The immunity established by Subsection (a) of this
11-27 section does not apply and an administrative, civil, or criminal
12-1 penalty may be imposed under applicable law if:
12-2 (1) the person who made the disclosure intentionally
12-3 or knowingly committed or was responsible within the meaning of
12-4 Section 7.02, Penal Code, for the commission of the disclosed
12-5 violation;
12-6 (2) the person who made the disclosure recklessly
12-7 committed or was responsible within the meaning of Section 7.02,
12-8 Penal Code, for the commission of the disclosed violation and the
12-9 violation resulted in substantial off-site harm to persons,
12-10 property, or the environment;
12-11 (3) the offense was committed intentionally or
12-12 knowingly by a member of the person's management and the person's
12-13 policies or lack of prevention systems contributed materially to
12-14 the occurrence of the violation; or
12-15 (4) the offense was committed recklessly by a member
12-16 of the person's management, the person's policies or lack of
12-17 prevention systems contributed materially to the occurrence of the
12-18 violation, and the violation resulted in substantial off-site harm
12-19 to persons, property, or the environment.
12-20 (e) A penalty that is imposed under Subsection (d) of this
12-21 section should, to the extent appropriate, be mitigated by factors
12-22 such as:
12-23 (1) the voluntariness of the disclosure;
12-24 (2) efforts by the disclosing party to conduct
12-25 environmental or health and safety audits;
12-26 (3) remediation;
12-27 (4) cooperation with government officials
13-1 investigating the disclosed violation;
13-2 (5) relative lack of harm or economic benefit; or
13-3 (6) other relevant considerations.
13-4 (f) In a civil, administrative, or criminal enforcement
13-5 action brought against a person for a violation for which the
13-6 person claims to have made a voluntary disclosure, the person
13-7 claiming the immunity has the burden of establishing a prima facie
13-8 case that the disclosure was voluntary. After the person claiming
13-9 the immunity establishes a prima facie case of voluntary
13-10 disclosure, other than a case in which under Subsection (d) of this
13-11 section immunity does not apply, the enforcement authority has the
13-12 burden of rebutting the presumption by a preponderance of the
13-13 evidence or, in a criminal case, by proof beyond a reasonable
13-14 doubt.
13-15 SECTION 11. CIRCUMVENTION BY RULE PROHIBITED. A regulatory
13-16 agency may not adopt a rule or impose a condition that circumvents
13-17 the purpose of this Act.
13-18 SECTION 12. APPLICABILITY. The privilege created by this
13-19 Act applies to environmental or health and safety audits that are
13-20 conducted on or after the effective date of this Act.
13-21 SECTION 13. RELATIONSHIP TO OTHER RECOGNIZED PRIVILEGES.
13-22 This Act does not limit, waive, or abrogate the scope or nature of
13-23 any statutory or common law privilege, including the work product
13-24 doctrine and the attorney-client privilege.
13-25 SECTION 14. EMERGENCY. The importance of this legislation
13-26 and the crowded condition of the calendars in both houses create an
13-27 emergency and an imperative public necessity that the
14-1 constitutional rule requiring bills to be read on three several
14-2 days in each house be suspended, and this rule is hereby suspended,
14-3 and that this Act take effect and be in force from and after its
14-4 passage, and it is so enacted.