By Chisum, Duncan, Stiles, Talton, Uher H.B. No. 2473
74R6424 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to audits and compliance management systems to determine
1-3 compliance with certain laws, rules, and regulations; providing
1-4 penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. SHORT TITLE. This Act may be cited as the Texas
1-7 Environmental, Health, and Safety Audit and Compliance Management
1-8 System Privilege Act.
1-9 SECTION 2. PURPOSE. The purpose of this Act is to encourage
1-10 voluntary compliance with environmental and occupational health and
1-11 safety laws.
1-12 SECTION 3. DEFINITIONS. (a) In this Act:
1-13 (1) "Audit or compliance management system report"
1-14 means an audit or compliance management system report described by
1-15 Section 4 of this Act.
1-16 (2) "Compliance management system" means a voluntary
1-17 compliance assurance program established for a regulated facility
1-18 or operation having at least the following elements:
1-19 (A) a policy requiring conduct of operations in
1-20 compliance with environmental or health and safety laws;
1-21 (B) incentives to encourage employees to ensure
1-22 compliance and report violations to management;
1-23 (C) a clear definition of responsibility for
1-24 compliance for each facility or operation;
2-1 (D) adequate resources dedicated to compliance
2-2 assurance activities;
2-3 (E) training for employees with responsibilities
2-4 related to compliance operations;
2-5 (F) systematically implemented procedures for
2-6 bringing about compliance at each facility or operation;
2-7 (G) regular facility or operation-specific
2-8 reviews of compliance;
2-9 (H) auditing of compliance by qualified
2-10 personnel who are independent from those who manage facility or
2-11 site operations;
2-12 (I) a mechanism to ensure prompt action to
2-13 correct noncompliance and address the underlying cause of the
2-14 noncompliance;
2-15 (J) a mechanism for disciplining employees who
2-16 intentionally or negligently contribute to the commission of
2-17 violations;
2-18 (K) effective management oversight of compliance
2-19 and correction of noncompliance; and
2-20 (L) a regular management review of compliance
2-21 performance and management systems to identify needed improvements.
2-22 (3) "Environmental or health and safety law" means:
2-23 (A) a federal or state environmental or
2-24 occupational health and safety law; or
2-25 (B) a rule, regulation, or regional or local law
2-26 adopted in conjunction with a law described by Paragraph (A) of
2-27 this subdivision.
3-1 (4) "Environmental or health and safety audit" means a
3-2 voluntary evaluation, review, or assessment conducted by an owner
3-3 or operator, an employee of the owner or operator, or an
3-4 independent contractor of:
3-5 (A) a regulated facility or operation; or
3-6 (B) an activity at a regulated facility or
3-7 operation.
3-8 (5) "Owner or operator" means a person who owns or
3-9 operates a regulated facility or operation.
3-10 (6) "Person" means an individual, corporation,
3-11 business trust, partnership, association, and any other legal
3-12 entity.
3-13 (7) "Regulated facility or operation" means a facility
3-14 or operation that is regulated under an environmental or health and
3-15 safety law.
3-16 (b) A person acts intentionally for purposes of this Act if
3-17 the person acts intentionally within the meaning of Section 6.03,
3-18 Penal Code.
3-19 (c) To fully implement the privilege established by this
3-20 Act, the term "environmental or health and safety law" shall be
3-21 construed broadly.
3-22 SECTION 4. AUDIT OR COMPLIANCE MANAGEMENT SYSTEM REPORT.
3-23 (a) An audit or compliance management system report is a report
3-24 that includes each document and communication arising out of the
3-25 environmental or health and safety audit or out of a compliance
3-26 management system.
3-27 (b) General components that may be contained in a completed
4-1 audit or compliance management system report include:
4-2 (1) a report prepared by an auditor, monitor, or
4-3 similar person, which may include a description of:
4-4 (A) the scope of the audit or compliance
4-5 management system;
4-6 (B) the information gained in the audit or
4-7 through the compliance management system and findings, conclusions,
4-8 and recommendations; and
4-9 (C) exhibits and appendices;
4-10 (2) memoranda and documents analyzing all or a portion
4-11 of the materials described by Subdivision (1) of this subsection or
4-12 discussing implementation issues; and
4-13 (3) an implementation plan or tracking system to
4-14 correct past noncompliance, improve current compliance, or prevent
4-15 future noncompliance.
4-16 (c) The types of exhibits and appendices that may be
4-17 contained in an audit or compliance management system report
4-18 include supporting information that is collected or developed for
4-19 the primary purpose of and in the course of an environmental or
4-20 health and safety audit or the compliance management system,
4-21 including:
4-22 (1) interviews with current or former employees;
4-23 (2) field notes and records of observations;
4-24 (3) findings, opinions, suggestions, conclusions,
4-25 guidance, notes, drafts, and memoranda;
4-26 (4) legal analyses;
4-27 (5) drawings;
5-1 (6) photographs;
5-2 (7) laboratory analyses;
5-3 (8) computer-generated or electronically recorded
5-4 information; and
5-5 (9) maps, charts, graphs, and surveys.
5-6 (d) To facilitate identification, each document in an audit
5-7 report should be labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT,"
5-8 or labeled with words of similar import. Failure to label a
5-9 document under this section does not constitute a waiver of the
5-10 audit privilege and does not create a presumption that the
5-11 privilege does not apply.
5-12 SECTION 5. PRIVILEGE. (a) An audit or compliance
5-13 management system report is privileged as provided in this section.
5-14 (b) Except as provided in Sections 6, 7, 8, and 9 of this
5-15 Act, any part of an audit or compliance management system report is
5-16 privileged and is not admissible as evidence or subject to
5-17 discovery in:
5-18 (1) a civil action, whether legal or equitable;
5-19 (2) a criminal proceeding; or
5-20 (3) an administrative proceeding.
5-21 (c) A person, when called or subpoenaed as a witness, cannot
5-22 be compelled to testify or produce a document if:
5-23 (1) the testimony or document relates to a matter that
5-24 was the subject or within the scope of an environmental or health
5-25 and safety audit or compliance management system and that is
5-26 addressed in a privileged part of an audit or compliance management
5-27 system report; and
6-1 (2) the person is:
6-2 (A) a person who conducted any portion of the
6-3 audit or who was responsible for any part of the compliance
6-4 management system;
6-5 (B) a person to whom the audit or compliance
6-6 management system results are disclosed under Section 6(b) of this
6-7 Act; or
6-8 (C) a custodian of the audit or compliance
6-9 management system results.
6-10 (d) An employee of a state agency may not request, review,
6-11 or otherwise use an audit or compliance management system report
6-12 during an agency inspection of a regulated facility or operation,
6-13 or an activity of a regulated facility or operation.
6-14 (e) A party asserting the privilege described in this
6-15 section has the burden of establishing the applicability of the
6-16 privilege.
6-17 SECTION 6. EXCEPTION: WAIVER. (a) The privilege described
6-18 by Section 5 of this Act does not apply to the extent the privilege
6-19 is expressly waived by the owner or operator who prepared the audit
6-20 or compliance management system report or caused the report to be
6-21 prepared.
6-22 (b) Disclosure of an audit or compliance management system
6-23 report or any information generated by an environmental or health
6-24 and safety audit or compliance management system does not waive the
6-25 privilege established by Section 5 of this Act if the disclosure:
6-26 (1) is made to address or correct a matter raised by
6-27 the environmental or health and safety audit or compliance
7-1 management system and is made only to:
7-2 (A) a person employed by the owner or operator,
7-3 including temporary and contract employees;
7-4 (B) a legal representative of the owner or
7-5 operator;
7-6 (C) an officer or director of the regulated
7-7 facility or operation or a partner of the owner or operator; or
7-8 (D) an independent contractor retained by the
7-9 owner or operator;
7-10 (2) is made under the terms of a confidentiality
7-11 agreement between the person for whom the audit or compliance
7-12 management system report was prepared or the owner or operator of
7-13 the audited facility or operation and:
7-14 (A) a partner or potential partner of the owner
7-15 or operator of the facility or operation;
7-16 (B) a transferee or potential transferee of the
7-17 facility or operation; or
7-18 (C) a lender or potential lender for the
7-19 facility or operation; or
7-20 (3) is made under a claim of confidentiality to a
7-21 governmental official by the person for whom the audit or
7-22 compliance management system report was prepared or by the owner or
7-23 operator.
7-24 (c) A party to a confidentiality agreement described in
7-25 Subsection (b)(2) of this section who violates that agreement is
7-26 liable for damages caused by the disclosure and for any other
7-27 penalties stipulated in the confidentiality agreement.
8-1 (d) Information that is disclosed under Subsection (b)(3) of
8-2 this section is confidential and is not subject to disclosure under
8-3 Chapter 552, Government Code. A public entity, public employee, or
8-4 public official who discloses information in violation of this
8-5 subsection commits an offense. An offense under this subsection is
8-6 a Class B misdemeanor.
8-7 SECTION 7. EXCEPTION: COURT-REQUIRED DISCLOSURE. (a) A
8-8 court of competent jurisdiction may require disclosure of a portion
8-9 of an audit or compliance management system report in a civil,
8-10 criminal, or administrative proceeding if the court determines,
8-11 after an in camera review consistent with the appropriate rules of
8-12 procedure, that:
8-13 (1) the privilege is asserted for a fraudulent
8-14 purpose;
8-15 (2) the portion of the audit or compliance management
8-16 system report is not subject to the privilege under Section 8 of
8-17 this Act; or
8-18 (3) the portion of the audit or compliance management
8-19 system report shows evidence of noncompliance with an environmental
8-20 or health and safety law and appropriate efforts to achieve
8-21 compliance with the law were not promptly initiated and pursued
8-22 with reasonable diligence after discovery of noncompliance.
8-23 (b) A party seeking disclosure under this section has the
8-24 burden of proving that Subsection (a)(1), (2), or (3) of this
8-25 section applies.
8-26 SECTION 8. NONPRIVILEGED MATERIALS. (a) The privilege
8-27 described in this Act does not apply to:
9-1 (1) a document, communication, datum, report, or other
9-2 information required by a regulatory agency to be collected,
9-3 developed, maintained, or reported under a federal or state
9-4 environmental or health and safety law;
9-5 (2) information obtained by observation, sampling, or
9-6 monitoring by a regulatory agency; or
9-7 (3) information obtained from a source not involved in
9-8 the preparation of the environmental or health and safety audit or
9-9 in the compliance management system.
9-10 (b) A regulatory agency may not adopt a rule or impose a
9-11 condition that circumvents this Act by requiring disclosure of an
9-12 audit or compliance management system report.
9-13 SECTION 9. COURT REVIEW AND DISCLOSURE. (a) If there is
9-14 reasonable cause, based on information obtained from a source
9-15 independent of an audit or compliance management system report, to
9-16 believe a criminal offense has been committed under an
9-17 environmental or health and safety law, the attorney representing
9-18 the state may obtain an audit or compliance management system
9-19 report for which a privilege is asserted under this Act under a
9-20 search warrant, criminal subpoena, or discovery as allowed by the
9-21 Code of Criminal Procedure and the Texas Rules of Criminal
9-22 Procedure.
9-23 (b) On receipt of the audit or compliance management system
9-24 report, the attorney representing the state shall seal the report
9-25 and may not review or disclose the contents of the report.
9-26 (c) Not later than the 30th day after the date an audit or
9-27 compliance management system report is received under Subsection
10-1 (a), the owner or operator who prepared the report or for whom the
10-2 report was prepared may file with a court of competent jurisdiction
10-3 a petition requesting an in camera review to determine whether all
10-4 or a portion of the report is privileged or is subject to
10-5 disclosure under this Act. An owner or operator who fails to file
10-6 a petition under this subsection within the period specified by
10-7 this subsection waives the privilege.
10-8 (d) On the filing of a petition under Subsection (c) of this
10-9 section, the court shall issue an order that:
10-10 (1) schedules the in camera review for a date not
10-11 later than the 45th day after the date the petition is filed; and
10-12 (2) authorizes the attorney representing the state to
10-13 remove the seal from the report to review the report, subject to
10-14 appropriate limitations on distribution or disclosure of the report
10-15 that are specified in the order to protect against unnecessary
10-16 disclosure.
10-17 (e) The attorney representing the state may consult with
10-18 enforcement agencies regarding the contents of the report as
10-19 necessary to prepare for the in camera review.
10-20 (f) Information used in preparation for the in camera review
10-21 under Subsection (e) of this section:
10-22 (1) is confidential;
10-23 (2) may not be used in any investigation or legal
10-24 proceeding; and
10-25 (3) is not subject to disclosure under Chapter 552,
10-26 Government Code.
10-27 (g) Subsection (f) of this section does not apply to
11-1 information a court finds to be subject to disclosure.
11-2 (h) On the motion of a party, a court or the appropriate
11-3 administrative official shall suppress evidence offered in any
11-4 civil, criminal, or administrative proceeding that arises or is
11-5 derived from review, disclosure, or use of information obtained
11-6 under this section if the review, disclosure, or use is not
11-7 authorized under this section. A party allegedly failing to comply
11-8 with this section has the burden of proving that the evidence
11-9 offered did not arise and was not derived from the unauthorized
11-10 review, disclosure, or use.
11-11 (i) The parties may stipulate to entry of an order directing
11-12 that specific information contained in an audit or compliance
11-13 management system report is or is not subject to the privilege.
11-14 (j) A court may compel the disclosure of only those portions
11-15 of an audit or compliance management system report relevant to
11-16 issues in dispute in the proceeding.
11-17 (k) A person commits an offense if the person:
11-18 (1) discloses information in violation of Subsection
11-19 (b) or (f) of this section; or
11-20 (2) knowingly discloses information provided to the
11-21 person in violation of this section.
11-22 (l) An offense under Subsection (k) of this section is a
11-23 Class B misdemeanor.
11-24 (m) A court may find a person who discloses information in
11-25 violation of this section in contempt of court and may order other
11-26 appropriate relief.
11-27 SECTION 10. VOLUNTARY DISCLOSURE; IMMUNITY. (a) Except as
12-1 provided by this section, a person who makes a voluntary disclosure
12-2 of a violation of an environmental or health and safety law is
12-3 immune from an administrative, civil, or criminal penalty for the
12-4 violation disclosed.
12-5 (b) A disclosure is voluntary only if:
12-6 (1) the disclosure was made promptly after knowledge
12-7 of the information disclosed is obtained by the person;
12-8 (2) the disclosure was made to an agency that has
12-9 regulatory authority with regard to the violation disclosed;
12-10 (3) the disclosure arises out of:
12-11 (A) a voluntary environmental or health and
12-12 safety audit; or
12-13 (B) the operation of a compliance management
12-14 system;
12-15 (4) the person who makes the disclosure initiates an
12-16 appropriate effort to achieve compliance, pursues that effort with
12-17 due diligence, and corrects the noncompliance within a reasonable
12-18 time; and
12-19 (5) the person making the disclosure cooperates with
12-20 the appropriate agency in connection with an investigation of the
12-21 issues identified in the disclosure.
12-22 (c) A disclosure is not voluntary for purposes of this
12-23 section if it is a report to a regulatory agency required solely by
12-24 a specific condition of an enforcement order or decree.
12-25 (d) The immunity established by Subsection (a) of this
12-26 section does not apply and a penalty may be imposed under
12-27 applicable law in a civil or administrative proceeding if the
13-1 disclosed violation was committed wilfully and intentionally by the
13-2 person who made the disclosure.
13-3 (e) The immunity established by Subsection (a) of this
13-4 section does not apply and a criminal penalty may be imposed under
13-5 applicable law if:
13-6 (1) the person who made the disclosure intentionally
13-7 committed or intentionally aided or abetted in the commission of
13-8 the disclosed violation; or
13-9 (2) the offense was committed intentionally by a
13-10 member of the person's management and the person's policies or lack
13-11 of prevention actions or systems contributed materially to the
13-12 occurrence of the violation.
13-13 (f) A penalty that is imposed under Subsection (e) of this
13-14 section should, to the extent appropriate, be mitigated by factors
13-15 such as:
13-16 (1) the voluntariness of the disclosure;
13-17 (2) efforts by the disclosing party to conduct
13-18 environmental or health and safety audits;
13-19 (3) implementation of a compliance management system;
13-20 (4) remediation;
13-21 (5) cooperation with government officials
13-22 investigating the disclosed violation;
13-23 (6) relative lack of harm or economic benefit; or
13-24 (7) other relevant considerations.
13-25 (g) In a civil, administrative, or criminal enforcement
13-26 action brought against a person for a violation for which the
13-27 person claims to have made a voluntary disclosure, the person
14-1 claiming the immunity has the burden of establishing a prima facie
14-2 case that the disclosure was voluntary. After a prima facie case of
14-3 voluntary disclosure is established, the enforcement authority has
14-4 the burden of rebutting the presumption by a preponderance of the
14-5 evidence or, in a criminal case, by proof beyond a reasonable
14-6 doubt.
14-7 SECTION 11. APPLICABILITY. The privilege created by this
14-8 Act applies to environmental or health and safety audits that are
14-9 conducted, and to conduct associated with a compliance management
14-10 system, on or after the effective date of this Act.
14-11 SECTION 12. RELATIONSHIP TO OTHER RECOGNIZED PRIVILEGES.
14-12 This Act does not limit, waive, or abrogate the scope or nature of
14-13 any statutory or common law privilege, including the work product
14-14 doctrine and the attorney-client privilege.
14-15 SECTION 13. EMERGENCY. The importance of this legislation
14-16 and the crowded condition of the calendars in both houses create an
14-17 emergency and an imperative public necessity that the
14-18 constitutional rule requiring bills to be read on three several
14-19 days in each house be suspended, and this rule is hereby suspended,
14-20 and that this Act take effect and be in force from and after its
14-21 passage, and it is so enacted.