1-1 By: Chisum, et al. (Senate Sponsor - Brown) H.B. No. 2473
1-2 (In the Senate - Received from the House April 27, 1995;
1-3 May 1, 1995, read first time and referred to Committee on Natural
1-4 Resources; May 5, 1995, reported favorably by the following vote:
1-5 Yeas 8, Nays 0; May 5, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to audits to determine compliance with certain laws,
1-9 rules, and regulations; providing penalties.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. SHORT TITLE. This Act may be cited as the Texas
1-12 Environmental, Health, and Safety Audit Privilege Act.
1-13 SECTION 2. PURPOSE. The purpose of this Act is to encourage
1-14 voluntary compliance with environmental and occupational health and
1-15 safety laws.
1-16 SECTION 3. DEFINITIONS. (a) In this Act:
1-17 (1) "Audit report" means an audit report described by
1-18 Section 4 of this Act.
1-19 (2) "Environmental or health and safety law" means:
1-20 (A) a federal or state environmental or
1-21 occupational health and safety law; or
1-22 (B) a rule, regulation, or regional or local law
1-23 adopted in conjunction with a law described by Paragraph (A) of
1-24 this subdivision.
1-25 (3) "Environmental or health and safety audit" means a
1-26 systematic voluntary evaluation, review, or assessment of
1-27 compliance with environmental or health and safety laws or any
1-28 permit issued under those laws conducted by an owner or operator,
1-29 an employee of the owner or operator, or an independent contractor
1-30 of:
1-31 (A) a regulated facility or operation; or
1-32 (B) an activity at a regulated facility or
1-33 operation.
1-34 (4) "Owner or operator" means a person who owns or
1-35 operates a regulated facility or operation.
1-36 (5) "Penalty" means an administrative, civil, or
1-37 criminal sanction imposed by the state to punish a person for a
1-38 violation of a statute or rule. The term does not include a
1-39 technical or remedial provision ordered by a regulatory authority.
1-40 (6) "Person" means an individual, corporation,
1-41 business trust, partnership, association, and any other legal
1-42 entity.
1-43 (7) "Regulated facility or operation" means a facility
1-44 or operation that is regulated under an environmental or health and
1-45 safety law.
1-46 (b) A person acts intentionally for purposes of this Act if
1-47 the person acts intentionally within the meaning of Section 6.03,
1-48 Penal Code.
1-49 (c) For purposes of this Act, a person acts knowingly, or
1-50 with knowledge, with respect to the nature of the person's conduct
1-51 when the person is aware of the person's physical acts. A person
1-52 acts knowingly, or with knowledge, with respect to the result of
1-53 the person's conduct when the person is aware that the conduct will
1-54 cause the result.
1-55 (d) A person acts recklessly or is reckless for purposes of
1-56 this Act if the person acts recklessly or is reckless within the
1-57 meaning of Section 6.03, Penal Code.
1-58 (e) To fully implement the privilege established by this
1-59 Act, the term "environmental or health and safety law" shall be
1-60 construed broadly.
1-61 SECTION 4. AUDIT REPORT. (a) An audit report is a report
1-62 that includes each document and communication, other than those set
1-63 forth in Section 8 of this Act, produced from an environmental or
1-64 health and safety audit.
1-65 (b) General components that may be contained in a completed
1-66 audit report include:
1-67 (1) a report prepared by an auditor, monitor, or
1-68 similar person, which may include:
2-1 (A) a description of the scope of the audit;
2-2 (B) the information gained in the audit and
2-3 findings, conclusions, and recommendations; and
2-4 (C) exhibits and appendices;
2-5 (2) memoranda and documents analyzing all or a portion
2-6 of the materials described by Subdivision (1) of this subsection or
2-7 discussing implementation issues; and
2-8 (3) an implementation plan or tracking system to
2-9 correct past noncompliance, improve current compliance, or prevent
2-10 future noncompliance.
2-11 (c) The types of exhibits and appendices that may be
2-12 contained in an audit report include supporting information that is
2-13 collected or developed for the primary purpose of and in the course
2-14 of an environmental or health and safety audit, including:
2-15 (1) interviews with current or former employees;
2-16 (2) field notes and records of observations;
2-17 (3) findings, opinions, suggestions, conclusions,
2-18 guidance, notes, drafts, and memoranda;
2-19 (4) legal analyses;
2-20 (5) drawings;
2-21 (6) photographs;
2-22 (7) laboratory analyses and other analytical data;
2-23 (8) computer-generated or electronically recorded
2-24 information;
2-25 (9) maps, charts, graphs, and surveys; and
2-26 (10) other communications associated with an
2-27 environmental or health and safety audit.
2-28 (d) To facilitate identification, each document in an audit
2-29 report should be labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT,"
2-30 or labeled with words of similar import. Failure to label a
2-31 document under this section does not constitute a waiver of the
2-32 audit privilege or create a presumption that the privilege does or
2-33 does not apply.
2-34 (e) Once initiated, an audit shall be completed within a
2-35 reasonable time not to exceed six months unless an extension is
2-36 approved by the governmental entity with regulatory authority over
2-37 the regulated facility or operation based on reasonable grounds.
2-38 SECTION 5. PRIVILEGE. (a) An audit report is privileged as
2-39 provided in this section.
2-40 (b) Except as provided in Sections 6, 7, 8, and 9 of this
2-41 Act, any part of an audit report is privileged and is not
2-42 admissible as evidence or subject to discovery in:
2-43 (1) a civil action, whether legal or equitable;
2-44 (2) a criminal proceeding; or
2-45 (3) an administrative proceeding.
2-46 (c) A person, when called or subpoenaed as a witness, cannot
2-47 be compelled to testify or produce a document related to an
2-48 environmental or health and safety audit if:
2-49 (1) the testimony or document discloses any item
2-50 listed in Section 4 of this Act that was made as part of the
2-51 preparation of an environmental or health and safety audit report
2-52 and that is addressed in a privileged part of an audit report; and
2-53 (2) for purposes of this subsection only, the person
2-54 is:
2-55 (A) a person who conducted any portion of the
2-56 audit but did not personally observe the physical events;
2-57 (B) a person to whom the audit results are
2-58 disclosed under Section 6(b) of this Act; or
2-59 (C) a custodian of the audit results.
2-60 (d) A person who conducts or participates in the preparation
2-61 of an environmental or health and safety audit and who has actually
2-62 observed physical events of violation, may testify about those
2-63 events but may not be compelled to testify about or produce
2-64 documents related to the preparation of or any privileged part of
2-65 an environmental or health and safety audit or any item listed in
2-66 Section 4 of this Act.
2-67 (e) An employee of a state agency may not request, review,
2-68 or otherwise use an audit report during an agency inspection of a
2-69 regulated facility or operation, or an activity of a regulated
2-70 facility or operation.
3-1 (f) A party asserting the privilege described in this
3-2 section has the burden of establishing the applicability of the
3-3 privilege.
3-4 SECTION 6. EXCEPTION: WAIVER. (a) The privilege described
3-5 by Section 5 of this Act does not apply to the extent the privilege
3-6 is expressly waived by the owner or operator who prepared the audit
3-7 report or caused the report to be prepared.
3-8 (b) Disclosure of an audit report or any information
3-9 generated by an environmental or health and safety audit does not
3-10 waive the privilege established by Section 5 of this Act if the
3-11 disclosure:
3-12 (1) is made to address or correct a matter raised by
3-13 the environmental or health and safety audit and is made only to:
3-14 (A) a person employed by the owner or operator,
3-15 including temporary and contract employees;
3-16 (B) a legal representative of the owner or
3-17 operator;
3-18 (C) an officer or director of the regulated
3-19 facility or operation or a partner of the owner or operator; or
3-20 (D) an independent contractor retained by the
3-21 owner or operator;
3-22 (2) is made under the terms of a confidentiality
3-23 agreement between the person for whom the audit report was prepared
3-24 or the owner or operator of the audited facility or operation and:
3-25 (A) a partner or potential partner of the owner
3-26 or operator of the facility or operation;
3-27 (B) a transferee or potential transferee of the
3-28 facility or operation;
3-29 (C) a lender or potential lender for the
3-30 facility or operation;
3-31 (D) a governmental official or a state or
3-32 federal agency; or
3-33 (E) a person or entity engaged in the business
3-34 of insuring, underwriting, or indemnifying the facility or
3-35 operation; or
3-36 (3) is made under a claim of confidentiality to a
3-37 governmental official or agency by the person for whom the audit
3-38 report was prepared or by the owner or operator.
3-39 (c) A party to a confidentiality agreement described in
3-40 Subsection (b)(2) of this section who violates that agreement is
3-41 liable for damages caused by the disclosure and for any other
3-42 penalties stipulated in the confidentiality agreement.
3-43 (d) Information that is disclosed under Subsection (b)(3) of
3-44 this section is confidential and is not subject to disclosure under
3-45 Chapter 552, Government Code. A public entity, public employee, or
3-46 public official who discloses information in violation of this
3-47 subsection commits an offense. An offense under this subsection is
3-48 a Class B misdemeanor. It is an affirmative defense to the
3-49 clerical dissemination of a privileged audit report that the report
3-50 was not clearly labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT"
3-51 or words of similar import. The lack of labeling may not be raised
3-52 as a defense if the entity, employee, or official knew or had
3-53 reason to know that the document was a privileged audit report.
3-54 SECTION 7. EXCEPTION: DISCLOSURE REQUIRED BY COURT OR
3-55 ADMINISTRATIVE HEARINGS OFFICIAL. (a) A court or administrative
3-56 hearings official with competent jurisdiction may require
3-57 disclosure of a portion of an audit report in a civil, criminal, or
3-58 administrative proceeding if the court or administrative hearings
3-59 official determines, after an in camera review consistent with the
3-60 appropriate rules of procedure, that:
3-61 (1) the privilege is asserted for a fraudulent
3-62 purpose;
3-63 (2) the portion of the audit report is not subject to
3-64 the privilege under Section 8 of this Act; or
3-65 (3) the portion of the audit report shows evidence of
3-66 noncompliance with an environmental or health and safety law and
3-67 appropriate efforts to achieve compliance with the law were not
3-68 promptly initiated and pursued with reasonable diligence after
3-69 discovery of noncompliance.
3-70 (b) A party seeking disclosure under this section has the
4-1 burden of proving that Subsection (a)(1), (2), or (3) of this
4-2 section applies.
4-3 (c) Notwithstanding Chapter 2001, Government Code, a
4-4 decision of an administrative hearings official under Subsection
4-5 (a)(1), (2), or (3) of this section is directly appealable to a
4-6 court of competent jurisdiction without disclosure of the audit
4-7 report to any person unless so ordered by the court.
4-8 (d) A person claiming the privilege is subject to sanctions
4-9 as provided by Rule 215 of the Texas Rules of Civil Procedure if
4-10 the court finds that the person intentionally or knowingly claimed
4-11 the privilege for unprotected information as provided in Section 8
4-12 of this Act.
4-13 (e) A determination of a court under this section is subject
4-14 to interlocutory appeal to an appropriate appellate court.
4-15 SECTION 8. NONPRIVILEGED MATERIALS. (a) The privilege
4-16 described in this Act does not apply to:
4-17 (1) a document, communication, datum, or report or
4-18 other information required by a regulatory agency to be collected,
4-19 developed, maintained, or reported under a federal or state
4-20 environmental or health and safety law;
4-21 (2) information obtained by observation, sampling, or
4-22 monitoring by a regulatory agency; or
4-23 (3) information obtained from a source not involved in
4-24 the preparation of the environmental or health and safety audit
4-25 report.
4-26 (b) This section does not limit the right of a person to
4-27 agree to conduct and disclose an audit report.
4-28 SECTION 9. COURT REVIEW AND DISCLOSURE. (a) If there is
4-29 reasonable cause to believe a criminal offense has been committed
4-30 under an environmental or health and safety law, the attorney
4-31 representing the state may obtain an audit report for which a
4-32 privilege is asserted under this Act under a search warrant,
4-33 criminal subpoena, or discovery as allowed by the Code of Criminal
4-34 Procedure and the Texas Rules of Criminal Procedure.
4-35 (b) On receipt of the audit report, the attorney
4-36 representing the state shall seal the report and may not review or
4-37 disclose the contents of the report.
4-38 (c) Not later than the 30th day after the date an audit
4-39 report is received under Subsection (a), the owner or operator who
4-40 prepared the report or for whom the report was prepared may file
4-41 with a court of competent jurisdiction a petition requesting an in
4-42 camera review to determine whether all or a portion of the report
4-43 is privileged or is subject to disclosure under this Act. An owner
4-44 or operator who fails to file a petition under this subsection
4-45 within the period specified by this subsection waives the
4-46 privilege.
4-47 (d) On the filing of a petition under Subsection (c) of this
4-48 section, the court shall issue an order that:
4-49 (1) schedules the in camera review for a date not
4-50 later than the 45th day after the date the petition is filed; and
4-51 (2) authorizes the attorney representing the state to
4-52 remove the seal from the report to review the report, subject to
4-53 appropriate limitations on distribution or disclosure of the report
4-54 that are specified in the order to protect against unnecessary
4-55 disclosure.
4-56 (e) The attorney representing the state may consult with
4-57 enforcement agencies regarding the contents of the report as
4-58 necessary to prepare for the in camera review.
4-59 (f) Information used in preparation for the in camera review
4-60 under Subsection (e) of this section:
4-61 (1) is confidential;
4-62 (2) may not be used in any investigation or legal
4-63 proceeding; and
4-64 (3) is not subject to disclosure under Chapter 552,
4-65 Government Code.
4-66 (g) Subsection (f) of this section does not apply to
4-67 information a court finds to be subject to disclosure.
4-68 (h) On the motion of a party, a court or the appropriate
4-69 administrative official shall suppress evidence offered in any
4-70 civil, criminal, or administrative proceeding that arises or is
5-1 derived from review, disclosure, or use of information obtained
5-2 under this section if the review, disclosure, or use is not
5-3 authorized under this section. A party allegedly failing to comply
5-4 with this section has the burden of proving that the evidence
5-5 offered did not arise and was not derived from the unauthorized
5-6 review, disclosure, or use.
5-7 (i) The parties may stipulate to entry of an order directing
5-8 that specific information contained in an audit report is or is not
5-9 subject to the privilege.
5-10 (j) A court may compel the disclosure of only those portions
5-11 of an audit report relevant to issues in dispute in the proceeding.
5-12 (k) A court may find a person who discloses information in
5-13 violation of this section in contempt of court and may order other
5-14 appropriate relief.
5-15 SECTION 10. VOLUNTARY DISCLOSURE; IMMUNITY. (a) Except as
5-16 provided by this section, a person who makes a voluntary disclosure
5-17 of a violation of an environmental or health and safety law is
5-18 immune from an administrative, civil, or criminal penalty for the
5-19 violation disclosed.
5-20 (b) A disclosure is voluntary only if:
5-21 (1) the disclosure was made promptly after knowledge
5-22 of the information disclosed is obtained by the person;
5-23 (2) the disclosure was made in writing by certified
5-24 mail to an agency that has regulatory authority with regard to the
5-25 violation disclosed;
5-26 (3) an investigation of the violation was not
5-27 initiated or the violation was not independently detected by an
5-28 agency with enforcement jurisdiction before the disclosure was made
5-29 using certified mail;
5-30 (4) the disclosure arises out of a voluntary
5-31 environmental or health and safety audit;
5-32 (5) the person who makes the disclosure initiates an
5-33 appropriate effort to achieve compliance, pursues that effort with
5-34 due diligence, and corrects the noncompliance within a reasonable
5-35 time;
5-36 (6) the person making the disclosure cooperates with
5-37 the appropriate agency in connection with an investigation of the
5-38 issues identified in the disclosure; and
5-39 (7) the violation did not result in injury to one or
5-40 more persons at the site or substantial off-site harm to persons,
5-41 property, or the environment.
5-42 (c) A disclosure is not voluntary for purposes of this
5-43 section if it is a report to a regulatory agency required solely by
5-44 a specific condition of an enforcement order or decree.
5-45 (d) The immunity established by Subsection (a) of this
5-46 section does not apply and an administrative, civil, or criminal
5-47 penalty may be imposed under applicable law if:
5-48 (1) the person who made the disclosure intentionally
5-49 or knowingly committed or was responsible within the meaning of
5-50 Section 7.02, Penal Code, for the commission of the disclosed
5-51 violation;
5-52 (2) the person who made the disclosure recklessly
5-53 committed or was responsible within the meaning of Section 7.02,
5-54 Penal Code, for the commission of the disclosed violation and the
5-55 violation resulted in substantial injury to one or more persons at
5-56 the site or off-site harm to persons, property, or the environment;
5-57 (3) the offense was committed intentionally or
5-58 knowingly by a member of the person's management or an agent of the
5-59 person and the person's policies or lack of prevention systems
5-60 contributed materially to the occurrence of the violation; or
5-61 (4) the offense was committed recklessly by a member
5-62 of the person's management or an agent of the person, the person's
5-63 policies or lack of prevention systems contributed materially to
5-64 the occurrence of the violation, and the violation resulted in
5-65 substantial injury to one or more persons at the site or off-site
5-66 harm to persons, property, or the environment.
5-67 (e) A penalty that is imposed under Subsection (d) of this
5-68 section should, to the extent appropriate, be mitigated by factors
5-69 such as:
5-70 (1) the voluntariness of the disclosure;
6-1 (2) efforts by the disclosing party to conduct
6-2 environmental or health and safety audits;
6-3 (3) remediation;
6-4 (4) cooperation with government officials
6-5 investigating the disclosed violation; or
6-6 (5) other relevant considerations.
6-7 (f) In a civil, administrative, or criminal enforcement
6-8 action brought against a person for a violation for which the
6-9 person claims to have made a voluntary disclosure, the person
6-10 claiming the immunity has the burden of establishing a prima facie
6-11 case that the disclosure was voluntary. After the person claiming
6-12 the immunity establishes a prima facie case of voluntary
6-13 disclosure, other than a case in which under Subsection (d) of this
6-14 section immunity does not apply, the enforcement authority has the
6-15 burden of rebutting the presumption by a preponderance of the
6-16 evidence or, in a criminal case, by proof beyond a reasonable
6-17 doubt.
6-18 (g) In order to receive immunity under this section, a
6-19 facility conducting an environmental or health and safety audit
6-20 under this Act must give notice to an appropriate regulatory agency
6-21 of the fact that it is planning to commence the audit. The notice
6-22 shall specify the facility or portion of the facility to be
6-23 audited, the anticipated time the audit will begin, and the general
6-24 scope of the audit. The notice may provide notification of more
6-25 than one scheduled environmental or health and safety audit at a
6-26 time.
6-27 (h) The immunity under this section does not apply if a
6-28 court or administrative law judge finds that the person claiming
6-29 the immunity has, after the effective date of this Act,
6-30 (1) repeatedly or continuously committed serious violations, and
6-31 (2) not attempted to bring the facility or operation into
6-32 compliance, so as to constitute a pattern of disregard of
6-33 environmental or health and safety laws. In order to be considered
6-34 a "pattern," the person must have committed a series of violations
6-35 that were due to separate and distinct events within a three-year
6-36 period at the same facility or operation.
6-37 (i) A violation that has been voluntarily disclosed and to
6-38 which immunity applies must be identified in a compliance history
6-39 report as being voluntarily disclosed.
6-40 SECTION 11. CIRCUMVENTION BY RULE PROHIBITED. A regulatory
6-41 agency may not adopt a rule or impose a condition that circumvents
6-42 the purpose of this Act.
6-43 SECTION 12. APPLICABILITY. The privilege created by this
6-44 Act applies to environmental or health and safety audits that are
6-45 conducted on or after the effective date of this Act.
6-46 SECTION 13. RELATIONSHIP TO OTHER RECOGNIZED PRIVILEGES.
6-47 This Act does not limit, waive, or abrogate the scope or nature of
6-48 any statutory or common law privilege, including the work product
6-49 doctrine and the attorney-client privilege.
6-50 SECTION 14. AMENDMENT. Subchapter C, Chapter 552,
6-51 Government Code, is amended by adding Section 552.124 to read as
6-52 follows:
6-53 Sec. 552.124. EXCEPTION: CERTAIN AUDITS. Any documents or
6-54 information privileged under the Texas Environmental, Health, and
6-55 Safety Audit Privilege Act are excepted from the requirements of
6-56 Section 552.021.
6-57 SECTION 15. EMERGENCY. The importance of this legislation
6-58 and the crowded condition of the calendars in both houses create an
6-59 emergency and an imperative public necessity that the
6-60 constitutional rule requiring bills to be read on three several
6-61 days in each house be suspended, and this rule is hereby suspended,
6-62 and that this Act take effect and be in force from and after its
6-63 passage, and it is so enacted.
6-64 * * * * *