1-1 By: Brown S.B. No. 1591
1-2 (In the Senate - Filed March 14, 1995; March 22, 1995, read
1-3 first time and referred to Committee on Natural Resources;
1-4 April 20, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 8, Nays 0; April 20, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1591 By: Brown
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to audits to determine compliance with certain laws,
1-11 rules, and regulations; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. SHORT TITLE. This Act may be cited as the Texas
1-14 Environmental, Health, and Safety Audit Privilege Act.
1-15 SECTION 2. PURPOSE. The purpose of this Act is to encourage
1-16 voluntary compliance with environmental and occupational health and
1-17 safety laws.
1-18 SECTION 3. DEFINITIONS. (a) In this Act:
1-19 (1) "Audit report" means an audit report described by
1-20 Section 4 of this Act.
1-21 (2) "Environmental or health and safety law" means:
1-22 (A) a federal or state environmental or health
1-23 and safety law; or
1-24 (B) a rule, regulation, or regional or local law
1-25 adopted in conjunction with a law described by Paragraph (A) of
1-26 this subdivision.
1-27 (3) "Environmental or health and safety audit" means a
1-28 voluntary evaluation, review, or assessment of compliance with
1-29 environmental or health and safety laws or any permit issued under
1-30 those laws conducted by an owner or operator, an employee of the
1-31 owner or operator, or an independent contractor of:
1-32 (A) a regulated facility or operation; or
1-33 (B) an activity at a regulated facility or
1-34 operation.
1-35 (4) "Owner or operator" means a person who owns or
1-36 operates a regulated facility or operation.
1-37 (5) "Penalty" means an administrative, civil, or
1-38 criminal sanction imposed by the state to punish a person for a
1-39 violation of a statute or rule. The term does not include a
1-40 technical or remedial provision ordered by a regulatory authority.
1-41 (6) "Person" means an individual, corporation,
1-42 business trust, partnership, association, and any other legal
1-43 entity.
1-44 (7) "Regulated facility or operation" means a facility
1-45 or operation that is regulated under an environmental or health and
1-46 safety law.
1-47 (b) A person acts intentionally for purposes of this Act if
1-48 the person acts intentionally within the meaning of Section 6.03,
1-49 Penal Code.
1-50 (c) For purposes of this Act, a person acts knowingly, or
1-51 with knowledge, with respect to the nature of the person's conduct
1-52 when the person is aware of the person's physical acts. A person
1-53 acts knowingly, or with knowledge, with respect to the result of
1-54 the person's conduct when the person is aware that the conduct will
1-55 cause the result.
1-56 (d) A person acts recklessly or is reckless for purposes of
1-57 this Act if the person acts recklessly or is reckless within the
1-58 meaning of Section 6.03, Penal Code.
1-59 (e) To fully implement the privilege established by this
1-60 Act, the term "environmental or health and safety law" shall be
1-61 construed broadly.
1-62 SECTION 4. AUDIT REPORT. (a) An audit report is a report
1-63 that includes each document and communication, other than those set
1-64 forth in Section 8 of this Act, produced from an environmental or
1-65 health and safety audit.
1-66 (b) General components that may be contained in a completed
1-67 audit report include:
1-68 (1) a report prepared by an auditor, monitor, or
2-1 similar person, which may include:
2-2 (A) a description of the scope of the audit;
2-3 (B) the information gained in the audit and
2-4 findings, conclusions, and recommendations; and
2-5 (C) exhibits and appendices;
2-6 (2) memoranda and documents analyzing all or a portion
2-7 of the materials described by Subdivision (1) of this subsection or
2-8 discussing implementation issues; and
2-9 (3) an implementation plan or tracking system to
2-10 correct past noncompliance, improve current compliance, or prevent
2-11 future noncompliance.
2-12 (c) The types of exhibits and appendices that may be
2-13 contained in an audit report include supporting information that is
2-14 collected or developed for the primary purpose of and in the course
2-15 of an environmental or health and safety audit, including:
2-16 (1) interviews with current or former employees;
2-17 (2) field notes and records of observations;
2-18 (3) findings, opinions, suggestions, conclusions,
2-19 guidance, notes, drafts, and memoranda;
2-20 (4) legal analyses;
2-21 (5) drawings;
2-22 (6) photographs;
2-23 (7) laboratory analyses and other analytical data;
2-24 (8) computer-generated or electronically recorded
2-25 information;
2-26 (9) maps, charts, graphs, and surveys; and
2-27 (10) other communications associated with an
2-28 environmental or health and safety audit.
2-29 (d) To facilitate identification, each document in an audit
2-30 report should be labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT"
2-31 or labeled with words of similar import. Failure to label a
2-32 document under this section does not constitute a waiver of the
2-33 audit privilege or create a presumption that the privilege does or
2-34 does not apply.
2-35 SECTION 5. PRIVILEGE. (a) An audit report is privileged as
2-36 provided in this section.
2-37 (b) Except as provided in Sections 6, 7, 8, and 9 of this
2-38 Act, any part of an audit report is privileged and is not
2-39 admissible as evidence or subject to discovery in:
2-40 (1) a civil action, whether legal or equitable;
2-41 (2) a criminal proceeding; or
2-42 (3) an administrative proceeding.
2-43 (c) A person, when called or subpoenaed as a witness, cannot
2-44 be compelled to testify or produce a document related to an
2-45 environmental or health and safety audit if:
2-46 (1) the testimony or document discloses any item
2-47 listed in Section 4 of this Act that was made as part of the
2-48 preparation of an environmental or health and safety audit report
2-49 and that is addressed in a privileged part of an audit report; and
2-50 (2) for purposes of this subsection only, the person
2-51 is:
2-52 (A) a person who conducted any portion of the
2-53 audit but did not personally observe the physical events;
2-54 (B) a person to whom the audit results are
2-55 disclosed under Subsection (b), Section 6 of this Act; or
2-56 (C) a custodian of the audit results.
2-57 (d) An employee of a state agency may not request, review,
2-58 or otherwise use an audit report during an agency inspection of a
2-59 regulated facility or operation or an activity of a regulated
2-60 facility or operation.
2-61 (e) A party asserting the privilege described in this
2-62 section has the burden of establishing the applicability of the
2-63 privilege.
2-64 SECTION 6. EXCEPTION: WAIVER. (a) The privilege described
2-65 by Section 5 of this Act does not apply to the extent the privilege
2-66 is expressly waived by the owner or operator who prepared the audit
2-67 report or caused the report to be prepared.
2-68 (b) Disclosure of an audit report or any information
2-69 generated by an environmental or health and safety audit does not
2-70 waive the privilege established by Section 5 of this Act if the
3-1 disclosure:
3-2 (1) is made to address or correct a matter raised by
3-3 the environmental or health and safety audit and is made only to:
3-4 (A) a person employed by the owner or operator,
3-5 including temporary and contract employees;
3-6 (B) a legal representative of the owner or
3-7 operator;
3-8 (C) an officer or director of the regulated
3-9 facility or operation or a partner of the owner or operator; or
3-10 (D) an independent contractor retained by the
3-11 owner or operator;
3-12 (2) is made under the terms of a confidentiality
3-13 agreement between the person for whom the audit report was prepared
3-14 or the owner or operator of the audited facility or operation and:
3-15 (A) a partner or potential partner of the owner
3-16 or operator of the facility or operation;
3-17 (B) a transferee or potential transferee of the
3-18 facility or operation;
3-19 (C) a lender or potential lender for the
3-20 facility or operation; or
3-21 (D) a governmental official or a state or
3-22 federal agency; or
3-23 (3) is made under a claim of confidentiality to a
3-24 governmental official or agency by the person for whom the audit
3-25 report was prepared or by the owner or operator.
3-26 (c) A party to a confidentiality agreement described in
3-27 Subdivision (2) of Subsection (b) of this section who violates that
3-28 agreement is liable for damages caused by the disclosure and for
3-29 any other penalties stipulated in the confidentiality agreement.
3-30 (d) Information that is disclosed under Subdivision (3) of
3-31 Subsection (b) of this section is confidential and is not subject
3-32 to disclosure under the open records law, Chapter 552, Government
3-33 Code. A public entity, public employee, or public official who
3-34 discloses information in violation of this subsection commits an
3-35 offense. An offense under this subsection is a Class B
3-36 misdemeanor.
3-37 SECTION 7. EXCEPTION: DISCLOSURE REQUIRED BY COURT OR
3-38 ADMINISTRATIVE HEARINGS OFFICIAL. (a) A court or administrative
3-39 hearings official with competent jurisdiction may require
3-40 disclosure of a portion of an audit report in a civil, criminal, or
3-41 administrative proceeding if the court or administrative hearings
3-42 official determines, after an in camera review consistent with the
3-43 appropriate rules of procedure, that:
3-44 (1) the privilege is asserted for a fraudulent
3-45 purpose;
3-46 (2) the portion of the audit report is nonprivileged
3-47 under Section 8 of this Act; or
3-48 (3) the portion of the audit report shows evidence of
3-49 noncompliance with an environmental or health and safety law and
3-50 appropriate efforts to achieve compliance with the law were not
3-51 promptly initiated and pursued with reasonable diligence after
3-52 discovery of noncompliance.
3-53 (b) A party seeking disclosure under this section has the
3-54 burden of proving that Subdivision (1), (2), or (3) of Subsection
3-55 (a) of this section applies.
3-56 (c) Notwithstanding Chapter 2001, Government Code
3-57 (Administrative Procedure Act), a decision of an administrative
3-58 hearings official under Subdivision (1), (2), or (3) of Subsection
3-59 (a) of this section is directly appealable to a court of competent
3-60 jurisdiction without disclosure to the administrative tribunal.
3-61 SECTION 8. NONPRIVILEGED MATERIALS. (a) The privilege
3-62 described in this Act does not apply to:
3-63 (1) a document, communication, datum, or report or
3-64 other information required by a regulatory agency to be collected,
3-65 developed, maintained, or reported under a federal or state
3-66 environmental or health and safety law;
3-67 (2) information obtained by observation, sampling, or
3-68 monitoring by a regulatory agency; or
3-69 (3) information obtained from a source not involved in
3-70 the preparation of the environmental or health and safety audit
4-1 report.
4-2 (b) This section does not limit the right of a person to
4-3 agree to conduct and disclose an audit report.
4-4 SECTION 9. COURT REVIEW AND DISCLOSURE. (a) If there is
4-5 reasonable cause to believe a criminal offense has been committed
4-6 under an environmental or health and safety law, the attorney
4-7 representing the state may obtain an audit report for which a
4-8 privilege is asserted under this Act under a search warrant,
4-9 criminal subpoena, or discovery as allowed by the Code of Criminal
4-10 Procedure and the Texas Rules of Criminal Procedure.
4-11 (b) On receipt of the audit report, the attorney
4-12 representing the state shall seal the report and may not review or
4-13 disclose the contents of the report.
4-14 (c) Not later than the 30th day after the date an audit
4-15 report is received under Subsection (a) of this section, the owner
4-16 or operator who prepared the report or for whom the report was
4-17 prepared may file with a court of competent jurisdiction a petition
4-18 requesting an in camera review to determine whether all or a
4-19 portion of the report is privileged or is subject to disclosure
4-20 under this Act. An owner or operator who fails to file a petition
4-21 under this subsection within the period specified by this
4-22 subsection waives the privilege.
4-23 (d) On the filing of a petition under Subsection (c) of this
4-24 section, the court shall issue an order that:
4-25 (1) schedules the in camera review for a date not
4-26 later than the 45th day after the date the petition is filed; and
4-27 (2) authorizes the attorney representing the state to
4-28 remove the seal from the report to review the report, subject to
4-29 appropriate limitations on distribution or disclosure of the report
4-30 that are specified in the order to protect against unnecessary
4-31 disclosure.
4-32 (e) The attorney representing the state may consult with
4-33 enforcement agencies regarding the contents of the report as
4-34 necessary to prepare for the in camera review.
4-35 (f) Information used in preparation for the in camera review
4-36 under Subsection (e) of this section:
4-37 (1) is confidential;
4-38 (2) may not be used in any investigation or legal
4-39 proceeding; and
4-40 (3) is not subject to disclosure under the open
4-41 records law, Chapter 552, Government Code.
4-42 (g) Subsection (f) of this section does not apply to
4-43 information a court finds to be subject to disclosure.
4-44 (h) On the motion of a party, a court or the appropriate
4-45 administrative official shall suppress evidence offered in any
4-46 civil, criminal, or administrative proceeding that arises or is
4-47 derived from review, disclosure, or use of information obtained
4-48 under this section if the review, disclosure, or use is not
4-49 authorized under this section. A party allegedly failing to comply
4-50 with this section has the burden of proving that the evidence
4-51 offered did not arise and was not derived from the unauthorized
4-52 review, disclosure, or use.
4-53 (i) The parties may stipulate to entry of an order directing
4-54 that specific information contained in an audit report is or is not
4-55 subject to the privilege.
4-56 (j) A court may compel the disclosure of only those portions
4-57 of an audit report relevant to issues in dispute in the proceeding.
4-58 (k) A person commits an offense if the person:
4-59 (1) discloses information in violation of Subsection
4-60 (b) or (f) of this section; or
4-61 (2) knowingly discloses information provided to the
4-62 person in violation of this section.
4-63 (l) An offense under Subsection (k) of this section is a
4-64 Class B misdemeanor.
4-65 (m) A court may find a person who discloses information in
4-66 violation of this section in contempt of court and may order other
4-67 appropriate relief.
4-68 SECTION 10. VOLUNTARY DISCLOSURE; IMMUNITY. (a) Except as
4-69 provided by this section, a person who makes a voluntary disclosure
4-70 of a violation of an environmental or health and safety law is
5-1 immune from an administrative, civil, or criminal penalty for the
5-2 violation disclosed.
5-3 (b) A disclosure is voluntary only if:
5-4 (1) the disclosure was made promptly after knowledge
5-5 of the information disclosed is obtained by the person;
5-6 (2) the disclosure was made in writing by certified
5-7 mail to an agency that has regulatory authority with regard to the
5-8 violation disclosed;
5-9 (3) the violation was not independently detected by an
5-10 agency with enforcement jurisdiction before the disclosure was
5-11 made;
5-12 (4) the disclosure arises out of a voluntary
5-13 environmental or health and safety audit;
5-14 (5) the person who makes the disclosure initiates an
5-15 appropriate effort to achieve compliance, pursues that effort with
5-16 due diligence, and corrects the noncompliance within a reasonable
5-17 time; and
5-18 (6) the person making the disclosure cooperates with
5-19 the appropriate agency in connection with an investigation of the
5-20 issues identified in the disclosure.
5-21 (c) A disclosure is not voluntary for purposes of this
5-22 section if it is a report to a regulatory agency required solely by
5-23 a specific condition of an enforcement order or decree.
5-24 (d) The immunity established by Subsection (a) of this
5-25 section does not apply and an administrative, civil, or criminal
5-26 penalty may be imposed under applicable law if:
5-27 (1) the person who made the disclosure intentionally
5-28 or knowingly committed or was responsible within the meaning of
5-29 Section 7.02, Penal Code, for the commission of the disclosed
5-30 violation;
5-31 (2) the person who made the disclosure recklessly
5-32 committed or was responsible within the meaning of Section 7.02,
5-33 Penal Code, for the commission of the disclosed violation and the
5-34 violation resulted in substantial off-site harm to persons,
5-35 property, or the environment;
5-36 (3) the offense was committed intentionally or
5-37 knowingly by a member of the person's management and the person's
5-38 policies or lack of prevention systems contributed materially to
5-39 the occurrence of the violation; or
5-40 (4) the offense was committed recklessly by a member
5-41 of the person's management, the person's policies or lack of
5-42 prevention systems contributed materially to the occurrence of the
5-43 violation, and the violation resulted in substantial off-site harm
5-44 to persons, property, or the environment.
5-45 (e) A penalty that is imposed under Subsection (d) of this
5-46 section should, to the extent appropriate, be mitigated by factors
5-47 such as:
5-48 (1) the voluntariness of the disclosure;
5-49 (2) efforts by the disclosing party to conduct
5-50 environmental or health and safety audits;
5-51 (3) remediation;
5-52 (4) cooperation with government officials
5-53 investigating the disclosed violation;
5-54 (5) relative lack of harm or economic benefit; or
5-55 (6) other relevant considerations.
5-56 (f) In a civil, administrative, or criminal enforcement
5-57 action brought against a person for a violation for which the
5-58 person claims to have made a voluntary disclosure, the person
5-59 claiming the immunity has the burden of establishing a prima facie
5-60 case that the disclosure was voluntary. After the person claiming
5-61 the immunity establishes a prima facie case of voluntary
5-62 disclosure, other than a case in which under Subsection (d) of this
5-63 section immunity does not apply, the enforcement authority has the
5-64 burden of rebutting the presumption by a preponderance of the
5-65 evidence or, in a criminal case, by proof beyond a reasonable
5-66 doubt.
5-67 SECTION 11. CIRCUMVENTION BY RULE PROHIBITED. A regulatory
5-68 agency may not adopt a rule or impose a condition that circumvents
5-69 the purpose of this Act.
5-70 SECTION 12. APPLICABILITY. The privilege created by this
6-1 Act applies to environmental or health and safety audits that are
6-2 conducted on or after the effective date of this Act.
6-3 SECTION 13. RELATIONSHIP TO OTHER RECOGNIZED PRIVILEGES.
6-4 This Act does not limit, waive, or abrogate the scope or nature of
6-5 any statutory or common law privilege, including the work product
6-6 doctrine and the attorney-client privilege.
6-7 SECTION 14. AMENDMENT; OPEN RECORDS LAW. Chapter 552,
6-8 Government Code, is amended by adding Section 552.124 to read as
6-9 follows:
6-10 Sec. 552.124. EXCEPTION: CERTAIN AUDITS. Any documents or
6-11 information privileged under the Texas Environmental, Health, and
6-12 Safety Audit Privilege Act are excepted from the requirements of
6-13 Section 552.021.
6-14 SECTION 15. EMERGENCY. The importance of this legislation
6-15 and the crowded condition of the calendars in both houses create an
6-16 emergency and an imperative public necessity that the
6-17 constitutional rule requiring bills to be read on three several
6-18 days in each house be suspended, and this rule is hereby suspended,
6-19 and that this Act take effect and be in force from and after its
6-20 passage, and it is so enacted.
6-21 * * * * *