1-1 By: Chisum (Senate Sponsor - Brown) H.B. No. 3459
1-2 (In the Senate - Received from the House April 30, 1997;
1-3 May 1, 1997, read first time and referred to Committee on Natural
1-4 Resources; May 8, 1997, reported favorably by the following vote:
1-5 Yeas 9, Nays 1; May 8, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to environmental and health and safety audits; providing a
1-9 penalty.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 5(b), Texas Environmental, Health, and
1-12 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
1-13 Statutes), is amended to read as follows:
1-14 (b) Except as provided in Sections 6, 7, and 8[, and 9] of
1-15 this Act, any part of an audit report is privileged and is not
1-16 admissible as evidence or subject to discovery in:
1-17 (1) a civil action, whether legal or equitable; or
1-18 (2) [a criminal proceeding; or]
1-19 [(3)] an administrative proceeding.
1-20 SECTION 2. Section 6, Texas Environmental, Health, and
1-21 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
1-22 Statutes), is amended by amending Subsection (b) and adding
1-23 Subsection (e) to read as follows:
1-24 (b) Disclosure of an audit report or any information
1-25 generated by an environmental or health and safety audit does not
1-26 waive the privilege established by Section 5 of this Act if the
1-27 disclosure:
1-28 (1) is made to address or correct a matter raised by
1-29 the environmental or health and safety audit and is made only to:
1-30 (A) a person employed by the owner or operator,
1-31 including temporary and contract employees;
1-32 (B) a legal representative of the owner or
1-33 operator;
1-34 (C) an officer or director of the regulated
1-35 facility or operation or a partner of the owner or operator; or
1-36 (D) an independent contractor retained by the
1-37 owner or operator;
1-38 (2) is made under the terms of a confidentiality
1-39 agreement between the person for whom the audit report was prepared
1-40 or the owner or operator of the audited facility or operation and:
1-41 (A) a partner or potential partner of the owner
1-42 or operator of the facility or operation;
1-43 (B) a transferee or potential transferee of the
1-44 facility or operation;
1-45 (C) a lender or potential lender for the
1-46 facility or operation;
1-47 (D) a governmental official of [or] a state [or
1-48 federal agency]; or
1-49 (E) a person or entity engaged in the business
1-50 of insuring, underwriting, or indemnifying the facility or
1-51 operation; or
1-52 (3) is made under a claim of confidentiality to a
1-53 governmental official or agency by the person for whom the audit
1-54 report was prepared or by the owner or operator.
1-55 (e) Nothing in this section shall be construed to circumvent
1-56 the protections provided by federal or state law for individuals
1-57 that disclose information to law enforcement authorities.
1-58 SECTION 3. Section 6(d), Texas Environmental, Health, and
1-59 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
1-60 Statutes), is amended to read as follows:
1-61 (d) Information that is disclosed under Subsection (b)(3) of
1-62 this section is confidential and is not subject to disclosure under
1-63 Chapter 552, Government Code. A public entity, public employee, or
1-64 public official who discloses information in violation of this
2-1 subsection is subject to any penalty provided in Chapter 552,
2-2 Government Code [commits an offense. An offense under this
2-3 subsection is a Class B misdemeanor]. It is an affirmative defense
2-4 to the clerical dissemination of a privileged audit report that the
2-5 report was not clearly labeled "COMPLIANCE REPORT: PRIVILEGED
2-6 DOCUMENT" or words of similar import. The lack of labeling may not
2-7 be raised as a defense if the entity, employee, or official knew or
2-8 had reason to know that the document was a privileged audit report.
2-9 SECTION 4. Section 7(d), Texas Environmental, Health, and
2-10 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
2-11 Statutes), is amended to read as follows:
2-12 (d) A person claiming the privilege is subject to sanctions
2-13 as provided by Rule 215 of the Texas Rules of Civil Procedure or to
2-14 a fine not to exceed $10,000 if the court finds, consistent with
2-15 fundamental due process, that the person intentionally or knowingly
2-16 claimed the privilege for unprotected information as provided in
2-17 Section 8 of this Act.
2-18 SECTION 5. Section 7(a), Texas Environmental, Health, and
2-19 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
2-20 Statutes), is amended to read as follows:
2-21 (a) A court or administrative hearings official with
2-22 competent jurisdiction may require disclosure of a portion of an
2-23 audit report in a civil[, criminal,] or administrative proceeding
2-24 if the court or administrative hearings official determines, after
2-25 an in camera review consistent with the appropriate rules of
2-26 procedure, that:
2-27 (1) the privilege is asserted for a fraudulent
2-28 purpose;
2-29 (2) the portion of the audit report is not subject to
2-30 the privilege under Section 8 of this Act; or
2-31 (3) the portion of the audit report shows evidence of
2-32 noncompliance with an environmental or health and safety law and
2-33 appropriate efforts to achieve compliance with the law were not
2-34 promptly initiated and pursued with reasonable diligence after
2-35 discovery of noncompliance.
2-36 SECTION 6. Section 9, Texas Environmental, Health, and
2-37 Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil
2-38 Statutes), is amended to read as follows:
2-39 Sec. 9. [Court] Review OF PRIVILEGED DOCUMENTS BY
2-40 GOVERNMENTAL AUTHORITY [and Disclosure]. (a) Where an audit
2-41 report is obtained, reviewed, or used in a criminal proceeding, the
2-42 administrative or civil evidentiary privilege created by this Act
2-43 is not waived or eliminated for any other purpose [If there is
2-44 reasonable cause to believe a criminal offense has been committed
2-45 under an environmental or health and safety law, the attorney
2-46 representing the state may obtain an audit report for which a
2-47 privilege is asserted under this Act under a search warrant,
2-48 criminal subpoena, or discovery as allowed by the Code of Criminal
2-49 Procedure and the Texas Rules of Criminal Procedure].
2-50 (b) Notwithstanding the privilege established under this
2-51 Act, a regulatory agency may review information that is required to
2-52 be available under a specific state or federal law, but such review
2-53 does not waive or eliminate the administrative or civil evidentiary
2-54 privilege where applicable [On receipt of the audit report, the
2-55 attorney representing the state shall seal the report and may not
2-56 review or disclose the contents of the report].
2-57 (c) If information is required to be available to the public
2-58 by operation of a specific state or federal law, the governmental
2-59 authority shall notify the person claiming the privilege of the
2-60 potential for public disclosure prior to obtaining such information
2-61 under Subsection (a) or (b) [Not later than the 30th day after the
2-62 date an audit report is received under Subsection (a), the owner or
2-63 operator who prepared the report or for whom the report was
2-64 prepared may file with a court of competent jurisdiction a petition
2-65 requesting an in camera review to determine whether all or a
2-66 portion of the report is privileged or is subject to disclosure
2-67 under this Act. An owner or operator who fails to file a petition
2-68 under this subsection within the period specified by this
2-69 subsection waives the privilege].
3-1 (d) If privileged information is disclosed under Subsection
3-2 (b) or (c), on [On the filing of a petition under Subsection (c) of
3-3 this section, the court shall issue an order that:]
3-4 [(1) schedules the in camera review for a date not
3-5 later than the 45th day after the date the petition is filed; and]
3-6 [(2) authorizes the attorney representing the state to
3-7 remove the seal from the report to review the report, subject to
3-8 appropriate limitations on distribution or disclosure of the report
3-9 that are specified in the order to protect against unnecessary
3-10 disclosure.]
3-11 [(e) The attorney representing the state may consult with
3-12 enforcement agencies regarding the contents of the report as
3-13 necessary to prepare for the in camera review.]
3-14 [(f) Information used in preparation for the in camera
3-15 review under Subsection (e) of this section:]
3-16 [(1) is confidential;]
3-17 [(2) may not be used in any investigation or legal
3-18 proceeding; and]
3-19 [(3) is not subject to disclosure under Chapter 552,
3-20 Government Code.]
3-21 [(g) Subsection (f) of this section does not apply to
3-22 information a court finds to be subject to disclosure.]
3-23 [(h) On] the motion of a party, a court or the appropriate
3-24 administrative official shall suppress evidence offered in any
3-25 civil[, criminal,] or administrative proceeding that arises or is
3-26 derived from review, disclosure, or use of information obtained
3-27 under this section if the review, disclosure, or use is not
3-28 authorized under Section 8 [this section]. A party having received
3-29 information under Subsection (b) or (c) [allegedly failing to
3-30 comply with this section] has the burden of proving that the
3-31 evidence offered did not arise and was not derived from the
3-32 [unauthorized] review of privileged information[, disclosure, or
3-33 use].
3-34 [(i) The parties may stipulate to entry of an order
3-35 directing that specific information contained in an audit report is
3-36 or is not subject to the privilege.]
3-37 [(j) A court may compel the disclosure of only those
3-38 portions of an audit report relevant to issues in dispute in the
3-39 proceeding.]
3-40 [(k) A court may find a person who discloses information in
3-41 violation of this section in contempt of court and may order other
3-42 appropriate relief.]
3-43 SECTION 7. Sections 10(a), (b), (d), (f), and (h), Texas
3-44 Environmental, Health, and Safety Audit Privilege Act (Article
3-45 4447cc, Vernon's Texas Civil Statutes), are amended to read as
3-46 follows:
3-47 (a) Except as provided by this section, a person who makes a
3-48 voluntary disclosure of a violation of an environmental or health
3-49 and safety law is immune from an administrative or[,] civil[, or
3-50 criminal] penalty for the violation disclosed.
3-51 (b) A disclosure is voluntary only if:
3-52 (1) the disclosure was made promptly after knowledge
3-53 of the information disclosed is obtained by the person;
3-54 (2) the disclosure was made in writing by certified
3-55 mail to an agency that has regulatory authority with regard to the
3-56 violation disclosed;
3-57 (3) an investigation of the violation was not
3-58 initiated or the violation was not independently detected by an
3-59 agency with enforcement jurisdiction before the disclosure was made
3-60 using certified mail;
3-61 (4) the disclosure arises out of a voluntary
3-62 environmental or health and safety audit;
3-63 (5) the person who makes the disclosure initiates an
3-64 appropriate effort to achieve compliance, pursues that effort with
3-65 due diligence, and corrects the noncompliance within a reasonable
3-66 time;
3-67 (6) the person making the disclosure cooperates with
3-68 the appropriate agency in connection with an investigation of the
3-69 issues identified in the disclosure; and
4-1 (7) the violation did not result in injury or imminent
4-2 and substantial risk of serious injury to one or more persons at
4-3 the site or [substantial] off-site substantial actual harm or
4-4 imminent and substantial risk of harm to persons, property, or the
4-5 environment.
4-6 (d) The immunity established by Subsection (a) of this
4-7 section does not apply and an administrative or [,] civil[, or
4-8 criminal] penalty may be imposed under applicable law if:
4-9 (1) the person who made the disclosure intentionally
4-10 or knowingly committed or was responsible within the meaning of
4-11 Section 7.02, Penal Code, for the commission of the disclosed
4-12 violation;
4-13 (2) the person who made the disclosure recklessly
4-14 committed or was responsible within the meaning of Section 7.02,
4-15 Penal Code, for the commission of the disclosed violation and the
4-16 violation resulted in substantial injury to one or more persons at
4-17 the site or off-site harm to persons, property, or the environment;
4-18 (3) the offense was committed intentionally or
4-19 knowingly by a member of the person's management or an agent of the
4-20 person and the person's policies or lack of prevention systems
4-21 contributed materially to the occurrence of the violation; [or]
4-22 (4) the offense was committed recklessly by a member
4-23 of the person's management or an agent of the person, the person's
4-24 policies or lack of prevention systems contributed materially to
4-25 the occurrence of the violation, and the violation resulted in
4-26 substantial injury to one or more persons at the site or off-site
4-27 harm to persons, property, or the environment; or
4-28 (5) the violation has resulted in a substantial
4-29 economic benefit which gives the violator a clear advantage over
4-30 its business competitors.
4-31 (f) In a civil or[,] administrative[, or criminal]
4-32 enforcement action brought against a person for a violation for
4-33 which the person claims to have made a voluntary disclosure, the
4-34 person claiming the immunity has the burden of establishing a prima
4-35 facie case that the disclosure was voluntary. After the person
4-36 claiming the immunity establishes a prima facie case of voluntary
4-37 disclosure, other than a case in which under Subsection (d) of this
4-38 section immunity does not apply, the enforcement authority has the
4-39 burden of rebutting the presumption by a preponderance of the
4-40 evidence or, in a criminal case, by proof beyond a reasonable
4-41 doubt.
4-42 (h) The immunity under this section does not apply if a
4-43 court or administrative law judge finds that the person claiming
4-44 the immunity has, after the effective date of this Act, (1)
4-45 repeatedly or continuously committed significant [serious]
4-46 violations, and (2) not attempted to bring the facility or
4-47 operation into compliance, so as to constitute a pattern of
4-48 disregard of environmental or health and safety laws. In order to
4-49 be considered a "pattern," the person must have committed a series
4-50 of violations that were due to separate and distinct events within
4-51 a three-year period at the same facility or operation.
4-52 SECTION 8. This Act takes effect September 1, 1997, and
4-53 applies only to an environmental or health and safety audit
4-54 prepared on or after that date.
4-55 SECTION 9. The importance of this legislation and the
4-56 crowded condition of the calendars in both houses create an
4-57 emergency and an imperative public necessity that the
4-58 constitutional rule requiring bills to be read on three several
4-59 days in each house be suspended, and this rule is hereby suspended.
4-60 * * * * *