83R7569 JRR-D

By: Lewis H.B. No. 3154

A BILL TO BE ENTITLED

AN ACT

relating to environmental or health and safety audits under the Texas Environmental, Health, and Safety Audit Privilege Act.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 3(a), Texas Environmental, Health, and Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) In this Act:

(1) "Acquisition closing date" means the date on which ownership of, or a direct or indirect majority interest in the ownership of, a regulated facility is acquired in an asset purchase, equity purchase, merger, or similar transaction.

(2) "Audit report" means an audit report described by Section 4 of this Act.

(3) [(2)] "Environmental or health and safety law" means:

(A) a federal or state environmental or occupational health and safety law; or

(B) a rule, regulation, or regional or local law adopted in conjunction with a law described by Paragraph (A) of this subdivision.

(4) [(3)] "Environmental or health and safety audit" means a systematic voluntary evaluation, review, or assessment of compliance with environmental or health and safety laws or with any permit issued under an environmental or health and safety law:

(A) [those laws] conducted by an owner or operator, an employee of an [the] owner or operator, or an independent contractor of:

(i) [(A)] a regulated facility or operation; or

(ii) [(B)] an activity at a regulated facility or operation; or

(B) conducted by a prospective purchaser of a facility, activity, or operation described by Paragraph (A) of this subdivision beginning before the acquisition closing date as part of the prospective purchaser's investigation concerning whether to complete the purchase of the facility, activity, or operation.

(5) [(4)] "Owner or operator" means a person who owns or operates a regulated facility or operation.

(6) [(5)] "Penalty" means an administrative, civil, or criminal sanction imposed by the state to punish a person for a violation of a statute or rule. The term does not include a technical or remedial provision ordered by a regulatory authority.

(7) [(6)] "Person" means an individual, corporation, business trust, partnership, association, and any other legal entity.

(8) [(7)] "Regulated facility or operation" means a facility or operation that is regulated under an environmental or health and safety law.

SECTION 2. Section 4, Texas Environmental, Health, and Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil Statutes), is amended by amending Subsection (e) and adding Subsection (f) to read as follows:

(e) Once initiated, an audit, as defined by Section 3(a)(4)(A) of this Act, must [shall] be completed within a reasonable time not to exceed six months unless an extension is approved by the governmental entity with regulatory authority over the regulated facility or operation based on reasonable grounds.

(f) If a prospective purchaser becomes an owner of a regulated facility or operation or an activity at a regulated facility or operation and continues an ongoing audit, as defined by Section 3(a)(4)(B) of this Act, after the acquisition closing date, the audit must be completed within a reasonable time not to exceed six months after the acquisition closing date unless an extension is approved by the governmental entity with regulatory authority over the regulated facility or operation based on reasonable grounds.

SECTION 3. Section 6(b), Texas Environmental, Health, and Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil Statutes), is amended to read as follows:

(b) Disclosure of an audit report or any information generated by an environmental or health and safety audit does not waive the privilege established by Section 5 of this Act if the disclosure:

(1) is made to address or correct a matter raised by the environmental or health and safety audit and is made only to:

(A) a person employed by the owner or operator, including temporary and contract employees;

(B) a legal representative of the owner or operator;

(C) an officer or director of the regulated facility or operation or a partner of the owner or operator; [or]

(D) an independent contractor retained by the owner or operator;

(E) a person who acquires the regulated facility or operation or the activity at a regulated facility or operation after beginning an audit as defined by Section 3(a)(4)(B) of this Act; or

(F) an employee, temporary employee, contract employee, legal representative, officer, director, partner, or independent contractor or a person described by Paragraph (E) of this subdivision;

(2) is made under the terms of a confidentiality agreement between the person for whom the audit report was prepared or the owner or operator of the audited facility or operation and:

(A) a partner or potential partner of the owner or operator of the facility or operation;

(B) a transferee or potential transferee of the facility or operation;

(C) a lender or potential lender for the facility or operation;

(D) a governmental official of a state; [or]

(E) a person or entity engaged in the business of insuring, underwriting, or indemnifying the facility or operation; or

(F) a person described by Subdivision (1)(E) of this subsection; or

(3) is made under a claim of confidentiality to a governmental official or agency by the person for whom the audit report was prepared or by the owner or operator.

SECTION 4. Section 10, Texas Environmental, Health, and Safety Audit Privilege Act (Article 4447cc, Vernon's Texas Civil Statutes), is amended by adding Subsection (b-1) and amending Subsection (g) to read as follows:

(b-1) A person who has owned a regulated facility or operation for a period of not more than six months after the acquisition closing date is immune from an administrative or civil penalty for a violation voluntarily disclosed as provided by Subsections (a) and (b) of this section only if:

(1) for a violation the person discovered after the acquisition closing date, the environmental or health and safety audit out of which the disclosure arises was an audit as defined by Section 3(a)(4)(B) of this Act and, not later than the 45th day after the acquisition closing date, the person notifies the governmental entity with regulatory authority over the regulated facility or operation that the audit is being conducted;

(2) for a violation the person discovered before the acquisition closing date, the disclosure is made not later than the 45th day after the acquisition closing date; and

(3) for a violation described by Subdivision (1) or (2) of this subsection, before the acquisition closing date:

(A) the person was not responsible for compliance at the regulated facility or operation with the environmental, health, or safety law violated;

(B) the person was not the person with the largest ownership share of the seller;

(C) the seller was not the person with the largest ownership share of the person; and

(D) the person and the seller did not have a common corporate parent or a common majority interest owner.

(g) In order to receive immunity under this section, a facility conducting an environmental or health and safety audit under this Act must give notice to an appropriate regulatory agency of the fact that it is planning to commence the audit. The notice shall specify the facility or portion of the facility to be audited, the anticipated time the audit will begin, and the general scope of the audit. The notice may provide notification of more than one scheduled environmental or health and safety audit at a time. This subsection does not apply to an audit defined by Section 3(a)(4)(B) of this Act.

SECTION 5. The change in law made by this Act applies only to an environmental or health and safety audit initiated on or after the effective date of this Act. An audit initiated before the effective date of this Act is governed by the law in effect on the date the audit was initiated, and the former law is continued in effect for that purpose.

SECTION 6. This Act takes effect September 1, 2013.