By: Eltife, Hegar S.B. No. 1300
 
 
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.  Subsection (a), Section 3, 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 or operation 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"
  or "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 [those laws] conducted by an owner or operator, an
  employee of an [the] owner or operator, a person, including an
  employee or independent contractor of the person, that is
  considering the acquisition of a regulated facility or operation,
  or an independent contractor of:
                     (A)  a regulated facility or operation; or
                     (B)  an activity at a regulated facility 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 adding Subsections (d-1) and (f) and
  amending Subsection (e) to read as follows:
         (d-1)  A person that begins an audit before becoming the
  owner of a regulated facility or operation may continue the audit
  after the acquisition closing date if the person gives notice under
  Section 10(g-1).
         (e)  Unless [Once initiated, an audit 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, an audit must be completed within a reasonable
  time not to exceed six months after:
               (1)  the date the audit is initiated; or
               (2)  the acquisition closing date, if the person
  continues the audit under Subsection (d-1).
         (f)  Subsection (e)(1) does not apply to an audit conducted
  before the acquisition closing date by a person that is considering
  the acquisition of the regulated facility or operation.
         SECTION 3.  Subsection (b), Section 6, 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 of [retained by]
  the owner or operator;
                     (E)  a person considering the acquisition of the
  regulated facility or operation that is the subject of the audit; or
                     (F)  an employee, temporary employee, contract
  employee, legal representative, officer, director, partner, or
  independent contractor of 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
               (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 amending Subsections (b), (e), and (g) and
  adding Subsections (b-1) and (g-1) to read as follows:
         (b)  A disclosure is voluntary only if:
               (1)  the disclosure was made:
                     (A)  promptly after knowledge of the information
  disclosed is obtained by the person; or
                     (B)  not more than the 45th day after the
  acquisition closing date, if the violation was discovered during an
  audit conducted before the acquisition closing date by a person
  considering the acquisition of the regulated facility or operation;
               (2)  the disclosure was made in writing by certified
  mail to an agency that has regulatory authority with regard to the
  violation disclosed;
               (3)  an investigation of the violation was not
  initiated or the violation was not independently detected by an
  agency with enforcement jurisdiction before the disclosure was made
  using certified mail;
               (4)  the disclosure arises out of a voluntary
  environmental or health and safety audit;
               (5)  the person who makes the disclosure initiates an
  appropriate effort to achieve compliance, pursues that effort with
  due diligence, and corrects the noncompliance within a reasonable
  time;
               (6)  the person making the disclosure cooperates with
  the appropriate agency in connection with an investigation of the
  issues identified in the disclosure; and
               (7)  the violation did not result in injury or imminent
  and substantial risk of serious injury to one or more persons at the
  site or off-site substantial actual harm or imminent and
  substantial risk of harm to persons, property, or the environment.
         (b-1)  For a disclosure described by Subsection (b)(1)(B),
  the person making the disclosure must certify in the disclosure
  that before the acquisition closing date:
               (1)  the person was not responsible for the
  environmental, health, or safety compliance at the regulated
  facility or operation that is subject to the disclosure;
               (2)  the person did not have the largest ownership
  share of the seller;
               (3)  the seller did not have the largest ownership
  share of the person; and
               (4)  the person and the seller did not have a common
  corporate parent or a common majority interest owner.
         (e)  A penalty that is imposed under Subsection (d) of this
  section should, to the extent appropriate, be mitigated by factors
  such as:
               (1)  the voluntariness of the disclosure;
               (2)  efforts by the disclosing party to conduct
  environmental or health and safety audits;
               (3)  remediation;
               (4)  cooperation with government officials
  investigating the disclosed violation; [or]
               (5)  the period of ownership of the regulated facility
  or operation; or
               (6)  other relevant considerations.
         (g)  In order to receive immunity under this section, a
  facility conducting an environmental or health and safety audit
  under this Act must provide [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
  conducted before the acquisition closing date by a person
  considering the acquisition of the regulated facility or operation
  that is the subject of the audit.
         (g-1)  A person that begins an audit before becoming the
  owner of the regulated facility or operation may continue the audit
  after the acquisition closing date if, not more than the 45th day
  after the acquisition closing date, the person provides notice to
  an appropriate regulatory agency of the fact that the person
  intends to continue an ongoing audit. The notice shall specify the
  facility or portion of the facility being audited, the date the
  audit began, and the general scope of the audit. The person must
  certify in the notice that before the acquisition closing date:
               (1)  the person was not responsible for the scope of the
  environmental, health, or safety compliance being audited at the
  regulated facility or operation;
               (2)  the person did not have the largest ownership
  share of the seller;
               (3)  the seller did not have the largest ownership
  share of the person; and
               (4)  the person and the seller did not have a common
  corporate parent or a common majority interest owner.
         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.