Texas Vernon's Texas Civil Statutes - Article 4447cc. Environmental, Health, And Safety Audit Privilege Act
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Art. 4447cc. ENVIRONMENTAL, HEALTH, AND SAFETY AUDIT
PRIVILEGE ACT.
Short Title
Sec. 1. This Act may be cited as the Texas Environmental,
Health, and Safety Audit Privilege Act.
Purpose
Sec. 2. The purpose of this Act is to encourage voluntary
compliance with environmental and occupational health and safety
laws.
Definitions
Sec. 3. (a) In this Act:
(1) "Audit report" means an audit report described by
Section 4 of this Act.
(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.
(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 any
permit issued under those laws conducted by an owner or operator, an
employee of the owner or operator, or an independent contractor of:
(A) a regulated facility or operation; or
(B) an activity at a regulated facility or operation.
(4) "Owner or operator" means a person who owns or operates
a regulated facility or operation.
(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.
(6) "Person" means an individual, corporation, business
trust, partnership, association, and any other legal entity.
(7) "Regulated facility or operation" means a facility or
operation that is regulated under an environmental or health and
safety law.
(b) A person acts intentionally for purposes of this Act if
the person acts intentionally within the meaning of Section 6.03,
Penal Code.
(c) For purposes of this Act, a person acts knowingly, or
with knowledge, with respect to the nature of the person's conduct
when the person is aware of the person's physical acts. A person
acts knowingly, or with knowledge, with respect to the result of the
person's conduct when the person is aware that the conduct will
cause the result.
(d) A person acts recklessly or is reckless for purposes of
this Act if the person acts recklessly or is reckless within the
meaning of Section 6.03, Penal Code.
(e) To fully implement the privilege established by this
Act, the term "environmental or health and safety law" shall be
construed broadly.
Audit Report
Sec. 4. (a) An audit report is a report that includes each
document and communication, other than those set forth in Section 8
of this Act, produced from an environmental or health and safety
audit.
(b) General components that may be contained in a completed
audit report include:
(1) a report prepared by an auditor, monitor, or similar
person, which may include:
(A) a description of the scope of the audit;
(B) the information gained in the audit and findings,
conclusions, and recommendations; and
(C) exhibits and appendices;
(2) memoranda and documents analyzing all or a portion of
the materials described by Subdivision (1) of this subsection or
discussing implementation issues; and
(3) an implementation plan or tracking system to correct
past noncompliance, improve current compliance, or prevent future
noncompliance.
(c) The types of exhibits and appendices that may be
contained in an audit report include supporting information that is
collected or developed for the primary purpose of and in the course
of an environmental or health and safety audit, including:
(1) interviews with current or former employees;
(2) field notes and records of observations;
(3) findings, opinions, suggestions, conclusions,
guidance, notes, drafts, and memoranda;
(4) legal analyses;
(5) drawings;
(6) photographs;
(7) laboratory analyses and other analytical data;
(8) computer-generated or electronically recorded
information;
(9) maps, charts, graphs, and surveys; and
(10) other communications associated with an environmental
or health and safety audit.
(d) To facilitate identification, each document in an audit
report should be labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT,"
or labeled with words of similar import. Failure to label a
document under this section does not constitute a waiver of the
audit privilege or create a presumption that the privilege does or
does not apply.
(e) 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.
Privilege
Sec. 5. (a) An audit report is privileged as provided in this
section.
(b) Except as provided in Sections 6, 7, and 8 of this Act,
any part of an audit report is privileged and is not admissible as
evidence or subject to discovery in:
(1) a civil action, whether legal or equitable; or
(2) an administrative proceeding.
(c) A person, when called or subpoenaed as a witness, cannot
be compelled to testify or produce a document related to an
environmental or health and safety audit if:
(1) the testimony or document discloses any item listed in
Section 4 of this Act that was made as part of the preparation of an
environmental or health and safety audit report and that is
addressed in a privileged part of an audit report; and
(2) for purposes of this subsection only, the person is:
(A) a person who conducted any portion of the audit but did
not personally observe the physical events;
(B) a person to whom the audit results are disclosed under
Section 6(b) of this Act; or
(C) a custodian of the audit results.
(d) A person who conducts or participates in the preparation
of an environmental or health and safety audit and who has actually
observed physical events of violation, may testify about those
events but may not be compelled to testify about or produce
documents related to the preparation of or any privileged part of an
environmental or health and safety audit or any item listed in
Section 4 of this Act.
(e) An employee of a state agency may not request, review,
or otherwise use an audit report during an agency inspection of a
regulated facility or operation, or an activity of a regulated
facility or operation.
(f) A party asserting the privilege described in this
section has the burden of establishing the applicability of the
privilege.
Exception: Waiver
Sec. 6. (a) The privilege described by Section 5 of this Act
does not apply to the extent the privilege is expressly waived by
the owner or operator who prepared the audit report or caused the
report to be prepared.
(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;
(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.
(c) A party to a confidentiality agreement described in
Subsection (b)(2) of this section who violates that agreement is
liable for damages caused by the disclosure and for any other
penalties stipulated in the confidentiality agreement.
(d) Information that is disclosed under Subsection (b)(3)
of this section is confidential and is not subject to disclosure
under Chapter 552, Government Code. A public entity, public
employee, or public official who discloses information in violation
of this subsection is subject to any penalty provided in Chapter
552, Government Code. It is an affirmative defense to the clerical
dissemination of a privileged audit report that the report was not
clearly labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT" or words
of similar import. The lack of labeling may not be raised as a
defense if the entity, employee, or official knew or had reason to
know that the document was a privileged audit report.
(e) Nothing in this section shall be construed to circumvent
the protections provided by federal or state law for individuals
that disclose information to law enforcement authorities.
Exception: Disclosure Required by Court or Administrative Hearings
Official
Sec. 7. (a) A court or administrative hearings official with
competent jurisdiction may require disclosure of a portion of an
audit report in a civil or administrative proceeding if the court or
administrative hearings official determines, after an in camera
review consistent with the appropriate rules of procedure, that:
(1) the privilege is asserted for a fraudulent purpose;
(2) the portion of the audit report is not subject to the
privilege under Section 8 of this Act; or
(3) the portion of the audit report shows evidence of
noncompliance with an environmental or health and safety law and
appropriate efforts to achieve compliance with the law were not
promptly initiated and pursued with reasonable diligence after
discovery of noncompliance.
(b) A party seeking disclosure under this section has the
burden of proving that Subsection (a)(1), (2), or (3) of this
section applies.
(c) Notwithstanding Chapter 2001, Government Code, a
decision of an administrative hearings official under Subsection
(a)(1), (2), or (3) of this section is directly appealable to a
court of competent jurisdiction without disclosure of the audit
report to any person unless so ordered by the court.
(d) A person claiming the privilege is subject to sanctions
as provided by Rule 215 of the Texas Rules of Civil Procedure or to a
fine not to exceed $10,000 if the court finds, consistent with
fundamental due process, that the person intentionally or knowingly
claimed the privilege for unprotected information as provided in
Section 8 of this Act.
(e) A determination of a court under this section is subject
to interlocutory appeal to an appropriate appellate court.
Nonprivileged Materials
Sec. 8. (a) The privilege described in this Act does not apply
to:
(1) a document, communication, datum, or report or other
information required by a regulatory agency to be collected,
developed, maintained, or reported under a federal or state
environmental or health and safety law;
(2) information obtained by observation, sampling, or
monitoring by a regulatory agency; or
(3) information obtained from a source not involved in the
preparation of the environmental or health and safety audit report.
(b) This section does not limit the right of a person to
agree to conduct and disclose an audit report.
Review of Privileged Documents by Governmental Authority
Sec. 9. (a) Where an audit report is obtained, reviewed, or
used in a criminal proceeding, the administrative or civil
evidentiary privilege created by this Act is not waived or
eliminated for any other purpose.
(b) Notwithstanding the privilege established under this
Act, a regulatory agency may review information that is required to
be available under a specific state or federal law, but such review
does not waive or eliminate the administrative or civil evidentiary
privilege where applicable.
(c) If information is required to be available to the public
by operation of a specific state or federal law, the governmental
authority shall notify the person claiming the privilege of the
potential for public disclosure prior to obtaining such information
under Subsection (a) or (b).
(d) If privileged information is disclosed under Subsection
(b) or (c), on the motion of a party, a court or the appropriate
administrative official shall suppress evidence offered in any
civil or administrative proceeding that arises or is derived from
review, disclosure, or use of information obtained under this
section if the review, disclosure, or use is not authorized under
Section 8. A party having received information under Subsection (b)
or (c) has the burden of proving that the evidence offered did not
arise and was not derived from the review of privileged
information.
Voluntary Disclosure; Immunity
Sec. 10. (a) Except as provided by this section, a person who
makes a voluntary disclosure of a violation of an environmental or
health and safety law is immune from an administrative or civil
penalty for the violation disclosed.
(b) A disclosure is voluntary only if:
(1) the disclosure was made promptly after knowledge of the
information disclosed is obtained by the person;
(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.
(c) A disclosure is not voluntary for purposes of this
section if it is a report to a regulatory agency required solely by
a specific condition of an enforcement order or decree.
(d) The immunity established by Subsection (a) of this
section does not apply and an administrative or civil penalty may be
imposed under applicable law if:
(1) the person who made the disclosure intentionally or
knowingly committed or was responsible within the meaning of
Section 7.02, Penal Code, for the commission of the disclosed
violation;
(2) the person who made the disclosure recklessly committed
or was responsible within the meaning of Section 7.02, Penal Code,
for the commission of the disclosed violation and the violation
resulted in substantial injury to one or more persons at the site or
off-site harm to persons, property, or the environment;
(3) the offense was committed intentionally or knowingly by
a member of the person's management or an agent of the person and
the person's policies or lack of prevention systems contributed
materially to the occurrence of the violation;
(4) the offense was committed recklessly by a member of the
person's management or an agent of the person, the person's policies
or lack of prevention systems contributed materially to the
occurrence of the violation, and the violation resulted in
substantial injury to one or more persons at the site or off-site
harm to persons, property, or the environment; or
(5) the violation has resulted in a substantial economic
benefit which gives the violator a clear advantage over its
business competitors.
(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) other relevant considerations.
(f) In a civil or administrative enforcement action brought
against a person for a violation for which the person claims to have
made a voluntary disclosure, the person claiming the immunity has
the burden of establishing a prima facie case that the disclosure
was voluntary. After the person claiming the immunity establishes
a prima facie case of voluntary disclosure, other than a case in
which under Subsection (d) of this section immunity does not apply,
the enforcement authority has the burden of rebutting the
presumption by a preponderance of the evidence or, in a criminal
case, by proof beyond a reasonable doubt.
(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.
(h) The immunity under this section does not apply if a
court or administrative law judge finds that the person claiming
the immunity has, after the effective date of this Act, (1)
repeatedly or continuously committed significant violations, and
(2) not attempted to bring the facility or operation into
compliance, so as to constitute a pattern of disregard of
environmental or health and safety laws. In order to be considered
a "pattern," the person must have committed a series of violations
that were due to separate and distinct events within a three-year
period at the same facility or operation.
(i) A violation that has been voluntarily disclosed and to
which immunity applies must be identified in a compliance history
report as being voluntarily disclosed.
Circumvention by Rule Prohibited
Sec. 11. A regulatory agency may not adopt a rule or impose a
condition that circumvents the purpose of this Act.
Applicability
Sec. 12. The privilege created by this Act applies to
environmental or health and safety audits that are conducted on or
after the effective date of this Act.
Relationship to Other Recognized Privileges
Sec. 13. This Act does not limit, waive, or abrogate the scope
or nature of any statutory or common law privilege, including the
work product doctrine and the attorney-client privilege.
Acts 1995, 74th Leg., ch. 219, Sec. 1 to 13, eff. May 23, 1995. Sec.
5(b) amended by Acts 1997, 75th Leg., ch. 206, Sec. 1, eff. Sept. 1,
1997; Sec. 6(b) amended by Acts 1997, 75th Leg., ch. 206, Sec. 2,
eff. Sept. 1, 1997; Sec. 6(d) amended by Acts 1997, 75th Leg., ch.
206, Sec. 3, eff. Sept. 1, 1997; Sec. 6(e) added by Acts 1997, 75th
Leg., ch. 206, Sec. 2, eff. Sept. 1, 1997; Sec. 7(a) amended by Acts
1997, 75th Leg., ch. 206, Sec. 5, eff. Sept. 1, 1997; Sec. 7(d)
amended by Acts 1997, 75th Leg., ch. 206, Sec. 4, eff. Sept. 1,
1997; Sec. 9 amended by Acts 1997, 75th Leg., ch. 206, Sec. 6, eff.
Sept. 1, 1997; Sec. 10(a), (b), (d), (f), (h) amended by Acts 1997,
75th Leg., ch. 206, Sec. 7, eff. Sept. 1, 1997.
Article: 4413(32e) 4413(34e) 4413(37) 4413(42a) 4413(47e-1) 4413(56a) 4438g 4447cc 4498c 4477-7j 4477-7k 4512.5 5190.6 5190.14 5196
Last modified: August 11, 2007
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