By: Eltife, Hegar S.B. No. 1300
(In the Senate - Filed March 7, 2013; March 13, 2013, read
first time and referred to Committee on Natural Resources;
April 2, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 10, Nays 0; April 2, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1300 By: Eltife
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.
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