CHAPTER 1. HEALTH BOARDS AND LAWS - Texas Statutes

VERNON'S CIVIL STATUTES

TITLE 71. HEALTH--PUBLIC

CHAPTER 1. HEALTH BOARDS AND LAWS

Art. 4438g. CONDITIONS ON MEDICAID REIMBURSEMENT. The Texas

Department of Human Services shall not impose any conditions on

Medicaid reimbursement of rural health clinics that are more

stringent than those imposed by the Rural Health Clinic Services

Act of 1977 (Pub. L. No. 95-210) or the laws of this state

regulating the practice of medicine, pharmacy, or professional

nursing.

Acts 1989, 71st Leg., ch. 1027, Sec. 26, eff. Sept. 1, 1989.

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.