### From: Jones, Danielle [ mailto:Danielle_Y_Jones@omb.eop.gov ]

Sent: Thursday, February 18, 2016 5:28 PM

To: Cogliano, Gerain < Cogliano.Gerain@epa.gov > Subject: SBA Comment
Attachments :

Hi Gerain,

This is the first of SBA comments and Kevin wanted me to share this with you right awa y. Let me know if we should set up a call to discuss.

Best,
Danielle

Danielle Y. Jones Policy Analyst Office of Management and Budget Phone: (202) 395

- 1741 | djones@omb.eop.gov

### Attachment: Document1. docx

SBA Comment 02/18/16

Attorney

- Client Privilege for Audit Reports

This is the new revised text:



### Proposed §§ 68.59(c)(2) and 68.80(c)(2) , if finalized, would include requirements for the

retention of reports and records by the third

- party auditors

. Proposed §§ 68.59(c)(3) and 68.80(c)(3) , if

finalized, would require the audit report to be submitted to the implementing agency at the same time, or

before, it is provided it to the owner or operator

. Finally, EPA is proposing in §§ 68.59(c)(4) and

68.80( c)(4) that the audit report and related records cannot be claimed as attorney

- client communications

or as attorney work products even if the auditors are themselves, or are managed by or report to,

attorneys

. EPA seeks comment on these proposed requirement s including any legal concerns that may

result from the provision that limits attorney

- related privileges

.

DISCUSSION:

EPA does not indicate why it needs to waive attorney client privileges for THIRD PARTIES. EPA should explain why it i sn’t enough for the EPA or the implementing agencies to have access. If it wants to request comment on this, it should explicitly say. EPA wants to get access for third parties BECAUSE

- and then solicit comment on that. If not, EPA should simply say t hat implementing agencies will have access irrrespective of
attorney

- client claims

- and not the current text which waives it for all parties.

The request for “legal concerns” does not address our specific complaint and doesn’t alert the reader to
the third party litigation problem. Commented [A1]: IA v.3 Comment #7 Page 80, regarding Third Party Reports: EPA could require production of such reports despite the existence of the attorney client privilege. Instead of the current regulatory language which makes thes e materials potentially available to third parties in litigation, why not state that these materials are available to EPA and implementing agencies without regard to the applicability of an attorney client privilege? This achieves EPA's purpose without ma king this information potentially available to the public. EPA does not have the authority to waive attorney client privilege for non

- governmental parties.

Commented [A4]: IA Comment #32 Page 76, regarding “Finally, EPA is proposing in §§68.59(c)(4) and 68.80(c)(4) that the audit report and related records cannot be claimed as confidential attorney work products even if the auditors are themselves, or managed by or report to, attorneys.” EPA should not interfere with attorney client privilege. This is unnecessary, and would compromise the honesty and value of the audit. It should suffice to
have access to the au dit, if needed by the agency. This provision could harm companies who are trying to perform a proper audit, but would subject them to litigation liability. What is the justification for such a provision? Commented [A2]: EPA added preamble language requesting
comment on this concern.

Commented [KLB3]: EPA does not indicate why it need s to waive attorney client privileges for THIRD PARTIES. The comment below suggests this is only needed for implementing agencies. We

agree.

EPA should explain why it isn’t enough for the EPA or the implementing agencies to have access. If it wants to r equest comment on this, it should explicitly say so. EPA wants to get access for third parties BECAUSE

- and then solicit comment on that. If not, EPA should simply say that implementing agencies will have access irrespective of attorney

- client claims

- and not the current text which waives it for all parties.

Commented [A5]: This is to prevent o/o from shielding regulatory compliance documents under the guise of attorney

client privilege. These documents should be available to the implementing agency for compliance monitoring purposes.