II

103D CONGRESS

2D SESSION S. 2371

To encourage owners and operators of facilities to conduct voluntary internal

audits of the compliance of the facilities with applicable Federal environmental laws, and for other purposes.

IN THE SENATE OF THE UNITED STATES

AUGUST 8, 1994

Mr. HATFIELD introduced the following bill; which was read twice and

referred to the Committee on Environment and Public Works

A BILL

To encourage owners and operators of facilities to conduct

voluntary internal audits of the compliance of the facilities with applicable Federal environmental laws, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Environmental Audit

5 Protection Act’’.

6 SEC. 2. PURPOSE.

7 The purpose of this Act is to encourage owners and

8 operators of facilities, and other persons conducting activi-
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1 ties, regulated under applicable environmental laws to con2 duct voluntary internal environmental audits of their com3 pliance programs and management systems and to assess

4 and improve compliance with applicable environmental

5 laws by protecting the confidentiality of communications

6 relating to voluntary internal environmental audits.

7 SEC. 3. DEFINITIONS.

8 As used in this Act:

9 (1) APPLICABLE ENVIRONMENTAL LAW.—The

10 term ‘‘applicable environmental law’’ means—

11 (A) the Federal Insecticide, Fungicide, and

12 Rodenticide Act (7 U.S.C. 136 et seq.);

13 (B) the Toxic Substances Control Act (15

14 U.S.C. 2601 et seq.);

15 (C) the Federal Water Pollution Control

16 Act (33 U.S.C. 1251 et seq.);

17 (D) the Oil Pollution Act of 1990 (33

18 U.S.C. 2701 et seq.);

19 (E) title XIV of the Public Health Service

20 Act (commonly known as the ‘‘Safe Drinking

21 Water Act’’) (42 U.S.C. 300f et seq.);

22 (F) the Noise Control Act of 1972 (42

23 U.S.C. 4901 et seq.);

24 (G) the Solid Waste Disposal Act (42

25 U.S.C. 6901 et seq.);
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1 (H) the Clean Air Act (42 U.S.C. 7401 et

2 seq.);

3 (I) the Comprehensive Environmental Re4 sponse, Compensation, and Liability Act of

5 1980 (42 U.S.C. 9601 et seq.);

6 (J) the Emergency Planning and Commu7 nity Right-To-Know Act of 1986 (42 U.S.C.

8 11001 et seq.); and

9 (K) the Pollution Prevention Act of 1990

10 (42 U.S.C. 13101 et seq.).

11 (2) ENVIRONMENTAL AUDIT.—The term ‘‘envi12 ronmental audit’’ means a voluntary, internal, and

13 comprehensive evaluation of a facility or an activity

14 at a facility regulated under an applicable environ15 mental law, or of a management system related to

16 the facility or activity, that—

17 (A) is designed to identify and prevent

18 noncompliance and to improve compliance with

19 an applicable environmental law; and

20 (B) is conducted by the owner or operator

21 of the facility, by an employee of the owner or

22 operator, by another person conducting an ac23 tivity regulated under an applicable environ24 mental law, or by an independent contractor.

25 (3) ENVIRONMENTAL AUDIT REPORT.—
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1 (A) IN GENERAL.—The term ‘‘environ2 mental audit report’’—

3 (i) means a report comprised of 1 or

4 more components, each labeled ‘‘Environ5 mental Audit Report: Privileged Docu6 ment’’, that is prepared as a result of an

7 environmental audit; and

8 (ii) includes any supporting informa9 tion (such as a field note or record of ob10 servations, finding, opinion, suggestion,

11 conclusion, draft, memorandum, drawing,

12 photograph, computer-generated or elec13 tronically recorded information, map,

14 chart, graph, or survey) that is collected or

15 developed for the primary purpose and in

16 the course of the environmental audit.

17 (B) COMPONENT.—As used in subpara18 graph (A), the term ‘‘component’’ means any of

19 the following 3 items:

20 (i) An audit report prepared by the

21 auditor, which may include information on

22 the scope of the audit, information gained

23 from the audit, and conclusions and rec24 ommendations relating to the audit, to25 gether with exhibits and appendices.
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1 (ii) A memorandum or other docu2 ment that analyzes a portion or all of the

3 audit report and that may include informa4 tion concerning the implementation of the

5 report.

6 (iii) An implementation plan that ad7 dresses the correction of past noncompli8 ance, the improvement of current compli9 ance, and the prevention of future non10 compliance.

11 SEC. 4. PROTECTION OF ENVIRONMENTAL AUDITS.

12 (a) GENERAL RULE.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2) and subsections (b) and (c), an environ15 mental audit report shall not be subject to discovery

16 and shall not be admitted into evidence in any civil

17 or criminal action or administrative proceeding be18 fore a Federal court or agency.

19 (2) EXCLUSION OF CERTAIN TYPES OF INFOR20 MATION.—Paragraph (1) shall not apply to—

21 (A) any document, communication, data,

22 report, or other information required to be col23 lected, developed, maintained, reported, or oth24 erwise made available to a regulatory agency

25 pursuant to an applicable environmental law, or
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1 other Federal, State, or local law, ordinance,

2 regulation, permit, or order;

3 (B) information obtained by observation,

4 sampling, or monitoring by any regulatory

5 agency; or

6 (C) information obtained from a source

7 independent of the environmental audit.

8 (b) WAIVER.—Subsection (a) shall not apply with re9 spect to an environmental audit report to the extent that

10 subsection (a) is waived expressly or by implication by the

11 owner or operator of a facility, or other person conducting

12 an activity, that is regulated under an applicable environ13 mental law, who prepared or caused to be prepared the

14 environmental audit report.

15 (c) INAPPLICABILITY OF GENERAL RULE.—

16 (1) CIVIL AND ADMINISTRATIVE PROCEED17 INGS.—

18 (A) IN GENERAL.—In a civil action or an

19 administrative proceeding, subsection (a) shall

20 not apply to an environmental audit report, or

21 a portion of the report, if—

22 (i) subsection (a) is invoked for a

23 fraudulent purpose; or
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1 (ii)(I) the report or portion provides

2 evidence of noncompliance with an applica3 ble environmental law; and

4 (II) appropriate efforts to achieve

5 compliance with the law were not promptly

6 initiated and pursued with reasonable dili7 gence.

8 (B) DETERMINATION OF INAPPLICABIL9 ITY.—In determining whether subsection (a)

10 applies to a report or portion of a report, a

11 court or administrative law judge shall conduct

12 an in camera review of the report or portion of

13 the report.

14 (2) CRIMINAL PROCEEDINGS.—

15 (A) IN GENERAL.—In a criminal proceed16 ing, subsection (a) shall not apply to an envi17 ronmental audit report, or a portion of the re18 port, if—

19 (i) subsection (a) is invoked for a

20 fraudulent purpose;

21 (ii)(I) the report or portion provides

22 evidence of noncompliance with an applica23 ble environmental law; and

24 (II) appropriate efforts to achieve

25 compliance with the law were not promptly
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1 initiated and pursued with reasonable dili2 gence; or

3 (iii)(I) the report or portion contains

4 evidence relevant to the commission of an

5 offense under an applicable environmental

6 law;

7 (II) the Attorney General has a com8 pelling need for the information;

9 (III) the information is not otherwise

10 available; and

11 (IV) the Attorney General is unable to

12 obtain the substantial equivalent of the in13 formation by any means without incurring

14 unreasonable cost and delay.

15 (B) DETERMINATION OF INAPPLICABILITY

16 OF GENERAL RULE.—In determining whether

17 subsection (a) applies to a report or portion of

18 a report, a court or administrative law judge

19 shall conduct an in camera review of the report

20 or portion of the report in accordance with sub21 paragraph (C).

22 (C) IN CAMERA REVIEW PROCEEDINGS.—

23 (i) IN GENERAL.—If the Attorney

24 General has probable cause to believe that

25 an offense has been committed under an
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1 applicable environmental law based on in2 formation obtained from a source inde3 pendent of an environmental audit report,

4 the Attorney General may obtain an envi5 ronmental audit report, or a portion of the

6 report, for which subsection (a) is invoked

7 pursuant to a search warrant, criminal

8 subpoena, or discovery in a criminal pro9 ceeding. The Attorney General shall imme10 diately place the report under seal and

11 shall not review or disclose the contents of

12 the report.

13 (ii) FILING OF PETITION.—Not later

14 than 30 days after the Attorney General

15 obtains an environmental audit report, or a

16 portion of the report, under clause (i), the

17 owner or operator, or other person con18 ducting an activity regulated under an ap19 plicable environmental law, who prepared

20 or caused to be prepared the report, may

21 file with the court a petition requesting an

22 in camera hearing on whether subsection

23 (a) applies to the environmental audit re24 port or portion. Failure by the owner or
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1 operator or other person to file the petition

2 shall constitute a waiver of subsection (a).

3 (iii) SCHEDULING ORDER.—As soon

4 as practicable after the filing of the peti5 tion, the court shall issue an order schedul6 ing an in camera hearing on the petition

7 not later than 45 days after the filing of

8 the petition.

9 (iv) REVIEW BY THE ATTORNEY GEN10 ERAL.—

11 (I) IN GENERAL.—An order de12 scribed in clause (iii) shall allow the

13 Attorney General to remove the seal

14 from the report to review the report

15 and shall place appropriate limitations

16 on the distribution and review of the

17 report to protect against unauthorized

18 disclosure. The Attorney General may

19 consult with any enforcement agency

20 regarding the contents of the report

21 as the Attorney General determines is

22 necessary to prepare for the in camera

23 hearing.

24 (II) USE OF INFORMATION FROM

25 REVIEW.—The information used in
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1 preparation for the in camera hearing

2 shall not be used in any investigation

3 or in any proceeding against the de4 fendant, and shall be kept confiden5 tial—

6 (aa) unless and until the in7 formation is found by the court

8 to be subject to disclosure under

9 subparagraph (A); or

10 (bb) unless the person using

11 the information demonstrates

12 that the information was ob13 tained from a source independent

14 of the environmental audit re15 port.

16 (v) STIPULATIONS BY THE PAR17 TIES.—With respect to proceedings under

18 this subparagraph, the parties may at any

19 time stipulate to entry of an order direct20 ing that subsection (a) does or does not

21 apply to specific information contained in

22 an environmental audit report.

23 (3) RELEVANCE REQUIREMENT.—Upon making

24 a determination under paragraph (1) or (2) that an

25 environmental audit report, or a portion of the re-
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1 port, should be subject to disclosure, the court may

2 require the disclosure of only such portions of the

3 report as are relevant to an issue in dispute in the

4 proceeding.

5 (d) BURDENS OF PROOF.—

6 (1) IN GENERAL.—Except as provided in para7 graphs (2) and (3), a party invoking the protection

8 of subsection (a) shall have the burden of proving

9 the applicability of subsection (a), including, if there

10 is evidence of noncompliance with an applicable envi11 ronmental law, the burden of proving that appro12 priate efforts to achieve compliance were promptly

13 initiated and pursued with reasonable diligence.

14 (2) FRAUD IN A CIVIL ACTION.—If a party

15 seeks discovery under subsection (c)(1)(A)(i), the

16 party shall have the burden of proving that sub17 section (a) is invoked for a fraudulent purpose.

18 (3) ATTORNEY GENERAL.—If the Attorney

19 General seeks discovery under subsection

20 (c)(2)(A)(iii), the Attorney General shall have the

21 burden of proving the matters described in sub22 section (c)(2)(A)(iii).

23 SEC. 5. EFFECT ON OTHER RULES.

24 Nothing in this Act shall limit, waive, or abrogate the

25 scope or nature of any statutory or common law rule re-
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1 garding discovery or admissibility of evidence, including

2 the attorney-client privilege and the work product doc3 trine.

4 SEC. 6. APPLICABILITY.

5 This Act shall apply to each Federal civil or criminal

6 action or administrative proceeding that is commenced

7 after the date of enactment of this Act.

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