What is the Texas Environmental, Health, and Safety Audit Privilege Act?

Enacted by the Texas Legislature and administered by the Texas Commission on Environmental Quality (TCEQ), the Texas Environmental, Health, and Safety Audit Privilege Act—the Audit Act for short—has been in effect since 1997, with the purpose to encourage voluntary compliance with environmental, health, and safety (EHS) laws. This act contains two main points:

• Providing immunity to the person (defined as an individual, corporation, partnership, or legal entity) from administrative or civil penalties for voluntarily disclosed EHS violations, and;
• Granting privilege to audit reports, protecting them from being used as evidence in civil or administrative proceedings.

These two privileges work together to encourage companies to be proactive with their compliance with environmental and occupational health and safety laws. The audits themselves can be rigorous and time consuming, as they assess a facility’s systems, processes, policies, and their compliance with regulatory standards. Ultimately, acting in accordance with the Audit Act allows companies to disclose and correct EHS violations in good faith on a more forgiving—yet reasonable—timeline and without fear of fines.

How do I take part in the Audit Act?

There are two required portions to participate in the Audit Act: the Notice of Audit (NOA) and the Disclosure of Violation (DOV), both of which are not privileged documents and are available to the public. The NOA is the letter that a person must submit to TCEQ before beginning an environmental audit to make use of the immunity granted by the Audit Act. Although audit reports hold the privilege provided by the Audit Act, documents, reports, and data required to be collected, developed, maintained, or reported under State or Federal law are still available to government bodies for review, and can be requested by the public. Additionally, the privilege provided by the Act does not apply to criminal proceedings. Once the audit commences, the person has six months to complete the audit and send a DOV to TCEQ, unless they have received a Request for Extension (RFE) approved by TCEQ. Ideally, the audit investigation would be as thorough as possible; any violations discovered by TCEQ that were not self-disclosed are not eligible for any privileges or immunities.

The DOV is the disclosure that promptly follows the completion of an environmental audit, detailing the dates, descriptions, and durations of any violations discovered, as well as the status and schedule for corrective actions. The privileges and immunities provided by the Audit Act are only granted if, among other things, the person does not conduct the audit in bad faith, the person making the disclosure makes appropriate efforts to achieve compliance, the person pursues those efforts with due diligence, and corrects the noncompliance within a reasonable time.

A person may submit an RFE—a letter requesting to extend the six-month period allowed for the completion of the audit—before the audit is completed and must include adequate details for TCEQ to determine whether a request is reasonable.

What if I just acquired a facility that is in the middle of an audit?

If an audit has started before the acquisition closing date, a NOA is not required; instead, a letter notifying TCEQ that the audit is continuing must be sent. If an audit is completed before an acquisition, then a DOV must be sent within 45 days of the acquisition closing date. If an RFE is submitted before the acquisition, it must also include a description of the relationship between the buyer and the seller.

How might the privileges be waived?

Audit privilege under the Audit Act does not apply to disclosures made to federal agencies, such as the United States Environmental Protection Agency, and such disclosure may waive the privilege. Additionally, audit reports submitted to TCEQ cannot be claimed as confidential.

How can ALL4 help?

ALL4 can provide EHS audits and assist in complying with the Audit Act, allowing you to look deeper to see if there are any EHS issues that need to be disclosed to TCEQ and subsequently corrected. If you would like to learn more, please contact Patrick Salvanera at psalvanera@all4inc.com for more information.