Amendment ASA1-AB235

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1997 - 1998 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 1997 ASSEMBLY BILL 235

October 28, 1997 - Offered by Committee on Environment.

AB235-ASA1,1,3 An Act to create 299.94 and 905.20 of the statutes; relating to: creating a privilege for environmental audits, providing immunity for disclosures related to environmental audits and providing a penalty.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB235-ASA1, s. 1 Section 1. 299.94 of the statutes is created to read:

AB235-ASA1,1,5 299.94 Immunity for disclosures. (1) Definitions. In this section:

AB235-ASA1,1,6 (a) "Environmental audit" has the meaning given in s. 905.20 (1) (a).

AB235-ASA1,1,7 (b) "Environmental requirement" has the meaning given in s. 905.20 (1) (b).

AB235-ASA1,1,11 (2) Disclosure immunity. (a) A person who voluntarily discloses to the department information relating to a potential violation of an environmental requirement to the department shall be immune from the imposition of a civil or criminal penalty that could be imposed for the violation if all of the following apply:

AB235-ASA1,2,6 1. At the time that the voluntary disclosure is made to the department, the person making that disclosure provides the department with a certification, signed before the environmental audit occurred by the person or by an authorized representative of the person, that specifies the facility or portion of a facility to be audited, when the audit will begin and the general scope of the audit. The certification may relate to more than one scheduled environmental audit.

AB235-ASA1,2,9 2. The voluntary disclosure is made promptly after the person knew, on the basis of information obtained during an environmental audit, that a potential violation occurred.

AB235-ASA1,2,15 3. The person making the disclosure initiates an appropriate and good faith effort to achieve compliance, pursues compliance with due diligence and promptly corrects the noncompliance or condition after discovery of the violation. If evidence shows that the noncompliance is the failure to obtain a permit, an appropriate and good faith effort to achieve compliance may be demonstrated by the submittal of a complete permit application within a reasonable time.

AB235-ASA1,2,17 4. The person cooperates with any reasonable request by the department in any investigation that results from the disclosure.

AB235-ASA1,2,20 5. The environmental audit occurs before the person is made aware that he or she is under investigation by a regulatory agency for potential violations of environmental requirements.

AB235-ASA1,2,23 6. At the time that the voluntary disclosure is made to the department, the person making that disclosure provides the department with information showing that the conditions specified in subds. 2. to 5. have been satisfied.

AB235-ASA1,3,3 (b) If the person who voluntarily discloses information under par. (a) is a governmental unit, as defined in s. 939.648 (1), or a business entity, the immunity under this subsection applies to a director, officer, official, shareholder, trustee and managing employe, as defined in s. 49.498 (1) (e), of that person and to an employe of that person if the employe consents in writing to the disclosure.

AB235-ASA1,3,5 (3) Exceptions. A penalty may be imposed notwithstanding sub. (2) if any of the following applies:

AB235-ASA1,3,8 (a) The information disclosed under sub. (2) is required to be reported under a specific permit, license or approval condition or under an order issued by the department.

AB235-ASA1,3,10 (b) The violation resulted in serious actual harm or in imminent and substantial endangerment to human health or the environment.

AB235-ASA1,3,18 (c) Within 3 years before the disclosure, the person making the disclosure has been found by a court or administrative law judge to have knowingly committed a criminal act or committed serious violations that constitute a pattern of continuous or repeated violations of environmental requirements, settlement agreements, consent orders or judicial orders that were due to separate and distinct events giving rise to the violations. In determining whether a person has a pattern of continuous or repeated violations under this paragraph, the trier of fact shall base the decision on the compliance history of the specific facility involved in the disclosure.

AB235-ASA1,3,20 (d) The violation resulted in a substantial economic benefit that gave the violator a clear advantage over its business competitors.

AB235-ASA1,3,21 (e) The violation is of an administrative or judicial order.

AB235-ASA1,4,2 (3m) Departmental response. If the conditions of a voluntary disclosure under sub. (2) (a) are not met but a good faith effort was made to voluntarily disclose and resolve a violation detected in an environmental audit, the department shall consider the nature and extent of any good faith effort in deciding the appropriate enforcement response and shall mitigate any civil penalties based on a showing that one or more of the conditions under sub. (2) (a) were met.

AB235-ASA1,4,7 (4) Criminal penalties. Immunity provided for in this section does not apply to any criminal penalties if the criminal violation was the result of gross negligence by the owner or operator of a site or facility or was committed with knowledge by an owner or operator of a site or facility that an environmental requirement was violated.

AB235-ASA1,4,19 (5) Burden of proof. When the department commences an enforcement action against any person covered under sub. (2) for a violation of an environmental requirement based in whole or in part on information contained in an environmental audit and disclosed to the department, the disclosure shall be presumed to be voluntary. The person claiming that a disclosure is voluntary shall provide the supporting information required under sub. (2) (a), including information showing that an appropriate and good faith effort to achieve compliance has been undertaken with due diligence and that action was promptly taken to achieve compliance in the period of time since the date of the disclosure. The department has the burden of proving by a preponderance of the evidence that a penalty may be imposed because the disclosure was not voluntary, because any of the conditions under sub. (2) (a) were not met or because one of the exceptions under sub. (3) applies.

AB235-ASA1, s. 2 Section 2. 905.20 of the statutes is created to read:

AB235-ASA1,4,21 905.20 Environmental audit privilege. (1) Definitions. In this section:

AB235-ASA1,4,24 (a) "Environmental audit" means an evaluation of a site or facility or of an activity or management system related to a site or facility, if the evaluation meets all of the following criteria:

AB235-ASA1,4,25 1. Is conducted by or at the request of the owner or operator of the site or facility.

AB235-ASA1,5,2 2. Is not required under a specific permit, license or approval condition or under an order issued by the department of natural resources.

AB235-ASA1,5,6 3. Is undertaken for the purpose of identifying, documenting and improving compliance with environmental requirements, to identify an environmental hazard, contamination or other adverse environmental condition, or to improve an environmental management system or process.

AB235-ASA1,5,9 4. Is completed within a reasonable time after beginning the evaluation, but not to exceed 6 months after beginning the evaluation unless an extension is granted by the department of natural resources.

AB235-ASA1,5,16 (am) "Environmental audit report" means a document or record or a set of documents or records, each labeled at the time of creation of the document or record, "environmental audit report: privileged document" and created as the result of an environmental audit and includes supporting information and an implementation plan that addresses, as appropriate, correcting past noncompliance, improving current compliance, improving an environmental management system and preventing future noncompliance.

AB235-ASA1,5,20 (b) "Environmental requirement" means a federal, state or local environmental law, including any rule, regulation, ordinance, permit, license, approval or special order issued under those laws. State environmental laws include chs. 160 and 280 to 299 and s. 166.20.

AB235-ASA1,6,2 (c) "Supporting information" means any collection of data or material in any format, including field notes, records of observations, findings, opinions, suggestions, conclusions, drafts, memoranda, reports, drawings, photographs and computer generated or electronically recorded data, maps, charts, graphs and surveys, if that data or material was created or prepared for the primary purpose and in the course of or as a result of an environmental audit.

AB235-ASA1,6,9 (2) General rule of privilege. An owner or operator of a site or facility has a privilege to refuse to disclose and to prevent any other person from disclosing any environmental audit report related to the owner's or operator's site or facility. This privilege may be claimed in any civil action or administrative proceeding, including a contested case, as defined in s. 227.01 (3). Disclosure of any part of an environmental audit report to any of the following does not waive the privilege under this section:

AB235-ASA1,6,11 (a) An employe, agent, successor, assignee, director or shareholder of the owner or operator of the site or facility.

AB235-ASA1,6,12 (b) An attorney of the owner or operator of the site or facility.

AB235-ASA1,6,14 (c) An independent contractor retained by the owner or operator of the site or facility to review an issue raised as a result of the environmental audit.

AB235-ASA1,6,17 (d) A partner or lender of the owner or operator of the site or facility or a person whom the owner or operator is currently negotiating with regarding partnership, transfer of ownership or lending of money.

AB235-ASA1,6,19 (e) A state or federal official or employe under the terms of an agreement between a state or federal agency and the owner or operator of the site or facility.

AB235-ASA1,6,21 (f) The department of natural resources if the disclosure meets the conditions under s. 299.94 (2) (a).

AB235-ASA1,7,3 (3) Who may claim the privilege. (a) The privilege may be claimed by the owner or operator of the site or facility. If the owner or operator of the site or facility is a governmental unit, as defined in s. 939.648 (1), or a business entity, the privilege may be claimed by a director, officer, official, shareholder, trustee or managing employe, as defined in s. 49.498 (1) (e), or by any other employe. The authority to claim the privilege under this paragraph is presumed without evidence to the contrary.

AB235-ASA1,7,6 (b) A person who may otherwise claim a privilege under par. (a) retains the right to claim that privilege in any civil or administrative proceeding, notwithstanding the use of an environmental audit in any criminal proceeding.

AB235-ASA1,7,12 (4) Exceptions. (a) The privilege does not apply if a court of record, after an in camera review of the environmental audit report, including a statement listing any activities undertaken as a result of the environmental audit to achieve compliance with environmental requirements, determines that the person seeking access to the environmental audit report proves by a preponderance of the evidence any of the following:

AB235-ASA1,7,13 1. That the privilege is asserted for a fraudulent purpose.

AB235-ASA1,7,20 2. That the owner or operator of the site or facility failed to take the appropriate responses necessary to achieve compliance within a reasonable time after any noncompliance was discovered as the result of an environmental audit, but not exceeding 3 years after the discovery. The department of natural resources may extend the time to achieve compliance beyond the 3-year limit in an order scheduling compliance if the department determines that acceptable progress is being made in achieving compliance.

AB235-ASA1,7,24 3. That the environmental audit report provides information about a site or facility that constitutes a violation of an environmental requirement and that the violation was committed with knowledge by an owner or operator of the site or facility that the site or facility violated an environmental requirement.