AB356: Bill Text

LRB-0895/2

RPN:cmh&jlg:km

1999 - 2000 LEGISLATURE

1999 Assembly BILL 356

May 24, 1999 - Introduced by Representatives Duff, Ziegelbauer, Kedzie, Jensen, Coggs, Ainsworth, Klusman, Brandemuehl, Vrakas, M. Lehman, Musser, Stone, Sykora, Petrowski, Albers, Grothman, Goetsch, Rhoades, Suder, Kestell and Jeskewitz, cosponsored by Senators Welch, Roessler, Schultz, Darling, Panzer and Farrow. Referred to Committee on Environment.

AB356,1,3 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.

Analysis by the Legislative Reference Bureau

This bill creates an immunity from the imposition of a civil or criminal penalty in cases involving potential violations of an environmental requirement. The immunity applies if a person voluntarily discloses the information related to an actual or potential violation within 45 days after the person knew of the actual or potential violation, based on information obtained in an environmental audit. In addition, the immunity applies only if the person makes a good faith effort to achieve compliance, corrects the potential violation, cooperates with the department of natural resources (DNR) in any investigation related to the disclosure and notifies DNR of the date when the environmental audit will begin. The immunity does not apply in certain situations, including when the information is required to be disclosed under a permit, license or approval condition or under an order issued by DNR.

The bill provides that immunity does not apply to criminal penalties if the owner or operator of the site or facility recklessly or knowingly committed the criminal act. The bill allows DNR to mitigate any civil penalties when immunity does not apply if the person made a good faith, voluntary effort to disclose and resolve the violation.

The bill also establishes an environmental audit privilege, restricting the disclosure of any information obtained as part of an environmental evaluation of a site or facility. The privilege applies to audits that are conducted at the request of the owner or operator of the site or facility and that are not required under a permit, license or approval condition or under an order issued by DNR. The bill provides that the privilege is not waived by disclosure of the contents of an environmental audit to certain groups, including directors and shareholders of the business entity that owns or operates the site or facility, state or federal officials under the terms of a specific agreement or DNR if the audit was voluntarily disclosed and conditions are met to provide immunity from penalties. Under the bill, a court may determine that the privilege does not apply if the privilege is asserted for fraudulent purposes, if timely action is not taken to respond to any environmental noncompliance found in the audit or if the owner or operator of a site or facility knew of an environmental violation disclosed during the audit.

The bill requires DNR to submit a report to the appropriate standing committees of the legislature within five years after the bill becomes law evaluating how the law has encouraged environmental audits and resulted in reduced environmental problems.

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

AB356, s. 1 Section 1. 299.94 of the statutes is created to read:

AB356,2,2 299.94 Immunity for disclosures. (1) Definitions. In this section:

AB356,2,3 (a) "Environmental audit" has the meaning given in s. 905.20 (1) (a).

AB356,2,4 (b) "Environmental requirement" has the meaning given in s. 905.20 (1) (b).

AB356,2,8 (2) Disclosure immunity. (a) A person who voluntarily discloses information relating to an actual or 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:

AB356,2,11 1. The voluntary disclosure is made within 45 days after the person knew, on the basis of information obtained during an environmental audit, that an actual or potential violation occurred.

AB356,3,5 2. The person making the disclosure initiates an appropriate and good faith effort to achieve compliance with the environmental requirements, pursues compliance with due diligence and promptly corrects the noncompliance after discovery of the violation. If evidence shows that the noncompliance is the failure to obtain a license, permit or other approval condition, an appropriate and good faith effort to achieve compliance may be demonstrated by the submittal of a complete license, permit or other approval condition application within a reasonable time.

AB356,3,7 3. The person cooperates with any reasonable request by the department in any investigation that results from the disclosure.

AB356,3,10 4. The environmental audit occurs before the person becomes aware that he or she is under investigation by a regulatory or enforcement agency for actual or potential violations of environmental requirements.

AB356,3,17 5. Before beginning an environmental audit, the person that requested the environmental audit notified the department in writing of the date on which the environmental audit would begin, the site or facility or activity or management system related to a site or facility to be audited and the general scope of the environmental audit. The department may not reveal to any person that the department has received a notice under this subdivision or the contents of any notice received under this subdivision.

AB356,3,20 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. 1., 2., 4. and 5. have been satisfied.

AB356,3,25 (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.

AB356,4,2 (3) Exceptions. A penalty may be imposed notwithstanding sub. (2) if any of the following applies:

AB356,4,5 (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.

AB356,4,7 (b) The violation resulted in serious harm or in imminent and substantial endangerment to human health or the environment.

AB356,4,15 (c) A court or administrative law judge finds that, within 3 years before making the disclosure, the person making the disclosure has 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.

AB356,4,17 (d) The violation resulted in a substantial economic benefit that gave the violator a clear advantage over its business competitors.

AB356,4,18 (e) The violation is of an administrative or judicial order.

AB356,4,24 (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 disclose and resolve voluntarily 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.

AB356,5,3 (4) Criminal penalties. Immunity provided for in this section does not apply to any criminal penalties if the owner or operator of a site or facility recklessly or knowingly committed the criminal act.

AB356,5,15 (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.

AB356,5,21 (6) Within 5 years after the effective date of this subsection .... [revisor inserts date], the department shall submit a report to the appropriate standing committees of the legislature, in the manner provided under s. 13.172 (3), evaluating whether this section and s. 905.20 have been effective in encouraging the use of environmental audits and in identifying and correcting environmental problems and conditions.

AB356, s. 2 Section 2. 905.20 of the statutes is created to read:

AB356,5,23 905.20 Environmental audit privilege. (1) Definitions. In this section:

AB356,6,3 (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:

AB356,6,4 1. Is conducted by or at the request of the owner or operator of the site or facility.

AB356,6,6 2. Is not required under a specific permit, license or approval condition or under an order issued by the department of natural resources.

AB356,6,10 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.

AB356,6,13 4. Is completed within a reasonable time after beginning the evaluation, but not to exceed 6 months after the notification under sub. (2) (b) is sent, unless an extension is granted by the department of natural resources.

AB356,6,20 (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 with environmental requirements, improving current compliance, improving an environmental management system and preventing future noncompliance.

AB356,6,24 (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.

AB356,7,6 (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 collection of data or material was created or prepared for the primary purpose of and in the course of or as a result of an environmental audit.

AB356,7,12 (2) General rule of privilege. (a) 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 is in addition to any other privilege provided under this chapter. This privilege may be claimed in any civil action or administrative proceeding, including a contested case, as defined in s. 227.01 (3).

AB356,7,19 (b) Before beginning an environmental audit, the person requesting the environmental audit shall notify the department of natural resources in writing of the date on which the environmental audit will begin, the site or facility or activity or management system related to a site or facility to be audited and the general scope of the environmental audit. The department of natural resources may not reveal to any person that the department has received a notice under this paragraph or the contents of any notice received under this paragraph.

AB356,7,21 (c) Disclosure of any part of an environmental audit report to any of the following does not waive the privilege under this section:

AB356,7,23 1. An employe, agent, successor, assignee, director or shareholder of the owner or operator of the site or facility.

AB356,7,24 2. An attorney of the owner or operator of the site or facility.