[First Reprint]

SENATE, No. 384

 

STATE OF NEW JERSEY

 

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

 

 

By Senators McNAMARA and MacINNES

 

 

An Act concerning environmental audits and supplementing Title 2A of the New Jersey Statutes and Title 13 of the Revised Statutes.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. Sections 1 through 10 of this act shall be known and may be cited as the "Voluntary Environmental Auditing Promotion Act."

 

    2. The Legislature finds and declares that it is in the public interest for businesses in this State that are subject to environmental regulation to conduct internal reviews of their operations and practices with the intent of discovering and correcting conditions that may lead to a violation of environmental laws before such violations occur; that the primary goal of environmental enforcement policies is to promote compliance and not to punish the violator; that a legal structure that promotes self-policing programs can achieve improved compliance effectively at a low cost to the State and business; and that environmental audits, when properly conducted and implemented, result not only in better compliance with environmental laws, but in the adoption of procedures and policies by businesses that exceed minimum legal requirements, and that save business money by lowering costs and reducing potential liabilities.

    The Legislature therefore determines that it is the public policy of the State to fashion an overall statutory and regulatory scheme, by the use of incentives and the elimination of disincentives, to encourage regulated businesses to voluntarily participate in an environmental self audit and voluntary corrective action program and that it is appropriate that a safe harbor from civil and administrative penalties be established for violations discovered as a result of a voluntary environmental audit.

    3. As used in sections 1 through 10 of P.L. , c. (C. ) (before the Legislature as this bill):

    "Department" means the Department of Environmental Protection.

    1["Enforcement action" means any administrative order issued pursuant to statute or any civil action.]1

    "Enforcement agency" means the State and any of its departments, offices, bureaus, agencies, or authorities, and any political subdivision of the State, including local health agencies or authorities, empowered with the ability to enforce an environmental law in its own name or on behalf of the State.

    "Environmental audit" means a voluntary, internal evaluation of one or more facilities or an activity at one or more facilities regulated under any federal, State, or local environmental law, or of management systems related to that facility or activity, that is designed to identify and prevent noncompliance and to improve compliance with statutory or regulatory requirements, and that is conducted by the owner or operator of the facility or facilities, by the owner's or operator's employees, or by independent contractors. An environmental audit shall substantially include at least the following elements:

    (1) A written policy articulating upper management support for an environmental auditing program, and for compliance with facility policies, permit requirements and statutes and regulations, as well as a commitment to follow up on, correct and prevent recurrence of identified problems;

    (2) Articulated objectives, scope, frequency, and dedicated resources;

    (3) 1[The auditing function shall be sufficiently free of] Freedom from1 interference with inquiry and observation or fear of potential retribution to ensure objectivity;

    (4) Explicit written audit procedures; and

    (5) Specific procedures to promptly prepare candid and appropriate written reports on audit findings, corrective actions, schedules for implementation, and for reporting of violations.

    "Environmental audit report" means a set of documents, each labeled "Environmental Audit Report" and prepared as part of an environmental audit, and which shall include a statement setting forth the scope of the environmental audit, a certified index identifying the documents in the report, and the calender dates on which the environmental audit was initiated and completed. The environmental audit report may include exhibits, appendices, conclusions, and recommendations; memoranda and documents analyzing part or all of the audit report and discussing implementation issues; an audit implementation plan that addresses correcting past noncompliance, improving current compliance, and preventing future noncompliance; documentation associated with the tracking of corrective actions for 1[non-compliance]1 audit findings 1of noncompliance1; and supporting information including field notes and records of observations, findings, suggestions, conclusions, drafts, memoranda, drawings, photographs, environmental sampling results, computer-generated or electronically recorded information, maps, charts, graphs, and surveys, provided, however, that the supporting information is collected or developed for the purpose of and in the course of an environmental audit.

    "Regulated entity" means any person, corporation, company, partnership, or other business entity, and any governmental entity including a federal, State, and local government facility, regulated under the State environmental laws that the department administers.

    "Voluntary" means not required by statute, regulation, permit, order, or agreement.

 

    4. a. An enforcement agency shall not seek to obtain an environmental audit report except when: (1) the enforcement agency has reasonable grounds to believe a violation of an environmental law has been committed; (2) the violation may result in serious harm to human health or the environment; (3) the enforcement agency made the determination in 1[paragraph] condition1 (1) of this subsection through means independent of an environmental audit report; (4) a substantial need exists to obtain the environmental audit report; and (5) the information sought to be obtained is either not otherwise available to the enforcement agency or the enforcement agency is unable to obtain the substantial equivalent of the information by any means without incurring unreasonable cost or delay. If 1[the]1 conditions 1[of paragraphs]1 (1), (2), (3), (4), and (5) of this subsection are met, the enforcement agency may seek to obtain those portions of the environmental audit report that are relevant to the specific violation in the manner provided in this section.

    b. If 1[the]1 conditions 1[of paragraphs]1 (1), (2), (3), (4), and (5) of subsection a. of this section are met, an enforcement agency may seek to obtain portions of an environmental audit report pursuant to an investigation through the issuance of an administrative subpoena signed by the commissioner or through the issuance of an administrative search warrant issued by a court of competent jurisdiction.

    c. If 1[the]1 conditions 1[of paragraphs]1 (1), (2), (3), (4), and (5) of subsection a. of this section are met, an enforcement agency may seek to obtain portions of an environmental audit report pursuant to an enforcement action through discovery by an enforcement agency in a civil enforcement action or administrative enforcement action, only in accordance with law and the rules of procedure and evidence applicable to the administrative or civil proceeding.

    d. Those portions of an environmental audit report obtained pursuant to this section shall be admissible as evidence in a civil enforcement action or a civil administrative enforcement action to the extent permitted by law and the rules of procedure and evidence applicable to the administrative or civil proceeding.

    e. Nothing in this section is intended or shall be construed to in any way modify, limit or impair the authority of an enforcement agency to seek, obtain, or 1[admit] seek admission1 into evidence 1,1 environmental audit reports for purposes of a criminal investigation or prosecution pursuant to 1a1 grand jury subpoena,1a1 search warrant issued by a court of competent jurisdiction, 1[and] or pursuant to1 applicable rules of discovery, procedure, and evidence. Any portion of an environmental audit report obtained pursuant to a grand jury subpoena may not be disclosed to an enforcement agency for the purposes of a civil action unless the grand jury returns an indictment.

    f. The limitations imposed on enforcement agencies in seeking to obtain environmental audit reports pursuant to this section shall not apply to:

    (1) Documents, communications, data, reports, or other information required to be collected, developed, maintained, reported, or made available to a governmental entity pursuant to any federal, State or local law, ordinance, regulation, permit or order;

    (2) Information obtained by observation, sampling, or monitoring by any enforcement agency;

    (3) Information obtained from a source independent of the environmental audit;

    (4) Documents existing prior to the commencement of and independent of the environmental audit;

    (5) Documents prepared subsequent to the completion of and independent of the environmental audit; and

    (6) The underlying factual information upon which an environmental audit report is based.

    1g. Nothing in this section is intended or shall be construed to, in any way, modify, limit or impair the authority of an enforcement agency to seek or obtain, or seek admission into evidence, environmental audit reports pursuant to a civil or administrative procedure or review, as provided in section 13, 14, and 15 of P.L.    , c. (C. ) (before the Legislature as this bill).1

 

    5. In setting priorities for nonmandatory inspections pursuant to any law administered or enforced by an enforcement agency, the enforcement agency shall give a lower priority to any regulated entity at which an environmental audit 1[is] has been1 conducted.

 

    6. a. The department, in consultation with the Department of Law and Public Safety, shall establish by rule a policy whereby, in determining whether or not to impose or 1to1 seek to have imposed an administrative or civil penalty, and in determining the amount of any such penalty, the 1[existence] performance1 of an environmental audit serves as a mitigating factor. The department may propose that a regulated entity conduct an environmental audit in administrative consent orders or in other settlement negotiations where an environmental audit could provide a remedy for identified problems and reduce the likelihood of similar problems recurring in the future.

    b. The Department of Law and Public Safety may maintain its current policy guideline for State and county prosecutors in the use of their discretion in pursuing criminal enforcement of any environmental law whereby the 1[existence] performance1 of an environmental auditing program is a mitigating factor.

 

    7. a. If a regulated entity discovers a violation of an environmental law, regulation, or permit as a result of an environmental audit 1,1 the enforcement agency shall waive civil and civil administrative penalties for that violation, provided the following conditions are satisfied:

    (1) The violation is discovered by a regulated entity through an environmental audit;

    (2) The regulated entity voluntarily discloses the violation to the department and 1to1 any other relevant enforcement agency in writing within a reasonable time upon discovery of the violation. Disclosure of a violation shall include, at a minimum, all information available to the regulated entity at the time disclosure is made concerning the cause of the violation, and any actual harm to human health or the environment, or imminent and substantial threat to human health and safety caused by the violation. Disclosure shall not be considered voluntary unless it occurs prior to: (a) the discovery or knowledge of the violation by the department; (b) the commencement of 1[a judicial or administrative] an1 enforcement action by the State, the United States Environmental Protection Agency, or an enforcement agency acting on behalf of the department; (c) the regulated entity's knowledge that the discovery of the violation by 1[a regulatory] an enforcement1 agency or a third party was imminent;

    (3) The regulated entity corrected the condition or activity constituting the violation and achieves compliance within a reasonable period of time following the discovery of the violation. If compliance cannot be achieved within 1[60] 901 days following its discovery, the violation shall be corrected in accordance with a reasonable schedule approved or ordered by the department;

    (4) The regulated entity expeditiously remedies any condition that has created or may create an imminent and substantial endangerment to human health, safety or 1[natural resources] the environment1;

    (5) The regulated entity takes appropriate, documented, steps to prevent the recurrence of the violation, and implements appropriate measures to 1[mitigate] fully remediate1 any harm caused by the violation; and

    (6) The regulated entity cooperates with the department or other relevant enforcement agency in the further investigation of the violation, including 1[the department's] an enforcement agency's1 efforts to ensure that the condition or activity constituting the violation is properly corrected, and any damage caused by the violation is fully remediated.

    b. If a regulated entity discovers a violation of an environmental law, regulation, or permit, as a result of an environmental audit, and most but not all of the conditions listed in subsection a. of this section are satisfied, the enforcement agency may reduce the amount of the civil administrative penalty that would otherwise be assessed, or civil penalty that would otherwise be sought, or may determine not to assess or seek to impose a civil administrative penalty or civil penalty. The enforcement agency may, in its discretion, on a case-by-case basis, determine whether to impose or seek any penalty or 1establish1 the amount of the penalty reduction that shall be appropriate as provided in this subsection.

    c. This section shall not apply to violations that involve purposeful, knowing, reckless, or criminally negligent conduct.

    d. Nothing in this section is intended 1[nor] or1 shall be 1[constructed] construed1 to 1,1 in any way 1,1 modify, limit or impair the authority of an enforcement agency to undertake any criminal investigation or prosecution, or obtain criminal penalties, restitution, 1[and] or1 any other sanction available pursuant to the criminal laws of the State.

    e. Nothing in this section is intended or shall be construed to 1,1 in any way 1,1 modify, limit or impair the authority of an enforcement agency to obtain damages, declaratory, injunctive or other equitable relief, or any other form of relief available by law.

    f. If a regulated entity discovers a violation of an environmental law, regulation or permit as a result of an environmental audit and discloses the violation as provided in this section, such action shall preclude an action by any person against the regulated entity pursuant to the provisions of P.L.1974, c.169 (C.2A:35A-1 et seq.), relating to the conduct that constituted the violation.

 

    8. Information contained within an environmental audit report and disclosed to an enforcement agency as part of an action to achieve compliance pursuant to section 7 of P.L. , c. (C. )(before the Legislature as this bill) shall not be disclosed by the enforcement agency.

 

    9. a. Nothing in sections 1 through 10 of P.L. , c. (C. ) (before the Legislature as this bill) shall limit, waive or abrogate the scope or nature of any statutory or common law privilege, including the work product doctrine and the attorney-client privilege.

    b. Nothing in sections 1 through 10 P.L. , c. (C. ) (before the Legislature as this bill) shall limit, waive, or abrogate any reporting requirements or permit conditions required by any other law, rule, regulation or ordinance.

    c. No governmental entity may adopt a rule, regulation, ordinance, or a permit condition for the purpose of circumventing the 1[evidentiary]1 limitations established in sections 1 through 10 of P.L.    , c. (C. ) (before the Legislature as this bill) by requiring disclosure of an environmental audit report.

 

    10. The department, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), may adopt rules and regulations to implement the provisions of sections 1 through 10 of P.L. , c. (C. ) (before the Legislature as this bill).

 

    11. As used in sections 11 through 18 of P.L. , c. (C. ) (before the Legislature as this bill):

    "Enforcement agency" means the State and any of its departments, offices, bureaus, agencies, or authorities, and any political subdivision of the State, including local health agencies or authorities, empowered with the ability to enforce an environmental law in its own name or on behalf of the State.

    "Environmental audit 1"1 means a voluntary, internal evaluation of one or more facilities or an activity at one or more facilities regulated under any federal, State, or local environmental law, or of management systems related to that facility or activity, that is designed to identify and prevent noncompliance and to improve compliance with statutory or regulatory requirements, and that is conducted by the owner or operator of the facility or facilities, by the owner's or operator's employees, or by independent contractors. An environmental audit 1[program]1 shall substantially include at least the following elements:

    (1) A written policy articulating upper management support for 1[a] an1 environmental auditing program, and for compliance with facility policies, permit requirements and statutes and regulations, as well as a commitment to follow up on, correct and prevent recurrence of identified problems;

    (2) Articulated objectives, scope, frequency, and dedicated resources;

    (3) 1[The auditing function shall be sufficiently free of] Freedom from1 interference with inquiry and observation or fear of potential retribution to ensure objectivity;

    (4) Explicit written audit procedures; and

    (5) Specific procedures to promptly prepare candid and appropriate written reports on audit findings, corrective actions, schedules for implementation, and for reporting of violations.

    "Environmental audit report" means a set of documents, each labeled "Environmental Audit Report" and prepared as part of an environmental audit, and which shall include a statement setting forth the scope of the environmental audit, a certified index identifying the documents in the report, and the calender dates on which the environmental audit was initiated and completed. The environmental audit report may include exhibits, appendices, and conclusions, and recommendations; memoranda and documents analyzing part or all of the audit report and discussing implementation issues; an audit implementation plan that addresses correcting past noncompliance, improving current compliance, and preventing future noncompliance; documentation associated with the tracking of corrective actions for 1[non-compliance]1 audit findings 1of noncompliance1; and supporting information including field notes and records of observations, findings, suggestions, conclusions, drafts, memoranda, drawings, photographs, environmental sampling results, computer-generated or electronically recorded information, maps, charts, graphs, and surveys, provided, however, that the supporting information is collected or developed for the purpose of and in the course of an environmental audit.

    "Regulated entity" means any person, corporation, company, partnership, or other business entity, and any governmental entity including a federal, State, and local government facility, regulated under the State environmental laws that the department administers.

    "Voluntary" means not required by statute, regulation, permit, order, or agreement.

 

    12. An environmental audit report shall be privileged and shall not be admissible or discoverable as evidence in any civil or administrative proceeding or review, except as provided in sections 13, 14, or 15 of P.L. , c. (C. )(before the Legislature as this bill). Nothing in sections 11 through 18 of P.L. , c. (C. ) (before the Legislature as this bill) shall be construed to prevent an enforcement agency from seeking, obtaining or 1[admitting] seeking admission of1 an environmental audit report in the manner provided in section 4 of P.L. , c. (C. )(before the Legislature as this bill) or in the manner provided in sections 1[11 through 18] 13, 14, and 151of P.L. , c.     (C. )(before the Legislature as this bill).

 

    13. The privilege established in section 12 of P.L. , c. (C. ) (before the Legislature as this bill) shall not apply if:

    a. The regulated entity for whom the environmental audit report was prepared, waives the privilege, regardless of whether the environmental audit report was prepared by the owner or operator of the regulated entity, by the owner's or operator's employees, or by an independent contractor hired by an owner or operator;

    b. A court or administrative law judge determines that the privilege is being asserted for a criminal or fraudulent purpose;

    c. A court or administrative law judge determines that (1) the public's interest in obtaining the information outweighs the regulated entity's legitimate expectation of confidentiality and (2) the information contained in the environmental audit report could not be secured from any less intrusive source. The exception to the privilege provided in this subsection shall not apply to an enforcement agency seeking to obtain an environmental audit report unless the enforcement agency is seeking injunctive relief to prevent serious harm to human health or the environment;

    d. The environmental audit report shows evidence that the regulated entity for which the environmental audit report was prepared is not or was not in compliance with an environmental law and the regulated entity did not initiate appropriate efforts to achieve compliance with the environmental law or complete any necessary permit application promptly after the noncompliance with the environmental law was discovered and, as a result, the regulated entity did not or will not achieve compliance with the environmental law or complete the necessary permit application within a reasonable amount of time; or

    e. A court or administrative law judge determines that the material for which the privilege is claimed is not subject to the privilege as provided in section 15 of P.L. , c. (C. )(before the Legislature as this bill).

 

    14. a. No person shall use any privileged information to discover any other information and any information so discovered shall be inadmissible in any action or proceeding. Nothing in this subsection shall be construed to limit the authority of an enforcement agency to conduct an investigation or 1[admit] seek admission1 into evidence 1of1 any document or information.

    b. If a court or administrative law judge determines that any portion of an environmental audit report is not privileged pursuant to sections 1[11 through 18] 13 or 151 of P.L. , c. (C. )(before the Legislature as this bill), it shall 1,1 by the entry of 1an1 appropriate protective 1[orders] order,1 provide that information 1[is] be1 disclosed only to the extent required for the proper conduct of the subject action or proceeding.

 

    15. The privilege established in section 12 of P.L. , c. (C. ) (before the Legislature as this bill) shall not extend to:

    a. Documents, communications, data, reports, or other information required to be collected, developed, maintained, reported, or made available to a governmental entity pursuant to any federal, State or local law, ordinance, regulation, permit or order;

    b. Information obtained by observation, sampling, or monitoring by any enforcement agency;

    c. Information obtained from a source independent of the environmental audit;

    d. Documents existing prior to the commencement of and independent of the environmental audit;

    e. Documents prepared subsequent to the completion of and independent of the environmental audit; and

    f. The underlying factual information upon which an environmental audit report is based.

 

    16. Nothing in sections 11 through 18 of P.L. , c. (C. ) before the Legislature as this bill) shall limit, waive or abrogate the scope or nature of any statutory or common law privilege, including the work product doctrine and the attorney-client privilege.

 

    17. Nothing in sections 11 through 18 of P.L. , c. (C. )(before the Legislature as this bill) shall limit, waive, or abrogate any reporting requirements or permit conditions required by any other law, rule, regulation or ordinance.

 

    18. No governmental entity may adopt a rule, regulation, ordinance, or a permit condition for the purpose of circumventing the privilege established in section 12 of P.L. , c. (C. )(before the Legislature as this bill) by requiring disclosure of an environmental audit report.

 

    19. This act shall take effect immediately and shall apply to any environmental audit report prepared on or after July 1, 1995.

 

 

 

Promotes the performance of environmental audits.