HOUSE BILL No. 5092 September 25, 1997, Introduced by Reps. Alley, Kilpatrick, Wetters, Middaugh, Mans, Sikkema, Walberg, LaForge, Brown, Anthony, Bodem, Basham, Birkholz, Byl, DeVuyst, Rhead, McNutt, Brater and Callahan and referred to the Committee on Conservation, Environment and Recreation. A bill to amend 1994 PA 451, entitled "Natural resources and environmental protection act," by amending sections 14801, 14802, 14804, 14805, and 14808 (MCL 324.14801, 324.14802, 324.14804, 324.14805, and 324.14808), as added by 1996 PA 132. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 14801. As used in this part: 2 (a) "Environmental audit" means a voluntary and internal 3 evaluation conducted on or after the effective date of this part 4 of 1 or more facilities or an activity at 1 or more facilities 5 regulated under state, federal, regional, or local laws or ordi- 6 nances, or of environmental management systems or processes 7 related to the facilities or activity, or of a previously 8 corrected specific instance of noncompliance, that is designed to 9 identify historical or current noncompliance and prevent 03336'97 ** JCB 2 1 noncompliance or improve compliance with 1 or more of those laws, 2 or to identify an environmental hazard, contamination, or other 3 adverse environmental condition, or to improve an environmental 4 management system or process. ONCE INITIATED, AN AUDIT SHALL BE 5 COMPLETED WITHIN A REASONABLE TIME, NOT TO EXCEED 6 MONTHS, 6 UNLESS A WRITTEN REQUEST FOR AN EXTENSION IS APPROVED BY THE 7 DIRECTOR ON REASONABLE GROUNDS. 8 (b) "Environmental audit report" means a document or a set 9 of documents, each labeled at the time it is created 10 "environmental audit report: privileged document" and created as 11 a result of an environmental audit. An environmental audit 12 report shall include supporting information. Supporting informa- 13 tion may include field notes, records of observations, findings, 14 opinions, suggestions, conclusions, drafts, memoranda, follow-up 15 reports, drawings, photographs, computer generated or electroni- 16 cally recorded information, maps, charts, graphs, and surveys, if 17 the supporting information or documents are created or prepared 18 for the primary purpose and in the course of or as a result of an 19 environmental audit. An environmental audit report may also 20 include an implementation plan that addresses correcting past 21 noncompliance, improving current compliance, improving an envi- 22 ronmental management system, and preventing future noncompliance, 23 as appropriate. 24 (c) "Privilege" means the privilege provided to an environ- 25 mental audit report as provided in this part. 26 Sec. 14802. (1) The owner or operator of a facility, or an 27 employee or agent of the owner or operator on behalf of the owner 03336'97 ** 3 1 or operator, at any time may conduct an environmental audit and 2 may create an environmental audit report. 3 (2) Except as provided in subsection (3), an environmental 4 audit report created pursuant to this part is privileged and pro- 5 tected from disclosure under this part. 6 (3) The privilege described in subsection (2) does not 7 extend to any of the following regardless of whether or not they 8 are included within an environmental audit report: 9 (a) Documents, communication, data, reports, or other infor- 10 mation required to be COLLECTED, MAINTAINED, OR made available or 11 reported to a regulatory agency or any other person by statute, 12 rule, ordinance, permit, order, consent agreement, or as other- 13 wise provided by law. 14 (b) Information obtained by observation, sampling, or moni- 15 toring by any regulatory agency. 16 (c) Pretreatment monitoring results which a publicly owned 17 treatment works or control authority requires any industrial user 18 to report to a publicly owned treatment works or control authori- 19 ty, including, but not limited to, results establishing a viola- 20 tion of the industrial user's discharge permit or applicable 21 local ordinance. 22 (d) Information legally obtained from a source independent 23 of the environmental audit or from a person who did not obtain 24 the information from the environmental audit. 25 (e) Machinery and equipment maintenance records. 26 (F) INFORMATION IN INSTANCES WHERE THE PRIVILEGE IS ASSERTED 27 FOR A FRAUDULENT PURPOSE. 03336'97 ** 4 1 (G) INFORMATION IN INSTANCES WHERE THE MATERIAL SHOWS 2 EVIDENCE OF NONCOMPLIANCE WITH STATE, FEDERAL, REGIONAL, OR LOCAL 3 ENVIRONMENTAL LAWS, PERMITS, CONSENT AGREEMENTS, REGULATIONS, 4 ORDINANCES, OR ORDERS AND THE OWNER OR OPERATOR FAILED TO EITHER 5 TAKE PROMPT CORRECTIVE ACTION OR ELIMINATE ANY VIOLATION OF LAW 6 IDENTIFIED DURING THE ENVIRONMENTAL AUDIT WITHIN A REASONABLE 7 TIME, BUT NOT EXCEEDING 3 YEARS AFTER DISCOVERY OF THE NONCOMPLI- 8 ANCE OR VIOLATION UNLESS A LONGER PERIOD OF TIME IS SET FORTH IN 9 A SCHEDULE OF COMPLIANCE IN AN ORDER ISSUED BY THE DEPARTMENT OF 10 ENVIRONMENTAL QUALITY, AFTER NOTICE IN THE DEPARTMENT'S CALENDAR, 11 AND FOLLOWING THE DEPARTMENT'S DETERMINATION THAT ACCEPTABLE 12 PROGRESS IS BEING MADE. 13 (4) Except as otherwise provided in this part, a person who 14 conducts an environmental audit and a person to whom the environ- 15 mental audit results are disclosed shall not be compelled to tes- 16 tify regarding any information obtained solely through the envi- 17 ronmental audit which is a privileged portion of the environmen- 18 tal audit report. Except as otherwise provided in this part, the 19 privileged portions of an environmental audit report are not 20 subject to discovery and are not admissible as evidence in any 21 civil, criminal,or administrative proceeding. 22 Sec. 14804. (1) A request by state or local law enforcement 23 authorities for disclosure of an environmental audit report shall 24 be made by a written request delivered by certified mail or a 25 demand by lawful subpoena. Within 30 business days after receipt 26 of a request for disclosure or subpoena, the person asserting the 27 privilege may make a written objection to the disclosure of the 03336'97 ** 5 1 environmental audit report on the basis that the environmental 2 audit report is privileged. Upon receipt of such an objection, 3 the state or local law enforcement authorities may file with the 4 circuit court, and serve upon the person, a petition requesting 5 an in camera hearing on whether the environmental audit report or 6 portions of the environmental audit report are privileged or 7 subject to disclosure. The motion shall be brought in camera and 8 under seal. The circuit court has jurisdiction over a petition 9 filed under this subsection requesting a hearing. Failure of the 10 person asserting the privilege to make an objection to disclosure 11 waives the privilege as to that person. 12 (2) Upon the filing of a petition for an in camera hearing 13 under subsection (1), the person asserting the privilege in 14 response to a request for disclosure or subpoena under this sec- 15 tion shall provide a copy of the environmental audit report to 16 the court and shall demonstrate in the in camera hearing all of 17 the following: 18 (a) The year the environmental audit report was prepared. 19 (b) The identity of the person conducting the audit. 20 (c) The name of the audited facility or facilities. 21 (d) A brief description of the portion or portions of the 22 environmental audit report for which privilege is claimed. 23 (3) Upon the filing of a petition for an in camera hearing 24 under subsection (1), the court shall issue an order under seal 25 scheduling, within 45 days after the filing of the petition, an 26 in camera hearing to determine whether the environmental audit 27 report or portions of the environmental audit report are 03336'97 ** 6 1 privileged or subject to disclosure. The counsel for the state 2 or local law enforcement agency seeking disclosure of the infor- 3 mation contained in the environmental audit report and the coun- 4 sel for the person asserting the privilege shall participate in 5 the in camera hearing but shall not disclose the contents of the 6 environmental audit report for which privilege is claimed unless 7 the court so orders. 8 (4) The court, after in camera review, shall require disclo- 9 sure of material for which privilege is asserted, if the court 10 determines that either of the following exists: 11 (a) The privilege is asserted for a fraudulent purpose. 12 (b) Even if subject to the privilege, the material shows 13 evidence of noncompliance with state, federal, regional, or local 14 environmental laws, permits, consent agreements, regulations, 15 ordinances, or orders and the owner or operator failed to EITHER 16 take PROMPT corrective action or eliminate any violation of law 17 identified during the environmental audit within a reasonable 18 time, but not exceeding 3 years after discovery of the noncompli- 19 ance or violation unless a longer period of time is set forth in 20 a schedule of compliance in an order issued by the department of 21 environmental quality, after notice in the department's calendar, 22 and following the department's determination that acceptable 23 progress is being made. 24 (5) The court, after in camera review,maySHALL require 25 disclosure of material for which privilege is asserted if the 26 court determines that the material is not subject to the 27 privilege. 03336'97 ** 7 1 (6) If the court determines under this section that the 2 material is not privileged, but the party asserting the privilege 3 files an application for leave to appeal of this finding, the 4 material, motions, and pleadings shall be disclosed unless the 5 court specifically determines that all or a portion of such 6 information shall be kept under seal during the pendency of the 7 appeal. 8 Sec. 14805. THE PRIVILEGE CREATED BY THIS PART DOES NOT 9 APPLY TO CRIMINAL INVESTIGATIONS OR PROCEEDINGS. WHERE AN AUDIT 10 REPORT IS OBTAINED, REVIEWED, OR USED IN A CRIMINAL PROCEEDING, 11 THE PRIVILEGE CREATED BY THIS PART APPLICABLE TO ADMINISTRATIVE 12 OR CIVIL PROCEEDINGS IS NOT WAIVED OR ELIMINATED.(1) To the13extent authorized by the code of criminal procedure, Act No. 17514of the Public Acts of 1927, being sections 760.1 to 760.21 of the15Michigan Compiled Laws, state or local law enforcement authori-16ties may seize an environmental audit report for which privilege17is asserted, pursuant to a lawful search warrant. Upon seizure,18the law enforcement authorities shall immediately place the envi-19ronmental audit report under seal and shall immediately file it20with the court that authorized the search warrant. The law21enforcement authorities or the court shall also provide notice of22the filing to any person who is eligible under this part to23assert the privilege. Unless and until the court orders disclo-24sure under section 14804, or the privilege has been waived pursu-25ant to section 14803, the law enforcement authorities shall not26inspect, review, or disclose the contents of the environmental27audit report. Within 30 business days after the notice of the03336'97 ** 8 1filing has been provided, the person asserting the privilege may2make a written objection to the disclosure of the environmental3audit report on the basis that the environmental audit report is4privileged. Upon receipt of such an objection, the state or5local law enforcement authorities may file with the circuit6court, and serve upon the person, a petition requesting an in7camera hearing on whether the environmental audit report or por-8tions of the report are privileged or subject to disclosure.9Failure of the person asserting the privilege to make an objec-10tion to disclosure waives the privilege as to that person.11(2) Upon the filing of a petition requesting an in camera12hearing under subsection (1), the person asserting the privilege13shall demonstrate in the in camera hearing all of the following:14(a) The year the environmental audit report was prepared.15(b) The identity of the person conducting the audit.16(c) The name of the audited facility or facilities.17(d) A brief description of the portion or portions of the18environmental audit report for which privilege is claimed.19(3) Upon the filing of a petition for an in camera hearing20under subsection (1), the court shall issue an order under seal21scheduling, within 45 days after the filing of the petition, an22in camera hearing to determine whether the environmental audit23report or portions of the environmental audit report are privi-24leged or subject to disclosure. The counsel for the state or25local law enforcement agency seeking disclosure of the informa-26tion contained in the environmental audit report and the counsel27for the person asserting the privilege shall participate in the03336'97 ** 9 1in camera hearing but shall not disclose the contents of the2environmental audit report for which privilege is claimed unless3the court so orders.4(4) The court, after in camera review, shall require disclo-5sure of material for which privilege is asserted, if the court6determines that either of the following exists:7(a) The privilege is asserted for a fraudulent purpose.8(b) Even if subject to the privilege, the material shows9evidence of noncompliance with state, federal, regional, or local10environmental laws, permits, consent agreements, regulations,11ordinances, or orders and the owner or operator failed to take12corrective action or eliminate any violation of law identified13during the environmental audit within a reasonable time, but not14exceeding 3 years after discovery of the noncompliance or viola-15tion unless a longer period of time is set forth in a schedule of16compliance in an order issued by the department of environmental17quality, after notice in the department's calendar, and following18the department's determination that acceptable progress is being19made.20(5) The court, after in camera review, may require disclo-21sure of material for which privilege is asserted if the court22determines that the material is not subject to the privilege.23(6) If the court determines under this section that the24material is not privileged, but the party asserting the privilege25files an application for leave to appeal of this finding, the26material, motions, and pleadings shall be disclosed unless the27court specifically determines that all or a portion of such03336'97 ** 10 1information shall be kept under seal during the pendency of the2appeal.3 Sec. 14808. This part does not limit, waive, or abrogate 4theEITHER OF THE FOLLOWING: 5 (A) THE scope or nature of any statutory or common law priv- 6 ilege, including the work product doctrine and the 7 attorney-client privilege. 8 (B) ANY EXISTING ABILITY OR AUTHORITY TO CHALLENGE PRIVILEGE 9 UNDER MICHIGAN LAW. 10 Enacting section 1. This amendatory act does not take 11 effect unless Senate Bill No. __________ or House Bill 12 No. __________ (request no. 04122'97) of the 89th Legislature is 13 enacted into law. 03336'97 ** Final page. JCB