May 1996
Michigan's Natural Resources and Environmental Protection Act (Act 451) has been amended once again. This time, Senate Bill 728 has created Part 148, titled "Environmental Audit Privilege and Immunity". The objective of this part of the Act is to encourage businesses and municipalities to voluntarily conduct self-audits, report identified problems, and conduct appropriate corrective actions or apply for required permits. Effective March 18, 1996, it provides those audits with a privileged status and protects information generated during the audit from disclosure under certain circumstances.
A t a time when industry is implementing pollution prevention programs and Environmental Management Systems (EMS) such as ISO 14001 to compete in international markets, the ability to conduct voluntary audits is an important element in assuring that facilities maintain compliance with the complex set of environmental regulations. But fear of enforcement actions and penalties have historically kept some industries from investigating operations and discovering violations.
The Act encourages voluntary compliance by providing privileged status and immunity to information discovered during environmental audits conducted on or after the effective date of the Act. If a violation or required permit is identified during the audit, the owner or operator of the facility is required to disclose and promptly correct the violation, or risk loosing the privileged status provided by the Act. This legislation does not change the current requirements for reporting, including notifications, release reporting, annual permits, and emissions reports contained in other local, state, and federal environmental regulations.
Environmental audits include evaluations of facilities or specific regulated activities at facilities, evaluations of environmental management systems or processes, or evaluations of previously corrected noncompliance issues. The objectives of the audit must be to; 1) identify historical or current noncompliance, and prevent noncompliance or improve compliance, 2) identify environmental hazards, contamination or other "adverse environmental conditions", or 3) improve an environmental management system or process.
To be eligible for the protections included in the Act, audit reports must be labeled at the time of creation as "Environmental Audit Report: Privileged Document", and must be created as a result of the audit. The audit report is an internal document, and does not need to be submitted to the regulatory agency.
If properly prepared and labeled, these reports are privileged. Except in the following circumstances, the information is protected from disclosure and discovery, and is not admissible as evidence in any civil, criminal, or administrative proceeding. These exceptions to the privileges do not limit already existing protections under attorney-client privilege.
In addition to the protection provided for the audit report information, the person that conducted the audit, and the person that received the audit results, can not be compelled to testify regarding any privileged information obtained solely through the audit.
In addition, a person is immune from any administrative or civil penalties and fines if the person makes a voluntary disclosure of violations to the appropriate agency. To be considered voluntary, the person must promptly disclose the violations, make a good-faith effort to achieve compliance or complete the required permit application, disclose the information as a result of the audit, and have conducted the audit before the person is aware of any investigation by a regulatory agency for violations of the Act.
This immunity does not apply to criminal penalties and fines for gross negligence, and is not available to persons that have 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 laws. In addition, the court can require that the information in an audit report be disclosed if the privilege was asserted for a fraudulent purpose, the owner or operator failed to correct a violation of law in a reasonable time, or if a court determines that the information was not subject to the privilege.
This immunity for voluntary disclosure applies only to violations of Article II, Chapter 1 of Article III, or Chapter 3 of Article 3 of the Michigan Environmental Code. Immunity for voluntary disclosure does not eliminate responsibilities for completing corrective actions or paying damages.
State or local law enforcement authorities can request disclosure of privileged audit report information if the request is made in writing, and delivered by certified mail or a demand by lawful subpoena. Objections to the disclosure must be returned in writing within 30 business days of receipt of the request. If written objection is made, the requesting authority may file with the circuit court, which will issue an order under seal and schedule a hearing within 45 days of the filing.
The information in the audit report can be voluntarily disclosed without waiver of the privilege provided by the Act if the disclosure is made under the terms of a confidentiality agreement between the person for whom the report was prepared and either government officials, a partner or potential partner, transferee or potential transferee, lender or potential lender, or trustee, or between a parent corporation and a subsidiary.
For more information on environmental programs for your business, contact Mr. Thomas Wackerman, Managing Partner at Applied Science & Technology, Inc. at 800.395.ASTI or visit our homepage
Implementing the privilege and immunity provided by Part 148 will require coordination between the facility and their consultant. Next issue we will discuss opposing views on audit protection and the role of the consultant is assisting business with protected audits.
In July, Applied Science & Technology, Inc., in conjunction with Dickinson, Wright, Moon, VanDusen & Freeman, will present a breakfast seminar on the new audit privileges of Part 148. For reservations or more information call Lenna Dietrich at 1-800.395.ASTI.
Applied Science & Technology, Inc. staff is presenting a one semester course on Environmental Information Management using the Internet. at Wayne State University in Detroit, Michigan. The course starts May 1996 and is taught entirely on the Internet. For more information call Tom Wackerman at 800.395.ASTI or send email request to twacker@chem1.eng.wayne.edu
1stThe EPA administrator will begin accepting applications for 1996 direct sale of sulfur dioxide emission allowances. [CAA: 40 CFR 73.72, FR 12/17/91]
3rdEquivalency determination reports for existing solvent cleaning machines are due. [CAA: 40 CFR 63, FR 12/02/94]
6thOwners or operators of an existing facility that treats, stores, or disposes of hazardous waste in tanks, surface impoundments, or containers, and hazardous waste generators that accumulate waste on-site in permit-exempt tanks and containers, must comply with air emission standards and related inspection, monitoring, record keeping and reporting requirements. [RCRA: 40 CFR 262, 264 and 265, FR 02/09/96]
6thFacilities that performed waste stabilization activities in tanks as of December 6, 1994 must comply with air emission standards or perform specific waste determinations. [RCRA: 40 CFR 264 and 265, FR 02/09/96]
TECH-BITS is a monthly publication of Applied Science & Technology, Inc. (ASTI), P.O. Box 1328, Ann Arbor, Michigan, 48106. For a free mail subscription call 800.395.ASTI. For a free electronic subscription, send an email message to twacker@chem1.eng.wayne.edu, referencing Tech-Bits in the body of the message.
TECH-BITS is intended to provide information concerning current environmental issues, and is not intended to provide technical or legal advice regarding any particular situation. Questions about individual situations should be addressed to your environmental engineer. Copyright 1995 by ASTI