Texas Environmental, Health, and Safety Audit

Privilege Act

Stephen Neighbours

November 13, 2014

AgendaIntroduction and BackgroundAudit ProcessCase StudiesDiscussion of Selected Best PracticesQuestions from the Audience

Stephen NeighboursIntroduction

Compliance Leader for The Dow Chemical Company

Worked for Dow for 25 yearsOperations, Logistics, EHS, Coaching

(Performance), & Regulatory24 years in the Texas Army National Guard –

Retired as a Sergeant First Class (Platoon SGT) with 2 tours in Iraq

Truck Driver, Ammunitions Specialist, Tanker, Cavalry Scout

Background to Texas Audit ActTexas Statute –

http://www.statutes.legis.state.tx.us/Docs/CV/htm/CV.71.1.htm

Official Name is the Texas Environmental, Health, and Safety Audit Privilege Act –Section 1

Known as “The Audit Act”“The purpose of this Act is to encourage voluntary

compliance with environmental and occupational health and safety laws.” - Section 2

Provides no fines and lack of admissibility of audit document in state courts or agencies – Section 10

A regulatory agency may not adopt a rule or impose a condition that circumvents the purpose of this Act. – Section 11

Audit ProcessDeclare Intent to Audit (Certified Mail)AuditFirst disclosure of violations (Certified Mail)

No obligation to discloseCan’t be required to disclose at that time

Disclosure includes Compliance Plan (CP)May have optional additional disclosures/CPRestore Compliance/Inform AgencyPrivileged Status Confirmed

ScopeApplies to all Texas Environmental Health and

Safety AgenciesTCEQ receives most of the auditsLegislature expanded scope to favor new

owners of operating facilitiesAgencies see this as a very favorable self-

inspection/correction They have plenty to inspectWe can find more than they canThey overview and ensure violation is corrected

Agencies Texas Audit Used by DowTexas Commission on Environmental Quality -

TCEQTexas Railroad Commission - RRCTTexas General Land OfficeTexas Department of Public Safety - DPSTexas Parks and Wildlife

TCEQ Audits and NOVs/10

2008 2009 2010 2011 2012 20130

200

400

600

800

1000

1200

1400

AuditsViolations

NOVs/10

Deer Park-Case Study, p1Case Study 1 – Deer Park, following Dow’s

Acquisition of Rohm and HaasActually three sites, but near each other

Many “upgrades” to Dow standard methods – listed as violationsSaved Dow the need to examine the

compliance of these heritage Rohm and Haas methods

Cut off any potential for Dow or TCEQ ever having to examine this historical methods

Deer Park-Case Study, p2Discussed with TCEQ before disclosure

mailedMany changes or “violations” referencedNo specifics of any violations were discussedFirst disclosure was promptly mailed by

Certified MailCompliance was restored for all violations

ahead of schedule

Dow Freeport – Audits

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

10

20

30

40

50

60

70

80

Texas Operations Audits

100 No Findings Audits

630 Violations found and fixed

YTD data for 2014

Best Practices 1Submit the notification by certified mailReporting violations found during the auditSpecify the scope of the EHS Audit to include

the entire scope of potential non-compliance findings – Use focus language

Suspend auditing activities during audit gapsApplicable to Non TCEQ agencies

Best Practices 2Complete the audit before any disclosure or

auditing is required, such as under RRCT, Title V, TPDES or NESHAP

Compliance is restored as soon as the organization is no longer in non-compliance

Conduct Texas EHS Audits promptly and disclose violations before scheduled agency inspections

Best Practices 3Combine Texas EHS Audits and Attorney

Client Privilege AuditsAudits for non-delegated Federal EHS Laws

QuestionsWhat do you want to talk about?

Example LettersStarting a Texas EHS AuditAudit over - No Violation DisclosedInterim Disclosure of Violation(s)Final Disclosure of Violation(s)Final Disclosure of Violation(s) – ongoing

Corrective Action