The Oklahoma Environmental, Health and Safety Audit Privilege Act is now effective as of November 1, 2019, and available to manufacturers and industrial businesses in Oklahoma that undertake voluntary environmental audits, such as those companies involved in aircraft manufacturing, chemicals, oil and gas processing, plastics, cement, food and meat processing, and paper products . Oklahoma is the 30th state, by EPA’s count, to enact an audit program, providing privilege and enforcement benefits to parties that voluntarily undertake an environmental audit, disclose the findings and conduct corrective actions.
Companies with facilities in Oklahoma that are subject to environmental, health, and safety regulatory requirements, such as Clean Water Act permitting, hazardous waste obligations under applicate rules, and Clean Air Act compliance, may want to avail themselves of the protections authorized by the new Act. While businesses should consider a variety of factors before undertaking such an audit, this can be an important tool in certain situations, providing state-level benefits in addition to the existing EPA policy applicable to federal programs. More information on EPA’s audit policy is available here.
The Oklahoma Department of Environmental Quality has issued guidance on the new act for interested parties. This program is intended to provide privilege for audit reports as well as some enforcement immunity for certain disclosed and corrected violations for both current facility owners/operators and potential purchasers. To qualify for the benefits of the Act, the violation must be found to have been voluntarily discovered and disclosed, and not subject to any of the limitations of the Act.
Modeled after the existing Texas program, the Act does require prior notification of a planned audit in order to take advantage of the immunity provided by the Act. Parties must complete and submit the Notice of Audit, to qualify for enforcement immunity for any identified violations. Parties that conduct an audit without prior notification may still be eligible to claim the privilege offered by the Act regarding the audit report. A potential purchaser must provide the Notice of Audit within forty-five (45) days of acquisition of a facility for a pre-purchase audit that continues after closing.
Following completion of the audit a party must submit any Disclosure of Violation promptly by Certified Mail (Appendix B to the guidance). If more than six months is needed to complete the audit, a party must seek an extension from DEQ, demonstrating “reasonable grounds” why additional time is needed. For violations discovered in a pre-purchase audit, a new purchaser must provide the Disclosure of Violation within forty-five (45) days of acquisition.
It is important to note that all information within the Notice of Audit and Disclosure of Violation will be publicly available. To maintain privilege over the audit reports, the reports themselves should not be provided to DEQ.
Please contact your Spencer Fane attorney if you have questions or are interested in learning more about the applicability of the Oklahoma Environmental, Health and Safety Audit Privilege Act.
This post was drafted by AJ Ferate in the Oklahoma City, OK office and Jessica Merrigan the Kansas City, MO office of Spencer Fane LLP. For more information, visit spencerfane.com.