With the onslaught of new regulations in the last few years, energy companies’ management of environmental, health and safety compliance has become increasingly challenging. But in Texas there’s an indispensable tool for that: the Texas Environmental, Health, and Safety Audit Privilege Act and, in particular, a 2013 amendment. The amendment provides a risk management method for helping owners and operators address gaps in compliance due to, for example, neglected distressed assets, turnover in personnel, unfamiliarity with environmental regulations, or mere oversight.

The Texas Environmental, Health, and Safety Audit Privilege Act, or Audit Act, has been in place since 1995. Here’s the gist: It encourages voluntary compliance with environmental and occupational health and safety (EHS) laws by providing certain benefits, such as immunity from civil and administrative penalties, to owners and operators who conduct a compliance audit. Certain requirements for eligibility must be met to obtain these benefits—for example, prior notice of the audit to the appropriate regulatory agency, voluntary disclosure of the EHS violations identified during the audit, and diligent correction of the violations identified. The Audit Act also provides a confidentiality privilege for audit reports, whether or not prior notice of the audit is given or voluntary disclosures are made.