ISSUES OF CONFIDENTIALITY AND DISCLOSURE
IN ENVIRONMENTAL AUDITING
by
Malcolm Weiss, Esq.
Regulatory Reform Staff
Office of Standards and Regulations
Office of Planning, Policy and Evaluation
U. S. Environmental Protection Agency
Final
April 1984
The views expressed in this paper are solely the author's
and do not necessarily represent the position of the U. S.
Environmental Protection Agency or any other government entity
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TABLE OF CONTENTS
INTRODUCTION
WHY AUDIT?
COMPLIANCE ASSURANCE vs.
ENVIRONMENTAL AUDITING
THE DISCLOSURE!
CONFIDENTIALITY ISSUE
VALUE OF AUDIT
INFORMATION
DISCLOSURE OF
AUDIT INFORMATION
Information Sought by
a Government Agency
Disclosure In Government
Enforcement Proceedings
Disclosure Relating
To Third Parties
Attorney—Client
Privilege
Work product
Rule
Self—Evaluative
Privilege
CONCLUSIONS
FOOTNOTES
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INTRODUCTION
A growing number of industrial firms are instituting environ-
mental audits at their facilities. EPA considers such auditing an
important corporate management technique to assure corporate officers
that their facilities are in compliance with environmental require-
ments and related corporate policies. The Agency has accordingly
sought to act as a catalyst and clearinghouse to encourage more
firms to evaluate and implement individualized environmental audit-
ing programs, since private—sector auditing can enhance firms’
environmental compliance while supplementing scarce government re-
sources.
Some managers considering whether to conduct environmental
audits of their facilities have expressed concern that information
generated by these audits, if made public, could be embarrassing
or potentially sufficient to trigger inspection or enforcement
actions that would not otherwise occur.
This perception, that information developed pursuant to a vol-
untary audit program may be disclosed, is perhaps the greatest
deterrent to wider corporate implementation of environmental audit-
ing. Information developed by an audit can expose a firm and
its officers to civil and criminal liability, and is potentially
subject to pretrial discovery by an adversary party during litiga-
tion. Research and the experience of individuals responsible for
ongoing corporate audit programs suggest that this threat of disclo-
sure has neither restricted program effectiveness nor created
adverse consequences. Nevertheless, the perception that raw audit
data or refined information (in the form of memoranda or reports)
may subsequently be used against a corporation or its officers
must be addressed.
To put the following analysis in context, it is necessary to
re—state two basic auditing premises. First, firms without serious
commitment to environmental goals rarely implement an environmental
auditing system. In firms with auditing programs top managers seem
to have analyzed their situation and concluded that the potential
benefits from auditing are greater than the potential costs involved,
including any costs from possible information disclosures. This
may be true either because the risk of disclosure is low, or because
the firm has little to lose even if data is disclosed. Second, the
audit is a working, evolving management tool used to analyze and
evaluate internal corporate procedures, and should not be regarded
as primarily a generator of legal documents designed to function in
legal areas. In this sense it is similar to a financial audit,
though there are sharp differences as well.
This paper attempts to address the confidentiality/disclosure
issue by examining first the specific kinds of information audits
are likely to produce; second , whether and to what degree that
information could adversely affect its producer if disclosed; and
third , legal principles and developing case law which may be useful
in securing the legitimate confidentiality of audit information.
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Finally , it offers suggestions which, if implemented by firms and
agencies, may assuage confidentiality concerns while enhancing the
ability of audits to assure better compliance and environmental
results.
WHY AUDIT ?
Many reasons exist for firms to initiate audit programs. For
example, auditing systems can help corporate management: (1) project
positive concern about environmental effects and commitment to take
steps necessary to correct identified problems, (2) avoid substantial
tort liability arising from personal injury, property damage, or
“toxic tort” claims; (3) avoid the surprise, disruption, and unplan-
ned costs of sudden enforcement actions; (4) develop better relations
with government agencies through the presence of an affirmative
program designed to find and correct problems before they become
dangers; (5) realize savings through process changes which reduce
the amount of raw materials needed or create less pollution to be
controlled at the end of the manufacturing process; arid (6) avoid
civil or criminal liability under the large number of federal and
state environmental statutes under which firms now operate, includ-
ing: the Clean Air Act, 42 U.S.C. §S7401 et seq . (1981), the
Federal Water Pollution Control Act Amendments of 1972 as amended
in 1977, 33 u.s.c. §S1251 et seq . (1981), the Resource Conservation
and RecoveryAct, 42 u.S.C. SS6901 etseg. (1981), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(“Superfund”), 42 U.S.C. SS9601 et seq . (1981), and the Toxic
Substances Control Act, 15 U.S.C. §S2601 et seq . (1981).21
Private—sector environmental auditing systems and their nec-
essary accompaniment, plant—level compliance assurance programs
which those systems audit, offer chief executive officers (CEOs)
and other corporate stakeholders both more effective environmental
management and increased comfort or security that procedures to
assure compliance with environmental requirements and corporate
policies are not only in place, but are operating as planned.V
COMPLIANCE ASSURANCE vs. ENVIRONMENTAL AUDITING
“Compliance assurance” has been defined “as a systematic way
of determining, attaining, and maintaining Iplant—leve,1] compliance
with applicable environmental rules and regulations.” 2 ! The primary
objective is to establish procedures designed to produce compliance
with local, state and federal environmental statutes. “Environmental
auditing” is the evaluation of such compliance assurance activities,
designed to assure that these procedures are in place and working,
and to produce an organized data base. An auditing system enables
firms to identify and correct procedures which lead to noncompliance,
and to minimize delays arid costs resulting from a regulator’s
identification of noncompliance. Viewed in this perspective, envi-
ronmental auditing is a management information system that develops
a range of data on a firm’s compliance performance.!! It differs
from a compliance assurance program primarily because of its
evaluative and corrective capacity.
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Exhibit 1 illustrates the different activities and products
encompassed by compliance assurance and auditing, respectively.W
Column 1 samples activities compliance assurance usually covers in
the firm’s interaction with environmental agencies. In contrast,
Column 2 samples activities which appear unique to auditing. Un-
like the compliance assurance program, auditing often tends to be
(1) general , usually more concerned with proper procedures than
individual case results; (2) summarily descriptive , providing ex-
planations of business practices relevant to environmental compli-
ance and hazards; (3) evaluative , in that existing practices or
conditions are measured on the auditor’s scale of environmental
management values; and (4) corrective , since audits will suggest
specific practical improvements within the firm’s capability and
will set deadlines for plant or facility managers’ response.
EXHIBIT 1
EXAMPLES OF ACTIVITIES
IN COMPLIANCE ASSURANCE AND AUDIT PROGRAMS
Column #1
Compliance Assurance
Effluent characterization
Permits to be obtained
Process descriptions
Plant layouts
Operating manuals
Monitoring reports
Statutory spill or emergency
exceedance reports
Equipment purchase orders and
performance specifications
Engineering test reports
Sample collection and analysis
Compliance information
Column #2
Environmental Auditing
Summaries of information in column 1
Matrix of facilities and applicable
rules and permits
List of current violations
List of potential violations
List of hazards (not regulated)
Description of facility internal
management control system
Chart of compliance information
flows among staff and managers
List of employees interviewed and
auditor conclusions
Discussions with plant managers
Independent samples and test re—
suits
List of corrections or improve—
men t S:
— to hardware
— to management practices
— to corporate policy
— to maintenance procedures
— timetable for corrections or
improvements
Description of risk management:
policy and practices for making
assessments, choices and trade—
of f s
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Exhibit 1 suggests that an audit, which is more centralized
and in some ways more detailed than plant—level compliance assurance
activities, will increase the reporting of exceedances ./ and make
that data more accessible by aggregating information otherwise
difficult to discover because of its form or geographic dispersion
among corporate facilities. This is the core realization which
seems to cause concern among those exploring environmental auditing
as a supplemental management tool.
THE DISCLOSURE/CONFIDENTIALITY ISSUE1 !
Disclosure of audit data first becomes an issue when the firm
realizes that beneficial audit information in Exhibit 1, Column 2,
also may be beneficial to:
o Government regulators who are revising rules, collecting
data for regulatory impact analyses, or allocating enforce—
merit resources.
o Government attorneys who are investigating or prosecuting
administrative, civil, or criminal cases.
o Competitors whose production strategies, cost structure,
and advertising may be influenced by an accurate assessment
of competitors’ strengths and weaknesses.
o Acquisition target companies who can defend against take—ov—
ers by illustrating the acquirer’s environmental misdeeds.
o Acquiring companies who might modify or withdraw an offer
if the target’s environmental liabilities are too great.
o Private plairitiffs who have filed or are considering lawsuits
for personal injury, property, or environmental damages
from company products or operations.
o Citizen—suit plaintiffs who may seek to enforce compliance
with agency rules when an agency has not done so.
The existence of audit information can also enlarge the general
duty of corporate disclosure, especially with respect to:
O The SEC , which requires issuers of corporate securities to
disclose substantial changes in the projected costs of
environmental compliance and liability.
o Stockholders , who may sue for damages or injunctive relief
if the firm has disclosed incorrect or inadequate estimates
of corporate environmental liabilities.
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In short, a corporate manager aware of his competitive and
legal environment will wonder whether an environmental audit may
not simply be a handy way to package valuable business information
for use by potential antagonists. Such potential effects produce
uncertainty in the manager’s decision whether to perform an audit.
Methods to control this uncertainty and reduce the probability of
information losses exist and are explored below. The important
point is that while audit data, like other business information,
could be a liability in the hands of an adverse party, the loss is
suffered only if the information is actually disclosed. Similar
risks have not deterred collection of other data on production, raw
materials purchases, or quality assurance believed essential to
effective management. The existence of sensitive or confidential
environmental audit results need not outweigh the benefits of an
audit, if the probability that confidence will be breached is low.
VALUE OF AUDIT INFORMATION
The type of information developed by an audit depends on the
particular functions that audit is designed to serve, and will vary
depending on whether the primary goal is regulatory compliance,
avoidance of tort liability, detection of significant hazards, or
cost minimization.Y The information contained in the audit report
will reflect these corporate objectives. Exhibit 2 reduces such
information to categories which reflect different general areas to
which audit data can relate. (The categories themselves are impor-
tant only as points of reference.)
EXHIBIT 2
INFORMATION CONTINUUM
I I
required information information information
information not reported relating to relating to
reported to but required compliance with potentially
EPA relating to be kept corporate policy harmful
to compliance on site unregulated
practices
Audit information to the left of Exhibit 2 has only marginal
additional value to competitors or regulators, since most of this
information is already required by EPA and available to the public.
“Disclosure” of such information is unlikely to cause a firm signif-
icant incremental problems. Indeed, to the extent a firm can show
it is making good faith efforts toward correcting discovered prob-
lems (most likely in the form of exceedances), the likelihood of
adverse publicity, government enforcement actions, or potential
penalties may decrease.!! Reducing these adverse effects accrues
benefits to firms.
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Audit information to the left of Exhibit 2 also has other ben—
ef its which appear to outweigh potential costs, even if the audit
report cannot be kept confidential. What plant managers and CEOs
do not know can hurt them, since pollution exceedances which are
inadvertent or not brought to management’s attention can produce
severe negative effects in terms of civil or criminal penalties
as well as common law tort actions. Environmental audits can
provide the information necessary for remedial action in advance
of harm, and can avoid punitive damages, criminal liability, and
heavy penalties even where harm is not entirely averted.
Audit information that tends toward the right of Exhibit 2
raises more justified concerns about potential disclosure. For
example, where the audit record suggests a firm could have done
better but chose not to, a court or jury may be more sympathetic to
an individual plaintiff, rendering the firm liable for larger com-
pensatory or punitive damages. More importantly, the information
may help a plaintiff prove that specific injuries resulted from a
“willful” or “knowing”i / instance of noncompliance. This may in-
crease a firm’s or officer’s culpability from civil to criminal
liability. Such “right—side” information crystallizes core disclo-
sure issues. Those issues and possible responses are addressed
below.
DISCLOSURE OF AUDIT INFORMATION
Disclosure of audit information which may cause incremental
harm —— beyond that posed by required disclosure of compliance data
under current statutes and regulations —— must be treated as two
separate topics, depending on whether the information is sought by
(a) a government agency, or (b) a third party or citizen plaintiff
in pretrial discovery.
Information Sought by a Government Agency . Corporate managers
fear that despite auditing’s ability to improve compliance, audit
information, once generated, might be used by EPA or a state agency
to subject the firm to more frequent inspection and/or greater en-
forcement. This could result because an audit tends to aggregate
dispersed information ordinarily difficult for EPA or the state to
obtain; or because audit information in summary form highlights
exceedances; because compliance data can be checked more frequent-
ly or thoroughly than through physical inspections. Providing
summary information raises fears that if an agency needs “enforce-
ment success stories” audit results will be a handy guide pointing
to facilities where pollution problems exist.
It is important to note that this concern assumes the existence
of some form of program in which EPA or a state agency formally
“takes into account” the presence of a firm’s auditing program in
exchange for periodic reports showing, for example, that regulatory
requirements are being met and exceedances are declining over
time.fl/ Neither EPA nor any state has approved or sought to implement
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such a programJi/ If such a program were to be implemented, con-
fidentiality concerns might still be balanced against the need for
information sufficient to assure that the agency is not simply
closing its eyes to potential problems by not requiring any audit
information to be submitted. Under this approach firms could be
required to keep records on site and file only certain required
statements (e.g., notices of exceedances). Information in the
audit report would not be held in the Agency and would therefore
not be subject to Freedom of Information Act (FOIA) requests.J1 1
Unless carefully structured, however, this approach might undermine
one of auditing’s major potential benefits to government —— conserv-
ed resources —— by requiring continued physical site visits to
participating facilities.
Assuming data is submitted to EPA or a state a second more
substantial problem arises. Business competitors, environmental
groups, or individuals may attempt to gain access to it under the
Freedom of Information Actii/ or state analogues.i I The Act gen-
erally allows members of the public to request and receive informa-
tion held by an agency of the Federal government. However, nine
areas of information are specifically exempt from disclosure under
the Act, including information held by an agency which consists of
“trade secrets and commercial or financial information obtained
from a person and privileged or confidential.. i/ The Clean Air
Act (42 U.S.C. §7607 (Supp. V 1981)) and other major environmental
statutes specifically state that emissions or effluent data may not
be treated as confidential. But the general law relating to this
FOIA exemption suggests there is substantial room for managers to
protect the legitimate confidentiality of aspects of audit informa-
tion, without compromising either the effectiveness of the audit
or such statutory concerns.
The terms “trade secret” and “confidential business” informa-
tion must be defined, One common definition states that “any
formula, pattern, device, or compilation of information which is
used in one’s business, and which gives him an opportunity to
obtain an advantage over competitors” who do not have knowledge
of it is a trade secret and therefore confidential.J.i/ Courts con-
sider several factors when deciding whether information is confiden-
tial business information, including whether the information was
generated by the firm seeking protection, how well the information
is known outside the firm, the value or potential value of the
information to the firm, the amount of effort taken to protect the
information, and the firm’s demonstrated reasonable expectation of
confident iali ty.i ./
The environmental auditing process can help a firm determine
whether certain information is a trade secret and then help protect
it. A manager with knowledge of what constitutes a trade secret can
tailor audit procedures to bolster a firm’s claim and increase the
chances for nondisclosure. If a corporate officer believes that
confidential business information is contained in audit documents
available to EPA or a state agency, legitimate measures can not only
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be taken to prevent its subsequent release pursuant to a FOIA re-
quest, but may be incorporated into audit procedures to routinize
this protection.
EPA’S disclosure policy states that EPA will disclose records
to the public only where disclosure is consistent “with the rights
of individuals to privacy” and with “the rights of persons in
business information entitled to confidential treatment.” 40 C.F.R.
2.101 (1981). 40 C.F.R. §2.201 et seq . (1981) establishes the
procedure a firm should follow to assert a claim of confidentiality.
A cover sheet stamped “trade secret” or “confidential information”
will alert the Agency to the firm’s belief that information in the
report is confidential and should not be disclosed. Information
submitted under such a claim will be held in confidence by EPA un-
less, after full review of the information and supporting documents,
EPA determines the information is not in fact confidential or a
trade secret. Information held by EPA which might be expected to
contain trade secrets will not be disclosed until EPA determines
whether the business is asserting a confidentiality claim. More-
over, willful, unauthorized disclosure of trade secrets or confi-
dential business information by a United States officer or employee
is a punishable offensej.2!
Clear indications that a document is believed to contain con-
fidential information or trade secrets can create a powerful pre-
sumption that disclosure is willful and unauthorized, giving firms
deciding whether to undertake an audit a bit more certainty that
privileged information will not purposely or inadvertently be dis-
closed by EPA employees.
Disclosure In Government Enforcement Proceedings . Subject on-
ly to minimal statutory requirements, EPA can force firms to sub-
mit a broad array of information relating to environmental perform-
ance. Environmental statutes authorize EPA to require firms to
install and maintain monitoring equipment, keep records on file at
facilities, and report to EPA under specified circumstances —— such
as when the Administrator determines such information is necessary
for developing new standards or regulations or that such informa-
tion will assist enforcement efforts.2.2./
Despite these provisions, firms would not be completely vulner-
able if EPA decided to request the production of audit information.22 1
The Federal Rules of Civil Procedure apply when the government
seeks disclosure of information or production of documents pursuant
to, for example, a subpoena in Federal district court. 2 . J Rule
8l(a)(3 defines the relevant scope of application of the Federal
Rules.Lil Since the Federal Rules govern discovery, including the
procedural rules in enforcement actions, the Rules’ defenses avail-
able to a party attempting to avoid disclosure against a private
party are likewise available against the government.. . 4 ./ These
defenses are called “privileges” and are discussed in detail in
the following section.
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A distinction should be made here between an administrative
proceeding itself (e.g., an administrative request for audit infor-
mation) and the court action to enforce such an administrative re-
quest, since the Federal Rules apply only to the latter. 2 . ’ In
other words, the privileges discussed in the following section may
only be raised in a court action brought by the government to compel
disclosure after initial refusal by a party to disclose the informa-
tion pursuant to an administrative request. /
Because no disclosure issue arises where disclosure of internal
audit documents is not sought, an EPA policy statement defining how
the Agency would approach the confidentiality issue may effectively
establish the limits of disclosure where the Agency is involved,
potentially resolving this perceived disincentive to auditing. But
even without such a policy statement firms can invoke the same
privileges against the government in administrative enforcement
actions for the production of audit documents, as against a third
party.
Disclosure Relating to Third Parties . The following discus-
sion addresses third—party attempts to compel disclosure of audit
information and how a firm wishing to preserve the confidentiali-
ty of that information may do so. The analysis is not affected by
citizen suit provisions in either the Clean Air (S304) or the
Clean Water (S505) Acts since citizen access to Federal courts is
coextensive with —— but no greater than —— the Administrator’s
enforcement authority.22!
The three privileges a corporate defendant may alternatively
or conjunctively assert to avoid release of audit information in
these circumstances are (1) the attorney—client privilege , (2) the
work product rule , and (3) a developing doctrine known as the self—
evaluative privilege . Each of these is discussed and illustrated
below.
Some general points concerning judicial views of such privi-
leges should first be highlighted. First , a firm asserting a priv-
ilege based on confidentiality should realize there is a tendency
for courts to scrutinize such claims closely in light of the belief
that full disclosure of relevant evidence will aid the process of
reaching a just result. Privileges “are not lightly created nor
expansively construed, for they are in derogation of the search for
truth. “2!!
Second , however, there is a clear countervailing interest in
assuring legitimate confidentiality. The very concept of privilege
implies that certain information must remain confidential and cer-
tain communications must remain immune from disclosure. Courts
recognize the strong public policy that confidentiality is essential
in areas where frank discussion serves the larger public interest.
This effort to balance the public’s need for full disclosure against
the public interest in confidentiality underlies judicial determina-
tions of the merits of particular privilege claims.
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Third , the mere fact that parties to a communication believe it
confidential does not automatically make it so in a legal sense,
since that result would allow the privilege to swallow the rule.
The court, after moderate scrutiny, will make the final determina-
tion. Fourth , certain judge—made doctrines may foreclose attempts
to prevent disclosure of otherwise privileged materials. For ex-
ample, where communications to an attorney or materials which are
part of an attorney’s work product include information about future
criminal conduct or are part of a conspiratorial cover—up, the
legal protections against disclosure will be held not to apply in
order to prevent subversions of justice or the judicial processd2i
Attorney—Client Privilege . This privilege guarantees the con-
fidentiality of a client’s comnunications to his attorney so the
attorney may render competent legal advice. The rationale for the
privilege is the assumption that it is less dangerous to incur an
occasional miscarriage of justice than to restrict a person’s lib-
erty to fully obtain legal advice. Candid communication between a
client and his attorney would be stifled if others could discover
the substance of their communications. Free flow of information
allows the attorney properly to assess his client’s needs and render
his best advice. This attorney—client privilege is applicable to
corporations as well as individuals.iQ/
The leading case in the attorney—corporate client area is
Upjohn Co. v. United States , 449 U.S. 383 (1981), which recently
modified the law in federal courts in this area. However, individual
states may still apply either of the two traditional rules discussed
below and a company should determine which rule applies in its juris—
dict ion.
Prior to Upjohn , two distinct rules were applied by different
courts. One group of courts applied the “control group” test and
held that communications to an attorney made by individuals part
of the “control group” of a corporation were covered by the
privilege.fl/ Determination of whether the communicator was in
the “control group” involved consideration of his authority to
control a decision and relative authority to prescribe or dictate
corporate action based on the attorney’s advice. This test usually
exempted only communications made by senior company employees. A
second group of courts applied the four—part “subject matter test”
and held that an employee’s communication to counsel was privileged
if it was (a) at a superior’s direction, (b) for the purpose of
getting legal advice, (c) related to subject matter in line with
the scope of the employee’s duty, and (d) not disseminated beyond
those persons who needed to know its contents.21 /
Upjohn rejected both these tests, but the Court refused to
state a new rule, declaring that “we decline to lay down a broad
rule or series of rules to govern all conceivable future questions
in this area.” 2 2 1 However, while the attorney—corporate—client
privilege was left to be decided in the future on a case—by—case
basis, the facts of the case are suggestive with respect to auditing
concerns.
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In Upjohn , attorneys prepared a questionnaire to investigate
alleged “questionable payments” by employees in foreign countries.
The questionnaire’s purpose was to aid corporate attorneys in
advising Upjohn on how to handle this potentially adverse situation.
The employees (managers) who received the questionnaire were told
to treat the investigation as “highly confidential,” not to discuss
the case, and to return requested information directly to an Upjohn
Vice—President acting as General Counsel. Outside counsel also
interviewed some of the employees. The IRS attempted to obtain the
questionnaire response files, but Upjohn refused to produce then.
The Supreme Court agreed with Upjohn, holding the information was
privileged and not subject to disclosure.
The Court noted that in the corporate context “it will frequent-
ly be employees beyond the control group...who will possess the
information needed by the corporation’s lawyers.”ii/ Rejecting the
control group test, the Court stated that “in light of the vast and
cauplicated array of regulatory legislation confronting the modern
corporation, corporations, unlike most individuals, constantly go
to lawyers to find out how to obey the law.” 2 1 ’ It therefore sug-
gested that a broader attorney—client privilege might apply to
corporations than to individuals, a suggestion which seems to apply
to compliance with environmental regulation as well.
To make the best case to prevent disclosure under the attorney—
corporate—client privilege, the factors in Upjohn should be recog-
nized and incorporated in developing or revising an individualized
audit program. Practical application of the teachings of Up john
may provide the strongest legal basis against disclosure of audit
results. The factors the Court relied on were:
(1) Employees’ communications were made to corporate counsel
under orders of their superiors who informed them that
the purpose was to secure legal advice.
(2) The information sought by corporate counsel was not held
by upper—level management, but held by or known to lower—
level employees.
(3) Information conveyed by the managers was within their
scope of duties as corporate employees.
(4) Upjohn carefully prepared the questionnaire to make sure
employees were aware that the information would be used
by counsel to render legal advice.
(5) Upjohn ordered its employees to keep discussions and
questionnaires confidential, and in fact they were not
disclosed.
These factors seem directly applicable to environmental auditing
disclosure issues. Provided a company takes similar precautions,
the probability that sensitive information in an audit report will
be disclosed should be significantly reduced.
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Some general suggestions may help narrow and reduce potential
concerns. However, managers should be aware that overly vigorous
implementation of these suggestions may also reduce the effective-
ness of environmental audits. In general, the points below indicate
that Ca) the more a firm does to protect its own privacy (within
reasonable limits and expectations) the more persuasive its privi-
lege claim is likely to be, and that (b) a reasonable program can
be designed and implemented without substantial burdens on conpany
auditors or corporate counsel.
o The audit program should be coordinated by a firm’s Corporate
Counsel or at least contain procedures to route potentially
significant problems to Counsel’s office.
o Requests for information from employees should clearly
state that such information is required by counsel to rend-
er legal advice on environmental compliance or potential
liabilities arising fran corporate activities.
O The firm should make clear that information necessary to
develop an audit report is known only by middle — or lower—
level employees.
o A corporation’s auditing manual or environmental policy
statement is a good place to begin incorporating these
safeguards and state both their purpose and the firm’s
interest in confidentiality of results.
o The manual or policy statement should clearly explain the
purpose of the audit (to provide counsel with information
upon which advice may be rendered) and establish procedures
to include counsel in necessary audit phases, without dis-
rupting the way existing audits are scheduled, conducted
and reported.
O Job descriptions should be written to make it part of an
employee’s duty to assist corporate counsel in environmental
compliance.
o Personnel on the audit team and employees interviewed during
the audit should be instructed to keep findings confidential
and to report them only to the audit team or to counsel.
o A company might minimize the number of written documents by
instituting sane form of quantity control and by having
some findings reported orally. (However, reducing the
amount of hard copy may reduce the audit’s effectiveness.)
O As evidence of a firm’s intent to keep the audit material
from being disclosed papers can be stamped “CONFIDENTIAL”
or “DO NOT DISCLOSE” and a statement of confidentiality
should be added to cover pages or reports. The importance
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of attention to detail cannot be overstated. It is essenti-
al that correct procedures are established and closely
adhered to.i ./
° once the process is understood and operating the additional
burden to auditors or corporate counsel should not be
significant.. 2./
Finally, it should be remembered that the privilege applies
only to communications between employees and counsel. Underlying
facts are not immune to disclosure if they are otherwise discover-
able. Thus, merely using an attorney as a funnel through which to
pass information may not prevent disclosure of facts pointing
toward environmental problems or a firm ’s knowledge of them.
Work Product Rule . The attorney—client privilege protects con-
fidential communications between a client and an attorney so the
attorney can render competent legal advice. The work product rule
also protects the relationship between attorneys and clients. Rath-
er than protecting communications, however, the rule provides an
attorney with a “zone of privacy” in which to think, opine, plan,
and evaluate a client’s case when litigation looms on the horizon.
The rule accords information or materials assembled in antic-
ipation of litigation or in preparation for trial a qualified
privilege from disclosure to an opposing party. Work product is
protected because of the inherent unfairness in allowing one party
to discover or piggyback on an opponent’s litigation strategy.
Without this rule one party to alaw suit could sit back, allow his
adversary to research and thoroughly develop the case, then compel
complete disclosure of everything the adversary had learned. Suc-
cinctly stated, fear of disclosure of one’s work product “would
severely affect the performance of the lawyer’s role” and encourage
shady practices.. !/
The rule was initially formulated by the Supreme Court in
Hickman v. Taylor , 329 U.s. 495 (1947). That case summarized the
rationale for the rule into four points, a necessary starting
place for any work product discussion:
Cl) Factual information and witnesses’ statements obtained by
an attorney are not protected by the attorney—client priv-
ilege;
(2) A broad policy against disclosure of information in a law-
yer’s files does not make these files absolutely immune
from discovery;
(3) However, the party seeking disclosure must show special
circumstances in order to obtain the information; and
(4) If information desired may be obtained elsewhere, the
attorney’s work product is not discoverable.i /
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The rule of Hickman has essentially been codified in the Federal
Rules of Civil Procedure.! 2 .! Rule 26(b)C3) of the Federal Rules
defines the class of materials to be protected (“documents and tan-
gible things...prepared in anticipation of litigation or for trial
by or for another party”). It sets out the showing the party
seeking discovery must make (a “substantial need and undue hardship”
in obtaining equivalent information through other means). It
protects an attorney’s “mental impressions, conclusions, opinions,
or legal theories.” It also creates a procedure by which a third
party who has given a statement concerning the action may obtain a
copy of his own statement.
When a party asserts the work product rule in refusing a
disclosure request, courts will consider three factors in deciding
the claim: whether the information or materials (1) were collected
or prepared in anticipation of litigation or for trial, (2) are
documents and tangible things, and (3) were prepared by or for
another party or by or for the other party’s representative. These
requirements must be examined individually.
First , “in anticipation of litigation or trial” establishes a
temporal limitation for using the work product rule as a shield
against disclosure. At one end of the spectrum, most courts agree
that materials prepared in the “ordinary course of business” fall
outside the work product rule..il/ It is less clear at what point,
prior to actual litigation, the information or materials will be
considered as having been developed “in anticipation of litigation.”
Some cases conclude that reports neither requested by nor prepared
for an attorney “nor which otherwise reflects the employment of an
attorney’s legal expertise” cannot be in anticipation of litiga—
tion.i2/ However, many cases find information gathered by represen-
tatives investigating accidents which occurred significantly prior
to any litigation, to be collected in anticipation of litigation.
For example, where information was collected by an investigator
after the injury of a railroad employee the court held “the expecta-
tion of litigation in such circumstances is a reasonable assump—
tion”fl! and protected the information under the work product
ru 1 e.
Perhaps the best test of this first element is to ask whether
the document or information “can fairly be said to have been prepar-
ed or obtained because of the prospect of litigation.”ff/
The second consideration is whether the materials are “documents
and tangible things.”i / The crucial distinction courts make here
is between facts and opinion. Facts known to a party’s lawyer are
not protected by the work product rule. For example, discovery of
potential witnesses or information on the existence or nonexistence
of documents cannot be prevented. The Supreme Court has stated
that “where relevant and nonprivileged facts remain hidden in an
attorney’s file and where production of those facts is essential to
the preparation of one’s case, discovery may be properly had.” .4! /
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However, information or materials which are the “mental impres-
sions, conclusions, opinions or ],egal theories of an attorney”iZ./ are
called “opinion work product”.i .f and entitled to greater protection
than mere factual information under the work product rule. Whether
such opinion work product is entitled to absolute (rather than
merely a qualified) protection —— and hence given extra weight
when balanced against the general public interest in disclosure ——
is still an open question. It has been held that memoranda based
on an attorney’s interviews “are so much a product of the lawyer’s
thinking and so little probative of the witness’ actual words”
that such material is absolutely protected. i/ But most courts
do not appear to give opinion work product such absolute protection
against disclosure. Opinion work product is more often held to be
entitled to “heightened protection.”.2.2/ When a document contains
facts as well as opinion work product, a court may order disclosure
of the facts while protecting the opinion.. 2 !!
Third , Rule 26(b)(3) requires the materials to be prepared “by
or for another party or by or for that other party’s representative
(including his attorney, consultant, surety, indemnitor, insurer or
agerit).”. 2 .ilThis allows information developed by parties, or someone
acting on their behalf, to be protected from discovery, . 21 ’ and
broadens the Rule’s protection by allowing parties to use agents to
conduct interviews..2.2/
In the environmental auditing context, much data, reports and
information collected from an audit would probably be facts which
are not immune from disclosure under the work product rule if the
party seeking discovery shows that it has “substantial need” for
the data and is “unable without undue hardship to obtain the sub-
stantial equivalent” by other means. . 2..2 1 This is not to say that
all information in an audit report would necessarily be available
to litigants, since opinions or mental impressions of an attorney
(e.g., in interpreting a regulation to determine whether an exceed—
ance or violation exists) would be unlikely to be ordered disclosed.
Separation of material in audit reports into “fact” and “interpreta-
tion” or “conclusion” sections may help protect the latter categor-
ies.
One additional point should be noted by firms potentially
relying on the work product rule to prevent disclosure. The quali-
fied immunity provided by the rule may be waived by conduct.
Since the purpose of the rule is to prevent disclosure of knowledge
to opposing counsel, disclosure to certain third persons (i.e.,
without regard for the confidential nature of the information) will
constitute such a waiver. Of course, disclosure to certain others
(i.e., an attorney’s support staff) will not act as a waiver of
protections afforded by the work product rule. Courts have held
this to be the case unless disclosure substantially increases the
opportunity for adversaries to obtain the information. . 2 ./ In. the
corporate context, once a decision is made to disclose information
otherwise protected by the work product rule, the immunity may be
lost. This is true “no matter what the economic imperatives” because
confidentiality is inconsistent with such disclosure.. 22 !
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This discussion of work product protections emphasizes its
relatively narrow application to auditing. The rule gives firms
only a qualified immunity from disclosure of facts contained in
materials produced by auditing if they are requested by an opponent
during the discovery phase of litigation. Opinions contained in
an audit report are somewhat safer from involuntary disclosure, and
attorneys’ legal opinions even more so. But, in general the rule
will not be as powerful a shield against disclosure as the attorney—
client privilege. In particular, it may not protect materials
developed pursuant to an EA program that has been ongoing for
years, because to the extent EA is considered a good management
practice it may be found part of regular business activity. There-
fore, information and materials routinely generated by the audi
might not be considered developed “in anticipation of litigation.” .
While arguments may be made that an entire audit program is per se
in anticipation of litigation —— as railroads or other “target
defendants” have argued with respect to routine accident prevention
and investigation programs —— it is not clear they would prevail.
Nevertheless, an assertion that audit material is work product
may be very effective in certain situations. One such instance
might be where a firm is concerned that its operations are causing
effects likely to result in a lawsuit by citizens or the government.
This may arise where preliminary inspection indicates a firm may be
violating applicable standards or where initial epidemiological
studies suggest that local health problems may be related to plant
operations. If a firm responds by instituting an EA program in
order to better understand its potential liabilities in anticipation
of future litigation, a claim based on the work product rule would
appear valid and sustainable in court. In such a situation, as
with the attorney—client privilege, it would be prudent to involve
an attorney or “other representative” of the firm as listed in Rule
26(b)(3) in the collection and review of data and information likely
to be used in the anticipated litigation.
The Self—Evaluation Priviiege.. 2 ! This evolving privilege ap-
pears applicable to environmental auditing and could potentially
provide audit information the broadest, most rational and least
disruptive protection against disclosure. To date, it has generally
been used by courts to protect documents in three regulatory areas:
hospital committee meeting minutes, internal disciplinary investiga-
tion reports, and equal employment opportunity compliance cases.
In addition, at least two states have enacted self—evaluation
privilege legislation. / Like other privileges it balances the
public need for full disclosure necessary to discover the truth,
against the public interest in confidentiality to promote candid
communication. Unlike the others, it is specifically aimed at en-
couraging regulated entities to evaluate their compliance with
regulatory requirements and correct problems internally, without
fear that looking for problems and their remedies will produce more
problems than are found and resolved.
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A 1970 federal district court decision in Bredice v. Doctors
Hospital, inc.i .I first established the self—evaluative privilege.
The case involved a malpractice suit in which the plaintiff sought
production and inspection of certain documents consisting of minutes
and reports recording medical staff reviews of patient treatment
protocols. These reviews (essentially periodic staff meetings) were
established to improve patient care and were conducted with the
understanding that all communications during the meeting were con-
fidential. Sustaining the hospital’s refusal to produce the docu-
ments, the court noted that “confidentiality is essential to the
effective functioning of these staff meetings; and these meetings
are essential to the continued improvement in the care and treatment
of patients”. 2./ It stated that without confidentiality constructive
self—criticism would not occur, and that such criticism would pro-
mote public health interests.
Similar self—evaluation privilege claims have since been sus-
tained by other courts when three general criteria are met. First ,
the information to be protected must result from a self—evaluation.
Second , there must be a strong public interest in maintaining the
free flow of the self—evaluative information. Third , there must
be a finding that the information and procedures used to procure
it would necessarily be curtailed if the privilege did not attach.. iI
It can plausibly be asserted that the privilege should extend
to environmental auditing, which possesses a similar evaluative
nature and ability to serve the public interest in the form of bet-
ter compliance and a cleaner, healthier environment. In many cases
where disclosure of audit information may be at issue the party
resisting disclosure would seem to meet the enunciated criteria.
First, the information is obviously the result of a self—evaluation,
defined as “the evaluation of a firm’s compliance assurance activi-
ties.” Second, the public’s strong interest in maintaining the
free flow of audit information can be characterized or documented
in several reinforcing ways: better compliance with environmental
regulations (especially operating/maintenance practices which are
difficult for an agency to police through conventional inspections),
reduced cost of government monitoring and enforcement, and a pro-
active effort to identify and correct problems (or potential prob-
lems) before they become serious. Third, the view seems widely
held that without some method of ensuring the confidentiality of
auditing information a large number of firms will resist implementa-
tion of auditing programs, despite documented business benefits.
In other words, the evaluative information and corrective action
produced by auditing will not be generated unless the disclosure
risk is reduced.
Whether a firm asserting the privilege could actually meet the
burden of proof required by the third criterion (that the production
of audit information would be curtailed absent the self—evaluative
privilege) seems to be the most difficult question. However, EPA
or a state agency could mitigate this problem. EPA could, based on
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documented findings that use of auditing would be curtailed if the
disclosure issue is not resolved, issue a policy statement finding
that auditing is a self—evaluation, and that there is strong public
interest in auditing as an environmental policy initiative. Such a
policy statement might strengthen firms’ ability to prevent unwar-
ranted or counter—productive disclosure, while furthering environ-
mental goals. Without such a statement corporate assertion that
the self—evaluative privilege should extend to environmental audit-
ing may not prevail. However, that risk exists only because there
is not yet a direct precedent, not because the principles do not
apply.
Some additional caveats should be mentioned. First, it appears
that like work product, the privilege extends to evaluative but not
factual information.ff/ Second, the privilege is not absolute and
courts have shown their intention that it develop on a case—by—case
basis. Third, the privilege can be lost even after a firm has shown
circumstances adequate to sustain it. This may occur upon a plain-
tiff’s showing of extraordinary circumstances or exceptional need
for the information, though such showings must be powerful indeed. .’
Finally, since the argument for the privilege essentially rests
on the public interest served by,promoting frank discussion during
a self—evaluation, another rule of evidence based on a similar
premise may bolster arguments for nondisclosure. The “subsequent
remedial measures” exclusionary rule prevents a party at trial from
presenting evidence of remedial or precautionary measures taken
after the occurrence of an accident or event, where those measures,
if taken previously, would have made the accident less likely to
occur. ’ For example, on the issue of negligence, evidence showing
the defendant’s actions in replacing allegedly defective equipment
is routinely excluded in order to encourage remedial measures that
prevent future accidents and make society a generally safer place.
The “subsequent remedial measures” exclusionary rule and the self—
evaluative privilege are based on the same policy rationale —— en-
couraging people to take positive steps now in order to prevent
future harm. These converging lines of authority may be used
together to assert that audit information should not be disclosed.
CONCLUSIONS
Concern about potential corporate adversaries obtaining audit
information appears to have become an obsession in some quarters of
the private sector. As this paper demonstrates, much of this con-
cern misses the mark. Much of the information an audit report
generates is presently within the government’s statutory authority
to require reported. A significant part of such information may
already be available to potential corporate antagonists, regardless
of the presence or absence of an audit program. The relatively
small amount of audit generated information that would not otherwise
be produced, reported to the government, or discoverable in litiga-
tion can largely be protected by an audit system paying careful
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attention to legitimate confidentiality concerns. The attorney—
client privilege currently affords the best legal defense against
unwarranted disclosure, since corporate counsel can easily coordi-
nate an investigation of discovered problems to advise the company
of its potential legal obligations and liabilities. The work
product rule may not provide protections as broadly. Unlike the
attorney—client privilege, it does not protect underlying facts
from discovery, and greater temporal limitations apply.
The self—evaluative privilege may have the greatest potential
to protect internal audit data. However, this privilege is still
evolving and particualr courts may be reluctant to allow its use.
EPA or state agencies could substantially mitigate such reluctance
by publicly stating a policy against requiring audit information
per se to be discovered or reported in routine regulatory proceed-
ings and could state findings and rationales in support of extend-
ing the self—evaluative privilege to environmental compliance re-
gimes.
Industry representatives have noted that it is becoming in-
creasingly difficult for corporate management to close its eyes to
problems, whether actual or potential, at the plant level.&Z./ De-
liberate or structured ignorance occurs more and more at managers’
professional and personal peril. Auditing can help reduce these
dangers by instituting procedures for managing compliance more
effectively and making sure problems are promptly identified and
remedied prior to the arrival of a government inspector, a reporter,
or third party complaint. A properly structured audit program is
able to achieve these benefits without substantial confidentiality
concerns.
(END)
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FOOTNOTES
1. This list is illustrative rather than exhaustive.
2. Center for Environmental Assurance, Arthur D. Little, Inc.,
“Benefits to Industry of Environmental Auditing.” Report to
U.S. Environmental Protection Agency (1983).
3. “The Evolution of Environmental Auditing: Implications for
Firms and for Regulators,” by John palmisano, presented at
the Air Pollution Control Association Annual Meeting, Atlanta,
Georgia, pp. 3 (June 1983).
4. Id.
5. The following discussion and exhibit were developed in a pre-
liuiinary memorandum by Richard Ferguson, The Skylonda Group,
for U.S. EPA’s Regulatory Reform Staff.
6. An exceedance is not a violation. An exceedance indicates a
standard is not attained. It becanes a violation upon EPA’S
filing a notice.
7. The following discussion is partly derived from a preliminary
memorandum prepared by Richard Ferguson, The Skylonda Group,
for TJ.S. EPA’S Regulatory Reform Staff.
8. Center for Environmental Assurance, Arthur D. Little, Inc.,
“Benefits to Industry of Environmental Auditing.” Report to
U.S. Environmental Protection Agency (1983).
9. The preamble of U.S. EPA’S Office of Enforcement “Civil Penal-
ty Policy”, July 8, 1980, states that the policy “is based
primarily on four considerations —— the harm done to the
public health or the environment; the economic benefit gained
by the violator; the degree of recalcitrance of the violator;
and any unusual or extraordinary enforcement costs thrust
upon the public. The policy recognizes appropriate mitigating
circumstances or factors.” Environmental auditing could be a
mitigating factor and has been used to reduce potential penal-
ties when included as a requirement in consent decrees.
10. “To act ‘knowingly’ ... means to act voluntarily and purpose-
fully, and not because of mistake or inadvertence.” 22 C.J.S.
Criminal Law §3l(3)(1961).
11. To the extent art agency informally takes auditing into account
by reduced inspection frequency or penalties due to a con-
sistently good compliance record based on prior inspections,
no reporting or availability of audit results is implied and
the concern does not arise.
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12. However, EPA, as part of its general clearinghouse role, is
exploring the legal constraints and policy safeguards which
would have to be observed in such a program. Michael H.
Levin, Chief, Regulatory Reform Staff, U.S. EPA has requested
a memorandum on this issue from William F. pedersen, Jr.,
Acting Associate Counsel for Air, Noise and Radiation.
13. 40 C.F.R. §2.101 (1983). FOIA only reaches EPA—held docu-
ments. Documents not in EPA’s possession can not be made the
subject of a LOlA request.
14. 5 U.S.C. §552 (1976 and Supp. III 1979).
15. State FOIAS generally contain similar provisions.
16. 5 U.S.C. §552(b)(4) (1976 and Supp. III 1979).
17. Restatement of the Law of Torts §757, Comment (b)(1939).
18. Ridgway Hall, Jr. and David Case, The Environmental Audit ,
pp. 85 (1982).
19. 18 U.S.C. §1905 (1981).
20. See e.g., Clean Air Act, 42 U.S.C. § 7414 (1981) and the
Federal Water Pollution Control Act, as amended, 33 U.S.C.
§1318 (1981).
21. However, a constitutional claim based on the Fifth Amendment
privilege against self—incrimination would not he likely to
succeed. First, at least one leading case disallows a firm’s
claim that information in a notification of compliance to EPA
was improperly used by the government as a basis for its
complaint and that the coprporation’s rights had been violated.
The court responded that the “constitutional argument is
patently without merit since a corporation is not entitled to
a Fifth Amendment privilege against self—incrimination, Cali-
fornia Bankers Assn. v, Shultz, Secretary of the Treasury , et
al, 416 U.S. 21 (1974).” United States v. Allied Towing Corp. ,
12 ERC 1305 (4th Cir. 1978). Second, penalties in environ-
mental statutes are generally recognized as being “civil”
rather than “criminal” in nature, and the privilege against
self—incrimination applies only to “criminal cases.” See,
generally, United States v. Ward , 448 U.S. 242 (1980),
reh. den . 448 U.S. 916 (1980).
22. Fed. R. Civ. P. 45 discusses subpoena types and rules for
enforcement. Subpoenas are used to compel the attendance of
witnesses and production of documents so the court may .have
all available information to determine the controversy before
it. Universal Airline, Inc., v. Eastern Airlines, Inc. , 188
F.2d 993 (D.C. Cir. 1951).
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23. “These rules apply to proceedings to compel the giving of
testimony or production of documents in accordance with a
subpoena issued by an officer or agency of the United States
under any statute of the United States except as otherwise
provided by statute or by rules of the district court or by
order of the court in the proceedings.” Fed. R. Civ. P.
81(a) (3).
24. Much of the case law on this point arises out of Internal
Revenue Service (IRS) actions to compel disclosure of financial
and tax information. In that context it was stated, “in the
absence of a clear negative statutory pronouncement or compel-
ling circumstances.., it would seem apparent under...Rule
81(a)(3) that the Federal Rules” apply to the enforcement of
IRS summonses. Kennedy v. Ruben , 254 F. Supp. 190, 191 (N.D.,
Ill. 1966). But see, Fed. Say, and Loan Ins. Corp. v. Nation-
al Development Corp., 497 F. Supp. 724 (D.C. Tex. 1980).
(While these rules apply in subpoena enforcement proceedings,
district courts have discretion in certain circumstances to
limit their application.)
25. Falsone v. U.S. , 205 F.2d 734 (5th Cir. 1953) cert. den . 346
U.S. 864 (1953) (IRS, through a subpoena duces tecum , tried
to compel an accountant to appear and disclose clients’ finan-
cial information so long as confidential communications were
not involved.)
26. However, a privileged communication or relationship which
obtains its status only under a State law and not the Federal
Rules or federal evidence rules, would not be protected in a
Federal action. Id.
27. 95th Cong., 2nd Sess. 5 (1978), reprinted in “A Legislative
History of the Clean Air Act Amendments of 1977”, at pp. 4400
and 4093. The provisions confirm citizens’ ability to bring
suit to enforce Clean Air Act requirements, an ability drawn
into question by some previous court decisions.
28. United States v. Nixon , 418 U.S. 683, 710 (1974).
29. For example, with respect to the attorney—client privilege,
if a court finds certain communications were made for the
purpose of committing a future criminal act, the communications
will no longer be protected. The client’s purpose in seeking
legal counsel is controlling. See, United States v. Calvert ,
523 F.2d 895 (8th Cir. 1975), cert. den . 424 U.S. 911 (1975).
With respect to the work product rule, disclosure of informa-
tion that would ordinarily be protected may be required if
the attorney’s work product is created to cover up some wrong-
doing. See, In re John Doe Corporation , 675 F.2d 482, 492
(2d. Cir. 1982) (“The work product itself may be part of a
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criminal scheme and all reason for protecting it from judicial
exminat ion evaporates.”)
30. For a comprehensive review see, United States v. Louisville
and Nashville R.R. , 236 U.S. 318 (1914) . And see , J.W.
Gergacz, Attorney—Corporate Client Privilege , 37 Busi. L. 461
(Jan. 1982).
31. Philadelphia v. Westinghouse Electric Corp. , 210 F. Supp. 483
(E.D. Pa. 1962).
32. Diversified Industries, Inc. v. Meredith , 572 F.2d 596 (8th
Cir. 1978), see also, Harper & Row v. Decker , 423 F.2d 487
(7th Cir. 1970) aff’d 400 U.S. 348 (1971).
33. 449 U.s. 383, at 386 (1981).
34. • ., at 391.
35. Id., at 392.
36. see, In re John Doe Corporation , 675 F.2d 482 (2d Cir. 1982)
(where a company prepared a report for both internal and
external purposes, attorney—corporate—client privilege was
lost).
37. TO prevent breaches of confidence, employees or third party
consultants with access to sensitive data might also be requir-
ed to sign an “agreement of confidentiality.”
38. Id. , at 492 (1982).
39. Gardner, Agency Problems in the Law of Attorney—Client Privi-
lege: Privilege and “Work Product” Under Open Discovery , 42
U. Det. L. J. 105, 134 (1964).
40. Fed. R. Civ. P. 26(b)(3).
41. See, Thomas Organ Co. v. Jadranska Slobodna Plovidba , 54 F.R.D.
367 (N.D. Ill. 1972).
42. Id., at 372.
43. Almaguer v. Chicago, Rock Island & Pacific Railroad Co. , 55
F.R.D. 147, 149 (D. Neb. 1972).
44. 8 wright & Miller, Federal Practice and Procedure : Civil §2024,
pp. 198 (1970). Unfortunately, this allows courts some flexi-
bility in deciding the issue and therefore has led to conflict-
ing results. See, In re Grand Jury Investigation , 599 F.2d
1224 (3rd Cir. 1979). But see, Diversified Industries Inc.
v. Meredith , 572 F.2d 596 (8th Cir. 1977).
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45. Transmirra Prods. Corp. v. Monsanto Chem. Co. , 26 F.R.D. 572,
579 (1960). Although the work product rule expressly limits
discovery to “documents and tangible things,” oral communica-
tions are protected as well.
46. Hickman v. Taylor , 329 U.s. 495, 551 (1947).
47. Fed. R. Civ. P. 26(b)(3).
48. In re Grand Jury Investigation , 599 F.2d 1224, 1231 (3rd. Cir.
1979).
49. In re Grand Jury Investigation (Sturgis) , 412 F. Supp. 943, 949
(E.D. Pa. 1976).
50. In re Grand Jury Investigation , 599 F.2d 1224, 1233 (1979).
51. Id, at 1232—33 (showing of “good cause” is required).
52. Fed. R. Civ. P. 26(b)(3).
53. Bunting v. Gainsvil].e Mach. Co. , 53 F.R.D. 594 (D.C. Del. 1971).
54. United States. v International Business Machines Corp. , 415 F.
Supp. 668 (1976).
55. Fed. R. Civ. P. 26(b)(3).
56. 8 Wright & Miller, Federal Practice and Procedure : Civil
§2024, Pp. 210 (1970).
57. In re John Doe Corporation , 675 F.2d 482, 489 (2d. Cir. 1982).
58. In somewhat similar circumstances——though it was the government
claiming the privilege——the court in rejecting the work product
claim stated that, “to argue that every audit is potentially
the subject of litigation is to go too far.” Coastal States
Gas Corp. v. Department of Energy , 617 F.2d 854 (D.C. Cir.
1980). In the circumstances of that case, the court suggested
the work product rule will prevent disclosure only after a
“specific charge or allegation (isi under investigation.”
Id. , at 865.
59. The privilege is known by various names, including privilege
against disclosure of self—evaluative documents, privilege of
self—critical analysis, and self—evaluative report privilege.
60. See , Neb. Rev. Stat. §71—2048 (1981); Wis. Stat. Ann. §146.38
(West Supp. 1982).
61. 50 F.R.D. 249 (D.D.C. 1970), aff’d , 479 F.2d 920 (D.C. Cir.
1973).
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62. Id. , at 250.
63. See, Note , “The Privilege of Self—Critical Analysis,” 96
Harv. L. Rev. 1083 (1983)(discussing these three criteria in
a review of the development of the self—evaluative privilege).
64. See, Webb v. Westinghouse Elec. Corp. , 81 F.R.D. 431, 434
(E.D. Pa. 1978).
65. 50 F.R.D. 249, at 251.
66. 1 Wigmore on Evidence §283 (3rd ed. 1940).
67. Comment by Frank Friedman, Vice—President, Health and the
Environment, Occidental Petroleum Company, EPA Environmental
Auditing Opinion Leaders’ Workshop (June 9, 1983).
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