CSSB 41(L&C): "An Act relating to environmental audits and health and safety audits to determine compliance with certain laws, permits, and regulations."
00CS FOR SENATE BILL NO. 41(L&C) 01 "An Act relating to environmental audits and health and safety audits to 02 determine compliance with certain laws, permits, and regulations." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. FINDINGS; INTENT. The legislature finds and intends as follows: 05 (1) as environmental and health and safety regulations evolve, performance- 06 based standards will increasingly replace the traditional command-and-control approach of 07 state regulatory practices; this shift is expected to save money for both the state and regulated 08 entities and to lead to the integration of environmental and health and safety protections and 09 normal operating procedures for regulated facilities and operations; in order to foster a 10 partnership between the public and private sectors and promote this integration, it is the intent 11 of the legislature to establish under this Act a responsible incentive program to encourage 12 voluntary, critical self-evaluation and analysis by regulated entities of their compliance with 13 environmental and health and safety requirements by authorizing certain qualified privileges 14 and immunities related to those self-evaluations;
01 (2) the public has a strong interest in encouraging routine self-review of 02 environmental and health and safety business practices and procedures; this encouragement 03 can best be achieved by preserving the free flow of information; the free flow of the kind of 04 information that is generated by self-audits would be curtailed if a privilege for the audits 05 were not available; therefore, it is the intent of the legislature to recognize an audit privilege 06 under this Act to protect the confidentiality of communications related to voluntary internal 07 environmental and health and safety audits; however, the legislature does not intend that the 08 parts of an audit report consisting of confidential self-evaluation and analysis that are 09 privileged under this Act may be used to shield a person from liability under applicable laws 10 and regulations by blocking access to relevant facts; 11 (3) the public also has a strong interest in obtaining cost-effective correction 12 of inadvertent environmental and health and safety violations; this goal can best be achieved 13 by offering qualified immunity from administrative and civil penalties to regulated persons 14 who promptly report known violations of environmental and health and safety regulations that 15 are uncovered as part of an audit so that the violations can promptly be corrected and a 16 compliance plan can be negotiated with the appropriate governmental regulatory agency; 17 (4) an effective enforcement program is also necessary to protect the public 18 health and welfare and the environment; the legislature intends that the audit privilege and the 19 immunities established in this Act should be applied in a manner that promotes compliance 20 with environmental and health and safety laws, whether through voluntary compliance or 21 through enforcement efforts. 22 * Sec. 2. AS 09.25 is amended by adding new sections to read: 23 Article 5. Privileges and Immunities 24 Related to Disclosure of Certain Self-Audits and Violations. 25 Sec. 09.25.450. Audit report privilege. (a) Except as provided in 26 AS 09.25.460, an owner or operator who prepares an audit report or causes an audit 27 report to be prepared has a privilege to refuse to disclose, and to prevent another 28 person from disclosing, the parts of the report that consist of confidential self- 29 evaluation and analysis of the owner's or operator's compliance with environmental or health 30 and safety laws. Except as provided in AS 09.25.455 - 09.25.480, the privileged information 31 is not admissible as evidence or subject to discovery in
01 (1) a civil action, whether legal or equitable; or 02 (2) an administrative proceeding, except for workers' compensation 03 proceedings. 04 (b) With respect to confidential self-evaluation and analysis in an 05 environmental audit, in order to qualify for the privilege under this section and the 06 immunity under AS 09.25.475, at least 15 days before conducting the audit, the owner 07 or operator conducting the audit must give notice by certified mail to the department 08 of the fact that it is planning to commence the audit. The notice must specify the 09 facility, operation, or property or portion of the facility, operation, or property to be 10 audited, the date the audit will begin and end, and the general scope of the audit. The 11 notice may provide notification of more than one scheduled environmental audit at a 12 time. Once initiated, an audit shall be completed within 30 days unless a longer period 13 of time is agreed upon between the owner or operator and the department. The audit 14 report must be completed in a timely manner. 15 (c) The following persons may claim the privilege available under (a) of this 16 section: 17 (1) the owner or operator who prepared the audit report or caused the 18 audit report to be prepared; 19 (2) a person who conducted all or a portion of the audit but did not 20 personally observe or participate in the relevant instances or events being 21 reviewed for compliance; 22 (3) a person to whom confidential self-evaluation or analysis is 23 disclosed under AS 09.25.455(b); or 24 (4) a custodian of the audit results. 25 (d) A person who conducts or participates in the preparation of an audit report 26 and who actually observed or participated in conditions or events being reviewed for 27 compliance may testify about those conditions or events but may not, in a proceeding 28 covered by (a) of this section, be compelled to testify about or produce documents 29 consisting of confidential self-evaluation and analysis. 30 (e) A person claiming the privilege described in this section has the burden of 31 proving the applicability of the privilege.
01 (f) To facilitate identification, each document in an audit report that contains 02 confidential self-evaluation or analysis shall be labeled "AUDIT REPORT: 03 PRIVILEGED DOCUMENT." 04 (g) A government agency or its employees or agents may not, as a condition 05 of a permit, license, or approval issued under an environmental law, require an owner 06 or operator to waive the privilege available under this section. 07 (h) Except when the privilege is waived under AS 09.25.455(a) or disclosure 08 is made under AS 09.25.455(b), neither an agency nor its employees or agents may 09 review or otherwise use the part of an audit report consisting of confidential self- 10 evaluation or analysis during an inspection of a regulated facility, operation, or property or 11 an activity of a regulated facility, operation, or property. 12 (i) This section may not be construed to 13 (1) prevent a regulatory agency from issuing an emergency order, 14 seeking injunctive relief, independently obtaining relevant facts, conducting necessary 15 inspections, or taking other appropriate action regarding implementation and 16 enforcement of an applicable environmental or health and safety law, except as 17 otherwise provided in AS 09.25.475; or 18 (2) authorize a privilege for uninterrupted or continuous environmental 19 or health and safety audits. 20 Sec. 09.25.455. Waiver and disclosure. (a) The privilege in AS 09.25.450 21 does not apply to the extent the privilege is expressly waived in writing by the owner 22 or operator who prepared the audit report or caused the report to be prepared. 23 (b) Disclosure of the part of an audit report or information consisting of 24 confidential self-evaluation or analysis does not waive the privilege established by 25 AS 09.25.450 if the disclosure is made only 26 (1) to address or correct a matter raised by the environmental or health 27 and safety audit and is made only to 28 (A) a person employed by the owner or operator, including 29 temporary and contract employees; 30 (B) a legal representative of the owner or operator; 31 (C) an officer or director of the regulated facility, operation, or
01 property; 02 (D) a partner of the owner or operator; 03 (E) an independent contractor retained by the owner or operator; 04 or 05 (F) the principal of the independent contractor who conducted 06 an audit on the principal's behalf; 07 (2) under the terms of a confidentiality agreement between the owner 08 or operator who prepared the audit report or caused the audit report to be prepared and 09 (A) a partner or potential partner of the owner or operator of the 10 facility, operation, or property; 11 (B) a transferee or potential transferee of an interest in the 12 facility, operation, or property; 13 (C) a lender or potential lender for the facility, operation, or 14 property; or 15 (D) a person engaged in the business of insuring, underwriting, 16 or indemnifying the facility, operation, or property; or 17 (3) under a written claim of confidentiality to a government official or 18 agency by the owner or operator who prepared the audit report or who caused the audit 19 report to be prepared. 20 (c) Documents consisting of confidential self-evaluation and analysis that are 21 disclosed under (b)(3) of this section are required to be kept confidential and are not 22 subject to disclosure under AS 09.25.110 - 09.25.220. 23 Sec. 09.25.460. Nonprivileged materials. (a) There is no privilege under 24 AS 09.25.450 for that part of an audit report that contains the following: 25 (1) objective facts; 26 (2) a document, communication, datum, report, or other information 27 required by a regulatory agency to be collected, developed, maintained, or reported 28 under an environmental or health and safety law, under a permit issued under an 29 environmental or health and safety law, as a requirement for obtaining, maintaining, 30 or renewing a license, as a requirement under a contract or lease with the state, or as 31 a requirement under an administrative order or court order or decree;
01 (3) information that a regulatory agency obtains by observation, 02 sampling, or monitoring; 03 (4) information that a regulatory agency obtains from a source that was 04 not involved in compiling, preparing, or conducting the environmental or health and 05 safety audit report; 06 (5) a document, communication, datum, report, or other information 07 collected, developed, or maintained in the course of a regularly conducted business 08 activity or regular practice other than an environmental or health and safety audit; 09 (6) a document, communication, datum, report, or other information 10 that is independent of the environmental or health and safety audit, whether prepared 11 or existing before, during, or after the audit; and 12 (7) a document, communication, datum, report, or other information, 13 including an agreement or order between a regulatory agency and an owner or 14 operator, regarding a compliance plan or strategy. 15 (b) An audit report is not privileged and is admissible as evidence and subject 16 to discovery in a proceeding relating to pipeline rates, tariffs, fares, or charges. 17 Sec. 09.25.465. Exception: disclosure required by court. (a) A court with 18 jurisdiction may require disclosure of confidential self-evaluation and analysis 19 contained in an audit report in a civil proceeding if the court determines, after an in 20 camera review consistent with the appropriate rules of procedure, that the 21 (1) privilege is asserted for a criminal or fraudulent purpose; 22 (2) information for which the privilege is claimed is evidence of 23 substantial injury to one or more persons at the site audited or to persons, property, or 24 the environment offsite; 25 (3) audit report shows evidence of noncompliance with an 26 environmental or health and safety law and appropriate efforts to achieve compliance 27 with the law were not promptly initiated and pursued with reasonable diligence after 28 discovery of noncompliance; 29 (4) audit report was prepared for the purpose of avoiding disclosure of 30 information required for an investigative, administrative, or judicial proceeding that, 31 at the time of the report's preparation, was imminent or in progress; or
01 (5) privilege would result in a miscarriage of justice or the denial of 02 a fair trial to the party challenging the privilege. 03 (b) A party seeking disclosure under this section has the burden of proving that 04 (a) of this section applies. 05 Sec. 09.25.475. Voluntary disclosure; immunity. (a) Except as provided by 06 this section, an owner or operator who makes a voluntary disclosure of a violation of 07 an environmental or health and safety law is immune from an administrative or civil 08 penalty for the violation disclosed, for a violation based on the facts disclosed, and for 09 a violation discovered because of the disclosure that was unknown to the owner or 10 operator making the disclosure. 11 (b) Immunity is not available under this section if the violation resulted in 12 substantial injury to one or more persons at the site audited or to persons, property, or 13 the environment offsite. 14 (c) A disclosure is voluntary for the purposes of this section only if 15 (1) the disclosure is made promptly after knowledge of the information 16 disclosed is obtained by the person; 17 (2) the disclosure is made in writing by certified mail to an agency that 18 has regulatory authority with regard to the violation disclosed; 19 (3) an investigation of the violation was not initiated or the violation 20 was not independently detected by an agency with enforcement jurisdiction before the 21 disclosure was made using certified mail; under this paragraph, the agency has the 22 burden of proving that an investigation of the violation was initiated or the violation 23 was detected before receipt of the certified mail; 24 (4) the disclosure arises out of a voluntary environmental or health and 25 safety audit; 26 (5) the owner or operator making the disclosure initiates, within a 27 reasonable time, an appropriate effort to achieve compliance, pursues that effort with 28 due diligence, and corrects or implements a series of measures designed to remedy the 29 noncompliance within a reasonable time; and 30 (6) the owner or operator making the disclosure cooperates with the 31 appropriate agency in connection with an investigation of the issues identified in the
01 disclosure and agrees under terms of a confidentiality agreement to disclose to the 02 agency, on request of the agency, the part of the audit report that describes the 03 implementation plan or tracking system developed to correct past noncompliance, 04 improve current compliance, or prevent future noncompliance. 05 (d) To qualify for immunity under this section, the owner or operator making 06 the disclosure must 07 (1) promptly initiate appropriate efforts to achieve compliance and 08 remediation and pursue those efforts with due diligence; 09 (2) correct the violation within 90 days or enter into a compliance 10 agreement with the appropriate agency that provides for completion of corrective and 11 remedial measures within a reasonable time; 12 (3) implement appropriate measures designed to prevent the recurrence 13 of the violation; and 14 (4) cooperate with the appropriate agency in connection with an 15 investigation of the issues identified in the disclosure; an agency may request that the 16 owner or operator allow the agency to review, under an agreement as described in 17 AS 09.25.455(b)(3), the relevant portions of the confidential self-evaluation and 18 analysis as necessary to determine that appropriate corrective actions have been 19 identified. 20 (e) A disclosure is not voluntary for purposes of this section if it is a 21 disclosure to a regulatory agency expressly required by an environmental or health and 22 safety law, a permit, a license, or an enforcement order or decree. 23 (f) Immunity under this section for violation of an environmental law is 24 available only for a violation that is discovered as a result of information or documents 25 first produced or obtained during the time period specified in the notice required under 26 AS 09.25.450(b). 27 (g) During the audit period specified in the notice required under 28 AS 09.25.450(b), the department may not initiate an inspection, monitoring, or other 29 investigative activity concerning the audited facility, operation, or property based solely 30 on the receipt of a notice under AS 09.25.450. The department has the burden of 31 proving that an inspection, monitoring, or other investigative activity concerning the
01 audited facility, operation, or property initiated after receiving a notice under 02 AS 09.25.450 was not initiated based solely on receiving the notice. 03 (h) A violation that has been voluntarily disclosed and to which immunity 04 applies under this section shall be identified by the regulatory agency in its compliance 05 history report as having been voluntarily disclosed. 06 Sec. 09.25.480. Exceptions to immunity; mitigation. (a) There is no 07 immunity under AS 09.25.475 if a court finds that 08 (1) the owner or operator claiming the immunity has 09 (A) intentionally, knowingly, or recklessly committed or 10 authorized the violation; 11 (B) within the 36 months preceding the violation, repeatedly or 12 continuously committed violations that are the same as, or similar to, the 13 violation for which immunity is sought; 14 (C) not attempted to bring the facility, operation, or property 15 into compliance and this failure constitutes a pattern of disregard of 16 environmental or health and safety laws; or 17 (2) the offense was committed intentionally or knowingly by a member 18 of the owner's or operator's management or an agent of the owner or operator and the 19 owner's or operator's policies or lack of prevention systems contributed materially to 20 the occurrence of the violation. 21 (b) An administrative or civil penalty that is imposed on a person for violation 22 of an environmental or health and safety law when the person has made a voluntary 23 disclosure under AS 09.25.475(a) but is not granted immunity because of (a) of this 24 section may, to the extent appropriate and not prohibited by law, be mitigated by 25 (1) the voluntariness of the disclosure; 26 (2) efforts by the disclosing party to conduct environmental or health 27 and safety audits and to complete any resulting implementation plan or tracking system 28 for corrective and preventive action; 29 (3) remediation; 30 (4) cooperation with government officials investigating the disclosed 31 violation;
01 (5) the nature of the violation; and 02 (6) other relevant considerations. 03 Sec. 09.25.485. Relationship to other recognized privileges. AS 09.25.450 - 04 09.25.490 do not limit, waive, or abrogate the scope or nature of a statutory or 05 common law privilege, including the work product doctrine, the attorney-client 06 privilege, and any other privilege recognized by a court with appropriate authority in 07 this state. 08 Sec. 09.25.490. Definitions. (a) In AS 09.25.450 - 09.25.490, 09 (1) "audit report" means a report that includes each document and 10 communication, other than those set out in AS 09.25.460, produced from an 11 environmental or health and safety audit; general components that may be contained 12 in a completed audit report include 13 (A) a report, prepared by an auditor, monitor, or similar person, 14 including the scope of the audit, the dates the audit began and ended, the 15 information gained in the audit, findings, conclusions, recommendations, 16 exhibits, and appendices; 17 (B) memoranda and documents analyzing all or a portion of the 18 materials described in (A) of this paragraph or discussing implementation 19 issues; and 20 (C) an implementation plan or tracking system to correct past 21 noncompliance, improve current compliance, or prevent future noncompliance; 22 (2) "confidential self-evaluation and analysis" means the part of an 23 audit report that consists of memoranda and documents that evaluate or analyze all or 24 part of the material described in the audit report, including implementation issues or 25 an audit implementation plan or tracking system to correct past noncompliance, 26 improve current compliance, or prevent future noncompliance with an environmental 27 or health and safety law, and that is 28 (A) a voluntary, confidential, critical, internal, and retrospective 29 review, self-evaluation, or analysis of conduct, practices, and occurrences and 30 their resulting consequences; and 31 (B) prepared and maintained with the expectation that it will be
01 kept confidential; 02 (3) "department" means the Department of Environmental Conservation, 03 the Department of Labor, and the Department of Health and Social Services, as 04 appropriate; 05 (4) "environmental or health and safety audit" means a voluntary, 06 confidential, critical, internal, and retrospective review, self-evaluation, or analysis of 07 current or past conduct, practices, and occurrences and their resulting consequences, 08 including an assessment that is a part of the owner's or operator's compliance 09 management system, whether or not conducted on a regular basis or in response to a 10 particular event, by an owner or operator or by an employee or independent contractor 11 of an owner or operator and is 12 (A) conducted in the expectation that it will be confidential; and 13 (B) specifically and exclusively designed and undertaken for the 14 purpose of determining compliance with environmental or health and safety 15 laws or a permit issued under those laws; 16 (5) "environmental or health and safety law" means 17 (A) a federal or state environmental or occupational health and 18 safety law; or 19 (B) a rule, regulation, or municipal ordinance adopted in 20 conjunction with or to implement a law described by (A) of this paragraph; 21 (6) "intentionally" has the meaning given in AS 11.81.900; 22 (7) "knowingly" has the meaning given in AS 11.81.900; 23 (8) "owner or operator" means a person who owns or operates a 24 regulated facility, operation, or property; 25 (9) "penalty" means an administrative or civil sanction imposed by the 26 state to punish a person for a violation of a statute or rule; the term does not include 27 a technical or remedial provision ordered by a regulatory authority; 28 (10) "recklessly" has the meaning given in AS 11.81.900; 29 (11) "regulated facility, operation, or property" means a facility, 30 operation, or property that is regulated under an environmental or health and safety 31 law.
01 (b) To fully implement the privilege and immunity established under 02 AS 09.25.450 - 09.25.490, the term "environmental or health and safety law" shall be 03 construed broadly. 04 * Sec. 3. APPLICABILITY. The privilege and immunity created by AS 09.25.450 - 05 09.25.490, added by sec. 2 of this Act, apply to environmental or health and safety audits that 06 are conducted on or after the effective date of this Act.