Legislature(1995 - 1996)
03/21/1996 09:20 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 199
An Act relating to environmental audits and health and
safety audits to determine compliance with certain
laws, permits, and regulations; and amending Alaska
Rules of Appellate Procedure 202, 402, 602, 603, 610,
and 611.
Co-chairman Halford directed that SB 199 be brought on for
continued discussion. He noted teleconference participation
by JANICE ADAIR, Director, Division of Environmental Health,
Dept. of Commerce and Economic Development, to respond to
questions relating to the bill. No questions were raised.
SARA HANNAN, Alaska Environmental Lobby, came before
committee and spoke in opposition to the bill which she
termed "the violator's secrecy act." She referenced
previous testimony indicating that fourteen other states
have similar legislation which grants immunity and privilege
in cases of self-audit, and she advised that thirty-six
states have chosen not to pass similar laws and have instead
crafted narrow language.
Ms. Hannan suggested that the legislation deals with an
issue that is not a problem in Alaska. In hours of
testimony before Senate Resources, not one local case was
brought forward whereby penalties were forced on someone
working to comply with environmental or safety regulations.
Laws in Texas and Louisiana and examples of EPA leveling
punitive damages on corporations to comply with
environmental laws relate to other states. Referencing
prior comments that penalties might be levied for failure to
follow "simple paperwork procedures," Ms. Hannan suggested
that action would most likely only be taken if the violation
impacted public safety. She stressed that corporations do
not have the same level of privilege and privacy as
individual citizens. When corporations seek to do business
in Alaska, they should comply with local law. If they do
not do so, they have an undue business advantage over those
who comply. The state should not create an incentive to
forego compliance costs. Ms. Hannan acknowledged that
compliance with environmental and safety laws costs money.
Those laws, however, are put in place to protect the public.
If they are unduly burdensome, they should be repealed. The
legislature should not grant corporations privilege and
immunity for violations and non-compliance that makes them
more competitive in the marketplace.
Ms. Hannan reiterated that there is no problem with Alaska's
environmental and safety laws. No examples of problems have
been presented. She stressed need for free, open, and easy
discussion between corporations and regulators. The "dog"
hired by the state to make sure laws are complied with
should be respected by both sides. Ms. Hannan reiterated
that the granting of privilege puts the public right to know
at risk. Much of the problem with the proposed legislation
relates to privilege rather than immunity. She suggested
that the legislation would create problems that do not now
exist and urged that the bill not pass from committee.
GERON BRUCE, Legislative Liaison, Dept. of Fish and Game,
next came before committee to speak to current statutory
protection of anadromous fish habitat and why the proposed
bill would require additional funds to fulfill department
responsibilities. Protection laws within AS 16.05.870-80
require that those proposing activity in a fish stream
provide notification and plans to the department. The
department reviews the plans and works with applicants to
develop a viable project that protects fish habitat.
Stipulations on the permit are used to accomplish that goal.
The department has a high rate of permit approval under the
foregoing process (over 99% of those applying receive a
permit).
[Co-chairman Frank arrived at the meeting at this time.]
Concern regarding the legislation relates to the fact that
the department has no post-permit inspection capability.
The department thus depends upon the public and fishery
biologists who may be in the field and notice "a stream
running dirty" to notify the state that there may be a
problem. The department then contacts the permittee and
attempts to discover the problem. Under the proposed bill,
someone could conduct an audit, and the information would be
privileged. The department would no longer be able to "go
to the main source of information" traditionally utilized to
determine what the problem is and develop corrective action.
As a consequence, the department would need staff to collect
independent information to determine the cause of the
problem and ascertain whether proper corrective action is
being taken. The department thus seeks funding for an
additional staff person.
DWIGHT PERKINS, Special Assistant, Dept. of Labor, next came
before committee. He referenced two department concerns
raised when the bill was before Senate Resources. The first
relates to OSHA and the second to worker's compensation.
Senate Resources amended the legislation and removed
worker's compensation proceedings. Issues relating to OSHA
remain and give rise to concern that the state will no
longer comply with federal requirements. Alaska presently
has a "state plan" under which it operates its own OSHA
program. There are, however, certain things the state must
do to comply with federal law.
Mr. Perkins acknowledged that the Texas plan has privilege
language similar to that in the proposed bill. However, the
federal government ignores those statutes and goes in and
gets the information it needs. If Alaska were to proceed
under the proposed bill, the state could potentially lose
its program. As in Texas, the federal government would
retain ability to get the information it needs. Mr. Perkins
questioned whether the legislature would want OSHA to revert
to the federal program.
Speaking to penalties and OSHA compliance, Mr. Perkins
explained that the department has the ability to reduce "up
to 97.5% of the fines" levied against an employer or
individual for "things that they had wrong on their job
sites." In most situations, where good faith is shown and
it is acknowledged that an employer is attempting to take
corrective action, that is taken into consideration. More
importantly, the department "will go in, on consultation,
and . . . provide and perform the audits at no charge to the
employer." That information is privileged. Compliance
staff does not have access. Privileges are thus already
available on the consultation side of state OSHA
proceedings. Provisions in the proposed bill are not
needed.
Mr. Perkins next referenced 29 U.S. Code No. 651 and noted
that Sec. 17 relates to penalties, Sec. 8 relates to
inspections and investigations, and Sec. 18 mandates that
state requirements be "at least" as stringent as federal
requirements. He then asked that the committee consider
removing references to "health and safety" throughout the
bill. That would take care of the remaining Dept. of Labor
concern.
SAM KITO, III, Legislative Liaison/Special Assistant, Dept.
of Transportation and Public Facilities, next came before
committee. He described the circumstances whereby the
majority of airports in Alaska are owned and managed by the
department. Under the proposed bill, hundreds of industrial
leaseholders and tenants using lands at airports and
elsewhere would be subject to privileges and immunities.
State land managers would be unable to maintain tenant
environmental audit documents pertaining to use of public
lands. At the same time, state agencies, including
airports, would be subject to and responsible for
environmental compliance and violations occurring on those
lands and facilities. The bill would further reduce limited
information on the condition of state property and increase
the environmental liability of the state. DOTPF airports
have an overriding interest in obtaining environmental
audits and related documents because the state is liable for
environmental damages. Non-compliance, cleanup, ground
water contamination, public health and safety, and costs
caused by tenant activities are also included. The intent
of SB 199 is to encourage environmental cleanup and
compliance without penalizing individuals. However, as the
bill is written, landowners and tenants are placed at odds.
The department recommends that Sec. 09.25.465 (non-
privileged materials) be amended to add:
material required in public lease agreements,
permits, and licenses
Co-chairman Halford observed that testimony indicates that
under the proposed bill existing information would not be
available. He then voiced his understanding that bill
provisions state that if audit information is currently
required for other purposes, it does not warrant privileges
and immunities. Mr. Kito attested to "a little bit of a
clarity issue . . . on the lease provisions as a contract
and not a matter of law or regulation." Clarification of
this issue would take care of concerns regarding leases.
Senator Randy Phillips remarked on numerous statements in
opposition to the bill and asked who, other than the
sponsor, was supportive. Co-chairman Halford explained that
the bill emanated from an energy council recommendation. He
advised that he offered a different approach in Senate
Resources in terms of codifying existing federal privileges
and immunities. He stressed that a legitimate question is
raised in situations where an entity conducts an optional
audit, finds a deficiency, and is working on correction.
Action to fix the problem should not be used against the
entity. The Co-chairman acknowledged problems with the fact
that the proposed bill:
sets up a situation where both the privilege and
immunities can be used as a defense, possibly,
against actions that . . . aren't being cleaned up
. . . . Instead of being a shield, it becomes a
sword.
Senator Phillips again inquired concerning whether there was
Alaskan support for the bill. Co-chairman Halford
acknowledged much work on the bill in Senate Resources and
remarked on the complexity of the issue and associated
federal involvement.
Senator Zharoff inquired concerning the impact of the
legislation on tariff litigation. BETH KERTTULA, Assistant
Attorney General, Dept. of Law, spoke via teleconference
from Anchorage. She noted two impacts:
1. The state will have to pay for its own audits.
Based on '95 TAPS tariff litigation, it is estimated the
state would have to pay approximately $25 million to "gain
the same kind of information we're getting out of audits
from the owner companies and from Alyeska."
2. An overall impact on the tariff. Under state
royalty and production tax statutes, the state is
responsible for "about a quarter of the tariff." In the '95
case, which totals approximately $330 million overall, the
state portion is $82 million. Under privileges and
immunities sections of the bill, the state would not be
getting or using the information.
The state would thus be at quite a loss in tariff cases in
terms of environmental and safety audits which comprise the
greater part of the information in the '95 case.
In response to a further question from Senator Zharoff, Ms.
Kerttula clarified that while the case itself is worth
approximately $82 million to the state, under the proposed
bill the cost associated with obtaining needed information
to bring the case would have cost $25 million. Senator
Zharoff asked if there are other tariff cases for which the
proposed bill would require the state to gather information
on its own. Ms. Kerttula advised of ongoing tariff cases
and stressed that the state would not have access to future
audits.
Co-chairman Halford asked if privileges and immunities
provisions attach if the audit is required by law. Ms.
Kerttula voiced her belief that that would be a point of
contention. The joint pipeline office conducts certain
audits, and there would be no problem obtaining those. The
audits in question are owner audits not directly required by
the state or federal government.
In response to a question from Senator Zharoff, Co-chairman
Halford advised of his understanding that the bill would
apply to the entity reporting to the state rather than the
state itself. Ms. Kerttula concurred.
Co-chairman Halford queried members regarding disposition of
the bill. Senator Randy Phillips expressed his belief that
the bill should be returned to Senate Resources for
additional substantive work. Co-chairman Frank agreed,
saying that while it could be placed in a Senate Finance
subcommittee, it might be more appropriately returned to
Resources. As an alternative, he suggested that the sponsor
be asked to develop a committee substitute.
Co-chairman Halford directed that the bill be held in
committee and asked that Senator Phillips work with the
sponsor, Senator Leman.
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