Legislature(1995 - 1996)
03/06/1996 03:40 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 199 ENVIRONMENTAL & HEALTH/SAFETY AUDITS
SENATOR LEMAN announced SB 199 to be up next for consideration.
SENATOR TAYLOR moved to adopt the committee substitute to SB 199
for purposes of discussion. There were no objections and it was so
ordered.
MIKE PAULEY, Staff to Senator Leman, said the committee substitute
incorporates some of the changes suggested by administration
witnesses. A number of technical changes were made that tightened
the privilege and immunity provisions.
TAPE 96-24, SIDE B
JEFF CARPENTER, Anchorage Industrial Hygienist with Alaska
Occupational Safety and Health Program, said they believe this bill
will adversely affect the enforcement activities of the Alaska
Occupational Safety and Health Program by restricting their access
to documents relevant to an employers compliance with their
regulations. The committee substitute defines non-privileged
documents as documents required by a regulatory agency to be
maintained while the AOSHP only requires certain regulations
information found in audits not specifically required by
regulations to establish employer knowledge of an unsafe condition
and be the basis for a willful citation. If this information were
to be considered part of an audit report, it could be withheld from
an inspector. Additionally, employers would be immune from the
penalties if they voluntarily disclose an audit report. Alaska
statutes establish penalties for violations of our standards and
makes no provisions for immunities from penalties, but they can be
reduced by as much as 97.5 percent as provided for in their
compliance manual.
PAUL GROSSI, Division of Workers Compensation, said they support
any legislation that makes the work place safer. They have some
concerns with the present legislation. They think it could
negatively impact the Division fiscally and negatively impact
employees, cause delay and burden of cases, and negatively impact
employers by adding additional litigation expenses. Their concern
has to do with the restrictive privilege and the broad definition
of audits themselves. They are concerned that a lot of information
that may be contained in audits may be germane to a workers
compensation case. It may be difficult because of the restricted
privilege to obtain that information; it is difficult to determine
the impact completely.
SENATOR LEMAN commented that he met with Commissioner Cashen (DOL)
early in the session and he and Mr. Perkins agreed conceptually
with this approach of self audits. They are trying to encourage
businesses and people to come into compliance with environmental
and health and safety laws and regulations. He asked why they had
not come back with suggestions for making the bill work.
MR. GROSSI replied that he had submitted his suggestions and
perhaps they hadn't received them, yet. He asked if they intended
to make information restrictive to the workers compensation
process. He said the Department did not want to punish anyone who
is making the work place safer.
SENATOR LEMAN asked him how it is different from application of
some existing privilege like the attorney client privilege, the
doctor patient privilege, or work product privilege that they have
to deal with also. MR. GROSSI replied that information, as far as
the actual events, is open for discovery right now. SENATOR LEMAN
replied that the privilege does not extend to all information; the
underlying facts are not privileged.
Number 495
KEN DONAJKOWSKI, AOGA, supported the intent of SB 199. The
majority of their members currently conduct self audits as a means
of ensuring compliance and that is why they see value in this
legislation. There is more awareness now of health, safety, and
environmental issues in the work place and in communities.
Interpretation of the regulations, in an effort to achieve
compliance, has become correspondingly more difficult. Self
auditing serves to identify areas of inadvertent non-compliance,
allowing for corrective action. This legislation also furthers the
climate of cooperation between industry and state agencies and
appropriately places the emphasis on voluntary compliance.
This bill encourages companies who do not currently conduct self
audits to do so and encourages those who do to continue. The
ultimate goal of improving worker health and safety and minimizing
environmental impacts.
Number 468
PAM LA BOLLE, President, Alaska State Chamber of Commerce,
supported CSSB 199. It provides businesses with an opportunity to
conduct self audits in a effort to assure they are in compliance
with environmental health and safety laws. This creates an
incentive for businesses who find they have inadvertently been out
of compliance to voluntarily correct their actions and strive to
operate in the acceptable and prescribed manner.
The issue of disclosure and privileged information and the
presumption of immunity are important when voluntarily disclosing
evidence of a selfincriminating nature.
Number 444
DAVID HUTCHENS, Executive Director, Alaska Rural Electric
Cooperative Association, supported SB 199. They think it is very
important that businesses be encouraged to find out what their
problems are in complying with the regulatory environment and take
corrective action. As it is today, if results of self audits can
be discovered for regulatory purposes for penalty impositions, they
are afraid there are entirely too many businesses that don't want
to know what kind of problems they may have and if they don't know,
obviously corrective action is not being taken.
SENATOR LEMAN asked if he had any specific concerns that he could
suggest changes for. MR. HUTCHENS replied that the language in the
committee substitute addressed his concerns.
Number 420
JANICE ADAIR, Department of Environmental Conservation, testified
that they do agree with the concept behind this bill. Conducting
self audits is an important way to insure compliance with
environmental laws. They appreciate the changes made to the
committee substitute, but they still have some concerns. The
definition of environmental health and safety law has not been
clarified. The more traditional environmental programs within DEC
such as air and water quality and contaminated sites they would
expect to fall within the scope of SB 199. Less clear for their
agency are the impacts on the other programs within DEC that are
primarily public health related, such as seafood processing, other
kinds of food commodity processing, sanitation, public facilities,
and drinking water.
How the audits are done and who may conduct them and the scope of
the audit remains problematic. Environmental audits are still a
relatively new management tool undertaken only by the most
sophisticated companies. This is the reason behind the shop sweep
program they discussed with the committee in another hearing.
Even though they recognize there are no generally accepted
standards for audit, the department does not want to adopt
regulations that dictate how audits ought to be done. They believe
a more cooperative method is better to develop guidelines with a
particular industries or sectors. This becomes even more critical
if there is a privilege or an immunity associated with the audit.
It has to be a creditable exercise.
The proposed cs allows the audit to be done by an employee even if
that employee has no ability to carry out the audit
recommendations. They think the audit needs to be done by someone
who knows what's going on; knows how the facility operates, how it
should operate, what the rules are, and someone who can or works
for someone who can commit the company to whatever corrective
action may be necessary.
The definition of audit report hasn't changed. A particular
concern is the inclusion of the corrected action plan as a part of
that report. In order to receive the immunity a facility has to
voluntarily disclose any violations discovered as a part of the
audit. To be considered voluntary, the disclosure has to be made
promptly, the violation must be corrected, and the facility must
cooperate with the agency in connection with an investigation of
the issues identified in the disclosure. They interpret this to
mean working with the agency on a corrective action plan. Under
the privileged section, they can't ask for the audit and the
corrective action plan is a part of the audit. It may disclosed to
them, but it remains confidential. The report of the violation is
not confidential and they are concerned this will undercut the
public's confidence that the facility and the agency are dealing
with the corrections adequately.
Another important consideration is how the federal courts have
defined the critical self analysis privilege. Ms. Sansone
testified about the Reichhold Chemicals vs. Textron decision, but
one of the things they didn't talk about very much in the court's
ruling was the privilege applied only for retroactive analyses. It
did not apply for prospective analyses of the company's actions.
The court was very clear that the evaluations of potential
environmental risks of a proposed course of action made in advance
of the decision to adopt that course of action are not protected by
a privilege.
By the terms of the proposed legislation, as in the original, the
privilege is not limited to critical self analysis of past actions.
A facility operator could undertake an audit, find that a certain
course of action might result in environmental damage, go ahead and
take that course of action, yet benefit from the privilege.
They believe that protecting criminal actions through a privilege
or through an immunity is bad public policy. The bill seems to
recognize that criminal actions should not be protected in that it
says among other stipulations the immunity doesn't apply if the
person intentionally or knowingly committed or was responsible for
the action that lead to the violation. Therefore, it seems to
recognize that those elements generally looked for in a criminal
case (a certain state of mind) would exclude the person from the
benefits of the immunity. But that's contradicted in other
sections of the bill. In the first section that establishes the
privilege, it states the privilege applies in criminal proceedings.
Therefore, the audit would not be discoverable even if it could
demonstrate criminal intent. The section that establishes the
immunity states that it is also available for criminal penalties.
It goes on to apparently exclude those elements looked for to
decide criminal action.
They also believe that establishing a privilege for environmental
audits is unnecessary. All testimony has been such that an
immunity would encourage people to disclose and they have concurred
in the past that immunity is not problematic for them, but they do
have problems with the privilege. They currently, as policy, offer
people immunity from civil and administrative actions in certain
circumstances. They think a privilege that creates a secret would
only serve to increase public skepticism of both the industries
operating in Alaska and how the agency deals with them.
The question of whether or not the critical self analysis privilege
should apply is best decided by the courts which can take the
specifics of each case into account. A state established privilege
would do nothing to protect industries from potential action on the
part of federal agencies such as EPA. In fact, it's probable that
privilege would lead to increased federal enforcement.
EPA has already testified that this legislation could negatively
impact the State's ability to retain its delegation of federal
programs such as the Clean Air Program, drinking water, or solid
waste. In order for the State to receive program delegation, we
have to have the ability to enforce the provisions of the program.
They understand EPA's concern is with the mandatory immunity
provisions for all criminal, civil, and administrative actions.
Loosing delegation would result not only in the loss of funding for
the variety of programs delegated from EPA, but it would also
result in increased federal enforcement and dual requirements, both
in state and federal rules that regulate the public.
The legislation continues the idea that a disclosure is not
voluntary if it is required solely by a specific provision of an
enforcement order or decree, but it does not mention leases,
contracts, permits, statutes, or regulations.
There are different standards for harm determining if a closure is
voluntary as opposed to whether or not the immunity applies. In
some cases you must find substantial harm and injury. In other
cases you have to find substantial injury and harm.
The provision on the circumvention by regulation being prohibited
they believe is unnecessary. The Administrative Procedures Act
does state that a regulation adopted is not valid or affective
unless consistent with statute.
Number 283
STEVE WHITE, Assistant Attorney General, noted that Ms. Marie
Sansone, Assistant Attorney General, had testified earlier
regarding their concerns.
MR. WHITE said that all the changes in the committee substitute
were positive ones. Many of them addressed the comments made by
Ms. Sansone. The Department of Law still has some concerns not
addressed by the committee substitute. Those are set out in Ms.
Sansone's letter which he highlighted. He said one of her
remaining concerns with the bill is how the privilege would work in
a federal court action. She describes that on page 3 of her memo.
On page 4 and 5 she discusses the wide breadth of the proposed
privileges. As they are aware, the privilege would govern laws
administered by many agencies, not just DEC. On page 5 and 6 she
talks about the conduct of the audits. It's uncertain who in the
company would have the authority to initiate an audit and who would
have the authority, then, to initiate and oversee corrective
actions.
They have a concern dealing with the definition of an audit report.
An audit report covers a lot of information and maybe some of the
information was not intended, but in any event, it would cover the
raw data, federal surveys and maps that might be discovered, as
well as the conclusions and observations from the audit. It would
cover post-audit activities on not just the audit themselves, but
remedial activities and comments and reports and observations on
those.
Most privileges are an escape valve, so to speak, because if
privilege protects information from disclosure, quite often there
are provisions that allow information to be disclosed in case of
exceptional necessity or extraordinary hardship. This relief valve
is not present for the privilege.
Page 7 through 9 discussed the breadth of the privilege which can
be asserted against the State or by the State or between any third
parties. It can be applied in any kind of lawsuit no matter what
the issue is. It obviously can be applied at all stages of
criminal proceeding. The bill creates an immunity that is very
broad.
Number 220
MARK WHEELER, Alaska Environmental Lobby, said they support efforts
by industry to comply with environmental regulations. In order to
make SB 199 effective they believe it needs some changes.
Environmental audits should not be privileged because it invites
secrecy instead of the openness need to build public trust in
industry's ability to self police. Furthermore a privilege would
invite defendants to claim as audit material evidence DEC needs to
establish a violation or determine who is responsible.
Non-compliance which results in economic gain should not be
tolerated. DEC should seek to recover such economic gain. While
filing for immunity a self audit must have a number of additional
requirements. It must secure before notice of a citizen suit the
filing of a complaint by a third party and before the reporting of
a violation to DEC by a whistle blower employee. The responsible
party must correct any violation discovered under the self audit
within 60 days, certify in writing the corrections have been made,
and take appropriate measures to remedy any environmental or human
harm due to the violation.
A violation discovered by a self audit must not have presented an
imminent and substantial endangerment to public health or the
environment. The regulated entity must agree in writing to take
steps to prevent the recurrence of violation discovered under the
self audit and any violation discovered in the self audit must not
have occurred previously within the past three years at the same
facility.
SENATOR LEMAN noted that the bill does cover some of his concerns
and the committee would take his recommendations and make sure the
bill had been tightened adequately.
Number 212
NANCY WELLER, Division of Medical Assistance, said the Commissioner
sent them a letter asking for a possible exclusion from this bill.
The Division of Medical Assistance performs two functions which
guarantee the safety of all Alaskans when they are receiving health
care services in facilities in the State. That's licensing of
health care facilities under State law and certifying health care
facilities which allows them to build the medicare or medicaid
program for services they receive. The certification is performed
under a contract with the federal health care financing
administration under a very broad and vague federal law. They
don't have regulations that govern that function; they operate with
policy and procedure manuals that are issued by the medicaid
program.
They do encourage self audits of the health care facilities and
want them to correct their deficiencies before they are discovered
by the survey teams. They work with them very carefully so they
know what they are looking for when they certify the facilities.
They think it's very important for the safety of all Alaskans and
especially for the expenditure of public funds that they don't give
any of the facilities the ability to hide anything from the survey
teams. They have had some problems in the past with records being
hidden.
SENATOR LEMAN asked what the requirements for reporting are now for
these facilities. He said that would not be privileged
information. MS. WELLER answered that all information in the
facilities is available to the surveyors. Not only do they look at
the physical plant, they go through all of their records. She said
they have no State regulations that cover this function because it
is done under contract with the Health Care Financing
Administration and it's not done under federal regulations, but
under procedure manuals.
Number 156
DAVID ROGERS, Council of Alaska Producers, supported the intent of
SB 199. Unfortunately, he hadn't had time to review the committee
substitute, but would get back to the committee with any
suggestions.
Number 143
GERON BRUCE, ADF&G, said they support the idea of encouraging
voluntary compliance and disclosure. Some ADF&G programs would be
adversely affected under SB 199. Their program for protecting
anadromous fish streams which has been a law in the State since
statehood began has worked very effectively. It has been their
philosophy to work up front with operators to make sure their plans
and projects are able to go forward on schedule while protecting
anadromous fish habitat. They have a very high rate of issuance
for permits that are requested and they have a very low violation
rate. They are concerned an unintended consequence of this
legislation would be to encourage some people to withhold
information they might otherwise disclose because they might
perceive it would be in their interests to hold it back in case
they did have an audit done. They are concerned it would dampen
the spirit of cooperation they actually have in implementing Title
16 right now.
The other concern they have deals with State hatcheries that are
contracted out to private non-profit regional aquaculture
associations. Those hatcheries, although they are operated by
private entities, are still State property. If there should ever
come a time when one of those facilities wanted to return one of
those facilities to the State, if there was some activity they
conducted that was illegal or environmentally damaging, if they
returned one of those audits before they return the property, they
believe they could shift the cost of any cleanup to the State.
This concerns the Department.
SENATOR LEMAN asked him if he thought that would be covered under
the fraudulent protection provision in the bill. MR. BRUCE said he
thought it might be difficult to prove the person's intention for
performing the audit. SENATOR LEMAN noted that the privilege
applies only if they immediately do the fix.
SENATOR HALFORD said he didn't see how that worked because
basically they are protected from their own information, but not
from their prior acts.
SENATOR LEMAN said it was his intention to keep working on the bill
and asked interested parties to submit language that would fix
their concerns.
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