Legislature(1997 - 1998)
04/15/1997 08:12 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL 41
"An Act relating to environmental audits and health and
safety audits to determine compliance with certain
laws, permits, and regulations."
MICHAEL PAULEY, STAFF, SENATOR LOREN LEMAN, commented that
SB 41 would establish two incentives for businesses and
other regulated entities to conduct voluntary self-audits of
internal operations, in an effort to secure full compliance
with environmental laws and regulations.
The first incentive would be limited immunity. Entities
that conduct voluntary self-audits would be immune from
civil and administrative penalties for violations
discovered, provided several conditions had been met. The
instances of noncompliance must be discovered through a
self-audit and reported promptly to the appropriate
regulatory agency. The regulated entity must take action to
correct the identified problem and prevent its future
recurrence. Immunity is not available for violations
causing substantial off-site damage or serious on-site
injury. In addition, no immunity would be available for
violations that were knowingly committed or that resulted
from recklessness. Immunity can be denied to regulated
entities with a history of similar violations, or a pattern
of disregard for environmental laws.
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The second incentive would be qualified privilege. Certain
portions of the reports generated from voluntary self-audits
will be considered privileged and therefore not admissible
as evidence or subject to discovery in civil or
administrative proceedings. The provision recognizes the
valuative portion of an audit report which is self-
incriminating. Privilege can be overcome if asserted for a
fraudulent purpose or if the regulated entity has failed to
take required actions to correct areas of noncompliance.
SB 41 would create an incentive for companies and
individuals acting in good faith to police themselves and
maintain full compliance with highly complex regulations.
Co-Chair Therriault asked if immunity would need to be
disclosed to the regulatory agency. Mr. Pauley replied that
immunity would only be available for those violations which
are disclosed and discovered through a self-audit.
Additionally, the bill provides a notice provision,
providing a fifteen day in advance notice to the Department
of Environmental Conservation (DEC) explaining the scope of
the audit.
Co-Chair Therriault questioned concerns which had been
expressed in previous committees of referral regarding the
"whistleblower" protection laws. Mr. Pauley explained that
SB 41 neither adds or takes away any rights or protection
currently provided to whistleblowers under applicable State
law. In several places, the text of SB 41 clearly
anticipates the positive role whistleblowers may play in
calling attention to environmental problems.
Certain provisions in the bill will strike a balance between
the rights of employees to testify about what they have
witnessed and the rights of employers to preserve the
confidentiality of audit documents which are typically very
sensitive and costly to produce. SB 41 also provides a
mechanism through which any party can petition to have
privileged audit documents disclosed for serious reasons.
JANICE ADAIR, (TESTIFIED VIA TELECONFERENCE), DEPARTMENT OF
ENVIRONMENTAL CONSERVATION (DEC), ANCHORAGE, spoke to the
sections of the bill which the Department would support,
pointing out that their concerns had been addressed.
She continued, the "privilege of support" which the
legislation would allow is narrow. It applies only to a
portion of the audit addressing the analytical aspect of the
auditor including recommendations. The Department has the
authority to review the privilege portion of the audit and
the confidentiality of the owner/operator. That information
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can be retained in the agency file, not being subject to the
Public Audit Act.
Ms. Adair added that if the audit indicated a violation, it
would need to be addressed by the Department. From that
point forward, the proposed practices are similar to those
currently used by DEC. She reiterated that the bill would
not preclude DEC from seeking damages for cost recovery,
only penalties for violation.
SUSAN SCHRADER, EXECUTIVE DIRECTOR, ALASKA ENVIRONMENTAL
LOBBY (AEL), JUNEAU, testified that AEL supports industry's
efforts towards voluntarily compliance with environmental
regulations, but that they strongly oppose passage of SB 41.
Achieving compliance with regulations will require industry
and government to work together. The broad language of SB
41 will cripple the State's ability to enforce protection of
Alaska's environment and public welfare. She noted that the
legislation would greatly obstruct efforts to find the
balance between incentives for responsible monitoring and
effective enforcement of regulations. Ms. Schrader listed
the reasons that AEL oppose SB 41:
* The legislation is a bill of secrecy. It
would keep vital information regarding the
public's health and safety hidden from review
by the agencies we depend upon to enforce
environmental laws. It would limit the
employees' right to know.
* This is a bill of amnesty to industries that
conceal or condone noncompliance. Immunity
from civil and administrative penalties is
bad public policy and effectively rewards
non-compliance. The bill would let crime go
unpunished and encourages violators to profit
at the expense of law-abiding competitors.
* The legislation would be a full-employment
bill for attorneys. The bill will create
more confusion, litigation and expense
regarding the enforcement of regulations.
Ms. Schrader pointed out that environmental regulations have
been passed out of necessity. She stressed that industry
has a less than admirable record of self-regulating. The
public's health and safety must continue to be protected,
particularly in today's heated competitive climate where
industry is more likely to cut corners for economic
advantages.
In response to Co-Chair Therriault query regarding the "in-
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camera" review, Mr. Pauley explained the procedure was
outlined on Page 7, Line 9, of the Judiciary version of the
bill. In the "in-camera" review, the judge determines if
any of the conditions described in numbers #1 through #5
would require disclosure of audit reports.
Co-Chair Therriault inquired if DEC had offered a fiscal
note. Ms. Adair replied that the financial impact to the
Department would be reflected in the Department of Law's
fiscal note.
Co-Chair Hanley MOVED to report HCS CS SB 41 (JUD) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CS SB 41 (JUD) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Alaska
Court System and the Department of Law, and with a zero
fiscal note by the Department of Labor dated 3/18/97.
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