Legislature(1995 - 1996)

03/21/1996 09:20 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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                 
  [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                 
  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                 
  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                 
  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                 
  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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