Legislature(1995 - 1996)
03/21/1996 09:20 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 If they are unduly burdensome, they should be repealed.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.