Legislature(1995 - 1996)
03/06/1996 03:40 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.