Legislature(1997 - 1998)
04/07/1997 01:06 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 7, 1997
1:06 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Brian Porter
Representative Norman Rokeberg
Representative Jeannette James
Representative Eric Croft
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 95
"An Act relating to motor vehicle registration, licensing, and
insurance; and providing for an effective date."
- MOVED CSHB 95(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 41(FIN)
"An Act relating to environmental audits to determine compliance
with certain laws, permits, and regulations."
- HEARD AND HELD
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 132
"An Act relating to municipal taxation of alcoholic beverages."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 95
SHORT TITLE: MOTOR VEHICLE INSURANCE & LICENSING
SPONSOR(S): REPRESENTATIVE(S) GREEN, Bunde, Rokeberg, Cowdery
JRN-DATE JRN-PG ACTION
01/29/97 168 (H) READ THE FIRST TIME - REFERRAL(S)
01/29/97 168 (H) TRANSPORTATION, JUDICIARY
02/05/97 252 (H) COSPONSOR(S): BUNDE
02/10/97 297 (H) COSPONSOR(S): ROKEBERG
02/19/97 (H) TRA AT 1:00 PM CAPITOL 17
02/19/97 (H) MINUTE(TRA)
02/21/97 429 (H) COSPONSOR(S): COWDERY
02/26/97 (H) MINUTE(TRA)
02/27/97 504 (H) TRA RPT CS(TRA) 3DP 4NR
02/27/97 505 (H) DP: KOOKESH, COWDERY, WILLIAMS
02/27/97 505 (H) NR: HUDSON, ELTON, SANDERS, MASEK
02/27/97 505 (H) FISCAL NOTE (DPS)
03/05/97 548 (H) FIN REFERRAL ADDED
03/21/97 (H) JUD AT 1:00 PM CAPITOL 120
03/21/97 (H) MINUTE(JUD)
03/24/97 (H) JUD AT 1:00 PM CAPITOL 120
03/24/97 (H) MINUTE(JUD)
04/04/97 (H) JUD AT 1:00 PM CAPITOL 120
04/04/97 (H) MINUTE(JUD)
04/07/97 (H) JUD AT 1:00 PM CAPITOL 120
BILL: SB 41
SHORT TITLE: ENVIRONMENTAL AUDITS
SPONSOR(S): SENATOR(S) LEMAN,Pearce,Taylor
JRN-DATE JRN-PG ACTION
01/10/97 25 (S) PREFILE RELEASED 1/10/97
01/13/97 25 (S) READ THE FIRST TIME - REFERRAL(S)
01/13/97 25 (S) L&C, JUD, FIN
01/23/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
01/23/97 (S) MINUTE(L&C)
01/28/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
01/28/97 (S) MINUTE(L&C)
01/30/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
01/30/97 (S) MINUTE(L&C)
01/31/97 191 (S) L&C RPT CS 2DP 1NR SAME TITLE
01/31/97 191 (S) DP: LEMAN, MILLER; NR: MACKIE
02/12/97 306 (S) FISCAL NOTES TO CS (LAW, LABOR)
02/12/97 306 (S) INDETERMINATE FISCAL NOTE TO CS
(DHSS)
02/24/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
02/24/97 (S) MINUTE(JUD)
03/05/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
03/05/97 (S) MINUTE(JUD)
03/11/97 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/11/97 670 (S) FISCAL NOTE TO CS (COURT)
03/10/97 653 (S) JUD RPT CS 4DP 1DNP NEW TITLE
03/10/97 653 (S) DP: TAYLOR, PARNELL, MILLER, PEARCE
03/10/97 653 (S) DNP: ELLIS
03/14/97 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/14/97 (S) MINUTE(FIN)
03/14/97 740 (S) FISCAL NOTE TO CS (LAW)
03/13/97 717 (S) ZERO FN TO CS (DHSS)
03/18/97 766 (S) FIN RPT CS 3DP 1NR NEW TITLE
03/18/97 766 (S) DP: SHARP, PEARCE, PARNELL;
NR: PHILLIPS
03/18/97 766 (S) FISCAL NOTE TO CS (LAW, COURT)
03/18/97 766 (S) ZERO FISCAL NOTE (LABOR)
03/18/97 766 (S) PREVIOUS ZERO FN APPLIES (DHSS)
03/19/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
03/19/97 (S) MINUTE(RLS)
03/19/97 782 (S) RULES TO CALENDAR & OTHER RECS
3/19/97
03/19/97 783 (S) READ THE SECOND TIME
03/19/97 784 (S) FIN CS ADOPTED UNAN CONSENT
03/19/97 784 (S) AM NO 1 OFFERED BY DUNCAN
03/19/97 784 (S) AM NO 1 FAILED Y4 N15 E1
03/19/97 784 (S) AM NO 2 OFFERED BY DUNCAN
03/19/97 784 (S) AM NO 2 FAILED Y4 N15 E1
03/19/97 785 (S) ADVANCED TO THIRD READING
UNAN CONSENT
03/19/97 785 (S) READ THE THIRD TIME CSSB 41(FIN)
03/19/97 785 (S) PASSED Y16 N3 E1
03/19/97 786 (S) DUNCAN NOTICE OF RECONSIDERATION
03/21/97 810 (S) RECONSIDERATION NOT TAKEN UP
03/21/97 811 (S) TRANSMITTED TO (H)
03/24/97 801 (H) READ THE FIRST TIME - REFERRAL(S)
03/24/97 801 (H) JUDICIARY, FINANCE
04/07/97 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
KRISTY TIBBLES, Legislative Secretary
to Representative Joe Green
Capitol Building, Room 118
Juneau, Alaska 99811
Telephone: (907) 465-4931
POSITION STATEMENT: Prime Sponsor of HB 95
JUANITA HENSLEY, Chief
Driver Services,
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, Alaska 99811
Telephone: (907) 465-4361
POSITION STATEMENT: Provided testimony on HB 95
MICHAEL PAULEY, Legislative Administrative Assistant
to Senator Loren Leman
Capitol Building, Room 113
Juneau, Alaska 99811
Telephone: (907) 465-2095
POSITION STATEMENT: Prime Sponsor SB 41
LISA KIRSCH, Counsel
House Judiciary Committee
Representative Joe Green
Capitol Building, Room 120
Juneau, Alaska 99811
Telephone: (907) 465-4990
POSITION STATEMENT: Provided testimony on SB 41
SENATOR LOREN LEMAN
Alaska State Legislature
Capitol Building, Room 113
Juneau, Alaska 99811
Telephone: (907) 465-2095
POSITION STATEMENT: Prime sponsor SB 41
PATTY GINSBURG, Staff Person
Prince Williams Sound Regional
Citizens Advisory Council
750 West 2nd Avenue, Number 100
Anchorage, Alaska 99501
Telephone: (907)277-7222
POSITION STATEMENT: Provided testimony on SB 41
MICHAEL HANUS, Senior Staff Engineer
Exxon Company USA
P.O. Box 196601
Anchorage, Alaska 99519
Telephone: (907) 564-3712
POSITION STATEMENT: Testified in favor of SB 41
DOUG DONEGAN, Vice President
Trident Seafoods Corporation
5011 Jewel Lake, Number 203
Anchorage, Alaska 99502
Telephone: (907) 243-3166
POSITION STATEMENT: Testified in favor of SB 41
ROBERT W. SHAVELSON, Executive Director
Cook Inlet Keeper
P.O. Box 3269
Homer, Alaska 99603
Telephone: (907) 235-4068
POSITION STATEMENT: Testified in opposition to SB 41
GARY HINKLE
Small Business Owner
P.O. Box 322
Soldotna, Alaska 99669
Telephone: (907) 283-9231
POSITION STATEMENT: Testified in favor of SB 41
JANICE ADAIR, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova Street
Anchorage, Alaska 99501
Telephone: (907) 269-7644
POSITION STATEMENT: Provided testimony on SB 41
SUSAN SCHRADER, Executive Director
Alaska Environmental Lobby
P.O. Box 22151
Juneau, Alaska 99802
Telephone: (907) 463-3366
POSITION STATEMENT: Testified in opposition to SB 41
DAVID ROGERS, Representative
Council of Alaska Producers
211 Fourth Street, Suite 108
Juneau, Alaska 99801
Telephone: (907) 586-1107
POSITION STATEMENT: Testified in support of SB 41
PAM LA BOLLE, President
Alaska State Chamber of Commerce
217 Second Street, Number 201
Juneau, Alaska 99801
Telephone: (907) 586-2323
POSITION STATEMENT: Testified in support of SB 41
KYLE PARKER
International Association of Drilling Contractors
P.O. Box 241043
Anchorage, Alaska 99524
Telephone: (907) 566-1220
POSITION STATEMENT: Testified in support of SB 41
ACTION NARRATIVE
TAPE 97-50, SIDE A
Number 001
The House Judiciary Standing Committee was called to order by
Chairman Joe Green at 1:06 p.m. Members present at the call to
order were Representatives Brian Porter, Norman Rokeberg, Eric
Croft, Ethan Berkowitz and Chairman Joe Green. Representative
Jeannette James arrived at 1:27 p.m., and Representative Con Bunde
arrived at 1:34 p.m.
HB 95 - MOTOR VEHICLE INSURANCE & LICENSING
Number 097
CHAIRMAN GREEN advised members the first order of business would be
HB 95, "An Act relating to motor vehicle registration, licensing,
and insurance; and providing for an effective date." It had been
discussed the previous week.
KRISTY TIBBLES, Legislative Secretary to Representative Joe Green,
explained the changes that had occurred as a result of the
amendments adopted at the previous hearing. Ms. Tibbles advised
members that because of Executive Order 98, which moved the
Division of Motor Vehicles to the Department of Administration,
that all references to the Department of Public Safety had been
changed to the Department of Administration.
MS. TIBBLES advised members that the reporting requirements had
been changed to a monthly requirement, rather than after
cancellations, which was done at the request of the Department of
Public Safety.
MS. TIBBLES pointed out that the other change in Section 1 would
not require insurance companies to report commercial vehicle
insurance.
MS. TIBBLES advised members that the fee had been increased from $1
to $2 in Section 6.
Number 232
REPRESENTATIVE ERIC CROFT asked for an explanation as to why
commercial vehicles would not be subject to reporting requirements.
Number 257
JUANITA HENSLEY, Chief, Driver Services, Division of Motor
Vehicles, Department of Public Safety, advised members there was a
separate section in statute that required a separate limit of
liability for commercial vehicles, and the enforcement of that fell
under the Alaska State Troopers and also Weights and Measures, and
was moved to the Department of Transportation through Executive
Order 98. She noted that they were required, either interstate and
intrastate, to submit proof of insurance to that agency, not the
Division of Motor Vehicles.
REPRESENTATIVE CROFT asked if commercial vehicles typically
maintained their insurance because it was a business, as well as
being more regulated.
MS. HENSLEY responded that that would be the case, that if stopped
by an enforcement officer they would be required to show proof of
insurance, and they would also be required to show proof of
insurance when stopping at a weigh station. She also pointed out
that in order to receive an AK number, which was a US DOT number,
they would need to show proof of insurance when applying for that
number.
Number 362
REPRESENTATIVE BRIAN PORTER moved to adopt CSHB 95(JUD), Version
"K", dated 3/22/97.
CHAIRMAN GREEN expressed that members adopted that version at the
previous hearing. Ms. Tibbles agreed, Version "K", CSHB 95 (JUD)
was adopted at the previous hearing, 3/24/97.
MS. TIBBLES reiterated that under Section 6, the fee had been
increased from $1 to $2, to reflect the estimated cost of the
database which was $1 per vehicle per year. The fee was increased
to $2 because vehicles are registered every other year.
MS. TIBBLES advised members that Section 15 had been amended by
inserting language to allow peace officers to electronically verify
that a person had the required motor vehicle liability insurance
when stopped for a moving violation, in addition to when an
accident had occurred. Ms. Tibbles noted that that had been added
at the request of State Farm Insurance Company.
Number 468
MS. TIBBLES advised members section 16 had been amended to allow
the Department of Administration to request an audit on the third
party vendor.
MS. TIBBLES expressed that the last change provided for a sunset
provision, which had also been requested by State Farm Insurance
Company. She explained that by July 1, 2000, if the program proved
to be effective, legislative action would be necessary to remove
the sunset provision.
Number 533
MS. HENSLEY pointed out that the Division of Motor Vehicles felt
they needed a longer sunset period. She stated that the year 2000
was not sufficient to have comparative data available to see if the
program was working, and they would request at least three full
years of program operation prior to having to report back to the
legislature. It was her suggested that the sunset provision be
moved up to the year 2002, or 2005. Ms. Hensley explained that the
division would have to go through the procurement process and
request for bids, and to go through that process would take some
time.
MS. TIBBLES pointed out that she did have a proposed amendment that
would address that concern.
Number 604
REPRESENTATIVE PORTER referred to the provision which would allow
law enforcement to ask someone to show proof of liability coverage,
and asked if that was an enforceable provision.
MS. HENSLEY advised members that it was, and currently it was a
Class B misdemeanor and would continue as such if someone failed to
have insurance, which could be found under AS 28.22.011.
REPRESENTATIVE PORTER asked why it had not been enforceable before,
or why it had not been done in the past.
MS. HENSLEY stated that even though officers had the authority to
ask an individual if they were insured, there was no citing
provision, and that was included in draft committee substitute of
HB 95.
REPRESENTATIVE PORTER noted that testimony had been heard at
previous hearings that one of the problems was that people were
being asked once a year whether they had liability insurance, and
if it was found that the person had cancelled immediately, or
falsely signed the renewal registration form, that there was no
penalty imposed. He asked if the draft committee substitute
addressed that concern.
MS. HENSLEY advised members that if a policy were cancelled it
would be reflected in the insurance data base, and either the
Division of Motor Vehicles, or through a contract with a third
party, could require that the third party agent send a notice to
the individual and require that proof of insurance be submitted to
the division. She noted that if the individual failed to do that,
their drivers license would be suspended at that point.
Number 892
REPRESENTATIVE PORTER stated that rather than suspending a person's
drivers license, had anyone considered going after the plates of
the offending vehicle.
MS. HENSLEY advised members they would rather use the enforcement
mechanism on the drivers license, as opposed to the vehicle,
because there could be multiple owners of the vehicle, as well as
the possibility of placing a hardship on someone that might not be
the responsible party in making sure the vehicle was insured.
CHAIRMAN GREEN agreed, and stated that what was intended to be an
administrative cure, appeared now to be swaying towards a criminal
cure.
REPRESENTATIVE PORTER expressed that drivers licenses get suspended
or revoked all the time, and it did not preclude those people from
driving because there was no visual knowledge that could be
obtained by revoking someone's drivers license. He stated that if
the license plates were taken off the car it would be noticeable,
and it was the responsibility of the owner of the car to maintain
liability insurance. Representative Porter stated that in terms of
actual enforceability and real results, it would take more effort
to remove the plates, but they might have a better response to the
law.
MS. HENSLEY noted that she did not disagree with what
Representative Porter was saying; however, with the fiscal impact
the division was faced with, she did not believe it would be
possible to endeavor that action.
REPRESENTATIVE PORTER asked if there was joint ownership of
vehicles so both drivers licenses could be taken.
MS. HENSLEY advised members that very few people had joint vehicle
ownership in the state, that it was "or" language, rather than
"and" on the vehicle title or registration.
Number 995
REPRESENTATIVE BERKOWITZ asked if Ms. Hensley had any indication as
to how many people drove company cars, if and if there would a
problem in the context of company cars.
MS. HENSLEY expressed that if it was a company car, it would be
considered a commercial vehicle. She explained, though, that the
provision of the commercial vehicle insurance referred to earlier
would not take place unless a vehicle weighed 10,000 pounds or
more, and other vehicles, such as rental cars, would fall under the
self insurance packet the company would have on file with the
division.
REPRESENTATIVE BERKOWITZ pointed out that when anyone rents a car
the question was always posed as to whether the individual wanted
to include insurance on the rental policy. People with rental cars
tended to be a little less cautious than if they were driving their
own cars, and asked if it would be problematic in that context, and
asked if car rental agencies were required to maintain insurance on
their rental vehicles.
MS. HENSLEY stated that they would be required to maintain
insurance on the vehicle through their self insurance policy,
whether they pay out a claim on a specific vehicle or not.
Number 1091
REPRESENTATIVE ROKEBERG asked if the committee had adopted
amendment 1 relating to a moving violation on page 6.
CHAIRMAN GREEN responded that it had not been adopted.
CHAIRMAN GREEN advised members he had three proposed amendments of
which the first could be found on page 6, line 11, to insert a
moving violation or following "involved in". He explained that it
would allow the officer citing a moving violation to request a
showing of proof of insurance.
CHAIRMAN GREEN moved Amendment 1. There being no objection,
Amendment 1, draft CSHB 95 (JUD), was adopted.
CHAIRMAN GREEN moved Amendment 2, page 7, line 20, delete [three]
and insert two, and on line 22, delete [45] and insert 15.
REPRESENTATIVE ROKEBERG objected for the purpose of discussion. He
asked if it was a doable time frame, and in particular changing 45
days to 15 days.
MS. HENSLEY expressed that that would be sufficient time.
CHAIRMAN GREEN moved to Amend Amendment 2, to insert after "15" the
words working days.
REPRESENTATIVE BERKOWITZ offered a friendly amendment to change
"15" to "21", because the working days concept was difficult from
a tabulation point.
CHAIRMAN GREEN had no objection to the friendly amendment to his
amendment to Amendment 2. Representative Rokeberg withdrew his
objection, so Amendment 2 to draft CSHB 95 (JUD) was adopted as
amended.
CHAIRMAN GREEN moved to adopt Amendment 3, page 8, line 2, to
delete [2000] and insert 2002.
REPRESENTATIVE CROFT asked if the Chairman wanted to consider the
department's suggestion of extending that date to the year 2005.
CHAIRMAN GREEN expressed that the reason for keeping the sunset
date at 2002 was a compromise between the department's
recommendation and what the insurance companies had requested.
There being no objection, Amendment 3, draft CSHB 95(JUD) was
adopted.
REPRESENTATIVE ROKEBERG moved to report CSHB 95(JUD) out of
committee with individual recommendations and attached fiscal note.
There being no objection, CSHB 95(JUD) was reported out of
committee.
CSSB 41(FIN) - ENVIRONMENTAL AUDITS
Number 1357
CHAIRMAN GREEN advised members they would next consider CSSB
41(FIN), "An Act relating to environmental audits to determine
compliance with certain laws, permits, and regulations. Prime
Sponsor Senator Loren Leman, and his staff person, Michael Pauley,
would present the bill to committee members.
MICHAEL PAULEY, Legislative Administrative Assistant to Senator
Loren Leman, advised members that SB 41 was similar to legislation
introduced in the 19th Legislature, which was then called SB 199.
That bill passed the Senate and was also passed by the House
Resources Committee and, unfortunately, the legislature adjourned
before the House Finance Committee was able to consider the bill.
MR. PAULEY advised members that the purpose of SB 41 was to create
an incentive system to encourage self auditing. He stated that the
purpose of self auditing was to bring about full compliance with
regulations designed to protect the environment. The bill would
encourage businesses and public institutions to integrate
environmental protection measures into their normal operating
procedures.
MR. PAULEY pointed out that currently, more than 1000 of the
world's largest corporations conduct self audits; however, SB 41
was an attempt to encourage smaller companies to adopt that
practice as well. In addition, it was the desire that the bill
would result in the expansion and improvement of existing audit
programs.
MR. PAULEY noted that 20 other states had passed some form of self
audit legislation, most being very similar to SB 41, and also 8
other states were debating those measures in their legislatures
this year. Mr. Pauley advised members that the laws had been very
well received and had lead to increased compliance. He expressed
that among the states with self audit incentive laws, many had
environmental concerns that were similar to Alaska, such as Oregon,
Idaho, Utah, Colorado and Wyoming.
MR. PAULEY advised members that, in addition, legislation had been
introduced in the last Congress to encourage self auditing through
federal law. It was Mr. Pauley's understanding that that
legislation would be re-introduced in the 105th Congress.
Number 1473
MR. PAULEY advised members that the mechanism in SB 41 involved two
incentives to encourage self auditing. The first incentive was
limited immunity. Mr. Pauley explained that entities that conduct
voluntary self audits would be immune from civil and administrative
penalties for violations discovered, provided that several
conditions were met. The regulated entity must take action to
correct the identified problem and prevent its occurrence in the
future. Immunity was not available for violations that had caused
substantial off-site damage, or serious on-site injury. Mr. Pauley
pointed out that there were several other conditions that must be
met, but the ones he described were the most important.
MR. PAULEY advised members that the second incentive was qualified
privilege. He explained that the self critical analysis contained
in an audit report would be considered privileged, and therefore,
not admissible as evidence, or subject to discovery, in civil or
administrative proceeding. Mr. Pauley pointed out that that
provision recognized that an audit report, by its very nature, was
a self incriminating document. It discovered problems, identified
what personnel, or management deficiencies caused the problem, and
also recommended corrective action. Mr. Pauley noted that studies
had shown that many businesses had opted not to perform audits out
of fear that the resulting reports would be used by agencies, or
hostile third parties, as a road map to prosecution.
MR. PAULEY advised members that as with the immunity benefit, the
privilege had limitations and could be overcome if it was asserted
for a fraudulent purpose, or if the regulated entity had failed to
take required actions to correct noncompliance.
MR. PAULEY pointed out that there had been a lot of talk lately
about making Alaska open for business, and it was the sponsor's
belief that SB 41 would help create a pro-business climate in the
state of the Alaska. He noted that it made clear that the state
was interested in having a cooperative, not a confrontational
relationship with the business community.
MR. PAULEY expressed that there had been nine proposed amendments
that had been circulated to committee members, and of those,
Amendment 3 and Amendment 9 were problematic from the sponsor's
view point. It was believed by the sponsor that the other
amendments were supported by the administration and the affected
industries in the state, or they had no objection to their
adoption. Mr. Pauley stated that the sponsor was willing to
request a blank committee substitute to incorporate the amendments
that were noncontroversial, and the committee could then proceed
with those which met with controversy, which ever way the Chairman
saw fit.
Number 1611
REPRESENTATIVE BERKOWITZ asked if everyone had a copy of the Price
Waterhouse survey.
MR. PAULEY advised members he did not have a copy with him;
however, he could provide the full survey to the committee.
REPRESENTATIVE BERKOWITZ pointed out that he had received a letter,
through the Chairman, from the U.S. Attorney in Anchorage, which
expressed the impact of the proposed legislation. He asked Mr.
Pauley if his office had had a chance to review that letter.
MR. PAULEY stated that he had not read the letter, and a copy had
not been sent to Senator Leman's office, although they would be
very interested in reviewing that letter. He asked if the letter
was from Mr. Bundy.
REPRESENTATIVE BERKOWITZ stated that was correct.
MR. PAULEY was then provided a copy, and noting its length, he
expressed that he would refrain from offering any immediate
comments to the letter.
REPRESENTATIVE BERKOWITZ pointed out that Mr. Bundy was fairly
critical of SB 41, and that he had interpreted some of the data
from the Price Waterhouse survey differently than the Senator.
Representative Berkowitz pointed out that Mr. Bundy felt SB 41
could have a negative impact on business.
MR. PAULEY acknowledged that the federal government had not been
enthusiastic about self audit incentive legislation, at least in
the form that had been passed in most states. He felt it was fair
to say that both the Department of Justice and the Environmental
Protection Agency (EPA), had objections to similar legislation, and
the Senator believed those objections could be answered, and did
not believe, that in many cases, they had a lot of merit.
MR. PAULEY stated with regard to the effect on the business
community, all he could say was that in Alaska, the legislation had
been endorsed by the State Chamber of Commerce, the Resource
Development Council, the Alliance and many other business groups.
He noted that, obviously, from the perspective of the many business
groups who had reviewed the bill thought there was something
beneficial for them.
REPRESENTATIVE BERKOWITZ understood and respected the viewpoint of
those organizations; however, he did note that one indication in
Mr. Bundy's letter reflected that the Republican Governor was going
to let a similar bill sunset, and that George Pataki, the
Republican Governor of New York, would oppose any attempt to enact
privilege and immunity in that state. So there was clearly a
spectrum of opinions even from that side of the political agenda.
Number 1744
CHAIRMAN GREEN asked if Mr. Pauley had access to, or information
relating to the responses from other states who had enacted similar
legislation, and their reaction to the kinds of objections that had
been conveyed here.
MR. PAULEY advised members that there had been some third party
challenges to the self audit law in Colorado, and Democratic
Governor Romer [Ph], had defended, vigorously, their state's audit
law and pledged that he would commit the full resources of the
state to defend those objections and law suits that had been raised
against the Colorado Law.
Number 1787
REPRESENTATIVE JEANNETTE JAMES advised members that a concern she
had related to a business being exempt, or being granted amnesty
from their reports. She stated that if Alaska wished to have a
good, clean environment, it would require that the people do that,
as opposed to government enforcing it. Representative James
expressed that generally, she would encourage companies to conduct
audits on themselves, whether or not it was required by the
government or not. Representative James requested an explanation
of the amnesty provision, because as she saw it, there was the
possibility of someone conducting an audit that was damaging, and
could then cover it up and it would never be found.
MR. PAULEY advised members that there were a lot of conditions that
would have to be met in order to be eligible for the immunity. He
noted that he had often described SB 41 as creating a mine field
for any bad actor who thought that they would gain some benefit
from what the bill provided. Mr. Pauley directed members attention
to page 7, which related to the immunity aspect of the proposed
legislation. He advised members that immunity was not available if
the violation reported posed a threat of causing substantial injury
to people on-site, or substantial injury to person's property, the
off-site environment. Mr. Pauley pointed out that they were
generally talking about violations that were of a non-serious
nature when considering immunity.
MR. PAULEY noted that in the state of Texas, the kinds of
violations that were typically reported involved displaying the
wrong kind of labels on hazardous materials that were stored at the
facility. Their wastewater treatment operators did not have their
certifications up to date. Mr. Pauley reiterated that serious
violations would not be considered eligible for immunity.
MR. PAULEY stated that other things required in order to get
immunity was to promptly disclose the violation and work with the
appropriate regulatory agency, in the case of Alaska, the
Department of Environmental Conservation (DEC), to bring about
corrective action. He noted that there was a time table that would
be necessary to follow with respect to the corrective measures that
should be taken towards a violation. Mr. Pauley advised members
that the time table required that any violation must be corrected
within 90 days, unless a longer amount of time was negotiated
between the business and the DEC. He advised members that another
element also existed within the bill which would require the
individual to implement appropriate measures to prevent the
violation from occurring in the future. Mr. Pauley noted that it
was not just fixing an existing problem, but making sure that it
would not occur again, and to consider what systems would necessary
to assure that it would not happen again.
MR. PAULEY stated that Senator Leman believed that the proposed
legislation provided a rather extensive list of caveats and
conditions placed on the ability to get immunity.
Number 2017
REPRESENTATIVE JAMES advised members that she thought a self audit
concept would provide for better compliance because there was the
incentive to regularly police themselves which they otherwise might
not do because of waiting for the state to go in and conduct the
audit. She was surprised to hear people from the environmental
community, and others, being concerned that the proposed
legislation would make things worse, as well as forgiving people
for being in noncompliance. Representative James asked if Senator
Leman had answers that would respond to those concerns that had
been expressed, or if it was just a fear they had that a self audit
would not work.
MR. PAULEY advised members that the sponsor did feel he had answers
to the concerns that had been expressed and believed that they were
addressed in the bill. He assumed that people from some of the
environmental groups would be testifying and he would be available
to respond to the issues raised by those people if the Chair so
desired.
CHAIRMAN GREEN suggested that there could be some entities who,
just prior to being audited by the state, would rush out and
quickly audit his premises, and then point out whatever to the
inspector in hopes to receive some degree of immunity.
Number 2343
REPRESENTATIVE CROFT referred to the Bundy letter on page 5, which
indicated that Idaho did sunset its law because the governor found
it had no tangible benefit. He noted that the states of Utah and
Texas were revisiting the issue because of compliance problems.
Representative Croft pointed out that to the extent SB 41 was
modeled after those laws, he would like to hear a response to why
those states were changing their laws. He expressed that Mr.
Pauley could respond to that at the next hearing after having the
ability to review the Bundy letter.
REPRESENTATIVE CROFT stated that on a theoretical level, he
understood the reasons for the argument for keeping a self audit
confidential. He asked with respect to the immunity clause, if the
EPA, or federal government had a procedure of lesser penalties if
someone promptly disclosed a violation, and if SB 41 provided
immunity if something was promptly disclosed. Representative Croft
asked why it was appropriate to absolve an act of irresponsibility,
rather than provide an incentive that provided for a minimal
penalty.
MR. PAULEY advised members that part of the answer to
Representative Croft's question was contained in the intent
language of the bill on page 1, beginning on line 5; "As
environmental regulations evolve, performance-based standards will
increasingly replace the traditional command-and-control approach
of state regulatory practices." He explained that what that meant
was that there were a couple of ways to measure how the state was
enforcing environmental compliance. Mr. Pauley pointed out that
the success could be measured by the number of fines that had been
imposed in a given month, how many people had been sued and brought
to court, or, it could be measured on performance based standards.
He stated that that would involve determining what percentage of a
regulated community was actually in compliance, because the two
realities were not necessarily the same. Mr. Pauley pointed out
that the reason that was the case was because the state's
departments did not have unlimited budgets, in fact the budgets
were shrinking with each passing year, and there were simply not
enough inspectors to inspect every facility out there.
MR. PAULEY advised members that the bill was an attempt to
encourage a system where people were policing themselves. He
expressed that some of those audits cost hundreds of thousands of
dollars for some of the larger companies. Mr. Pauley stated that
if a company were to spend a lot of money on a compliance
inspection and they found violations that they knew they would get
fined for, they would more than likely say, why bother. So,
providing immunity for violations that were inadvertent violations
of a non-serious nature would bring more people into compliance
with regard to those types of violations.
REPRESENTATIVE CROFT felt Mr. Pauley's explanation was very well
said; however, felt very few people would get immunity for turning
themselves in, that most of the criminal analogies he had reviewed
provide some sort of reduced penalty, if you take the action
required. Representative Croft questioned the purpose of going all
the way to providing immunity in order to accomplish the goals of
the proposed legislation.
MR. PAULEY advised members that immunity had been the pattern in
self audit legislation that had been passed in 20 other states.
Penalty immunity was the incentive that was provided. The EPA
policy which offered reduced penalties at agency discretion, that
the sponsor believed, and was the view of many people in the
business community, that it was sufficiently nebulous as to how
much a penalty would be reduced. Mr. Pauley pointed out they were
talking about punitive penalties, not economic benefits that
someone might have realized for being out of compliance, nor did
the bill address the costs for fixing a problem. He noted that if
a person self disclosed a violation, they would be automatically
bound by the conditions of the law that they would be required to
address any damage caused, and also it would be necessary to
implement a system that would prevent the same kind of violation
from occurring in the future. Mr. Pauley expressed that those were
other things that could cost money and the investment of resources
on the part of the business. He reiterated that the immunity
clause would protect one from being assessed punitive fines and
penalties, adding that they were only talking about things in the
civil, administrative sphere. Mr. Pauley advised members there
would be no immunity to things that fell within the criminal
sphere.
REPRESENTATIVE CROFT asked where the bill referred to the economic
benefit being recovered.
MR. PAULEY advised members that could be found on page 10, line 9,
and essentially what it said was, "the owner or operator, after
taking into account the cost of completing corrective and remedial
measures realize substantial economic savings in not complying with
the requirement for which a violation is charged." Mr. Pauley
stated that, basically, after fixing the problem and taking the
remedial measures and after subtracting for those costs, if it was
still evident that the person had realized an economic benefit over
their competitors, then the government could collect the
difference.
Number 2441
CHAIRMAN GREEN noted that Mr. Pauley stated that the bill would
only affect civil actions, and asked where a situation would fall
whereby some company had had a out-fall line. that was improper and
felt the pinch coming, so they point out that they had,
inadvertently discovered the problem, and so they change it from a
criminal penalty to a civil penalty. He asked if there would be
immunity in a situation such as that, or would it require an act of
committing perjury in order to deny knowing about the violation.
MR. PAULEY was not certain about the specific example cited by
Chairman Green; however, pointed out that language on page 9, line
23 would allow for no immunity if it was found that the owner or
operator claiming the immunity had intentionally, knowingly, or
recklessly committed or authorized the violation. With the
hypothetical situation put forth by Chairman Green, Mr. Pauley felt
that appeared to be a deliberate action by the company who was in
noncompliance.
CHAIRMAN GREEN, for clarification purposes, asked if the proposed
legislation would provide for a loophole for a criminal prosecution
by including an immunity clause because if the violation was caught
it would be criminal, but because it was a volunteered, self audit
report, it would then be considered a civil violation.
REPRESENTATIVE BERKOWITZ pointed out that that was one of the
concerns raised by the U.S. Attorney in his letter, that frequently
a prosecution might arise following an administrative action, and
if there was immunity granted in the administrative action that the
discovery process of the administrative action could lead to a
criminal prosecution down the road.
TAPE 97-50, SIDE B
Number 000
MR. PAULEY stated that it seemed in either case that there would be
a burden on the prosecutor to show that it was a knowing violation.
In viewing it from the other analogy where the person did not
voluntarily report a violation and was discovered later as a result
of an inspection, that a decision would still have to be made
whether a civil case was appropriate, or if it would be considered
a criminal case. Mr. Pauley did not believe the proposed
legislation made that determination any more or less difficult than
it would be otherwise.
REPRESENTATIVE PORTER expressed that there was no immunity for a
criminal act, and if the proof was available to prove a criminal
act had taken place, there would be no immunity.
REPRESENTATIVE BERKOWITZ felt one could get into an Oliver North
situation where evidence might come out in an immunized setting,
whereby evidence could be used in one forum; however, it could not
be used in another forum because it was immunized.
REPRESENTATIVE PORTER advised members if an allegation was criminal
that anything that had transpired would be admissible because there
was no immunity, or confidentiality provided in a criminal case,
that it is not allowed under statute.
LISA KIRSCH, Counsel to House Judiciary Committee, felt that
possibly what Representative Porter was referring to was a
circumstance where the action was initially brought as a criminal
action. She believed that Representative Berkowitz referred to a
situation where the violation originally arose in a civil action
where the testimony was immunized, and that at point they
discovered a potential criminal action. The criminal action would
be filed later, and in that circumstance Representative Berkowitz
might have a good point.
REPRESENTATIVE PORTER believed the criminal charge would overcome
the immunity granted in a civil context.
MS. KIRSCH noted that she had just received the letter from U.S.
Attorney Bundy today, as everyone else had, and had not had the
opportunity to review it in detail. However, she believed that the
concern that Mr. Bundy raised, was that there could be
circumstances where a violation would begin as a civil action, then
become immunized, and because of that, a problem would arise in an
attempt to use the evidence in a criminal context. Ms. Kirsch
stated that to her, there was a colorable legal argument, although
she would have to investigate it further to be certain. She
pointed out that one problem was that they did not know what the
bill was going to do yet, and perhaps they could look to other
states' experience to see how it had worked within the context of
their evidentiary rules, and that could possibly explain why other
states had questioned the legislation.
REPRESENTATIVE BERKOWITZ advised members that there had been an
example in the state of Alaska with respect to the Exxon-Valdez oil
spill. He pointed out that when Joe Hazelwood ran aground, he
stated that he had banged into the rocks; federal immunity kicked
in regarding the spill, and that immunity was granted and was
attached to the state criminal action against him. Representative
Berkowitz pointed out that that was one of the reasons Joe
Hazelwood's criminal conviction was overturned.
Number 160
CHAIRMAN GREEN advised members the issue under discussion was
something that needed to be followed up on, possibly through the
state's Attorney General's Office, and/or the experience of other
states.
REPRESENTATIVE BUNDE asked how being immune from a civil penalty
would play into a private party bringing a civil suit, as opposed
to having a reduced civil penalty and a private party bringing a
civil suit after that process had taken place. He explained that
under one scenario, a person conducts a self audit and was
subsequently immune from any state civil action, and utilizing the
same scenario with a reduced penalty, rather than immunity, would
in turn result in civil action against the individual.
Representative Bunde asked if it was more likely to more standing
for the ensuing civil action because the person had been found
guilty, even though at a reduced rate, or did the state action have
no standing at all in the ensuing civil action.
REPRESENTATIVE BUNDE for clarification purposes, advised members
that his question dealt with a concern expressed by Representative
Croft as to why not just have reduced penalties rather than
immunity, and asked if one or other of the scenarios have a likely
impact other than civil suits brought by private parties.
MR. PAULEY advised members he was not prepared to provide a
definitive answer to Representative Bunde's question. He
understood the question to be what impact the proposed legislation
would have on third party law suits, but he was not sure he could
see, in SB 41, how it could have the impact Representative Bunde
was inquiring about.
REPRESENTATIVE BUNDE stated that his ultimate goal of the question
was to see if that might be more reason to provide for immunity
than partial penalties being imposed.
REPRESENTATIVE JAMES expressed that in trying to understand the
hypothetical that had been presented, it would appear to her that
if a business conducted an environmental audit and disclosed the
outcome which resulted in a series of things which they were immune
to, as well as some violations they were not granted immunity for.
She stated that it did not appear to her that they would get into
a civil action and claim immunity because the only resulting action
would be to determine if there was a violation that did not fall
under the immunity clause, and that could mean that it might fall
under a criminal action. Representative James stated that in
response to Representative Bunde's question, that immunity in that
case would be better than a reduction of a penalty because reducing
the penalty would be a result of a civil case. Representative
James believed that the initial challenge would be to determine
whether the violation was immune, which would either provide
evidence for criminal action or not.
Number 378
REPRESENTATIVE PORTER stated that to the extent that a third party
claim for a violation having caused some outside damage to private
property, or public property, he believed would be covered under
page 10, line 9, subsection (3), which provided exceptions to the
immunity clause, that; "the owner or operator, after taking into
account the cost of completing corrective or remedial measures
within a reasonable time and implementing appropriate measures to
prevent recurrence", and pointed out that if those stipulations
were not carried out, immunity would not be granted.
REPRESENTATIVE ROKEBERG stated that he would like to speak to the
supremacy clause, or the primacy issues about the differential
between federal and EPA regulations and state regulations and
standards. He asked if presently there were instances that the
bill would affect where state regulations were in effect.
Representative Rokeberg pointed out that clearly, SB 41 focused on
state regulatory activity; however, it had come to his attention
that there were a number of gray areas in which the EPA and the
definition of environmental law as contained in the bill, referred
to both federal and state regulations. And the fact that members
had a letter from a United States attorney, indicated that there
was federal interest involved because of the area where the issues
were melded together.
REPRESENTATIVE ROKEBERG asked if the bill only related to a breach
of state regulations, or was it a joint authority between both
federal and state jurisdictions, and if so, how would that work.
MR. PAULEY advised members that the bill applied to state laws;
however, added that federal laws would override it if the gray
areas came about when there was a federal law that was implemented
by the state. He stated that primacy of those programs had been an
issue in some other states that had passed self audit laws;
however, he was happy to report to the committee that two weeks
ago, the state of Texas, and the Federal EPA worked out an
agreement where if Texas agreed to make certain changes to their
audit law, that they could retain the ability to implement all the
state delegated programs that they had from the federal government.
Mr. Pauley explained that the changes that the state of Texas was
required to make were changes that had already been added into SB
41 through the committee process. He stated that after reviewing
the Texas EPA Settlement, they felt very comfortable that SB 41, as
written, would not cause problems with the EPA, in so far as state
delegated programs, although the government was still opposed to
self audit laws as a concept.
MR. PAULEY pointed out that the federal government did not like the
legislation. He stated that in a lot of areas, the states were on
the cutting edge of policy development and Washington D.C. lagged
behind. Mr. Pauley expressed that it was the view of the sponsor,
that that was the case with SB 41; that the EPA had resisted such
a policy in every state that had attempted to implement it. He
advised members that he had spoken with John Riley, the Director
for the Enforcement Office for the Texas Natural Resources
Conservation Commission, and they were extremely enthusiastic about
the effect of the self audit law in that state. He noted that Mr.
Riley had faxed him a list of well over 400 companies who had given
audit notices to his agencies regarding self audits they planned to
conduct on their companies. Mr. Pauley advised members that Mr.
Riley also faxed samples of violation disclosures that those
companies had sent in, which he would be happy to provide the
committee because they could provide a real sense of taking the
concept out of the abstract and see how it worked in real life.
MR. PAULEY advised members that the reports consisted mainly of
minor violations, such as the water treatment officers not being
properly certified, stored chemicals in which the label did not
reveal all the information required by state law, et cetera.
REPRESENTATIVE ROKEBERG expressed that Mr. Pauley spoke exactly to
his second question, which was in many instances that the EPA
enforced various different congressional acts and provided for
daily penalties or daily fines. Those then begin to cumulatively
add up, and asked if the state of Alaska, similarly, had daily type
fines and were they mandated by the EPA as part of their
enforcement regime to do that.
Number 712
CHAIRMAN GREEN pointed out that Janice Adair, with the Department
of Environmental Conservation was available to testify, and could
probably respond to some the concerns expressed by committee
members.
MR. PAULEY advised members that he did not have anything to offer
in response to Representative Rokeberg's question, and felt Ms.
Adair could.
CHAIRMAN GREEN agreed that in some cases the federal government
provided primacy to the state, but in other cases the state was
enforcing federal law, and if a company came forward and admitted
a mistake under state law and was provided immunity, what would
occur with respect to federal prosecution.
MR. PAULEY advised members that the federal law always had primacy,
and if a federal law, implemented by the federal government, that
neither privilege nor immunity would apply to a case such as that.
SB 41 only spoke to state enforcement, although as he had indicated
before, there were certain programs where the federal government
had delegated the enforcement authority to the state's Department
of Environmental Conservation. And those would be covered under
the proposed legislation.
REPRESENTATIVE BERKOWITZ stated that through reading the U.S.
Attorney's letter he did not see it as a conflict between state
rights and federalism, and questioned what sparked introduction of
SB 41.
CHAIRMAN GREEN asked that Senator Loren Leman join Mr. Pauley at
the witness table.
SENATOR LOREN LEMAN advised members he brought SB 41 to the
attention of the legislature last year, and it had been brought to
his attention during a meeting of the Energy Council approximately
two years ago which was an organization of 10 states who had a
tremendous interest in energy, as did Alaska. He advised members
that the other states had described their success and experiences,
and in particular, Texas described their most recent success in
passing legislation that would provide for some limited immunity
and privilege for environmental and health and safety self audits.
SENATOR LEMAN explained that he saw the practice as being very
beneficial, and from his own background as a professional engineer
working in that area, and from having clients from around the state
express to him anecdotal stories of things that they might not
know, or chose not to know because of their concern about the
overreaching arm of government. He advised members that that was
where the idea had originated and reiterated that 20 states had
adopted similar legislation and eight other states were considering
the similar legislation currently. Senator Leman expressed that to
have Mr. Bundy, the U.S. Attorney, say the legislation was not
necessary, flew directly in the face of evidence throughout the
United States. He pointed out that, obviously, enough people
believed it was necessary because not only was legislation being
introduced, but it was being enacted. For that reason, he believed
SB 41 would be a big step in helping small businesses in the state
of Alaska, especially. Senator Leman did not believe the main
benefit of the proposed legislation was to large companies, but to
the "Moms and Pops" of Alaska because it would enable them to come
into compliance with environmental law.
Number 976
CHAIRMAN GREEN asked if Senator Leman could explain to the
committee his opinion as to why there was such a reluctance from
the overseers from both the state and federal government.
SENATOR LEMAN advised members that it was his opinion that those in
control in federal government wanted to continue to maintain that
control. They preferred to have the command of control approach.
The EPA had literally come kicking and screaming who had now seen
policy changes in the EPA; however, Senator Leman wondered if they
would have made those changes but for resistance and the new ideas
taking place in the states. No, they would not have done that, so
they are now saying that they can make some policy changes, because
they now think it is appropriate, and in fact they were now saying
their own department said it was their own policy.
SENATOR LEMAN expressed that now when more than 25 states had
implemented such a law that he felt it would provide an even
greater incentive for the EPA to change its policy.
Number 1085
CHAIRMAN GREEN asked that Patty Ginsburg, testifying from
Anchorage, provide her comments to the House Judiciary Committee.
Number 1285
PATTY GINSBURG, Staff person to the Prince William Sound Regional
Citizens Advisory Council, (RCAC), advised members that their
mission was to promote environmentally safe operations of the
Alyeska terminal and associated tankers. Ms. Ginsburg stated that
she could not emphasize enough RCAC's support of the underlying
goal of SB 41. She stated that in their work with the industry and
regulatory agency, they found that a cooperative approach was
almost always more productive than the alternative.
MS. GINSBURG advised members that RCAC was in support of the
cooperative approach to encourage regulated entities to find and
correct environmental problems. RCAC believed that goal could be
met while still protecting the public's right to know and the
government's responsibility to enforce.
MS. GINSBURG stated that the bill, in its current form, went too
far by granting blanket immunity from legitimate litigation for
self disclosed offenses. She advised members that it was primarily
that aspect of SB 41 that RCAC opposed. Ms. Ginsburg advised
members that they believed that the blanket immunity was not
necessary and did not serve the public interest.
MS. GINSBURG pointed out that RCAC would suggest, in stead, that
the bill prohibit agencies from initiating civil or administrative
litigation based solely on an environment audit report. That was
a provision used by the EPA in its policy and it made more sense.
It assured both fairness to the regulated entity and provided
appropriate protections to the public.
Number 1214
REPRESENTATIVE ROKEBERG asked that Ms. Ginsburg explain for members
what the Prince William Sound Regional Citizens Advisory Council
was, who paid for it and when, and if it had a sunset provision.
MS. GINSBURG advised members that RCAC did not have a sunset
provision. She explained that the RCAC was a citizens advisory
group funded almost entirely under contract with the Alyeska
Pipeline Service Company. Ms. Ginsburg advised members that they
were charged by Alyeska with advising them and the public on issues
associated with an environmental safe operation of the terminal.
Ms. Ginsburg stated that the RCAC actually predated the federal law
because their contract with Alyeska was initiated and signed prior
to the OPA 90 announcement.
REPRESENTATIVE ROKEBERG asked if advisory councils were mandated
under OPA 90.
MS. GINSBURG advised members that OPA 90 set up a pilot program as
a demonstration project after the oil spill for both Prince William
Sound and Cook Inlet for the purpose of citizens being able to work
with industry, and with regulators, to resolve issues of mutual
concern.
REPRESENTATIVE ROKEBERG asked if Prince William Sound and Cook
Inlet were specifically created under OPA 90.
MS. GINSBURG advised members that the law required that something
like SB 41 be established
in those specific geographic areas. She reiterated that it was a
demonstration project with the idea that congress would look at
those demonstration projects to determine if the oversight provided
by RCAC should be required at other terminals.
REPRESENTATIVE CROFT advised Ms. Ginsburg that he had a January
1997 EPA update which listed companies that were voluntarily
disclosing under the EPA's procedures. He noted that there were
two disclosures by Alyeska Pipeline, Prudhoe Bay, and one at Unocal
in Cook Inlet. Representative Croft asked if Ms. Ginsburg had any
additional information as to what had been disclosed, and if she
did not currently have that information, if she could obtain that
information for the committee.
MS. GINSBURG stated that she did not have that information;
however, could attempt to find out.
Number 1482
MICHAEL HANUS, Senior Staff Engineer, Exxon Company USA, advised
members he was testifying on behalf of the Alaska Oil and Gas
Association, more commonly known as AOGA. He advised members that
AOGA was a trade association with a 19 member company that
accounted for the majority of oil and gas exploration, production,
transportation, refining and marketing activities in Alaska.
MR. HANUS advised members that AOGA was in support of the intent of
environmental self audit legislation, which would provide immunity
from penalty, and ensure confidentiality of the self audit. He
pointed out that the majority of AOGA members currently conducted
self audits as a means of assuring compliance, and saw value in
legislation that encouraged greater utilization of self audits by
providing immunity and privilege.
MR. HANUS stated that immunity acted as an incentive for companies
to identify, disclose, correct and prevent the reoccurrence of non-
confined behavior. He stated that privilege would protect
companies from unnecessary repercussions of disclosing audit
results to agencies, and would preserve the integrity of the audit
process.
MR. HANUS advised members that looking for deficiencies,
identifying them, disclosing them to the appropriate agencies, and
correcting them was what self auditing was all about. He continued
to state that self auditing was an important tool for voluntary
compliance. Mr. Hanus stated that by providing privilege and
immunity for self auditing, the state was saying that voluntary
compliance with environmental laws and regulations was in the best
interest of the state, as well as industry.
MR. HANUS reiterated that AOGA was in support of the intent of SB
41, and believed the bill would move compliance in a positive
direction through its encouragement of self auditing. Mr. Hanus
advised members that they were hopeful that legislation, based on
the intent of SB 41, could be passed, and encouraged the
committee's support of the proposed legislation.
DOUG DONEGAN, Vice President, Trident Seafoods Corporation, advised
members he strongly supported CSSB 41. He believed that the bill
would increase overall compliance with environmental regulations.
Mr. Donegan advised members that his observation and experience,
working both in the DEC and the seafood industry, was that there
were two basic views of business in environmental regulation. In
one view, operators were seen as people who avoid regulations to
increase their profits. The second view involved people who were
primarily responsible citizens who wished to comply with the rules,
but due to the vast volume of regulations, they may not know what
their responsibilities were and might be afraid to ask. Mr.
Donegan advised members that through his experience, the second
view point reflected the reality. His experience had lead him to
believe that many violations occurred because of the sheer mass of
regulations and various policies regarding their interpretation.
MR. DONEGAN advised members that in the seafood industry,
compliance was particularly problematic. Many operations were
subject to the whole gamut of environmental regulations. Mr.
Donegan expressed that they must meet requirements for the disposal
of solid waste, disposal of carcass waste, disposal of hazardous
substances, transportation hazardous substances, drinking water
systems, air quality and fuel storage. Mr. Donegan expressed that
compliance was sometimes made more difficult because of being a
highly seasonal operation, with heavy employee turn over.
MR. DONEGAN advised members that some facilities would stand a much
greater chance of compliance if they would hire consultants to come
in and assist them in understanding their responsibilities. Mr.
Donegan reiterated that the fear of incurring staggering penalties
for unknown violations had a chilling effect on operations. Mr.
Donegan stated that SB 41 encouraged businesses to investigate
their level of compliance and required that they remedy
deficiencies, and rather than waiting for an inspector that might
never come, they would be provided incentives to investigate
themselves. Mr. Donegan advised members if it was the wish to have
increased regulatory compliance, SB 41 would help in achieving that
goal. He noted that the proposed legislation was not designed to
protect criminals, not designed to let egregious violators off the
hook, but designed to encourage facilities to investigate their
operations and correct problems.
Number 1664
REPRESENTATIVE ROKEBERG asked if Mr. Donegan could provide an idea
of what an environmental audit might cost on one of his seafood
plants, and also if he could speak to any of the types of penalties
or fines that he thought he might be subject to which he felt the
bill would preclude from happening in the future.
MR. DONEGAN expressed that there were many different levels of
environmental auditing that could come from things that were fairly
focused, relatively inexpensive and that it would depend on the
size of the operation. He stated that if it was a small "Mom and
Pop" operation, it could get an environmental audit relatively
inexpensively. Mr. Donegan advised members that he had heard
quotes for full scale environmental audits of a large facility that
would run into six figures.
MR. DONEGAN stated that he thought, in terms of environmental
penalties, that the potential was enormous. He stated, for
instance with air quality, he believed the minimum penalty for the
first day of violation was $500 and not to exceed $100,000, and
then $10,000 per day for a violation for the first day. Mr.
Donegan stated that if someone was inadvertently violating an air
quality regulation, which could happen just through lack of
knowledge, that by the time the person found out about it he could
potentially incur an enormous penalty. After that point when they
hire someone to investigate the facility they could suddenly find
that they were facing penalties in the hundreds of thousands, and
perhaps millions of dollars. Mr. Donegan advised members that
sometimes that type of information could be used to extract things
out of an owner or operator that might be termed unreasonable.
Number 782
BOB SHAVELSON, Executive Director, Cook Inlet Keeper, advised
members they were a 501 C3 nonprofit organization dedicated to
protecting water quality in Cook Inlet.
MR. SHAVELSON advised members that he had been working on the
environmental audit issue for several years because it was an issue
of great concern to him. He felt very strongly that privilege was
the wrong way to go when looking at environmental compliance. Mr.
Shavelson pointed out that there were comments made earlier that
the state was on the cutting edge of policy breakthroughs and that
EPA was behind the curve on that. Mr. Shavelson noted that he was
not testifying to defend the EPA; however, suggested that they were
certainly the first ones to get out of the gate on the issue, and
they convened a National Stakeholder effort in Chicago and San
Francisco several years ago with all the largest corporations and
stakeholders in that, to review the issue thoroughly and decided
not to go with "privilege". He advised members that they came up
with a policy that recognized that immunity from certain civil
penalties was a way to induce proper behavior, but they did away
with the privilege idea because it was too extreme of a solution to
a non-problem.
MR. SHAVELSON stated that he would say it was a non-problem because
there had been no demonstrated need that there was a problem. With
all due respect to Senator Leman, and the anecdotal evidence that
he cited, Mr. Shavelson stated that all the reports and studies he
had seen from both sides of the issue had shown that responsible
corporations and businesses were doing environmental audits. He
expressed that there were a number of different studies available
that clearly showed that people that were in business, that were
concerned about environmental compliance, were already doing the
type of work as suggested in SB 41.
MR. SHAVELSON advised members that he also believed there was no
evidence that the system worked in the states where the legislation
had been passed. He stated that they could get information from
the state of Texas that would reflect people were signing up under
the law, but there was nothing to compare that to, to say how many
people provided an audit if they had not had a similar law to work
with.
MR. SHAVELSON pointed out that another argument that was frequently
made was that prosecutors would use environmental audits as road
maps and puts the chill on auditing by companies. Mr. Shavelson
reiterated that privilege was a very extreme solution to a non-
problem, and pointed out that one commentator from the Attorney
General's Office in Arizona made a comment and said that the
environmental audit privilege was like replacing a brand new car
because it had a flat tire. Mr. Shavelson felt that was an
appropriate analogy because that was really what was being proposed
through SB 41. The state would be taking an extreme step to get at
a rather small problem.
MR. SHAVELSON advised members that he believed the type of
legislation before members was really anti-family, anti-worker,
anti-community. He stated that if members reviewed some of the
U.S. Supreme Court writings, and what they said in the case of
former President Nixon; "that privileges and other exclusionary
rules are not lightly created nor expansively construed, for they
are in derogation of the search for the truth." He felt it was
important that people consider that the Supreme Court refused to
create a new privilege for the President of the United States.
Number 2038
REPRESENTATIVE ROKEBERG stated that in the course of the oil and
gas development in the Cook Inlet area, the offshore platforms,
that even recently there had been fines that had been basically
bookkeeping type fines which had required both Marathon Oil, and
its predecessor Unocal, to pay significant fines over a period of
time. He asked Mr. Shavelson if he thought there had been a
harmful effect on oil and gas development in Cook Inlet. And also
asked him if he thought it was fair to charge those fines based on
administrative bookkeeping type issues when they, in fact, did not
have any kind of negative impact on the environment.
MR. SHAVELSON stated with respect to the second question, he did
not see those as administrative bookkeeping violations. Those were
right-to-know violations because it was the public's right to know
about certain things. Mr. Shavelson advised members that if a
corporation did not record the amount of pollution it was
discharging in a report or document, then that document would not
be available to a citizen who was concerned about subsistence
resources, or other things. Mr. Shavelson expressed that he was
not clear as to the first question asked by Representative
Rokeberg.
REPRESENTATIVE ROKEBERG stated that his first question related to
if oil and gas development in Cook Inlet offshore drilling
negatively impacted the eco system of Cook Inlet.
MR. SHAVELSON believed there were a number of studies available
that would reflect more information was needed.
REPRESENTATIVE CROFT referred to the EPA report that showed Unocal
had provided a voluntary disclosure on Cook Inlet, and asked Mr.
Shavelson what had been disclosed and the reduction in penalty they
received.
MR. SHAVELSON advised members he did not have that information in
front of him, but it was his understanding that on the Steelhead
platform last summer, Unocal did an audit and they discovered that
they were mixing some of the processed waste waters with some of
their deck drainage. He pointed out that that was an illegal
discharge that had apparently been going on for at least 10 years,
including when Marathon owned the Steelhead platform. Mr.
Shavelson advised members that in that case there had been 10 days
of daily violations of the Clean Water Act, and as was mentioned
earlier, the Clean Water Act imposed a substantial per day, per
violation penalty. He expressed that the potential penalty there
could have been astronomical, but because Unocal considered the
problem itself, and reported it to EPA under their voluntary
reporting system, Unocal got off with a relatively minimal penalty.
Mr. Shavelson felt that was a classic example of how the EPA policy
was acceptable without going to the extreme of enacting a
privilege.
REPRESENTATIVE PORTER asked Mr. Shavelson if he said that he felt
that the revelations by businesses that had been reported in Texas,
because of their law, would have occurred, or would have turned
themselves in.
MR. SHAVELSON advised members that he was saying that there was no
evidence that would suggest that they would not have.
REPRESENTATIVE BERKOWITZ stated if compliance reports or audits
were made public, and the citizenry had a good idea of, for
example, how little pollution was occurring, if Mr. Shavelson
believed they might be more supportive of industry.
MR. SHAVELSON agreed with that, adding at the national level, and
uniformly across the board, it had been recognized that the more
information that citizens are provided about a facility, the more
comfortable they feel in discussing the issues. He noted that that
in itself, making the information available to agencies and the
public, had a very positive effect in getting industry and
businesses to come into compliance.
REPRESENTATIVE BERKOWITZ asked if it would then be fair to say,
that in some cases, disclosure could be good for business.
MR. SHAVELSON advised members he felt it was frequently good for
business.
TAPE 97-51, SIDE A
Number 000
CHAIRMAN GREEN moved on to take testimony from Kenai, Alaska, and
asked if Gary Hinkle was available to comment on SB 41
GARY HINKLE stated from the point of view of a small business
operator that he supported the proposed legislation strongly. He
advised members that the primary issue should not be compliance
with the law, but the environment. Mr. Hinkle stated that the more
easily the environment could be cleaned, the more people who
encounter contamination would gladly and willing do it; the easier
it was to accomplish, the more it would be done.
MR. HINKLE advised members that he felt the state needed to even go
further with the concept put forth in SB 41 to exempt property and
individuals who get involved in contaminations that were unknown at
the time of purchase. He did not mean to exempt those individuals
from cleanup, but exempt them from any kind of criminal act or
fine. Mr. Hinkle stated that a policy should be offered that would
develop methods of cleanup only, and a new landowner should not be
required in any case, to spend more than the equity in the land
they just purchased. He noted that there had been several
individuals on the Kenai Peninsula who had been very severely
financially damaged by unknowingly buying land that turned out to
be contaminated, and great hardships had been caused by total
unknowing situations.
MR. HINKLE reiterated his full support of SB 41, although
encouraged members, and the legislature, to take it further to
protect new landowners.
REPRESENTATIVE ROKEBERG asked Mr. Hinkle of those who were
penalized, if it was done so under federal law, or by state
regulation.
MR. HINKLE stated that to his knowledge the state operated, in the
instances he was aware of, on behalf of the federal law, so
believed it was based on the federal law; however, was
administrated by the Department of Environmental Conservation.
Number 405
JANICE ADAIR, Director, Division of Environmental Health,
Department of Environmental Conservation, advised members that the
department had been working cooperatively with the sponsor of SB
41, and appreciated his willingness to listen to the concerns of
DEC, and to work with the department to address those concerns.
MS. ADAIR advised members that besides working with the sponsor of
the bill, they had talked with EPA and had reviewed what other
states had done, and had looked into the department's own
experiences to make sure they were upholding the public trust that
DEC was required to fulfill to both protect the environment and
business.
MS. ADAIR pointed out that the "privilege" was actually very narrow
and what was confidential was the work of the auditor. She stated
that what was not privileged were any reports that any industry or
company was required to submit to the DEC by virtue of statute,
regulation, permit, lease or other contracts with the state and
anything generated in the normal, daily operations of the business.
Ms. Adair stated that all that was privileged was the critical self
analysis that was done by the auditor, and the department felt that
was a significant improvement over last year's version of the
proposed legislation.
MS. ADAIR advised members that the department was pleased when the
sponsor reintroduced the bill without having it apply to criminal
actions. She noted that she, too, had only just seen Mr. Bundy's
letter, and thought the bill was probably not as clear on the
criminal point as it should be, and that might be reevaluated. Ms.
Adair stated that both for the department, and she felt for the
sponsor as well, that the intent was not to cover criminal actions.
MS. ADAIR noted that there was a provision in the proposed
legislation for an in-camera review if someone felt that disclosure
of the privileged information was necessary to have a fair trial
because they could not get the information any other way. She
pointed out that the reasons for disclosure were specifically
address in the bill.
MS. ADAIR advised members that one concern the department continued
to have with the bill, which was one of the not agreed to
amendments before the committee, Amendment 3, was the burden of
proof and what would be necessary to have that disclose be granted.
Ms. Adair expressed that the way the bill was currently written,
the burden of proof was on the person seeking disclosure, and the
department felt that was a burden of proof that could never be
done. She explained that they would never see the document to be
able to say that the audit document had information that was needed
by the department.
MS. ADAIR stated that the department felt a person should have to
make a good faith showing that a reasonable person would believe
that disclosure was necessary. Ms. Adair noted that she had
recently read a book titled A Civil Action, which was an actual
account of a law suit brought by a variety of citizens in a
community against Beatrice Foods and a chemical manufacturer. She
pointed out that it was a very good case history of an
environmental law suit and how things could go wrong, as well as
provided a good description of the in-camera review process and how
the judge used that. It also addressed the types of things that a
person would have to prove in order to get disclosure of privileged
information.
MS. ADAIR advised members that DEC currently had a policy of not
seeking penalties for people who voluntarily disclose certain
violations to the department. She expressed that the department
wanted people to voluntarily disclose, and they wanted people to
correct the violations, which was the department's primary
interest. Ms. Adair pointed out that the department only had
penalty authority for air violations, hazardous wastes and large
oil spills. She advised members that the department was seeking
penalty authority for drinking water violations, which would be an
administrative penalty authority that was currently required by the
Safe Drinking Water Act. Other than that, the department had no
administrative penalty authority, but only civil penalty authority
for the three ares she earlier referred to, and she felt that was
important for members to keep in mind.
MS. ADAIR advised members that the air program penalty authority
was required as part of the delegation from EPA, and hazardous
waste was put on the books when it was thought that the DEC would
get authority for that program. She noted that oil spill penalties
resulted from the Exxon-Valdez oil spill.
MS. ADAIR stated that another area she wanted to point out were
some of the protections the department had attempted to factor into
the proposed legislation. She advised members that one that would
be most important to the department was a notification requirement.
Ms. Adair explained that a person who was going to conduct an audit
who wanted to either have the privilege or the immunity apply,
would have to give the department 15 days written notice prior to
commencing the self audit. The written notice would require the
individual specify the scope of the audit, when it would start, and
generally, how long it would last, and she thought there was a 60
or 90 day deadline on how long the audit could last. Ms. Adair
pointed out that if the audit was going to extend that time period,
it would require the person to approach the department and
negotiate a different time line. Ms. Adair explained that that was
real important to the department because they did not want people
to be able to shield things from the public. She noted that the
sponsor agreed with that change. Ms. Adair pointed out that the
Exxon-Valdez oil spill was one of examples the department had
considered when discussing a notice requirement.
MS. ADAIR advised members that the bill did not privilege
underlying information, or facts, that related to a violation. Any
documents that are required to be kept otherwise, as well as
anything that a company created prior to, or after an audit had
been completed, would not be subject to the privilege. Ms. Adair
advised members that the department had the authority to look at an
audit to ensure that the appropriate remedial action was taking
place, and they felt that was a very important protection so the
department would be able to respond to whomever, that the company
was undertaking the appropriate remedial action.
MS. ADAIR pointed out that the bill included a provision for
voluntary disclosure to be a mitigating factor in setting a penalty
if immunity did not apply for one of the reasons stipulated in the
bill. She expressed that certainly working with the agency, to
come to an agreeable solution on whatever violation might be found,
would be part of getting immunity. However, it was important to
remember that the vast majority of things were not privileged
because they were already required by statute, or by regulation, to
be disclosed to the department.
MS. ADAIR advised members that she had met with the EPA during the
Easter break in Seattle, Washington, and they told her that as far
as the types of laws, such as SB 41, went across the nation, SB 41
was one of the best they had seen. All but one of EPA's concerns
were addressed in the pending proposed amendments except for one
which involved the delegation for MPDES, the Clean Water Act, the
department would have to be able to penalize people for gross
negligence. Ms. Adair pointed out that should the state ever go
after MPDES delegation, that it would be a problem.
Number 878
REPRESENTATIVE ROKEBERG noted that Ms. Adair had stated that it was
not the policy of DEC to penalize people that disclose certain
infractions, and asked if the department had the statutory
authority to do that currently.
MS. ADAIR advised members that the department always had
enforcement discretion, which is what they used. The department
had no specific statutory direction to do that.
REPRESENTATIVE ROKEBERG asked if the department only had the
ability to take civil actions that related to air quality, oil
spills and hazardous wastes.
MS. ADAIR explained that the department had penalty authority in
those areas.
REPRESENTATIVE ROKEBERG stated that under the Clean Water Act, the
department would not have the authority to assess fines.
MS. ADAIR responded that was correct, unless it also related to an
oil spill, or a hazardous waste release.
REPRESENTATIVE ROKEBERG stated that in conjunction with the Clean
Drinking Water Act, there was a bill before the legislature
currently that would provide the ability for the state to assess
fines for violation, and asked if it was consistent with the
federal policy, or would it just grant authority to the department.
He was speaking to a portion of HB 51, and it was his understanding
that without that law, the department had no ability to charge
penalties currently, and that authority would be necessary to go
forward with federal grants.
MS. ADAIR advised members that when Congress reauthorized the Safe
Drinking Water Act, in 1996, they added, as a condition of primacy,
the ability to levy administrative penalties; HB 51, HB 71 and SB
50 all dealt with that added authority for the DEC in order for the
department to retain primacy of the Drinking Water Act. She
pointed out that the department had not gotten to a "drop dead"
date from EPA yet as to when the department must have that
authority, or when they would begin primacy withdrawal, it was not
high enough on their list of priorities.
REPRESENTATIVE ROKEBERG reiterated, then, that the department
currently had primacy, but the provision was necessary to maintain
the primacy.
MS. ADAIR said that was correct.
Number 1078
REPRESENTATIVE JAMES expressed that she was interested in Ms.
Adair's testimony and pleased with her comments. She pointed out
that she had heard the DEC say consistently, over the past few
years, that they viewed their purpose was to assist people in
following environmental law, as opposed to imposing penalties, and
comments presented by Ms. Adair reaffirmed that position.
Representative James stated that because the goal of the department
was the same as hers, which was the goal of voluntary compliance,
and asked Ms. Adair if she believed that by placing self audits
into statute would provide some incentive for more people to self
police, than what was current law.
MS. ADAIR pointed out that that was a question she had contemplated
for approximately one and a half years. She stated that she
honestly did not know. Ms. Adair advised members that a part of
her believed that a company or a business was either inclined to be
in compliance, or they were not. She stated that she felt there
was a lot of anecdotal information about what the DEC did, or did
not do that was, frankly, not correct. Ms. Adair expressed that
she was not sure that by passing a law people would not believe
those stories anymore than they were inclined to not believe them
now. Ms. Adair felt that voluntary compliance was always the best
kind of compliance and the most long term. She thought it was
necessary to encourage people to do the right thing, but it would
be necessary to be prepared, in the background, to have some form
action available if they did not.
REPRESENTATIVE JAMES shared the concerns expressed by Ms. Adair,
and advised members that she compared the issue of environmental
compliance to all the other problems that currently existed. She
pointed out that there were two mentalities, of which one was
punish, and the other was encourage, and she had always believed
that encouragement gets one further than punishment did.
Representative James stated that the opposition to the proposed
legislation came from groups who, through her experience, did not
trust, and another aspect was that there had to be some trust,
which she believed was one of the most valuable things a person had
to deal with, and it had been destroyed so much over the years.
Representative James stated that, "we don't know if we don't try",
and she would hope they could measure some success in compliance
and that the end result of environmental law would be for
compliance, not for punishment.
CHAIRMAN GREEN asked if it was not true that the DEC oversaw and
enforced laws and regulations that were not just DEC regulations,
but were actually on an agreement basis with the EPA.
MS. ADAIR advised members it did not work like that exactly. She
explained that the DEC had, in every case, their own, independent
statutory authority, whether it was for solid waste, drinking
water, contaminated sites, air quality, et cetera. In some cases,
that statutory authority mirrored the federal law, or better, and
the department was then delegated that program from the EPA to act
in their stead. Ms. Adair advised members that it was not an
exclusive jurisdiction because the EPA could always come in and
take their own independent action because, they too, had their own
independent statutory authority.
MS. ADAIR explained that there were other cases where the EPA was
not involved at all. She noted that a lot of the oil spill
regulations were like that. OPA 90 was passed after most of the
state statutes were passed, and there were some conflicts with
Alaska law and OPA 90, and she did not know if they had been
resolved or not.
CHAIRMAN GREEN explained that the reason for his question was
because with the potential for dual jurisdiction it could be
possible that company A, in one case, would approach the DEC
voluntarily, and would subsequently get hammered by the EPA, or
visa versa, because they did not voluntarily approach both agencies
because the other agency would also have access to the records.
MS. ADAIR stated that in a case like that she felt it would work in
the following manner. She felt there would have had to have been
a failure, or perceived failure on the part of the DEC, before EPA
would get involved in a program where the DEC had primacy.
MS. ADAIR believed that a company would disclose to the agency who
had primary enforcement authority. She stated that in the case of
MPDES, that would be the EPA because it was their permit, and Ms.
Adair would suspect that UNOCAL and Alyeska instances, mentioned by
Representative Croft, were probably MPDES situations, which she
pointed out was a guess on her part.
MS. ADAIR advised members that the EPA used to contract with the
DEC to conduct hazardous waste inspections, although she did not
know if that was still the case. She pointed out that it was not
that the department had primacy, but EPA actually provided funds to
DEC on a contract sort of basis.
Number 1554
REPRESENTATIVE ROKEBERG asked if the DEC set daily penalties in the
areas where the department had primacy and the ability to enforce,
or if they had a penalty schedule set out.
MS. ADAIR advised members that she believed the statute, at least
in the air bill, laid out a penalty schedule. She expressed that
it had been awhile since she had reviewed the statute and could not
recall if it addressed hazardous waste in that respect.
REPRESENTATIVE ROKEBERG pointed out that there were provisions, for
example in the Clean Water Act, where the state of Alaska had a
regulation that was not covered by a federal regulation standard or
criteria. Therefore, the state may have a regulation, or
something, and asked if the DEC enforced that regulation in absence
of a federal regulation.
MS. ADAIR advised members that the department did have independent
statutory authority from the EPA in many areas, including some
water quality standards.
REPRESENTATIVE ROKEBERG asked what she meant by independent
statutory authority.
MS. ADAIR advised members that the legislature had given the
department the authority to do things, despite whatever the federal
government may, or may not do.
REPRESENTATIVE ROKEBERG asked how those were enforced, and if it
was through civil penalties.
MS. ADAIR advised members that the department enforced those
through permit actions; not issuing a permit, through cajoling,
through wailing and gnashing of teeth.
REPRESENTATIVE ROKEBERG stated, for example, if there was an
illegal discharge, how would the department find that person.
Would they have to refer back to the MPDES permit and have the EPA
actually do the finding.
MS. ADAIR advised members if there was a discharge into a water
body where there was no MPDES permit, the department would issue a
NOV, a written Notice of Violation which would state that they
violated, whatever. If it was a continuing violation, the
department would try to negotiate with the party, a compliance
order by consent whereby they would stop the discharge and take
steps to prevent it from happening again. Ms. Adair pointed out
that that document could include stipulated penalties where they
agree if they did not meet the terms of the compliance order they
would pay a penalty; however, reiterated that it was by consent and
the party did not have to sign that document. She stated that in
the most extreme case, the department could take the party to court
and the judicial system would take it from there. Ms. Adair stated
that if the violating party had a state permit, the department
could suspend that permit.
REPRESENTATIVE ROKEBERG stated that was why SB 41 was before the
committee, that if in fact there was an operator discovered who was
illegally discharging and they brought it to the attention of the
department, the department would have the primary enforcement
ability, and SB 41 would be applicable in that case.
MS. ADAIR advised members that would not be the case. She
explained that the bill would not privilege or immunize that action
because it would have been in violation of a permit. Ms. Adair
emphasized that in no case could a permit term be violated and be
immunized or privileged.
REPRESENTATIVE ROKEBERG thought that perhaps they could revisit
that issue later. Chairman Green agreed, as neither were aware of
that.
Number 1777
REPRESENTATIVE CROFT stated that a lot of the primacy discussion
regarding the other bill was interesting, if not directly relevant,
because he did not believe HB 51, in its entirety, would be needed
in order to keep primacy.
MS. ADAIR thought that members could keep the portion that was HB
71.
REPRESENTATIVE CROFT noted that Ms. Adair had stated that before
the audit information was freely disclosable, and after an audit
was disclosable would not be privileged.
MS. ADAIR responded that that would involve information that was
generated before and after.
REPRESENTATIVE CROFT stated that his worry about the length of an
audit was if there was some way that a company could keep an audit
going forever for the purpose of extending that period of
protection.
MS. ADAIR stated that there was a provision that would not
authorize continuous audits, and there was also a 15 day notice
requirement, which could be found on page 3, beginning on line 3,
subsection (B), and on line 14; the audit could not last longer
than 90 days unless the party and the department agreed to an
extension of time.
Number 1866
REPRESENTATIVE JAMES pointed out that Ms. Adair had indicated that
the department did not have any penalty authority; however, the
department issued penalties anyway because in order for the
violating party to keep their permit they would be required to
clean up the violation.
MS. ADAIR stated that members could interpret what she had said
that way. She explained that the department had compliance orders
by consent, which essentially allows the party to operate outside
the strict terms of their permit, an in all unlikelihood, a
regulation or a statute for some period of time while they come
into compliance. Ms. Adair advised members that the department
demands that the party come into compliance by a certain date, and
to let the department know if more time was necessary, or a penalty
would be associated with continued violations. Ms. Adair pointed
out that the terms of the permit were legally binding terms and
conditions based upon regulations which are based upon statutes
that had been passed by the legislature. She reiterated that the
department would allow the entity to operate, for a period of time,
outside of the terms of the permit, outside the terms of the law,
and then provide for stipulated penalties if they did not. Ms.
Adair pointed out that in most cases it worked fine and the
stipulated penalties never came into play.
REPRESENTATIVE JAMES, in follow up, stated then that the department
did not have any statutory authority to impose a penalty, but that
it was only because the entity agreed with the process put forth by
the department to clean up the violation.
MS. ADAIR advised members that the department had statutory
authority to impose penalties for violations of air quality,
hazardous waste and the larger oil spills.
REPRESENTATIVE JAMES thought Ms. Adair was speaking to violations
that the department did not have the authority to impose a penalty.
MS. ADAIR stated that that was correct, but she wanted to point out
that there were some areas where the department could impose a
penalty, and some areas where they did not have that authority.
REPRESENTATIVE JAMES stated that she understood that; however, she
would rather provide some kind of penalty authority, rather than
have a penalty that was agreed to. She expressed that with respect
to landlord tenant laws, the landlord could not hold personal
belongings in lieu of rent monies due; however, in her case, she
did get the renter to agree to such an arrangement whereby the
tenant signed a note. What Representative James saw, was the
department asserting a penalty that really was not available for
the purpose of protecting the public.
MS. ADAIR advised members that the department would like to have
administrative penalty authority, as they thought it would work
better for everyone concerned, but absent that, the department
found that most operators would much rather be able to continue to
operate. Ms. Adair advised members that the department's purpose
was not to shut businesses down, but to assist them in finding a
way to comply with the law and continue to operate. She stated
that if that meant the entity needed a little extra time to order
a part, to wait till summer when they could do the construction, or
whatever, that the department was willing to do that. However, it
would be necessary to recognize that there were certain laws on the
books and the department was charged with upholding those laws.
Number 2049
REPRESENTATIVE ROKEBERG pointed out that under common law,
Representative James had every right to distraint for rents due for
chattel that she may have in possession.
CHAIRMAN GREEN pointed out that before Representative Bunde left,
he had asked a question about third party litigation and Ms. Adair
had indicated that the actual facts of the admission would not be
public record. Chairman Green stated that if he was "Joe
Goodheart" and was aware that there had been a voluntary audit
conducted but was aware of smoke, or whatever, so he then would
file some sort of an action, and through the court process he would
be able to have access to the information relating to the violating
party.
MS. ADAIR advised members that in the state of Alaska an individual
was required to have standing in order to bring a law suit. She
stated that there were no citizen law suit provisions like there
were at the federal level, so, while the notice would be public
record, that, in and of itself, would not be enough to say that
there was any problem. Ms. Adair expressed that an individual
could conduct a self audit and find that they were not only 100
percent in compliance, but had gone far beyond that.
CHAIRMAN GREEN felt that it appeared that third party litigation
would not be an issue if SB 41 were enacted.
MS. ADAIR thought only in a case where the third party had been
harmed, or believed they had been harmed.
Number 2142
CHAIRMAN GREEN asked that Ms. Schrader come forward and provide her
comments to the committee.
SUSAN SCHRADER advised members that she was Executive Director,
Alaska Environmental Lobby, which was a coalition of 22
conservation groups throughout the state with a combined membership
of over 10,000 Alaskans. Ms. Schrader advised members that because
of the late hour she would touch on the high points of what she had
expressed in her position paper.
MS. SCHRADER advised members that the Environmental Lobby was in
support of the concept of providing incentives for regulated
entities to voluntarily find, disclose and correct violations of
environmental laws. She noted that certainly, a voluntary audit
was something that was quite noble and the Lobby would endorse it;
however, they did not believe SB 41 would achieve that goal. Ms.
Schrader advised members that the history of industry in the
country, and the state of Alaska, provided ample evidence that
voluntary auditing did not always work.
MS. SCHRADER stated that the responsible companies that did
voluntary audits had found that by doing their audits, they would
be economically ahead, would be competitively ahead because
typically, if they were conducting business in an environmentally
sound manner it would be to their economic advantage. Ms. Schrader
further stated that the responsible companies did not need a new
privilege of secrecy. She noted that many people had referred to
the EPA's self policing program which indicated that it had been
working well. Ms. Schrader pointed out there had been 350
violations disclosed by 105 companies, of which several were in the
state of Alaska, and that seemed to be working with no particular
problem.
MS. SCHRADER stated that it was unfortunate that a lot of companies
did not take responsibility for their actions, and those were the
companies that would enjoy having SB 41 in place. Ms. Schrader
advised members that the proposed legislation would simply make it
easier for those individuals to continue their irresponsible ways.
MS. SCHRADER stated that there were a couple of issues she did not
believe had been brought out. She stated that from her own point
of view, and having spoken with a number of attorneys, the bill
would limit the people's right to know. Ms. Schrader pointed out
that it would limit, potentially, the right of property owners near
potentially polluting industries to know what was going on with
those industry. Ms. Schrader advised members that there were two
cases pending, one in the state of Ohio and one in Texas, where
landfill businesses were allegedly polluting the ground water and
the air quality. Adjacent property owners were having concerns
with that and were having great difficulty in getting access to
information they needed to pursue their concerns because of the
audit privilege legislation that was on the books in those states.
MS. SCHRADER further stated that such laws could certainly have a
chilling effect on an employees' ability to defend their right to
speak the truth about workplace activities. She pointed out that
the kind of legislation under consideration would impact whistle
blower protections, and although the sponsor had denied that, she
suggested that members review the letter from the Alaska Forum for
Environmental Responsibility (AFER). Ms. Schrader advised members
that the letter directly discussed the impacts on whistle blower
protections that SB 41 would negatively impact.
MS. SCHRADER advised members that SB 41 would basically allow
secrecy, the privilege, to replace corporate responsibility and
accountability. She thought that it would also create a lot of
confusion, there would be a lot of additional litigation
surrounding the bill and, obviously, a lot of expense to both the
companies it was intended to assist, and for the people who would
be impacted.
MS. SCHRADER stated that just the fact that the Department of Law
had proposed over a dozen amendments to the bill to simply clarify
the language was ample evidence that the bill was very ambiguous.
She reiterated that there were problems in other states with
similar legislation, and she could not see why Alaska would not
realize similar types of problems, and certainly an increase in
litigation.
MS. SCHRADER stated that an example of that, in the bill, was the
definition of how the environmental law should be construed
broadly, and by doing so it would pull in all matter of federal,
state and municipal laws that might be able to fall under the bill
if enacted.
MS. SCHRADER noted that while the sponsor was quick to point out
that 20 states had enacted audit privilege legislation, he did not
make clear that several of those states did not have immunity,
which she thought was what Representative Croft had alluded to.
Illinois, Idaho and Oregon did not provide for immunity. Ms.
Schrader pointed out that Minnesota had passed an audit privilege
bill, but it was very limited and quite similar to the EPA's self
policing policy. She noted that several of the bills that had
passed had sunset provisions, such as Idaho's governor had
indicated that he would not push for re-enactment of their self
audit law.
MS. SCHRADER stated also that the bill sponsor had not mentioned
that 18 states, in 1996, considered similar legislation and chose
not to enact it. In Arizona the legislature enacted a similar bill
which was vetoed by their republican governor.
MS. SCHRADER advised members that the Lobby would suggest that the
same intent that would be achieved through enactment of SB 41 could
be accomplished by having the DEC adopt a self policing policy
similar to the EPA's that would provide for clear incentives,
through leniency, for self disclosure and correction without the
unnecessary privilege and immunity provisions as provided in SB 41.
Ms. Schrader pointed out that the Lobby would strongly encourage
both the legislature and the administration to pursue that type of
policy, rather than enacting legislation such as SB 41.
Number 2422
CHAIRMAN GREEN pointed out that Ms. Schrader had indicated that if
SB 41 were to pass that someone who conducted self audits could
continue to operate in their same polluting manner and asked that
she expand on that theory. He stated that it seemed to him a short
time frame had been included that would address such a situation.
MS. SCHRADER stated that through her reading of the bill that there
was no mandate that if a self audit was done and a violation
discovered, that the violation had to be disclosed. She stated
that if the company wished to disclose, the immunity privilege
would then come into place. Ms. Schrader asked how the DEC, or
anyone, would know if a company was out of compliance if they did
not disclose what they had found on their self audit because that
information was privileged. She stated that if there was enough
suspicion to go to a judge to get an in-camera review, they could
possibly get around that privilege, or at least allow a judge to
look at the situation. Ms. Schrader felt that was one of the basic
problems with the bill.
CHAIRMAN GREEN asked if what she was implying was that the entity,
or individual conducting a self audit, was falsifying what they
found.
TAPE 97-51, SIDE B
Number 000
MS. SCHRADER advised members that she did not see where the bill
required information in the audit be disclosed.
REPRESENTATIVE CROFT felt Ms. Schrader was making a distinction
between the privilege, which is attached to the self audit, and the
immunity, which was attached to disclosure. He stated that
clearly, if he disclosed something he would be immune, but he might
audit himself, find out he was polluting and just keep on going.
MS. SCHRADER advised members that was her concern, and she was not
sure that concern had ever been addressed sufficiently.
REPRESENTATIVE CROFT pointed out that he had such a concern, as
well, and did not know whether that was addressed in the bill.
REPRESENTATIVE JAMES stated that she was of the opinion that the
only real advantage of a self audit was to file the audit with the
department because it would provide the company, or whomever, a
clean bill of health. She advised members that if there was a
problem, it would be disclosed, as well, as how it would be
addressed and corrected. Representative James did not see any
advantage, at all, for even bothering with a self audit if they
were not going to provide a report on the results.
REPRESENTATIVE JAMES expressed that the area of Ms. Schrader's
presentation that she was most interested in was when she stated
that it limited the employees' right to know and that it would have
a chilling affect on an employees' ability to defend their right to
speak the truth about the workplace activities without fear of
reprisal. Representative James likened those circumstances to when
she worked for General Foods Corporation and they did not have an
auditor within the company, but had an outside auditor that came in
periodically to conduct an audit. She advised members that they
"shook in their boots" when the auditors came out because they
knew, no matter how good things were being done, the auditor would
find something out of compliance to challenge the company on.
Representative James advised members that later, General Foods
Corporation expanded the facility and hired an internal auditor who
was on the premises all the time. Representative James advised
members that the difference between not having an auditor on the
premises, and having one, was that it provided an open door for
employees to report problems that they saw or perceived. She
pointed out that that was back in 1966, so was a long time ago, but
she felt that having an on-site auditor at a facility at all times
was an immediate improvement in correcting problems as they arose,
as opposed to some time later when an auditor would come in to
conduct a random audit.
REPRESENTATIVE JAMES stated that her understanding where self
audits would be conducted, she would assume that the entity would
have someone on staff that was assigned specifically for that
purpose. She thought that would make it easier on the employees,
and it also seemed that under the self audit procedure, that the
incentive to listen to employees concerns would exist because they
would be the ones bringing a deficiency to the attention of the
company.
MS. SCHRADER agreed with Representative James' comments if she
understood them correctly. She stated that she would suspect that
most responsible corporations already, if they could afford it, had
their own type of procedures in place for maintaining employee
safety. Ms. Schrader expressed that the health and safety laws,
per se, OSHA laws had been removed from the bill, and was not
meaning to confuse it with that. Ms. Schrader reiterated that she
did not see where responsible corporations would necessarily be
helped by the proposed legislation because they were already doing
things right. The situation she foresaw was when there was a
whistle blower, that for the most part, those employees would
report a violation within their own company prior to going outside
with the information. Ms. Schrader stated that what could happen
in such a situation, regarding an irresponsible company, might
start retaliating against that trouble maker. She explained that
that person would get to the point where the problem was not being
addressed or corrected and might feel like he/she was being
harassed by the company. At that point, the person might approach
an attorney for the purpose of seeking legal help, and after
explaining the situation to the attorney, the attorney would ask
for evidence of the alleged violation. Ms. Schrader advised
members that the employee would not be able to access that evidence
because it was contained in an audit privilege report.
Number 265
REPRESENTATIVE JAMES noted that she was considering the positive
side of the proposed legislation, and it appeared as though Ms.
Schrader was looking at the negative side. She stated that she
could see where changing the law for the benefit of a business
would result in a company having less desire to conceal a violation
than what was current law.
REPRESENTATIVE BERKOWITZ was also concerned about the whistle
blower because he had seen cases where the whistle blowers did
suffer retaliation. He noted that he had not reviewed the bill
with a specific eye towards the whistle blower provision, and asked
what kind of protection was provided for a whistle blower.
MS. SCHRADER advised members that she would have to defer that
question, although Senator Leman's staff could probably address
that issue, as well as the two letters submitted by the Alaska
Forum for Environmental Responsibility. She thought he might want
to contact Stan Stevenson directly because they dealt much more
directly with whistle blower issues than she did.
REPRESENTATIVE BERKOWITZ expressed that he tended to agree with
Representative James whereby scrupulous companies would not have to
worry about that situation so much.
MS. SCHRADER agreed with that also; however, in the letter from
AFER, they personalized such an incident to a situation that had
occurred in the state of Alaska, and she felt that made it quite
clear that it was a real concern.
CHAIRMAN GREEN directed members attention to page 3, line 26, which
provides that an individual would not be compelled to testify, but
it did not appear to prohibit the person from wanting to testify.
He thought that was an area the committee might want to revisit
with Senator Leman.
Number 365
DAVID ROGERS advised members he was representing the Council for
Alaska Producers, which was a nonprofit corporation that consisted
of most of the active mining companies doing business in the state
of Alaska.
MR. ROGERS advised members that the Council strongly supported SB
41, and felt it provided for a balance in competing interests by
providing effective incentives. He stated that the Council wanted
to particularly thank and compliment Senator Leman, Mike Pauley,
Janice Adair, Marie Sansone with the Department of Law and others
for their surprisingly and effectively cooperative approach to
resolving the issues, and would happy to continue working with them
on any remaining concerns.
Number 454
PAM LA BOLLE, President, Alaska State Chamber of Commerce, advised
members the Chamber was in support of SB 41. She stated that in
the Chamber's view, the bill did provide an incentive for companies
to undertake self audits, and the goal of everyone was to be in
compliance with the environment laws. Ms. LaBolle stated that the
Chamber believed SB 41 encouraged compliance because it would allow
for finding inadvertent situations where one may have overlooked,
or were unaware of being out of compliance. She advised members
that the Chamber felt that immunity and privilege was very
important because there was the problem of law suits being brought
after the fact, even though what had been found to be out of
compliance had been corrected. Ms. LaBolle expressed that the
Chamber believed the proposed legislation was a win-win situation
for everyone, and strongly supported SB 41.
Number 507
KYLE PARKER, representing the International Association of Drilling
Contractors, wanted to comment very briefly to a question raised by
Representative James which was whether people would actually take
advantage of what was being provided through SB 41. Mr. Parker
pointed out that there was a new reality on the slope in the
relationship between operators and drilling contractors and other
oil field service companies. He advised members that specifically
had to do with the development and implementation of health, safety
and environmental plans. Mr. Parker stated that as a part of that,
the new relationship between the drilling contractors and the other
service companies were responsible for developing their HFC plans,
which were traditionally the plan of the operators, and the
contractors had been required with the operator's plans.
MR. PARKER stated that they now would have the obligation of
developing HFC plans and they would be sharing the types of audits
they conduct on those HFC plans with the operators, and the
operators would also share the results of their audits conducted on
the implementation of their plans with the contractors. Mr. Parker
advised members that the International Association of Drilling
Contractors intended to take full advantage of SB 41 if enacted
into law. He expressed that they felt it was a great incentive,
and was actually required with the new relationship on the slope.
CHAIRMAN GREEN advised members that would close public testimony on
SB 41.
ADJOURNMENT
Number 588
CHAIRMAN GREEN adjourned the House Judiciary Standing Committee
meeting at 3:40 p.m.
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