Legislature(1997 - 1998)

02/24/1997 01:40 PM Senate JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                   SENATE JUDICIARY COMMITTEE                                  
                       February 24, 1997                                       
                           1:40 p.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Robin Taylor, Chair                                                   
 Senator Drue Pearce, Vice-chair                                               
 Senator Mike Miller                                                           
 Senator Sean Parnell                                                          
 Senator Johnny Ellis                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 None                                                                          
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 41                                                            
 "An Act relating to environmental audits and health and safety                
 audits to determine compliance with certain laws, permits, and                
 regulations."                                                                 
  HEARD AND HELD                                                               
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 41 - See Senate Labor & Commerce Committee minutes dated                   
     1/23/97, 1/28/97, and 1/30/97.                                            
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Senator Loren Leman                                                           
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Sponsor of SB 41.                                      
                                                                               
 Randy Ruedrich, Chairman                                                      
 Alaska Chapter                                                                
 International Assn. of Drilling Contractors                                   
 Doyon Drilling                                                                
 101 West Benson Blvd. Ste. 503                                                
 Anchorage, AK  99503                                                          
  POSITION STATEMENT:   Supports SB 41.                                        
                                                                               
 Chris Ross                                                                    
 Alaska Safety Advisory Committee                                              
 3701 Eagle, #305                                                              
 Anchorage, AK  99510                                                          
  POSITION STATEMENT:   Opposed to SB 41 as written.                           
                                                                               
   Janice Adair                                                                
 Department of Environmental Conservation                                      
 555 Cordova St.                                                               
 Anchorage, AK  99503                                                          
  POSITION STATEMENT:   Supports SB 41 if amended.                             
                                                                               
 Steve Trosper                                                                 
 1255 Old Seward Highway                                                       
 Anchorage, AK  99604                                                          
  POSITION STATEMENT:   Opposed to SB 41 as written.                           
                                                                               
 Wayne Coleman                                                                 
 1612 Simeonoff                                                                
 Kodiak, AK  99615                                                             
  POSITION STATEMENT:   Opposed to SB 41 as written.                           
                                                                               
 Nancy Weller                                                                  
 Medicaid Services Unit                                                        
 Division of Public Health                                                     
 Dept. of Health and Social Services                                           
 PO Box 110610                                                                 
 Juneau, AK  99811-0610                                                        
  POSITION STATEMENT:   Commented on SB 41.                                    
                                                                               
 Marie Sansone                                                                 
 Assistant Attorney General                                                    
 Department of Law                                                             
 PO Box 110300                                                                 
 Juneau, AK  99811-0300                                                        
  POSITION STATEMENT:   Commented on SB 41.                                    
                                                                               
 Sue Schrader                                                                  
 Alaska Environmental Lobby                                                    
 P.O. Box 22151                                                                
 Juneau, AK  99802                                                             
  POSITION STATEMENT:   Opposed to SB 41 as written.                           
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 97-11, SIDE A                                                            
 Number 000                                                                    
                                                                               
  CHAIRMAN ROBIN TAYLOR  called the Judiciary Committee meeting to             
 order at 1:40 p.m.  All members were present.  The committee took             
 up SB 41.                                                                     
         SB  41 ENVIRONMENTAL & HEALTH/SAFETY AUDITS                         
                                                                               
  SENATOR LOREN LEMAN , sponsor of SB 41, gave the following overview.         
 SB 41 is similar to SB 199, which passed the Senate last year and             
 was in the House Finance Committee at the time of adjournment.                
 Since then, he has worked with the Departments of Law,                        
 Environmental Conservation (DEC) and Labor to craft a new version.            
 The Department of Labor disagrees with the concept of self-audits,            
 and is concerned it will lose primacy in workplace safety matters.            
 Most criticism of the bill is aimed at implementation, not the                
 concept of self-auditing, privilege and immunity.  He asked the               
 committee to apply the concept to both environmental audits and               
 workplace safety audits to enable businesses to come into higher              
 compliance with both environmental and workplace laws.                        
                                                                               
 SB 41 creates two incentives to encourage businesses and other                
 regulated entities to correct non-compliance with environmental or            
 occupational health and safety regulations.  The first incentive is           
 limited immunity.  Entities that conduct voluntary self-audits will           
 be immune from civil and administrative penalties for violations              
 discovered, provided the entity takes corrective action to prevent            
 a recurrence.  Immunity is not available for substantial off-site             
 damage or on-site injury and several other minor conditions must be           
 met.  The second incentive is qualified privilege.  The self-                 
 critical analysis contained in an audit report will be considered             
 privileged and not admissible as evidence, or subject to discovery,           
 in civil or administrative proceedings.  This provision recognizes            
 that an audit report is a self-incriminating document.  It                    
 discovers problems and identifies what personnel or management                
 deficiencies are responsible, and recommends corrective action.               
                                                                               
 Number 114                                                                    
                                                                               
  SENATOR LEMAN  continued.  Studies show that many businesses opt not         
 to conduct audits out of fear that the resulting reports will be              
 used by agencies or hostile third parties for prosecution purposes.           
 He discussed the results of a Price Waterhouse survey in 1995 in              
 which 75 percent of 369 companies reported conducting self-audits;            
 two-thirds of those conducting environmental self-audits would                
 expand such programs if penalties were eliminated for identified              
 and corrected problems.  Among the companies not conducting audits,           
 20 percent fear the information will be used against them and 25              
 percent report attempts by outside parties to collect audit data.             
                                                                               
  SENATOR LEMAN  explained the immunity benefit can be overcome if             
 asserted for a fraudulent purpose, or if the regulated entity has             
 failed to take required actions to correct areas of non-compliance.           
 SB 41 will be of greatest benefit to small businesses.  Twenty                
 other states have passed some form of self-audit legislation, and             
 eight others are debating similar legislation.                                
                                                                               
 Number 156                                                                    
                                                                               
  SENATOR LEMAN  noted proposed amendments have been submitted by DEC          
 and the Department of Law, and industry members.                              
                                                                               
  CHAIRMAN TAYLOR  asked Senator Leman to highlight the differences            
 between SB 41 and SB 199.   SENATOR LEMAN  replied most of the                
 changes were editorial to simplify the language and reduce                    
 confusion.  SB 199 included health and safety audits but that                 
 provision was removed in the House Labor and Commerce Committee               
 last year.  The changes to SB 41 have been iterations toward                  
 positions that the Department of Law and DEC are more comfortable             
 with.                                                                         
                                                                               
 Number 208                                                                    
                                                                               
  SENATOR PEARCE  discussed the Department of Law's assertion that             
 OSHA will revoke Alaska's 18E certification if SB 41 passes and               
 asked whether that has happened in any other state with similar               
 legislation.   SENATOR LEMAN  replied it has not because the other            
 states did not include health and safety self-auditing in their               
 legislation, with the exception of Texas.  Texas, however, does not           
 have 18E certification regarding its OSHA program therefore, Alaska           
 would be blazing new ground.                                                  
                                                                               
  SENATOR LEMAN  remarked he does not believe information received by          
 the Department of Labor from federal agencies is conclusive                   
 regarding the loss of state primacy if SB 41 is enacted.  He added            
 the Department of Health and Social Services (DHSS) has requested             
 any references to it be eliminated from SB 41 so that self-audits             
 do not apply to health facilities.                                            
                                                                               
 Number 264                                                                    
                                                                               
  CHAIRMAN TAYLOR  noted he has watched many small hospitals waste as          
 much as one month per year doing audits for Medicare, Medicaid, the           
 Veterans' Administration, DHSS, and other certifying boards, all of           
 whom audit using a similar checklist, but cannot share any of the             
 information with each other.   He believed eliminating any of those           
 audits will reduce wasted medical resources and money.                        
                                                                               
 Number 286                                                                    
                                                                               
  RANDY   RUEDRICH,  Chairman of the Alaska Chapter of the Internationa        
 Association of Drilling Contractors (IEDC), stated the self-audit             
 concept, as embodied in SB 41, deserves favorable consideration               
 from the Legislature this year.  The Senate Labor and Commerce                
 Committee version is a constructive step in regulatory reform                 
 however the IEDC is concerned the bill may not cover an independent           
 contractor's disclosure of an audit of its own operations at a                
 shared facility; the new self-audit privilege should be made                  
 applicable to these disclosures.  In Alaska, owners of drilling               
 rigs have improved their health and safety, and environmental,                
 records for nearly three decades.  IEDC believes SB 41 will allow             
 the industry to concentrate on the reduction of the remaining                 
 deficiencies in the system, rather than focussing on the legal                
 nuances of protecting audits and restricting the sharing of                   
 information with other entities in the workplace.  IEDC has                   
 submitted four amendments for the committee's consideration.                  
                                                                               
  CHAIRMAN TAYLOR  asked Mr. Ruedrich to review written testimony              
 submitted to the committee by the Alaska Forum for Environmental              
 Responsibility and respond at a later time.                                   
                                                                               
 Number 381                                                                    
                                                                               
  CHRIS ROSS  testified on behalf of the Alaska Safety Advisory                
 Council.  The Council specifically opposes the inclusion of the               
 Department of Labor in SB 41, otherwise it has no position on the             
 bill.  The Council's concerns are twofold: first, providing                   
 employer immunity from audit discovery by the Department of Labor             
 presumes there is a significant deterrent to self-audits in current           
 law.  That is a fallacy for several reasons.  Companies with good             
 safety systems routinely perform self-audits, companies without               
 will be unlikely to conduct them in the future as a result of SB
 41.  SB 41 provides immunity only from the Department of Labor's              
 ability to fine employers.  There is no immunity from criminal, and           
 much civil, litigation.  Since the actual penalties, or threat of             
 penalties, from the Department of Labor are small compared to the             
 cost of litigation, there is little incentive to start performing             
 audits for the sake of immunity.  The sole reason for audits is to            
 perform a measurement of existing safety systems.  If there is no             
 effective safety system in place, there is nothing to audit and               
 nowhere in SB 41 is there an incentive for employers to develop               
 effective safety systems.  The second main issue deals with state             
 funding of AKOSH.   The Department of Labor has received a letter             
 from OSHA's Acting Assistant Secretary indicating OSHA would assume           
 a lead role in any investigation where immunity was invoked, if SB
 41 is enacted.  In general, employers prefer to deal with a state             
 agency as opposed to a federal agency.  If OSHA was called in on              
 several occasions, it is conceivable it would assume control of the           
 state compliance program and the state would lose 18E                         
 certification.  The Council sees no benefit in the passage of SB 41           
 and believes it would cause overall harm to the existing safety and           
 health system managed by the Department of Labor.                             
                                                                               
 Number 416                                                                    
                                                                               
  AL DWYER , Director for Labor Standards and Safety, Department of            
 Labor, summarized written testimony submitted to committee members.           
 Alaskan businesses have nothing to gain by the passage of CSSB
 41(L&C): it will undermine the Alaska Occupational Safety and                 
 Health Enforcement Program (AKOSH) by limiting the department's               
 access to employer safety audits and by obstructing the department            
 in its mission to penalize employers who disregard safety rules.              
 While the intention of SB 41 is to enhance the safety of the                  
 worker, in reality it will tie the hands of the agency charged with           
 protecting the worker from the few dishonest, unscrupulous                    
 employers who would hide behind the protection this bill provides.            
 Allowing immunity from citations, and making safety audits                    
 privileged documents, could encourage the unscrupulous employer to            
 disregard safety rules and would result in the government revoking            
 Alaska's hard won 18E certification.  OSHA could then conduct                 
 safety inspections in Alaska whenever an employer asserts the                 
 privilege or claims immunity.  OSHA and the federal courts will not           
 apply the audit privilege or immunity provisions in CSSB 41(L&C);             
 consequently, Alaskan businesses will gain nothing from this bill.            
                                                                               
  MR. DWYER  explained the federal government monitored the Department         
 of Labor on a quarterly basis for many years before granting 18E              
 certification to the State.  To turn over exclusive inspection                
 authority to the State, OSHA had to be sure the State followed                
 federal procedures for enforcement, citations, consultations, and             
 the rest.  Alaska was the third state to receive 18E certification.           
 Since then, 23 states and two territories have state enforcement              
 plans.  If CSSB 41(L&C) passes, employers will have to deal with              
 two enforcement agencies until OSHA decides to take over the                  
 program.  If the Alaska Department of Labor has to deal with a                
 privilege case, it will have to bring the case before a judge to              
 have an evidentiary hearing, which is both time consuming and                 
 costly.  Alaska would lose federal funding and both public and                
 private sector enforcement.  Currently, the federal program only              
 oversees maritime safety issues.                                              
                                                                               
 Number 470                                                                    
                                                                               
  CHAIRMAN TAYLOR  asked why less than half of the states have 18E             
 certification, if it is so important.   MR. DWYER  responded it is            
 very difficult to meet the match requirements.  The consultation              
 match is 90 percent federal, and 10 percent state.  The enforcement           
 match is 50/50.  California eliminated their state program, but               
 took it back one or two years later, at a tremendous cost, because            
 employers did not like federal administration of the program.                 
                                                                               
  CHAIRMAN TAYLOR  questioned what difference it would make to an              
 Alaskan business whether its neighbor enforces a federal law or               
 someone from New Mexico, and why it took so long for Alaska to                
 prove to OSHA it was capable of administering the program.   MR.              
 DWYER  said Alaska had to prove that it could enforce the law                 
 blindfolded and that it would do a better job in consultation                 
 because the state is familiar with requirements here.  The                    
 Department of Labor settles most of its cases before they become              
 major confrontations and charges lower penalties than OSHA.                   
 Businesses deal with an Alaska review board.                                  
                                                                               
  CHAIRMAN TAYLOR  asked how the programs in the states without 18E            
 certification are designed.   MR. DWYER  explained a lot of those             
 states have 7C1 which covers consultation and training programs;              
 enforcement remains with OSHA.                                                
                                                                               
  Number 503                                                                   
                                                                               
 CHAIRMAN TAYLOR  asked if the enforcement standards used in those             
 states are the federal standards.   MR. DWYER  answered those states          
 without enforcement programs do follow federal standards.                     
 CHAIRMAN TAYLOR  noted if Alaska chooses not to have its own                  
 program, it would be bound by the federal standards, which in many            
 instances are lower than the standards currently required by the              
 Alaska Department of Labor.   MR. DWYER  replied the state has only           
 a few rules that are more stringent than the federal standards;               
 living space is one.                                                          
                                                                               
  CHAIRMAN TAYLOR  stated that would benefit a union that wants to             
 bust an employer and increase living space - that same living space           
 requirement is not applied in Wyoming or any other rural camp                 
 situation outside of Alaska.   MR. DWYER  said most of the people             
 benefitting from the living space requirement are non-union and               
 most union workers have a steward to watch out for their welfare.             
                                                                               
  CHAIRMAN TAYLOR  emphasized his concern is that we are setting up a          
 different level of enforcement in Alaska.  He commented DEC                   
 enforces significantly different standards than the federal                   
 standards, plus we are taking precious state dollars to do the work           
 for the federal agency.  He questioned whether losing 18E                     
 certification is bad if the state will end up enforcing basically             
 the same standards.                                                           
                                                                               
  MR. DWYER  stated the reason the state sought 18E certification was          
 to involve Alaskans in the policy-making side.  When imposing                 
 penalties on businesses, the Alaska Department of Labor takes a lot           
 of things into consideration that Washington, D.C. does not.                  
                                                                               
 Number 530                                                                    
                                                                               
  JANICE ADAIR,  Director of the Division of Environmental Health in           
 DEC, testified via teleconference.  DEC has been working                      
 cooperatively with Senator Leman and his staff on this bill.  DEC             
 believes some areas need correction and has submitted proposed                
 amendments.  SB 41 could impact DEC's primacy for the Clean Air Act           
 and Safe Drinking Water Act.  Primacy of those programs allows for            
 some flexibility in state implementation not allowed under the                
 federal law.  Implementation of the Clean Air Act is paid for by              
 permitholders.  The federal presumptive minimum is significantly              
 higher than the amount charged by DEC, so if SB 41 is enacted,                
 those fees could increase.  Under the Safe Drinking Water Act, DEC            
 is able to issue waivers for monitoring requirements that EPA is              
 unable to issue, as well as other things.  Also, when Congress                
 reauthorized the Safe Drinking Water Act in 1996, it required                 
 primacy as a condition for access to the state revolving loan fund,           
 which provides construction funds for primarily urban drinking                
 water systems.  The state's share of that fund, in 1998, will be              
 about $27 million.  If DEC loses primacy for that program, it will            
 lose access to those funds.  The Underground Injection Control                
 Program, operated by the Alaska Oil and Gas Conservation                      
 Commission, could also be impacted by SB 41 as written.  DEC has              
 worked hard on SB 41 to provide businesses with the protection they           
 feel is necessary to conduct self-audits, but needs to protect                
 primacy and other aspects of environmental protection in the State.           
                                                                               
  CHAIRMAN TAYLOR  asked Ms. Adair if DEC will support SB 41 if its            
 proposed amendments are adopted.   MS. ADAIR  responded she is not            
 familiar with all of the amendments that have been submitted, but             
 if the final version of SB 41 addresses DEC's concerns, it will.              
 She noted DEC agrees provisions regarding the Departments of Labor            
 and Health and Social Services should not be included in the bill.            
                                                                               
 Number 564                                                                    
                                                                               
  TOBY STEINBERGER , Assistant Attorney General, testified about the           
 possible negative impacts passage of SB 41 will have on the AKOSH             
 program.  Congress passed the OSHA Act in the 1970s and gave the              
 U.S. Department of Labor the authority to conduct workplace safety            
 inspections, collect evidence, and fine employers who violate the             
 law.  That Act gave the U.S. Secretary of Labor the authority to              
 authorize state programs, if state plans are as effective as                  
 federal plans.  SB 41 would render AKOSH less effective in                    
 inspections and enforcement because it could no longer obtain                 
 evidence and businesses could claim immunity.  OSHA would not be              
 limited by those statutory provisions so would be   more effective.           
 There are several levels of certification, AKOSH has the highest              
 (18E) which gives it exclusive jurisdiction to go into workplaces             
 OSHA cannot.                                                                  
                                                                               
  MS. STEINBERGER  continued.  If Alaska loses 18E certification,              
 concurrent jurisdiction with OSHA will occur.  Alaskan employers              
 will not gain because they will lose immunities offered by the                
 State, and OSHA will not recognize privilege.  In addition, Alaska            
 employers will no longer be dealing with the Alaska review board;             
 hearings will be held before an administrative law judge.                     
 Currently, an employer can appeal a decision made by the Alaska               
 review board to the Superior Court.  Under SB 41, the employer will           
 have to go before an administrative law judge from Seattle, then              
 appeal the decision to the OSHA Review Commission in Washington,              
 D.C., and then to the federal courts.   There would be no advantage           
 to the Alaskan employer.                                                      
                                                                               
 TAPE 97-11, SIDE B                                                            
                                                                               
  MS. STEINBERGER  noted a similar bill was introduced before Congress         
 several years ago.  The Acting Secretary of Labor, Mr. Deere,                 
 testified against the bill.  AKOSH believes the U.S. Department of            
 Labor will come down hard on the first state to enact such                    
 legislation.  Of the 26 states with approved plans, none have a law           
 similar to SB 41.  Many states have adopted laws pertaining to                
 environmental self-auditing, but none have included health and                
 safety, except for Texas.  Texas does not have a state OSHA plan so           
 its law does not affect federal enforcement.                                  
                                                                               
 Number 557                                                                    
  STEVE TROSPER,  Safety Director for Teamsters Local 959, testified           
 via teleconference.  Teamsters Local 959 is opposed to SB 41 for              
 several reasons.  Teamsters Local 959 is concerned about changes to           
 its current relationship with management regarding health and                 
 safety in the workplace.  That relationship is based on the                   
 position that worker safety should be taken out of the arena of               
 confrontation and worked on cooperatively.  To that end, it has               
 implemented a policy of joint safety and health inspections, where            
 union representatives conduct safety/health inspections with                  
 company safety representatives.  It has been an effective tool for            
 identifying hazards and establishing abatement periods.  One                  
 advantage is that employers do not get fined for hazards that are             
 uncovered and corrected.  Occasionally, when employers are                    
 reluctant to comply with corrections, union representatives go to             
 a regulatory agency to get issues addressed in a timely manner.               
 That tool would be removed by SB 41 and, if an inspection was part            
 of an audit, the immunities and privilege provisions might apply to           
 union representatives, as well as the employer, as part of the                
 audit team.  Union representatives would have to establish                    
 themselves as a separate entity which goes against the cooperative            
 arrangement they have been trying to develop over the last few                
 years.                                                                        
                                                                               
  MR. TROSPER  said the Teamsters' response from AKOSH has been very           
 good: AKOSH is cooperative, an excellent source of information, and           
 not quick to impose fines when people are trying to work                      
 cooperatively.  OSHA might be more likely to impose fines.  OSHA              
 considers violations by national companies as repeat offenses if a            
 violation previously occurred in another state, and fines up to ten           
 times as much for a second offense.  The Teamsters believe SB 41              
 will negatively affect labor relations and suggests, as an                    
 alternative, encouraging small businesses to use AKOSH's voluntary            
 inspection service.                                                           
                                                                               
  Number 491                                                                   
                                                                               
 CHAIRMAN TAYLOR  asked if the Van Been case was ever resolved.   MS.          
 STEINBERGER  responded it was.                                                
                                                                               
  CHAIRMAN TAYLOR  asked if a union is participating in self-audits            
 with an employer, whether the union might be placed in a position             
 of liability with the employer.                                               
                                                                               
  MR. TROSPER  replied the Teamsters' concern is not with liability,           
 but with its ability to maintain some control over the abatement              
 period once a hazard has been recognized.  If a voluntary audit was           
 conducted and no corrections were made, the Teamsters, under the              
 privileges and immunities clause in SB 41, could not go to AKOSH              
 and request an inspection based on a recognized hazard, or a more             
 reasonable abatement period.   CHAIRMAN TAYLOR  noted the union               
 representative would be better off not participating in audits, so            
 that the representative could turn the employer in for uncorrected            
 violations.   MR. TROSPER  agreed.                                            
                                                                               
 Number 439                                                                    
                                                                               
  CHAIRMAN TAYLOR  again questioned whether a liability issue exists           
 for participants.   MR. TROSPER  answered his organization has an             
 agreement with the employer that establishes the employer's                   
 responsibility for safety in the workplace.  The Teamsters do not             
 assume any liability for failing to uncover a hazard or for                   
 misrecognizing a hazard.  He was unsure whether the Van Been                  
 decision was broad enough to cover third party audits.                        
                                                                               
  CHAIRMAN TAYLOR  commented that if an employee died as a result of           
 a recognized hazard that had not yet been corrected, the employee's           
 family could most likely sue members of the auditing team,                    
 including the union representative.   MR. TROSPER  thought Chairman           
 Taylor was correct, and noted an employer, under SB 41, may believe           
 he/she has immunity which will not exist at the federal level.  He            
 stated Mr. Ross believes the Van Been decision is specific to                 
 immunity for insurance inspectors.                                            
                                                                               
  WAYNE COLEMAN , representing the Kodiak Island Borough on the Prince         
 William Sound Regional Citizens Advisory Council (RCAC) Board of              
 Directors, testified via teleconference.  RCAC supports the                   
 underlying goal of SB 41 and supports a cooperative approach to               
 encourage regulated entities to find and correct environmental                
 problems, however that goal can be met while still protecting the             
 public's right-to-know and the government's responsibilities to               
 enforce.  SB 41 goes too far by granting blanket immunity from                
 legitimate litigation for self-disclosed offenses; blanket immunity           
 does not serve the public interest.  RCAC suggests rewriting SB 41            
 to prohibit agencies from initiating civil or administrative                  
 litigation based solely on an environmental audit report, similar             
 to EPA's policy.  That policy ensures fairness to the regulated               
 entity, and provides appropriate protections to the public.                   
                                                                               
     Number 356                                                                
                                                                               
  NANCY WELLER , Division of Medical Assistance, DHSS, explained DHSS          
 has two primary concerns with its inclusion in SB 41: certification           
 and licensing of health facilities; and programs of surveillance,             
 utilization review, provider fraud, and rate setting.  DHSS                   
 licenses health facilities under State licensing laws and                     
 simultaneously certifies health facilities to receive Medicaid and            
 Medicare payments.  The facility surveyors review physical plans of           
 facilities, and patient care and financial records to determine               
 whether care is provided in a safe way and appropriately                      
 documented.  The entities are encouraged to do complete program               
 reviews and self-audits.  If routine access to documentation is               
 prevented, potentially life-threatening situations could go                   
 undetected and federally required verification that Medicaid                  
 services were correctly provided and billed could not occur.  In              
 addition, a provider could claim an audit privilege and prevent the           
 division from imposing sanctions related to program abuse. Federal            
 regulations require recoupment of Medicaid overpayments made to a             
 provider.  The State would be unable to collect funds it is                   
 required to return to the federal government within 60 days of                
 identification.  The Medicaid Rate Advisory Commission sets rates             
 for health facilities and is concerned that the Commission's                  
 ability to set rates could be impacted by an inability to secure              
 facility records.  Lack of access to these documents could prevent            
 rate compliance with the federal Borne amendment to ensure that               
 payments relate to economically and efficiently operated                      
 facilities.  DHSS believes SB 41 needs to be amended to delete                
 references to it in order to protect the significant public                   
 investment in the Medicaid program and guarantee the health of                
 Alaskans who receive care in health facilities.                               
                                                                               
 Number 317                                                                    
                                                                               
  CHAIRMAN TAYLOR  stated the Attorney General's opinion on behalf of          
 DHSS cited several bothersome examples - one a case of a young                
 woman who was scalded to death in a bath - and a case where five of           
 eight residents in one nursing home facility were found underweight           
 from malnutrition, with one close to death.  He asked who conducted           
 the audits on those facilities during the few years prior to the              
 discovery of the inadequate conditions.    MS. WELLER  replied the            
 malnutrition situation went undetected by the facility until DHSS             
 surveyors made their annual licensing visit, and in the case of the           
 scalding, the water temperature mixer was malfunctioning.  The                
 problem had been identified but corrective action was not taken.              
                                                                               
  CHAIRMAN TAYLOR  asked why no employee checked the temperature               
 before immersing the patient.   MS. WELLER  was unsure.   CHAIRMAN            
 TAYLOR   commented DHSS's audit procedure is to take action when a            
 patient is near death or dead.   MS. WELLER  responded in those               
 specific situations, had SB 41 been enacted, the facilities could             
 have conducted self-audits and kept the information from state                
 surveyors.  Had the surveyors been unable to review patient                   
 nutrition records, the problem may have gone uncorrected.   CHAIRMAN          
 TAYLOR  asked if the facilities were run by the State.   MS. WELLER           
 replied the facilities are privately owned.                                   
                                                                               
 Number 265                                                                    
                                                                               
  SENATOR PEARCE  asked if SB 41 provides immunity only when a problem         
 has been identified and corrected, which would not apply to the               
 cases cited.   SENATOR LEMAN  answered that is correct; SB 41 grants          
 limited immunity and privilege, one of the conditions being                   
 correction of identified problems within a reasonable time limit.             
                                                                               
  SENATOR PEARCE  asked if DHSS can continue to review records and             
 reports but not use that information as evidence in court.   SENATOR          
 LEMAN  clarified the entity would submit a report to DHSS of                  
 identified deficiencies and a compliance schedule.                            
                                                                               
  CHAIRMAN TAYLOR  added DHSS could not take action to fine or                 
 penalize the entity when a report is voluntarily filed because the            
 immunity provision immunizes the entity from the enforcement tools            
 that might be assessed.                                                       
                                                                               
  SENATOR PEARCE  remarked no immunity is available for violations             
 that are knowingly committed or that result from recklessness; both           
 examples cited by the Attorney General could be considered reckless           
 therefore would not be immune.                                                
                                                                               
  SENATOR PARNELL  noted on page 7, line 11, the bill reads immunity           
 is not available if the violation results in substantial injury of            
 one or more persons at the site audited, which would cover the                
 cases cited.                                                                  
                                                                               
 Number 200                                                                    
                                                                               
  SENATOR PEARCE  commented in trying to take care of problems the             
 departments have that are reasonable, the examples cited by the               
 Department of Law created a paper chase.                                      
                                                                               
  MARIE SANSONE , Assistant Attorney General, testified primarily on           
 the provisions in SB 41 related to compliance with environmental              
 regulations.   The Department of Law has provided Senator Leman               
 with a number of amendments, its concerns are as follows:                     
 1.  Remove references to DHSS and the Department of Labor.                   
 2.  Tighten the term "health and safety," used throughout SB
 41, to narrow the scope of the bill and exclude municipal                     
 ordinances.                                                                   
 3.  Change the trigger for the privilege and immunity                        
 exception section.  To trigger exceptions, a request must be                  
 made before a judge.  If an administrative hearing is                         
 occurring for a permit issuance or revocation, for example, SB
 41 requires the administrative proceeding to stop, and a court                
 to rule on the exceptions.  This system could be costly and                   
 result in delays.                                                             
 4.  Extend the exceptions for substantial injury to people on-               
 site or off-site, or to property or the environment off-site,                 
 to include circumstances where there is imminent or present                   
 threat of serious or substantial injuries.                                    
 5.  Change the burden of proof on privilege when determining                 
 whether an exception applies as that burden is insurmountable                 
 without access to privileged information.  DOL proposes that                  
 the person seeking disclosure go forward, make a prima facie                  
 case that the exception applies, at which point the burden                    
 would shift back to the person trying to protect the                          
 information.                                                                  
 6.  SB 41 requires self-auditing entities to correct                         
 violations.  DOL feels an additional condition should be that                 
 entities with violations causing injury, or risk of injury,                   
 should be required to take necessary steps to abate the                       
 violation and mitigate the damages immediately.                               
 7.  The Labor and Commerce Committee substitute omitted an                   
 exception for tariff cases which rely on environmental, health                
 and safety audits to establish proper tariffs.                                
 8.  DOL proposed an amendment relating to federal trigger                    
 language which would have required the CEO of the federal                     
 agency involved to notify the commissioner of the relevant                    
 department, in writing, that a state program, as a result of                  
 the self-audit privilege, was inconsistent with federal                       
 requirements.                                                                 
 9.  The definition of "audit" needs to be corrected, as well                 
 as other overall corrections for the purpose of clarification.                
                                                                               
  SUE SCHRADER , Executive Director of the Alaskan Environmental Lobby         
 (AEL), testified.  AEL supports the goal of SB 41 but does not                
 believe it will encourage businesses to self-audit, correct                   
 problems, and protect workers. Regulated industries have had ample            
 opportunity to self-audit. Those businesses that have done so have            
 found it to be economically and competitively advantageous.                   
 Unfortunately many companies do not take responsibility for their             
 actions, and SB 41 will make it easier for those companies to                 
 continue non-compliance.  AEL believes SB 41 will keep information            
 vital to public health and safety hidden from review by the                   
 agencies we depend on to enforce health and safety laws.  It will             
 also keep that same information hidden from the legal system we               
 rely on to remedy violations of these laws.  SB 41 will have a                
 chilling effect on the employee's ability to speak the truth about            
 what is going on in the workplace when they are faced with reprisal           
 by their employer.  The concerned worker who speaks out will find             
 himself without the ability to access the documents needed to                 
 defend him/herself against retaliation from employers.  SB 41 is a            
 bill of amnesty and will allow industries to conceal or condone               
 non-compliance.  The sponsor is making the assumption that if a               
 self-audit reveals non-compliance, that entity will come forth and            
 correct the underlying problem. AEL suggests reviewing EPA's policy           
 for self-policing, and crafting simple legislation to provide clear           
 incentives through leniency, definite time windows, and no                    
 privilege provision.                                                          
                                                                               
 Number 97-12, SIDE A                                                          
 Number 034                                                                    
                                                                               
  CHAIRMAN TAYLOR  stated Ms. Schrader is advocating that corporate            
 polluters be required to take responsibility for their actions, and           
 asked her whether that should be applied to everyone.   MS. SCHRADER          
 replied it should.                                                            
                                                                               
  CHAIRMAN TAYLOR  commented he has asked for AEL's membership list            
 many times over the last 10-12 years but was always told the list             
 is not public.                                                                
                                                                               
  SENATOR PEARCE  commented that previous speakers have expressed              
 concern about SB 41's impact on worker disclosure of workplace                
 violations and asked Senator Leman if the bill contains a provision           
 to prevent workers from disclosing violations.                                
                                                                               
  SENATOR LEMAN  responded there is nothing in the bill to prevent             
 workers from disclosing uncorrected violations, and it would be a             
 very unwise business policy to try to hide uncorrected violations.            
 A company may conduct a self-audit and not file it with an agency,            
 but SB 41 will not provide immunity or privilege.  It is not to a             
 business's advantage to hide problems that could cause damage or              
 injury.                                                                       
                                                                               
 Number 165                                                                    
                                                                               
  CHAIRMAN TAYLOR  asked Mr. Ruedrich to respond to the Alaska Forum's         
 letter to the committee, and specifically to Ms. Ott's allegation             
 about Doyon Drilling.   MR. RUEDRICH  remarked none of the aspects of         
 whistleblowing protection will be modified by SB 41.  Individuals             
 will be free to proceed to take any actions available today.  With            
 respect to corporate responsibility and accountability being                  
 converted to secrecy and diminished, the limited immunity and                 
 privilege provisions would be given to entities after deficiencies            
 are disclosed and problems corrected.  There is a higher likelihood           
 problems will be corrected in order to get immunity and privilege.            
 SB 41 proposes to improve the workplace for the employee, employer,           
 and the people of the State.                                                  
                                                                               
 Number 195                                                                    
                                                                               
  CHAIRMAN TAYLOR  asked Senator Leman to provide the committee with           
 a package of the proposed amendments he supports at Wednesday's               
 meeting, and have the other proposed amendments prepared in a                 
 packet as well.                                                               
                                                                               
  SENATOR PEARCE  asked Senator Leman to discuss whether SB 41 will            
 jeopardize Alaska's 18E certification.   SENATOR LEMAN  said he               
 believes the threat of revocation is real, but it does not need to            
 be.  OSHA is responding to requests from, and corroborating with,             
 Alaska's Department of Labor, but they are misrepresenting what               
 needs to be done.  As long as the state law is as effective as the            
 federal requirements, we should not be in jeopardy of losing                  
 primacy, which he does not advocate.  Alaska can demonstrate,                 
 especially with passage of SB 41, it can be as effective as the               
 federal program.                                                              
                                                                               
  CHAIRMAN TAYLOR  repeated his intent to have the committee review            
 packets of amendments on SB 41 and pass the bill out as amended,              
 rather than have a committee substitute drafted at this time.  He             
 adjourned the meeting at 3:27 p.m.                                            
                                                                               

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