Legislature(1997 - 1998)
03/05/1997 01:48 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE March 5, 1997 1:48 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. 14 "An Act relating to insurance covering an insured who is a victim of domestic violence and requiring certain disclosures by an insurer." PASSED CSSB 14(JUD) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 22(JUD) "An Act relating to civil liability for illegal sale or barter of an alcoholic beverage or a controlled substance; and providing for an effective date." PASSED CSHB 22(JUD) OUT OF COMMITTEE CS FOR SENATE BILL NO. 41(L&C) "An Act relating to environmental audits and health and safety audits to determine compliance with certain laws, permits, and regulations." PASSED CSSB 41(JUD) OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 14 - See Labor and Commerce Committee minutes dated 1/28/97 and Senate Health, Education & Social Services Committee minutes dated 2/3/97. HB 22 - No previous Senate committee action. SB 41 - See Senate Labor & Commerce Committee minutes dated 1/23/97, 1/28/97, and 1/30/97 and Senate Judiciary minutes dated 2/24/97 and 2/26/97. WITNESS REGISTER Senator Dave Donley Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SB 14 Marianne Burke, Director Division of Insurance Department of Commerce & Economic Development P.O. Box 110805 Juneau, AK 99811-0804 POSITION STATEMENT: Commented on amendments to SB 14. Lauree Hugonin Alaska Network on Domestic Violence and Sexual Assault 130 Seward St., Rm. 501 Juneau, AK 99801 POSITION STATEMENT: Supports SB 14, concerned about Amendment #2. Jayne Andreen Council on Domestic Violence and Sexual Assault Department of Public Safety P.O. Box 111200 Juneau, AK 99811-1200 POSITION STATEMENT: Supports SB 14, concerned about Amendment #2. Representative Ivan Ivan Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of HB 22. Tom Wright Legislative Aide Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Commented on HB 22. Al Dwyer, Director Division of Labor Standards & Safety Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Opposed to SB 41. Marie Sansone Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Testified on amendments to SB 41. Beth Kerttula Assistant Attorney General P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Commented on Amendment #8 to SB 41. Janice Adair, Director Division of Environmental Health Department of Environmental Conservation 555 Cordova St. Anchorage, AK 99501 POSITION STATEMENT: Supports SB 41 with changes. ACTION NARRATIVE TAPE 97-15, SIDE A Number 00 CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 1:48 p.m. Present were Senators Miller, Parnell, and Chair Taylor. The first order of business before the committee was SB 14. SB 14 INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES SENATOR DAVE DONLEY , sponsor of the measure, gave the following overview. SB 14 is similar to legislation that passed both houses last year. It prohibits discrimination by insurers against victims of domestic violence based solely on that fact. The bill still allows appropriate underwriting based on objective criteria. In the lower 48 there has been a problem with insurance companies redlining victims of domestic violence. The Division of Insurance has proposed one technical amendment (Amendment #1). Number 044 SENATOR PARNELL moved to adopt Amendment #1 (0-LS0160\A.2) which reads as follows. Page 2, line 14: Delete "a writing carrier, as defined in AS 21.55.500" Insert "the Comprehensive Health Insurance Association, established in AS 21.55.010" CHAIRMAN TAYLOR objected for the purpose of taking further testimony. MARIANNE BURKE , Director of the Division of Insurance, explained SB 14, as drafted, contains a reference to a "writing carrier." No such entity exists within insurance terminology. The entity being referred to is defined in AS 21.55.010, and is known as "the Comprehensive Health Insurance Association." Amendment #1 uses that term. CHAIRMAN TAYLOR asked if anyone in attendance opposed Amendment #1 or wanted to testify on it. There being no response, CHAIRMAN TAYLOR removed his objection to Amendment #1, and it was adopted. SENATOR DONLEY explained a second amendment (Amendment #2) clarifies the intent of the legislation that a rate adjustment or denial of coverage based on a known frequency of loss, as would occur if the client was not a victim of domestic violence, is permissible. The intent of the bill is to prevent discrimination against clients simply because he/she has been a victim of domestic violence, not to prevent ratings by insurers based on objective facts. Number 124 CHAIRMAN TAYLOR asked if a person was a victim of domestic violence eight times over a ten-year period, the insurance company could take into account frequency when determining rates, because each time the person got medical attention. SENATOR DONLEY replied that is correct and noted if an insurer's underwriting criteria can base rates on eight claims over a ten-year period for non-domestic violence medical claims, that criteria can be used for a domestic violence victim. The rating policy must be consistent. SENATOR PARNELL asked whether SB 14 will allow the insurance industry to objectively look at a person's injury, regardless of the cause, and adjust rates and premiums based on that injury, or would that criteria be prohibited if the person is a victim of domestic violence. SENATOR DONLEY answered the purpose of Amendment #2 is to make crystal clear that it can not be argued at a later time, that if the results of the objective criteria were domestic violence, the insurer could not use the objective criteria in rating someone. Number 164 MS. BURKE commented there are a lot of legitimate underwriting criteria. If a person had seven car accidents in two years, the insurance company would have a legitimate reason to cancel the policy. If a person submits seven claims because the damage to the car was caused by the person's partner during domestic violence disputes, frequency is the issue, not the person's status as a domestic violence victim. CHAIRMAN TAYLOR felt it will be difficult to establish, in the future, that the insurance raters used objective facts rather than a bias toward this category of victim. MS. BURKE said the Division conducts market examinations and reviews insurance company files. If a person's coverage was denied or cancelled, the cited reason is reviewed and compared with the company's written policies and procedures to verify compliance with criteria. Number 215 CHAIRMAN TAYLOR expressed concern that an insurance company can write altruistic policies but carry out something different. SENATOR PARNELL moved to adopt Amendment #2 (0-LS0160\A.3). LAUREE HUGONIN , Director of the Alaska Network on Domestic Violence and Sexual Assault, echoed Chairman Taylor's concern that policies and procedures could be drawn by insurance companies to appear to apply evenly but would, in fact, apply to victims of domestic violence more often or strenuously than other customers, particularly in the property and casualty lines. Underwriting is not consistent among companies. She stated she supports SB 14 but prefers the language "only a victim of domestic violence" because then a victim could determine the reasons he/she was denied coverage. JAYNE ANDREEN , Executive Director of the Council on Domestic Violence and Sexual Assault, agreed with Ms. Hugonin's testimony. CHAIRMAN TAYLOR removed his objection to Amendment #2, therefore it was adopted. There being no further testimony or opposition to SB 14, SENATOR PARNELL moved SB 14 as amended from committee with individual recommendations and its accompanying zero fiscal note. There being no objection, the motion carried. HB 22 CIV.LIAB.:ILLEGAL SALE OF ALCOHOL/DRUGS REPRESENTATIVE IVAN IVAN presented his sponsor statement for the record. HB 22 closes a loophole in current law that exempts those who sell liquor without a license or those who sell or barter a controlled substance from any civil liability for the damages that may be caused by the buyer's actions while under the influence. An injured party can be an individual, as well as the state, or a political subdivision of the state. Civil damages include personal injury, death or injury to property. CHAIRMAN TAYLOR questioned whether any limitation on non-economic damages is placed in HB 22. TOM WRIGHT , staff to Representative Ivan, answered that issue was not addressed by the House Judiciary Committee. CHAIRMAN TAYLOR asked whether bootleggers and drug dealers will get the benefit of caps on punitive and non-economic damages. He noted it is rare to see a bill that encourages people to use the civil litigation process to recover damages and he wants to make sure this bill will not protect the bootleggers. MR. WRIGHT replied the intent is to not protect the bootleggers. Number 322 SENATOR PARNELL asked whether ongoing cases would be affected by the July 1, 1997 effective date. MR. WRIGHT said he understood the bill will only affect actions that take place after July 1. CHAIRMAN TAYLOR verified the bill's intent is prospective, not retroactive. SENATOR PARNELL moved CSHB 22(JUD) from committee with individual recommendations and the accompanying fiscal notes. There being no objection, the motion carried. SB 41 ENVIRONMENTAL & HEALTH/SAFETY AUDITS AL DWYER , Director of the Division of Labor Standards and Safety, Department of Labor (DOL) read the following from a letter from Acting Assistant Secretary of Labor, Mr. Greg Watchman: Employers' privilege and immunities proposed in SB 41 would greatly limit Alaska's authority to investigate accidents and illnesses in the workplace, document their cases, and enforce job safety and health standards. This bill would significantly damage the credibility and effectiveness of Alaska's enforcement program. As you know, Congress has required the states with OSHA-approved state plans to maintain an occupational safety and health program which is at least as effective as the federal. Enactment of such a provision by the state would seriously undermine the continued approvability of Alaska's 18E Occupational Safety and Health Program and may result in the withdrawal of federal approval and funding for the Alaska program. SEE PAGES 17 - FOR THE PROPOSED AMENDMENTS. BETH KERTTULA , Assistant Attorney General, testified on Amendment will have on tariff cases. First, if the bill is amended to extend the privilege under Amendment 8, it will jeopardize tariff cases which could cost the state millions of dollars. MS. KERTULLA outlined the tariff rate procedure as follows. Under Alaska's royalty and production tax statutes, the state pays one- quarter of the tariff. That calculation includes pipeline operation costs through reduced revenues to the state. The state has the right to challenge imprudent costs and technical errors under the TAPS settlement agreement. In the 1995 tariff case, the state is challenging over $300 million worth of remediation costs to the pipeline's electrical systems, as-built drawings, and business management systems because it believes the carriers did not act reasonably in maintaining those systems. The vast majority of the evidence in that case came from audits. If the state had not had access to those audits, its ability to bring the case would have been severely curtailed. The estimated cost of conducting the audits was $25 million. Amendment 8 would grant a privilege to anything that was not "necessary" to determine pipeline rates, tariffs, or charges. Use of the imprudent standard requires review of all pipeline costs to determine which are justified and in normal discovery, one is allowed to get information that leads to relevant information. Furthermore, most audits are mixed between fact and analysis, making the two difficult to separate. Therefore, Amendment 8 is either meaningless, because audit information is truly necessary to determine rates, or harmful if the intent is to limit the ability of the state to receive information related to pipeline management just because that information is in an audit. Amendment 8, in conjunction with the fact the bill was previously amended to not allow the state to review objective facts in audits, is a threat to the state properly bringing TAPS tariff cases. Regarding the immunity provision, MS. KERTTULA noted because of the bill's limitations to the definition of "penalty," it appears the sponsor may not have intended immunity to apply to tariff cases, however the definition states the penalty means administrative or civil sanctions. It is possible an argument could be made that an APUC order could be viewed as an administrative sanction. More problematic on the immunity point is the fact that there are tariff related cases that can be brought civilly, instead of administratively. Civil penalties are available for egregious behavior. If immunity is limited in tariff cases, the right of the state to receive civil penalties in penalties would cease. MS. KERTTULA summarized at best, Amendment 8 confuses what information the state will be able to receive to bring tariff cases and will hamstring the Department of Law. She requested the committee add the tariff exception back to the immunity clause. Number 429 SENATOR MILLER moved the adoption of Amendment 8. SENATOR ELLIS objected to the motion. CHAIRMAN TAYLOR asked Ms. Kerttula if she disagrees with Senator Leman's statement that Amendment 8 will allow review of only those parts of an audit report necessary to assist in determining rates, tariffs, fares or charges to be nonprivileged. MS. KERTTULA felt the problem lies in the fact the language could be interpreted very restrictively and allow disclosure to determine appropriate tariff rates, but not imprudence. In the 1995 case, all of the costs used to calculate the tariff included the costs of managing the pipeline, which can be very broad. CHAIRMAN TAYLOR said the original intent of reviewing some audit results was not for TAPS regulation for purposes of revenue, but to ensure that environmental safety concerns, such as corrosion, were addressed. DEC would have jurisdiction over those matters. MS. KERTTULA agreed that might have been the primary focus of those audits, but repeated those problems do relate back to the rates. Number 455 CHAIRMAN TAYLOR commented if an audit discloses pipe corrosion and DEC requires three miles of pipe to be replaced, the repair cost then gets calculated into the operation costs of the facility which is paid for by the people of the state. MS. KERTTULA agreed. CHAIRMAN TAYLOR stated it appears all Amendment 8 would protect is disclosure of audits conducted for ancillary purposes that may, or may not, get built into the tariff someday. For example, if a carrier determined, through a self-audit, it did not have appropriate monitoring equipment for gas releases and was in violation of the Clean Air Act, parts of the self-audit would be available to the Department of Law for rate-fixing aspects, but not for the penal aspect. MS. KERTTULA was unsure how Amendment 8 would be interpreted because of the inclusion of the word "necessary." MS. KERTTULA explained the state gets charged up front, through a reduction to production in the state's royalty tax return. The department gets to look at the charge once it has been assessed. In the 1995 electrical code case, the tariff suddenly took a jump, so the Department of Law had to work back to determine the cost of the increase: in this case it had to review audits, including self- audits, that explained what had occurred to cause the cost increase. The self-audits were a mix of facts and analysis. She cautioned without access to those types of audits, millions of dollars to the state could be jeopardized. Number 492 CHAIRMAN TAYLOR asked whether millions of dollars of revenue, or of costs to the state, would be jeopardized. MS. KERTTULA responded at this point, it is millions of dollars the state would have lost in royalty and production taxes. The state will be reimbursed if it wins the case. CHAIRMAN TAYLOR noted Ms. Kerttula was making the assumption the state would not have its own audit report available. MS. KERTTULA replied the Department of Law might not have access to the company's audit, if Amendment 8 is enacted. CHAIRMAN TAYLOR commented the Senate Finance Committee can more adequately address that aspect. SENATOR ELLIS maintained his objection to adopt Amendment 8. The motion carried with Senators Miller, Parnell and Taylor voting "yea," and Senator Ellis voting "nay." Number 510 SENATOR ELLIS moved to adopt a packet of amendments submitted by the Administration. CHAIRMAN TAYLOR objected and asked Senator Ellis to describe each one individually. SENATOR ELLIS explained Amendment 25 deletes the words "health and safety" following the word "environmental" throughout the bill. JANICE ADAIR , Director of Environmental Quality, DEC, testified in support of Amendment 25 because she believes although SB 41 works well for DEC, it does not work well for the Department of Labor. SENATOR LEMAN believed SB 41 will help employers come into compliance with health and safety laws as well as environmental laws. Amendment 25 was adopted with Senators Ellis, Miller, Parnell, and Pearce voting "yea," and Senator Taylor voting "nay." TAPE 97-15, SIDE B SENATOR ELLIS explained Amendment 26 removes references to the Departments of Labor and Health and Social Services but asked that Amendment 26 be reconstructed to say ", the Department of Labor," since the committee passed Amendment 7 at a previous meeting which deleted references to the Department of Health and Social Services from the bill. DWIGHT PERKINS, Special Assistant to the Commissioner of the Department of Labor, clarified Amendment 25 deleted all references to health and safety audits; Amendment 26 would conform by removing references to the Department of Labor. There being no objection to Amendment 26, it was adopted. SENATOR MILLER objected to Amendment 27. MARIE SANSONE explained under SB 41, the owner/operator who is claiming the privilege has the burden of establishing that the privilege applies and contains a category of information that is excepted from the privilege requirements under SB 41. These exceptions are very similar to what is contained in evidence rules regarding attorney/client privileges or doctor/patient privileges. For example, if the privilege is asserted for a criminal or fraudulent purpose, there would be an exception to the privilege. This recognizes that a privilege should not be used to further criminal or fraudulent acts. Amendment 27 deals with the mechanics of proving that an exception applies. SB 41 requires the party seeking disclosure come forward and prove an exception applies but without access to the audit information, it would be very difficult to prove. Amendment 27 allows the person seeking disclosure to make a prima facie case that the exception applies, using nonprivileged information to make that showing. At that point, the party maintaining privilege would be required to show that the exception should not apply. She discussed numerous court cases which recognize the notion of the prima facie showing to establish exceptions to the privilege. SENATOR MILLER said his concern with Amendment 27 is the assumption that the party is guilty unless it can prove itself innocent. He questioned whether the amendment would shift the burden from the state to the company to prove why it should not have privilege. MS. ADAIR explained a private third party may believe it has been harmed by an action. That party would be required to get independent evidence to convince a judge or hearing officer to set the privilege exception aside so that the party could review the privileged documentation to make a case. Without Amendment 27, SB 41 requires the party to demonstrate something it has no way to demonstrate because the documentation is privileged. She believes the amendment does not shift the burden, but levels the way it is applied. Number 501 CHAIRMAN TAYLOR questioned whether a whistleblower could establish a prima facie case based on the evidence he/she was fired for whistleblowing under Amendment 27 and then use self-audit information to defend his/her re-employment. MS. SANSONE felt in such a case, the employer may want to bring the self-audit forward if it wished to prove the whistleblower was sabotaging the company by intentional wrongdoing. CHAIRMAN TAYLOR said he was thinking of a situation in which the whistleblower was peripherally involved in sabotage with other employees but uses his/her whistleblower status to bring a wrongful termination suit. MS. SANSONE believed judges have quite an array of means to protect the information in such a case. The judge could rule that part of the information is relevant to the whistleblower case but not for other purposes. She believed the bill would give the judge the appropriate latitude to craft a protective order so that the information cannot be misused. CHAIRMAN TAYLOR asked what standard for the burden of proof is used for parties wishing to seek this information. He added Amendment 27 would obviously weaken the current standard by making it a prima facie case. MS. SANSONE described two Alaska Supreme Court decisions that set out very good procedures for dealing with privileged information. In 1974, the United Service Automobile Association v. Worley decision defined what is a prima facie case for purposes of trying to gain access to privileged information. It is defined as the evidence that would sufficiently support a showing of a crime or fraud if all contrary evidence is disregarded. The burden of proof does not change in that scenario; the question becomes how much of a burden does one have to meet, or does one ever get to look at the privileged information in order to show that the privilege does not apply. To show that the privilege does not apply without access would be very hard, if not impossible, in certain circumstances. Where it would be possible, under the Central Construction case, the Court recognized that a trial judge can choose to not have an in-camera review if the proceeding established that enough evidence is available to tie the case up. Number 416 CHAIRMAN TAYLOR said he asked the question because he thought a standard for access to privileged documents exists. He felt Amendment 27 appears to be a reduction in the burden upon the person asking for the key to the vault. MS. SANSONE repeated the Department of Law's concern and reason for the suggested amendment was that SB 41 does not allow for a party to have access to the privileged material at any time, to meet their burden of showing that it did not apply. The Department of Law is trying to establish a level at which one could gain access to that information in order to prove the exception. SENATOR PARNELL referred to back-up material provided by Ms. Sansone and read the following. The Alaska Supreme Court also follows this approach. In Sloan v. Jefferson, 758 P.2d 81, 83 (Alaska 1988), the court recognized that the burden of proof generally falls upon the party asserting a fact, particularly where that party controls the evidence bearing upon that fact. He asked, in this kind of a proceeding, for an example of a fact being asserted by the owner/operator. MS. ADAIR replied an example would be that the owner/operator promptly initiated the necessary action to correct a violation. SENATOR MILLER maintained his objection to the adoption of Amendment 27. The motion failed with Senator Ellis voting "yea," and Senators Miller, Parnell, Pearce and Taylor voting "nay." CHAIRMAN TAYLOR announced Amendment 28 was up for discussion. Number 374 MS. ADAIR advised Amendment 28 is a conforming amendment. SENATOR LEMAN agreed Amendment 28 provides a necessary technical change. There was no objection to Amendment 28, therefore it was adopted. CHAIRMAN TAYLOR clarified Amendment 29 is numbered #16 in packets, and that Senator Ellis did not wish to offer #15. MS. ADAIR informed the committee Amendment 29 reinstates language that was contained in prior versions of SB 41 and may have been inadvertently omitted. Amendment 29 pertains to an exception to immunity if the disclosure is in a proceeding relating to pipeline rates, tariffs, fares, or procedures. SENATOR LEMAN stated he recommends Amendment 29 not be adopted because an exception already exists under the privilege section. He explained immunity is only granted regarding violations of environmental laws, and not underpayment of tariffs. Number 355 MS. KERTTULA stated an APUC order is a state administrative order. Outside of the administrative realm, the state can bring civil cases where penalties are available, if there were particularly egregious facts behind a tariff case. If self-audits are immune, the state will be unable to recover in APUC cases, as well as in civil complaints and anti-trust cases. Regarding the privilege argument, environmental audits can contain information necessary for tariff cases and rate-making to determine if money was imprudently spent. If that information is privileged, the state will never know if the rate charged was correct. SENATOR PEARCE asked how this provision works in Texas with the Texas Railroad and its utilities. SENATOR LEMAN replied Representative Warren Chisolm told him that out of 400 audits conducted, none of the potential problems brought forward to this committee have occurred in Texas. Number 325 CHAIRMAN TAYLOR felt only certain audit information is of necessity to the Department of Law for rate-setting. He believes whichever department sets the rates would like to cooperate with DEC on audit information that could be used to file charges. MS. KERTTULA responded the Department of Law's concern is truly for the 25 percent the state pays for the transportation of our oil. In the last two years, on the 1995 case, the Department of Law was faced with precisely this kind of information as evidence of the problem. Without it, the Department of Law could not have brought the case. Even if the Department of Law could have paid $25 million to conduct those audits, it might not have been able to get to it under SB 41's immunity section. MS. ADAIR added DEC would be happy to offer an amendment prohibiting it from getting the tariff setting information. Objection was maintained to the adoption of Amendment 29. The motion to adopt Amendment 29 failed with Senators Pearce, Miller, Parnell, and Taylor voting "nay," and Senator Ellis voting "yea." Number 277 CHAIRMAN TAYLOR announced Amendment 30 was before the committee. MS. ADAIR commented because of discomfort with the specific language, DEC would like to propose Amendment 30 as a conceptual amendment. The purpose for the amendment is to assure that if SB 41 is not crafted to meet all of EPA's standards, the state not lose primacy of either the Clean Air Act program or the Drinking Water program. The amendment provides that if DEC is notified by EPA that primacy withdrawal has begun, then the statutory provisions of SB 41 be set aside for the particular program. CHAIRMAN TAYLOR believed Amendment 30 to be unconstitutional because it would require a precedent be set by another entity's actions. SENATOR ELLIS withdrew his motion to adopt Amendment 30. There was no objection. CHAIRMAN TAYLOR announced Amendment 31 was before the committee. MS. ADAIR explained Amendment 31 deletes the language, `To fully implement the privilege and immunity established under AS 09.25.450-09.25.490, the term "environmental or health and safety law" shall be construed broadly.' DEC sees no reason to "broadly construe" its statutes, as well as municipal ordinances, which are covered under SB 41. The phrase lends uncertainty to the bill. Number 198 SENATOR PARNELL asked Ms. Adair what laws would then apply if that section is deleted. MS. ADAIR responded SB 41 would apply to Title 46 which DEC implements, but she was unclear how municipal ordinances might be affected. She added Amendment 31 clarifies SB 41 would not impact the Underground Injection Control Program; an EPA-delegated program run by the Oil and Gas Conservation Commission in Alaska. That program does fall under Title 46 but is not a DEC law. SENATOR PARNELL expressed reluctance to narrow the language without a clear understanding of the impact. MS. ADAIR thought that language, when included in SB 41, was directed to DEC laws. SENATOR MILLER cautioned although the Legislature may intend SB 41 to apply to all environmental laws, the Judicial Branch could interpret it more narrowly without the "construed broadly" phrase. SENATOR PARNELL asked whether operator/owners are making any voluntarily disclosures of violations under federal law to state agencies. MS. ADAIR replied affirmatively. SENATOR PARNELL asked if SB 41 is limited to Title 46, whether those privileges and immunities would not attach to violations of federal law. MS. ADAIR replied they would continue to attach as far as our state laws are concerned that are implementing federal laws but they would not apply in a federal proceeding. Number 113 SENATOR ELLIS asked if the major producers of the oil industry would like to narrow the scope of the bill so that the UIC Program is not impacted by SB 41. MS. ADAIR said the oil industry has not indicated whether it supports the amendment one way or another, but it has expressed concern about SB 41 applying to that program. She also corrected herself, and noted the UIC Program is not in Title 46. CHAIRMAN TAYLOR stated he shares Senator Miller's concern that the phrase "broadly construed" speaks to state agencies and the courts, and, as a matter of legislative interpretation, they will always attempt to narrowly construe a grant of immunity unless specifically stated. MS. SANSONE thought by defining the word "department" to mean DEC in SB 41, if SB 41 were to apply to the UIC Program under the Department of Administration, the term "broadly construed" would set up a schism in the bill. CHAIRMAN TAYLOR agreed and asked Senator Leman to review that issue. CHAIRMAN TAYLOR noted objection was maintained to the adoption of Amendment 31. The motion failed with Senator Ellis voting "yea," and Senators Pearce, Parnell, Miller and Taylor voting "nay." The committee took up Amendment 32. CHAIRMAN TAYLOR clarified the amendment would read: Page 5, line 24: Following "AS 09.24.450 for": Insert: "objective facts and" MS. ADAIR explained with the adoption of Amendment 32, page 5, lines 23 and 24 would read: Sec. 09.25.460. Nonprivileged materials. (a) There is no privilege under AS 09.25.450 for objective facts and for that part of an audit report that contains the following: TAPE 97-16, SIDE B SENATOR MILLER maintained his objection to adoption of Amendment 32. SENATOR PARNELL asked for a description of Amendment 32. MARIE SANSONE explained the self-audit privilege is very similar to a privilege against self-incrimination. A person cannot be forced to incriminate him/herself, but the evidence of a crime is not privileged. SENATOR PARNELL noted the person would not have to disclose the evidence and asked why a company should. MS. SANSONE responded the defendant would have to turn over the evidence, i.e. O.J. Simpson had to turn over the shoes and glove, etc. She explained in this amendment, the term "objective" was used to try to make a distinction between something that might be subjective or opinion, and something that might be an objective fact. The EPA's policy does not recognize the privilege, partially because the underlying facts are necessary to determine whether the corrective actions have been taken. One can assure the privileges and immunities are not being abused only with the objective facts. Number 097 SENATOR MILLER stated he believes the underlying concept of the bill is to provide incentive for businesses to determine and fix problems. If, under SB 41, the objective facts of the determination are not privileged and can be used against the company, no incentive exists. MS. ADAIR explained if a company conducted tests on a stream because it was orange and smelly, the fact the stream turned orange would not be privileged, but the test results would be. SENATOR MILLER asked if DEC got the information, it would not be privileged. MS. ADAIR said that was correct. SENATOR LEMAN said he opposed the amendment. Amendment 32 failed with Senators Pearce, Miller, Parnell and Taylor voting "nay," and Senator Ellis voting "yea." SENATOR LEMAN clarified SB 41 will not apply to information that is required to be disclosed by permit so the previous example would not apply. Number 141 CHAIRMAN TAYLOR noted Amendment 33 was before the committee. SENATOR PARNELL objected for the purpose of discussion. MS. ADAIR stated DEC considers Amendment 33 to be a technical amendment that would allow the court to require disclosure if, after an in-camera review, the court found that the information for which the privilege is claimed is evidence of a violation that caused substantial injury. Amendment 33 failed with Senators Miller, Parnell, Pearce, and Taylor voting "nay," and Senator Ellis voting "yea." The committee took up Amendment 34. MS. ADAIR explained SB 41 says if immunity is not granted, there are certain actions that mitigate any penalty. The first action is the voluntariness of the disclosure. DEC finds that awkward since the basic premise of SB 41 is voluntary disclosure. DEC believes what was intended is good-faith actions of the owner/operator in disclosing the violations. Amendment 34 uses that language. There being no objection to Amendment 34, it was adopted. The committee took up Amendment 35. MS. ADAIR noted the amendment uses the word "contained" in reference to material in an audit report, rather than material "described" in an audit report. The word "contained" is broader and will include appendices or other documents that are a part of the audit. Also, the word "implementation" has been changed to "findings, conclusions, and recommendations" for the purpose of clarity. There being no objection to Amendment 35, it was adopted. SENATOR MILLER moved CSSB 41(JUD) from committee with individual recommendations. The motion carried with Senators Taylor, Pearce, Miller, and Parnell voting "yea," and Senator Ellis voting "nay." CHAIRMAN TAYLOR adjourned the meeting at 3:35 p.m. AMENDMENT #8 Page 6, lines 15-16: Reword subsection (b) as follows: The parts of an audit report that consist of information necessary to determine pipeline rates, tariffs, fares, or charges are not privileged and are admissible as evidence and subject to discovery in a proceeding relating to pipeline rates, tariffs, fares, or charges. [AN AUDIT REPORT IS NOT PRIVILEGED AND IS ADMISSIBLE AS EVIDENCE AND SUBJECT TO DISCOVERY IN A PROCEEDING RELATING TO PIPELINE RATES, TARIFFS, FARES OR CHARGES.] AMENDMENT #25 Page 1, line l: Following "environmental audits": Delete "and health and safety audits" Page 1, line 5: Following "environmental": Delete "and health and safety" Page 1, line 8: Following "environmental": Delete "and health and safety" Page 1, line 13: Following "environmental": Delete "and health and safety" Page 2, line 2: Following "environmental": Delete "and health and safety" Page 2, line 7: Following "environmental": Delete "and health and safety" Page 2, line 12: Following "environmental": Delete "and health and safety" Page 2, line 14: Following "environmental": Delete "and health and safety" Page 2, line 20: Following "environmental": Delete "and health and safety" Page 2, line 30: Delete "or health and safety" Page 4, line 16: Following "environmental": Delete "or health and safety" Page 4, line 19: Delete "or health and safety" Page 4, lines 26-27: Following "environmental": Delete "or health and safety" Page 5, line 28: Following "environmental": Delete "or health and safety" Page 5, line 29: Following "environmental": Delete "or health and safety" Page 6, lines 4-5: Following "environmental": Delete "or health and safety" Page 6, line 8: Following "environmental": Delete "or health and safety" Page 6, line 10: Following "environmental": Delete "or health and safety" Page 6, line 26: Following "environmental": Delete "or health and safety" Page 7, line 7: Following "environmental": Delete "or health and safety" Page 7, lines 24-25: Following "environmental": Delete "or health and safety" Page 8, lines 21-22 Following "environmental": Delete "or health and safety" Page 9, line 16: Following "environmental": Delete "or health and safety" Page 9, line 22: Following "environmental": Delete "or health and safety" Page 9, lines 26-27: Following "environmental": Delete "or health and safety" Page 10, line 11: Following "environmental": Delete "or health and safety" Page 10, line 27: Following "environmental": Delete "or health and safety" Page 11, lines 2-4: Following "Conservation": Delete ", the Department of Labor, and the Department of Health and Social Services, as appropriate" Page 11, line 5: Following "environmental": Delete "or health and safety" Page 11, line 14: Following "environmental": Delete "or health and safety" Page 11, line 16: Following "environmental": Delete "or health and safety" Page 11, lines 17-18: Following "environmental": Delete "or occupational health and safety" Page 11, line 30: Following "environmental" Delete "or health and safety" Page 12, line 2: Following "environmental" Delete "or health and safety" Page 12, line 5: Following "environmental" Delete "or health and safety" AMENDMENT 26 Page 11, lines 2-4: Following "Environmental Conservation": Delete ", the Department of Labor" AMENDMENT 27 Page 7, lines 3-4: Following "under": Delete all material. Insert: "(a)(1) - (a)(4) of this section has the burden of establishing a prima facie case that the exception applies. (c) A party seeking disclosure under (a)(5) of this section has the burden of establishing that the exception applies." AMENDMENT 28 Page 8, line 16: Following "under": Delete: "an agreement" Insert: "a written claim of confidentiality" AMENDMENT 29 Page 9, line 21: Insert a new subsection as follows and renumber all subsections accordingly: "(b) There is no immunity under AS 09.25.475 if the disclosure is in a proceeding relating to pipeline rates, tariffs, fares, or procedures." AMENDMENT 30 Page 10, following line 2: Insert a new section to read: "Sec. 09.25.482. Inconsistencies with federal requirements. (a) When a state program requires federal approval or involves the expenditure of federal money or federal assistance, and there is a conflict between a provision of this chapter and a federal statute, regulation, or requirement, then, after completing the procedures in (b) of this section, the federal statute, regulation, or requirement shall prevail and the self-audit privilege and immunity created in this chapter are limited accordingly. (b) Upon final written notice from the chief executive officer of a federal agency that a provision of this chapter is in conflict with a federal statute, regulation, or requirement and that federal approval, federal money, or federal assistance will be denied or withdrawn as a result of the conflict, the chief executive officer of the state agency in receipt of the notice shall immediately notify the revisor of statutes that the self-audit privilege and immunity created by this chapter is limited, so that a revisor's note to that effect may be published in the Alaska Statutes. The chief executive officer of the state agency shall also immediately cause public notice of the limitation to be given and widely distributed and provide written notice of the limitation to all owners and operators submitting notices to the state agency under AS 09.25.450(b)." AMENDMENT 31 Page 12, lines 1-3: Delete all material. AMENDMENT 32 Page 5, line 24: Following "AS 09.24.450 for": Insert: "objective facts and" AMENDMENT 33 Page 6, line 23: At the beginning of line 23 Insert: "a violation that caused" AMENDMENT 34 Page 9, line 25: Delete all material and insert: "(1) the good faith actions of the owner or operator in disclosing a violation;" AMENDMENT 35 Page 10, line 24: Following "part of the material": Delete: "described" Insert: "contained" Page 10, line 24: Following "including": Delete: "implementation issues or" Insert: "findings, conclusions, opinions, recommendations, and"