SB 199 ENVIRONMENTAL & HEALTH/SAFETY AUDITS  SENATOR PEARCE moved to adopt the workdraft (f)Lauterback 3/9/96 as their working document. There were no objections and it was so ordered. MIKE PAULEY, Staff to Senator Leman, said the new committee substitute incorporates certain recommendations they received from both the business community and the administration. Many changes are technical matters. They have added clarifying language in the area of privilege saying that if one part of an audit report is disclosed for any reason, the privilege still applies to the remaining portions of the audit report. This is necessary because some federal courts have adopted a four part test for determining claims of privilege on the basis of self critical analysis. They have added to the list of nonprivilege materials such information that is required in order to obtain, maintain, or renew a license and also such information that is required under a contract with the State. These changes were made to address concerns of administration representatives. In the area of immunities they clarified that a regulated entity which voluntarily reports instances of noncompliance is not only eligible for immunity for the violations reported, but also violations that are based on the facts disclosed and which were unknown to the person making the disclosure. This change was made because of the concern that a person might not be covered by immunity for violations that were discovered as a result of a voluntary disclosure, but were not declared as violations in the disclosure. This possibility could be a powerful disincentive to voluntarily report violations. An extra requirement has been added for immunity. A regulated entity is required to disclose under terms of the confidentiality agreement that part of an audit report which deals with the plan for compliance, but only if the information is requested by the appropriate regulatory agency. A new paragraph has been added to the bill clarifying that a regulatory agency may not initiate an investigation of a regulated entity based solely on the fact that the entity has provided a notice of intent to perform a self audit. He said that the circumvention by regulation prohibited regulation was deleted because it is already covered in another part of State law. SENATOR LEMAN noted that made three major changes that were requested by DEC. SENATOR LEMAN noted that the circumvention regulation was addressed in AS44.62.030. He said they wanted to make sure it was covered not only by regulation, but by permit and other administrative action as well. They do not want to do things that are contrary to statute. DWIGHT PERKINS, Special Assistant, Department of Labor, said in the hearing on this bill last week Mr. Paul Grossi, Director, Workers Compensation, and Mr. Jeff Carpenter, Occupational Safety both testified why they have concerns. The Commissioner didn't have a problem with the legislation prior to introduction of the bill. After going through the bill they found that it does significantly change their role in Workers Compensation. On March 5 they had a letter prepared reviewing their concerns and he noted it was in their packets. He said they would be happy to work with the committee. TAPE 96-26, SIDE B Number 582 SENATOR LEMAN commented he was frustrated that they were notified of concerns after the first hearing when the bill had been out for 60 days. MR. PERKINS responded that during the first hearing the DOL and DEC did speak, but they ran out of time and the Department of Labor didn't go on record. SENATOR LEMAN apologized. MR. WHEELER, Alaska Environmental Lobby, commented that none of their concerns had been addressed in this CS. He said they are worried about the health and safety of the citizens of Alaska. This legislation shows a blatant disregard for the health of the public. The bill seems to make it harder for DEC and other State agencies to do their jobs by extending the right of privilege to information disclosed in self audits, by allowing industry to get around working toward compliance by excusing persons ignorant of the law and granting immunity for violations which industry hasn't even acknowledged breaking. MR. WHEELER said there was little evidence for protection against bad actors. There's not much talk about repeat violators. They are also concerned with interjecting "substantial" when referring to injury on page 4 of the summary of changes. SENATOR LEMAN said the intent of this legislation was to get people to come in compliance with environmental laws and he thought the bill accomplished that. He wanted to address some of his concerns. Number 525 JANICE ADAIR, Director , Division of Environmental Health, said she continues to have concerns with the privilege and that immunity is provided for criminal activity, and continue to have concerns with the broad definition of environmental health and safety law. She also pointed out that in the section regarding substantial harm and substantial injury she had pointed out that there was inconsistency. SENATOR TAYLOR asked if there was anyone here from ADF&G who wanted to address the $66,500 fiscal note submitted with the bill. He asked specifically why they would need additional staff to encourage people to come into compliance. GERON BRUCE, ADF&G, said they are looking at their authority under AS16.05.870 which regards anadromous streams, crossing, and other activities in the streams. Because of the broad application of privilege and immunity to information provided by this legislation they feel they would have to have some increased effort to develop their own sources of information when they suspect violations are occurring. In the past they have enjoyed good relationships with the companies in the field and they have gone to them for a lot of information, but they don't think that is likely to continue under this legislation. SENATOR TAYLOR countered that the self audit would be an effort to comply and would only impact the law if, in fact, it did. MR. BRUCE said he thought they were seeing things differently developing the balance between allowing private industry to conduct their business and our responsibility to protect the public resources. They are not eager to prosecute people. They have very few prosecutions under their authorities to protect anadromous fish streams. They generally try to work with operators up front to prevent problems and when problems are detected to then work with them to correct them. Because of the broad nature of the legislation some operators may not be willing to cooperate the same way they have in past. The Department may have to develop independent information where they think violations have occurred, because they will see this as a way to shield themselves from actions which were not in compliance. SENATOR LEMAN noted that the protection of the self audit only applies if the party who does the audit performs immediate compliance with the law. He thought the Committee should be seeing negative fiscal notes from all departments. SENATOR TAYLOR asked for an example of how this could be used as a shield. In response MR. BRUCE explained that someone going to engage in some kind of activities in an anadromous fish stream is supposed to notify the Department, supply plans about their intentions, and then receive a permit from them. After that, they pretty much operate on their own. For some reason, if they deviated from the terms of the permit that resulted in some damage of the stream, they could conduct one of these audits, disclose the information, then perhaps engage in some activity to correct the problem. The State would be in the position of arguing whether or not their corrective action was actually equal to what they thought it should be. SENATOR TAYLOR said he thought their department would probably be consulted on what was the best remedial action. They don't get the shield unless they haven't cleaned up their act. MR. BRUCE said their fiscal note addresses the cost of collecting information to demonstrate that a violation has occurred since under this legislation they can't get the information from the operator themselves if they have conducted an audit and the information is then confidential. SENATOR LEMAN commented that he thought they had the capacity to put in permit conditions which are not protected under the audit. MR. BRUCE said he thought it would be helpful for his staff to get together with some of their field people to walk them through some other examples. Number 312 SENATOR TAYLOR asked if he had conferred with other States to see if they needed additional funding for self audit programs. MR. BRUCE said they didn't and one of the reasons they didn't contact the state of Texas is there's so much difference between the two states. Texas, for instance, doesn't have salmon resources. He wasn't sure their experience would help us that much with the unique laws we have on the books to protect our salmon resources. Number 299 SENATOR HOFFMAN moved to adopt the Department of Labor amendment to add "except for worker's compensation proceedings." There were no objections and it was so ordered. SENATOR TAYLOR moved to pass CSSB 199 am from committee with individual recommendations. There were no objections and it was so ordered.