SB 41: "An Act relating to environmental audits and health and safety audits to determine compliance with certain laws, permits, and regulations."
00SENATE BILL NO. 41 01 "An Act relating to environmental audits and health and safety audits to 02 determine compliance with certain laws, permits, and regulations." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. FINDINGS; INTENT. The legislature finds and intends as follows: 05 (1) as environmental and health and safety regulations evolve, performance- 06 based standards will increasingly replace the traditional command-and-control approach of 07 state regulatory practices; this shift is expected to save money for both the state and regulated 08 entities and to lead to the integration of environmental and health and safety protections and 09 normal operating procedures for regulated facilities and operations; in order to foster a 10 partnership between the public and private sectors and promote this integration, it is the intent 11 of the legislature to establish under this Act a responsible incentive program to encourage 12 voluntary, critical self-evaluation by regulated entities of their compliance with environmental 13 and health and safety requirements by authorizing certain qualified privileges and immunities 14 related to those self-evaluations;
01 (2) the public has a strong interest in encouraging routine self-review of 02 environmental and health and safety business practices and procedures; this encouragement 03 can best be achieved by preserving the free flow of information; the free flow of the kind of 04 information that is generated by self-audits would be curtailed if a privilege for the audits 05 were not available; therefore, it is the intent of the legislature to recognize an audit privilege 06 under this Act to protect the confidentiality of communications related to voluntary internal 07 environmental and health and safety audits; however, the legislature does not intend that audit 08 reports privileged under this Act may be used to shield a person from liability under 09 applicable laws and regulations by blocking access to relevant facts; 10 (3) the public also has a strong interest in obtaining cost-effective correction 11 of inadvertent environmental and health and safety violations; this goal can best be achieved 12 by offering qualified immunity from administrative and civil penalties to regulated entities that 13 promptly report known violations of environmental and health and safety regulations that are 14 uncovered as part of an audit so that the violations can promptly be corrected and a corrective 15 action plan can be negotiated with the appropriate governmental regulatory agency; 16 (4) an effective enforcement program is also necessary to protect the public 17 health and welfare and the environment; the legislature intends that the audit privilege and the 18 immunities established in this Act should be applied in a manner that promotes compliance 19 with environmental and health and safety laws, whether through voluntary compliance or 20 through enforcement efforts. 21 * Sec. 2. AS 09.25 is amended by adding new sections to read: 22 Article 5. Privileges and Immunities 23 Related to Disclosure of Certain Self-Audits. 24 Sec. 09.25.450. Audit report privilege. (a) Except as provided in 25 AS 09.25.455 - 09.25.475, an audit report is privileged and is not admissible as 26 evidence or subject to discovery in 27 (1) a civil action, whether legal or equitable; or 28 (2) an administrative proceeding, except for workers' compensation 29 proceedings. 30 (b) A person, when called or subpoenaed as a witness, may not be compelled 31 to testify or produce a document related to an environmental or health and safety audit
01 if 02 (1) the audit report is privileged under (a) of this section and is 03 inadmissible in the same proceeding; 04 (2) the testimony or document discloses an item listed in 05 AS 09.25.490(a)(1) that was made as part of the preparation of an environmental or 06 health and safety audit report and that is addressed in a privileged part of an audit 07 report; and 08 (3) for purposes of this subsection only, the person is a 09 (A) person who conducted all or a portion of the audit but did 10 not personally observe or participate in the relevant instances or events being 11 reviewed for compliance; 12 (B) person to whom the audit results are disclosed under 13 AS 09.25.455(b); or 14 (C) custodian of the audit results. 15 (c) A person who conducts or participates in the preparation of an 16 environmental or health and safety audit and who has actually observed or participated 17 in instances or events being reviewed for compliance may testify about those instances 18 or events but may not, in a proceeding covered by (a) of this section, be compelled to 19 testify about or produce documents related to the preparation of or a privileged part 20 of an environmental or health and safety audit or an item listed in AS 09.25.490(a)(1). 21 (d) A regulatory agency and an employee of a regulatory agency may not 22 request, review, or otherwise use an audit report that is privileged under (a) of this 23 section during an agency inspection of a regulated facility, operation, or property or 24 an activity of a regulated facility, operation, or property. 25 (e) To facilitate identification, each document in an audit report shall be 26 labeled "COMPLIANCE REPORT: PRIVILEGED DOCUMENT," or labeled with 27 words of similar import. 28 (f) A party asserting the privilege described in this section has the burden of 29 establishing the applicability of the privilege. 30 (g) This section may not be construed to 31 (1) prevent a regulatory agency from issuing an emergency order,
01 seeking injunctive relief, independently obtaining relevant facts, conducting necessary 02 inspections, or taking other appropriate action regarding implementation and 03 enforcement of an applicable environmental or health and safety law, except as 04 otherwise provided in AS 09.25.475; or 05 (2) authorize a privilege for uninterrupted or continuous environmental 06 or health and safety audits. 07 Sec. 09.25.455. Exception: waiver. (a) The privilege in AS 09.25.450 does 08 not apply to the extent the privilege is expressly waived in writing by the owner or 09 operator who prepared the audit report or caused the report to be prepared. 10 (b) Disclosure of an audit report or information generated by an environmental 11 or health and safety audit does not waive the privilege established by AS 09.25.450 12 if the disclosure is made 13 (1) to address or correct a matter raised by the environmental or health 14 and safety audit and is made only to 15 (A) a person employed by the owner or operator, including 16 temporary and contract employees; 17 (B) a legal representative of the owner or operator; 18 (C) an officer or director of the regulated facility, operation, or 19 property; 20 (D) a partner of the owner or operator; or 21 (E) an independent contractor retained by the owner or operator; 22 (2) under the terms of a confidentiality agreement between the person 23 for whom the audit report was prepared or the owner or operator of the audited 24 facility, operation, or property and 25 (A) a partner or potential partner of the owner or operator of the 26 facility, operation, or property; 27 (B) a transferee or potential transferee of the facility, operation, 28 or property; 29 (C) a lender or potential lender for the facility, operation, or 30 property; 31 (D) a government official or a state or federal agency; or
01 (E) a person or entity engaged in the business of insuring, 02 underwriting, or indemnifying the facility, operation, or property; or 03 (3) under a claim of confidentiality to a government official or agency 04 by the person for whom the audit report was prepared or by the owner or operator. 05 (c) A party to a confidentiality agreement described in (b)(2) of this section 06 who violates that agreement is liable for damages caused by the disclosure and for 07 other penalties stipulated in the confidentiality agreement. 08 (d) Information that is disclosed under (b)(3) of this section is confidential and 09 is not subject to disclosure under AS 09.25.110 - 09.25.125. 10 (e) Disclosure of a portion of an audit report after waiver of the privilege 11 under (a) of this section, after disclosure under (b) of this section, or through another 12 means may not be construed to waive the privilege established under AS 09.25.450 for 13 another part of the audit report. 14 Sec. 09.25.460. Exception: disclosure required by court or administrative 15 hearing officer. (a) A court or administrative hearing officer with competent 16 jurisdiction may require disclosure of a portion of an audit report in a civil or 17 administrative proceeding if the court or administrative hearing officer determines, 18 after an in camera review consistent with the appropriate rules of procedure, that the 19 (1) privilege is asserted for a fraudulent purpose; 20 (2) portion of the audit report is not subject to the privilege under 21 AS 09.25.465; 22 (3) portion of the audit report shows evidence of noncompliance with 23 an environmental or health and safety law and appropriate efforts to achieve 24 compliance with the law were not promptly initiated and pursued with reasonable 25 diligence after discovery of noncompliance; or 26 (4) audit report was prepared for the purpose of avoiding disclosure of 27 information required for an investigative, administrative, or judicial proceeding that, 28 at the time of the report's preparation, was imminent or in progress. 29 (b) A party seeking disclosure under this section has the burden of proving that 30 (a) of this section applies. 31 Sec. 09.25.465. Nonprivileged materials. (a) The privilege under
01 AS 09.25.450 does not apply to that part of an audit report that contains 02 (1) a document, communication, datum, report, or other information 03 required by a regulatory agency to be collected, developed, maintained, or reported 04 under an environmental or health and safety law, under a permit issued under an 05 environmental or health and safety law, as a requirement for obtaining, maintaining, 06 or renewing a license, or as a requirement under a contract or lease with the state; 07 (2) information that a regulatory agency obtains by observation, 08 sampling, or monitoring; 09 (3) information that a regulatory agency obtains from a source that was 10 not involved in compiling, preparing, or conducting the environmental or health and 11 safety audit report; 12 (4) a document, communication, datum, report, or other information 13 collected, developed, or maintained in the course of a regularly conducted business 14 activity or regular practice other than an environmental or health and safety audit; 15 (5) a document existing before the commencement of, and independent 16 of, the environmental or health and safety audit; or 17 (6) a document prepared after the completion of, and independent of, 18 the environmental or health and safety audit. 19 (b) An audit report is not privileged and is admissible as evidence and subject 20 to discovery in a proceeding relating to pipeline rates, tariffs, fares, or charges. 21 (c) An audit report is not privileged and is admissible as evidence and subject 22 to discovery if the report was commenced after the owner or operator knew of an 23 impending inspection or investigation by a regulatory agency. 24 (d) This section does not limit the right of a person to agree to conduct and 25 disclose an audit report. 26 Sec. 09.25.475. Voluntary disclosure; immunity. (a) Except as provided by 27 this section, a person who makes a voluntary disclosure of a violation of an 28 environmental or health and safety law is immune from an administrative or civil 29 penalty for the violation disclosed, for a violation based on the facts disclosed, and for 30 a violation discovered because of the disclosure that was unknown to the person 31 making the disclosure.
01 (b) A disclosure is voluntary for the purposes of this section only if 02 (1) the disclosure is made promptly after knowledge of the information 03 disclosed is obtained by the person; 04 (2) the disclosure is made in writing by certified mail to an agency that 05 has regulatory authority with regard to the violation disclosed; 06 (3) an investigation of the violation was not initiated or the violation 07 was not independently detected by an agency with enforcement jurisdiction before the 08 disclosure was made using certified mail; under this paragraph, the agency has the 09 burden of proving that an investigation of the violation was initiated or the violation 10 was detected before receipt of the certified mail; 11 (4) the disclosure arises out of a voluntary environmental or health and 12 safety audit; 13 (5) the person making the disclosure initiates, within a reasonable time, 14 an appropriate effort to achieve compliance, pursues that effort with due diligence, and 15 corrects or implements a series of measures designed to remedy the noncompliance 16 within a reasonable time; 17 (6) the person making the disclosure cooperates with the appropriate 18 agency in connection with an investigation of the issues identified in the disclosure and 19 agrees under terms of a confidentiality agreement to disclose to the agency, on request 20 of the agency, the part of the audit report that describes the implementation plan or 21 tracking system developed to correct past noncompliance, improve current compliance, 22 or prevent future noncompliance; and 23 (7) the violation did not result in substantial injury to one or more 24 persons at the site or substantial off-site harm to persons, property, or the environment. 25 (c) A disclosure is not voluntary for purposes of this section if it is a report 26 to a regulatory agency required solely by a specific condition of an enforcement order 27 or decree. 28 (d) The immunity established by (a) of this section does not apply and an 29 administrative or civil penalty may be imposed under applicable law if 30 (1) the person who made the disclosure knowingly committed the 31 disclosed violation;
01 (2) the person who made the disclosure recklessly committed or was 02 responsible for the commission of the disclosed violation and the violation resulted in 03 substantial injury to one or more persons at the site or substantial off-site harm to 04 persons, property, or the environment; 05 (3) the offense was committed intentionally or knowingly by a member 06 of the person's management or an agent of the person and the person's policies or lack 07 of prevention systems contributed materially to the occurrence of the violation; or 08 (4) the offense was committed recklessly by a member of the person's 09 management or an agent of the person, the person's policies or lack of prevention 10 systems contributed materially to the occurrence of the violation, and the violation 11 resulted in substantial injury to one or more persons at the site or substantial off-site 12 harm to persons, property, or the environment. 13 (e) An administrative or civil penalty that is imposed on a person for violation 14 of an environmental or health and safety law when the person has made a voluntary 15 disclosure under (a) of this section but is not granted immunity because of (d) of this 16 section may, to the extent appropriate and not prohibited by law, be mitigated by 17 (1) the voluntariness of the disclosure; 18 (2) efforts by the disclosing party to conduct environmental or health 19 and safety audits; 20 (3) remediation; 21 (4) cooperation with government officials investigating the disclosed 22 violation; 23 (5) the nature of the violation; and 24 (6) other relevant considerations. 25 (f) In order to receive immunity under this section, a facility conducting an 26 environmental or health and safety audit must give notice by certified mail to an 27 appropriate regulatory agency of the fact that it is planning to commence the audit. 28 The notice must specify the facility or portion of the facility to be audited, the date the 29 audit will begin and end, and the general scope of the audit. Immunity under this 30 section is available only for violations that are revealed through or discovered as a 31 result of information and documents first produced or obtained during the time period
01 specified in the notice. The notice may provide notification of more than one 02 scheduled environmental or health and safety audit at a time. Once initiated, an audit 03 shall be completed within the time period specified in the notice except that the audit 04 period may be extended once for up to 60 days if the facility gives notice of the 05 extension and its duration to the appropriate regulatory agency by certified mail before 06 the original time period expires. 07 (g) A regulatory agency may not initiate an inspection, monitoring, or other 08 investigative activity based solely on the receipt of a notice under (f) of this section. 09 The agency has the burden of proving that an inspection, monitoring, or other 10 investigative activity initiated after receipt of a notice under (f) of this section was not 11 initiated based solely on the receipt of the notice. 12 (h) The immunity under this section does not apply if a court or administrative 13 law judge finds that the person claiming the immunity has 14 (1) repeated an unreasonable number of times or continuously 15 committed violations that are the same as, or similar to, the violation for which 16 immunity is sought under this section; and 17 (2) not attempted to bring the facility, operation, or property into 18 compliance, so as to constitute a pattern of disregard of environmental or health and 19 safety laws. 20 (i) A violation that has been voluntarily disclosed and to which immunity 21 applies must be identified in a compliance history report as being voluntarily disclosed. 22 (j) A person is not immune under this section if the disclosure is in a 23 proceeding relating to pipeline rates, tariffs, fares, or charges. 24 (k) A person may not be required to waive immunity as a condition of a 25 compliance plan or similar agreement. 26 Sec. 09.25.485. Relationship to other recognized privileges. AS 09.25.450 - 27 09.25.490 do not limit, waive, or abrogate the scope or nature of a statutory or 28 common law privilege, including the work product doctrine, the attorney-client 29 privilege, and any other privilege recognized by a court with appropriate authority in 30 this state. 31 Sec. 09.25.490. Definitions. (a) In AS 09.25.450 - 09.25.490,
01 (1) "audit report" means a report that includes each document and 02 communication, other than those set out in AS 09.25.465, produced from an 03 environmental or health and safety audit; general components that may be contained 04 in a completed audit report include 05 (A) a report, prepared by an auditor, monitor, or similar person, 06 that may include a description of the scope of the audit, the information gained 07 in the audit, findings, conclusions, recommendations, exhibits, and appendices; 08 the types of exhibits and appendices that may be contained in an audit report 09 include supporting information that is collected or developed for the primary 10 purpose of and in the course of an environmental or health and safety audit, 11 including 12 (i) interviews with current or former employees; 13 (ii) field notes and records of observations; 14 (iii) findings, opinions, suggestions, conclusions, 15 guidance, notes, drafts, and memoranda; 16 (iv) legal analyses; 17 (v) drawings; 18 (vi) photographs; 19 (vii) laboratory analyses and other analytical data; 20 (viii) computer generated or electronically recorded 21 information; 22 (ix) maps, charts, graphs, and surveys; and 23 (x) other communications associated with an 24 environmental or health and safety audit; 25 (B) memoranda and documents analyzing all or a portion of the 26 materials described in (A) of this paragraph or discussing implementation 27 issues; and 28 (C) an implementation plan or tracking system to correct past 29 noncompliance, improve current compliance, or prevent future noncompliance; 30 however, "audit report" does not include formal communications or agreements 31 between an owner or operator and the appropriate agency regarding a
01 compliance implementation plan or strategy; 02 (2) "environmental or health and safety audit" means a voluntary, 03 confidential, critical, internal, and retrospective review, evaluation, or analysis of 04 current or past conduct, practices, and occurrences and their resulting consequences, 05 including an assessment that is a part of the owner's or operator's compliance 06 management system, that is conducted randomly, regularly, or in response to a 07 particular event by an owner or operator or by an employee or independent contractor 08 of an owner or operator and is 09 (A) conducted in the expectation that it will be confidential; and 10 (B) specifically and exclusively designed and undertaken for the 11 purpose of determining compliance with environmental or health and safety 12 laws or a permit issued under those laws; 13 (3) "environmental or health and safety law" means 14 (A) a federal or state environmental or occupational health and 15 safety law; or 16 (B) a rule, regulation, or municipal ordinance adopted in 17 conjunction with or to implement a law described by (A) of this paragraph; 18 (4) "intentionally" has the meaning given in AS 11.81.900; 19 (5) "knowingly" has the meaning given in AS 11.81.900; 20 (6) "owner or operator" means a person who owns or operates a 21 regulated facility, operation, or property; 22 (7) "penalty" means an administrative or civil sanction imposed by the 23 state to punish a person for a violation of a statute or rule; the term does not include 24 a technical or remedial provision ordered by a regulatory authority; 25 (8) "recklessly" has the meaning given in AS 11.81.900; 26 (9) "regulated facility, operation, or property" means a facility, 27 operation, or property that is regulated under an environmental or health and safety 28 law. 29 (b) To fully implement the privilege and immunity established under 30 AS 09.25.450 - 09.25.490, the term "environmental or health and safety law" shall be 31 construed broadly.
01 * Sec. 3. AS 12.45 is amended by adding a new section to read: 02 Sec. 12.45.052. Privilege relating to certain self-audits. An audit report 03 based on an environmental or health and safety audit is privileged to the extent 04 provided under AS 09.25.450 - 09.25.490. 05 * Sec. 4. APPLICABILITY. The privilege created by AS 09.25.450 - 09.25.490, added 06 by sec. 2 of this Act, applies to environmental or health and safety audits that are conducted 07 on or after the effective date of this Act.