Legislature(2017 - 2018)GRUENBERG 120
03/08/2017 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB20 | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 20 | TELECONFERENCED | |
HB 121-OCC. HEALTH AND SAFETY CIVIL PENALTIES
2:31:15 PM
CHAIR CLAMAN announced that the final order of business would be
HOUSE BILL NO. 121, "An Act relating to occupational safety and
health enforcement penalties; and providing for an effective
date."
2:31:51 PM
The committee took a brief at ease.
2:32:49 PM
BIANCA CARPENETTI, Staff, Representative Sam Kito, III, Alaska
State Legislature, advised that the legislation is a House Labor
and Commerce Standing Committee by request of the Department of
Labor & Workforce Development (DLWD). She briefly paraphrased
the following:
House Bill 121 brings Alaska's Occupational Safety and
Health (AKOSH) state plan into compliance with federal
requirements, ensuring continued eligibility for
federal grant funds and helping to protect workers
from workplace injuries, illnesses, and fatalities.
2:34:01 PM
DEBORAH KELLY, Director, Division of Labor Standards and Safety,
Department of Labor & Workforce Development, paraphrased her
written testimony as follows:
I'm sure you are all familiar with OSHA [Occupational
Safety and Health Administration]. Well, Alaska
Occupational Safety and Health or (AKOSH) is Alaska's
state plan. This means that Alaska Occupational
Safety and Health receives federal grants and is
responsible for the safety and health standards that
protect almost all Alaskan workers.
... A state plan such as AKOSH must be at least as
effective as federal OSHA, so Alaska's program
develops and implements safety and health standards
that fit Alaska's unique environment using input from
Alaskan industries, workers, and the public. Federal
standards are much less responsive to local needs.
Alaska's program also provides free consultation
services to employers with an emphasis on small
employers, helping them to understand the standards
and implement them to keep their employees safe.
AKOSH inspects all private and public workplaces in
Alaska, with a few federal exceptions.
2:35:21 PM
If, during the course of an inspection, an employer is
found violating a safety or health standard, AKOSH may
issue a citation to the employer that includes
penalties. The maximum penalties, and one minimum
penalty, that AKOSH may access for various types of
violations are set in Alaska's statutes. Now, maximum
penalties mean just that, the maximums. These are the
amounts reserved for the most egregious and severe
cases. The actual penalties accessed are calculated
based on numerous factors beginning with the
probability of an injury or illness actually
occurring, and the severity of the injury or illness
that could occur. After that, the penalties reduce
based on numerous factors. The biggest single
reduction factor is business size, small employers see
a standard reduction of 60 percent and even more in
some cases. Penalties are also reduced for good faith
efforts on the part of the employer to keep their
employees safe, as well as the employer's history of
violations with AKOSH. Penalties can be, and often
are, reduced up to 100 percent. To illustrate the
difference between the statutory maximums and what
employers actually pay, we looked at the difference
between penalties collected in FY2016, and the maximum
amount that AKOSH could have assessed for all
violations. So, for FY16 -- 2016, AKOSH collected
roughly 6 percent of the statutory maximum for the
violations cited. This is not a fluke, it just
reflects the built-in process that protects small
businesses, and protects the majority of employers who
hard to keep their employees safe. So, in 2015
Congress passed an Act requiring many agencies to
adjust penalties for inflation going back to 1990, and
then to continue to adjust those penalties yearly with
the consumer price index. OSHA complied and raised
their penalties in July of last year, Alaska has six
months to come into compliance with federal changes
like these, and as of January 1, 2017, we are out of
compliance. So why does this matter? A failure to
comply will risk most of the over $2 million in
federal grant funds we receive every year, and
eventually will risk a federal takeover of
jurisdiction. This means federal OSHA will come in
and enforce the higher penalty amounts anyway, the
over $1 million in estimated yearly penalties that we
will bring in will go to the federal government
instead of to the state general fund. Businesses will
face the burden of out-of-state proceedings when they
disagree with citations, and we will lose the safety
and health standards developed locally to fit Alaska's
unique conditions, such as logging, oil and gas, and
temporary labor camp standards. And, Alaskan
businesses will lose the high level of input they
currently have in the development of safety and health
standards. Loss of state jurisdiction would also mean
that state and local government employees would lose
their work -- workplace safety and health protections
since federal OSHA does not have jurisdiction over
those public employees.
2:38:49 PM
The fact is that local enforcement works. AKOSH has
concentrated on the transportation and warehousing
industry which saw over an 18 percent decline in lost
time injury rates last year. Our emphasis in the
construction industry has also paid off, lost time
industry -- injuries in that industry fell over 32
percent last year. The 10 year averages for our
emphasis industries show a long-term decline in injury
and illness rates. And, in fact, lost time injuries
and illnesses for working Alaskans, overall, has
fallen by over 50 percent in the last 10 years. The
payoff is huge for businesses who save on workers'
compensation costs, and for families and workers who
get to go home safe every day.
House Bill 121, is a bill to bring Alaska Occupational
Safety and Health in compliance. No more, no less.
The bill requires the Department of Labor and
Workforce Development to adopt maximum penalty amounts
by regulation and limits those amounts to the
corresponding federal amounts for each violation type.
This simply allows the department to comply with
federal law and stay compliant -- in compliance as the
consumer price index adjusts from year to year. This
will preserve our state plan and ensure that we can
continue in our effort to reduce injuries, illnesses,
and fatalities for Alaskan workers.
2:40:40 PM
REPRESENTATIVE KOPP surmised that this federal compliance
request was asked of all 50 states to stay current with the
federal penalty schedule. He asked whether Alaska must comply
by law.
MS. KELLY responded that there are 26 state plans, including
Porto Rico and perhaps one other territory. She advised that
the federal jurisdiction states had already raised their
penalties, and the 26 state plans are required to come into
compliance as a condition of their state plan, which was a law
passed in 2015.
REPRESENTATIVE KOPP surmised that by not adopting the updated
schedule, Alaska would then fall under federal jurisdiction.
MS. KELLY answered that the failure to at least maintain the
same penalties as the federal OSHA would result in a federal
jurisdictional takeover, and many states are dealing with that
now. Although, she explained, as long as Alaska makes positive
progress toward adopting the federal penalties, it will be
recognized because the legislative process does take time.
REPRESENTATIVE KOPP pointed out that Alaska has AKOSH
regardless, and asked "Do we do business with the devil we know,
or the devil we don't -- with state employees or with the feds?"
MS. KELLY responded that this issue was debated around 1999, and
many local businesses and industry representatives came out to
support the Alaska plan. Ms. Kelly said she would paraphrased a
quote from a representative of the industry at that time as
follows: "AKOSH may be SOB's, at least they are Alaskan SOB's."
She remarked "And, that's a fact," people can talk with the
division on developing standards that work for Alaskan
industries and Alaskan businesses.
2:43:55 PM
REPRESENTATIVE LEDOUX surmised that in the event the federal
government takes over, Alaskan residents would be working for
the federal government and administration and wouldn't be "our
SOB's?" She asked the amount of money the state would save by
calling the federal government's bluff and letting them have
jurisdiction.
MS. KELLY agreed that on site compliance officers under federal
jurisdiction would be Alaskan residents, but the people
overseeing those residents would not be Alaskans. In the event
an employer appealed a citation it would not be an Alaskan
process as it would take place with an administrative law judge
out-of-state. More importantly, she explained, Alaska would
lose numerous local and state standards specific to Alaska. In
response to the amount of money Alaska would save, she said she
would perform research and get back to the committee.
2:45:54 PM
SAM KITO, III, Alaska State Legislature, added that another
dynamic to consider is that Alaska could not expect that the
federal government would open an office in Alaska. Therefore,
it is likely that the Alaska office of Occupational Safety and
Health would not be managed by Alaskan residents, and would
possibly be out of San Francisco or Seattle because the federal
government was also experiencing budgetary constraints. Also,
in the event the legislature lets the Alaska Occupational Safety
and Health revert to the federal government, Alaska would lose
the protections it currently has for state employees not covered
under a federal plan.
2:47:14 PM
REPRESENTATIVE REINBOLD asked whether it is true the fees are
being removed from statute and put into regulations.
REPRESENTATIVE KITO responded that HB 121 allows the Department
of Labor & Workforce Development to have the statutory authority
to produce regulations allowing continued compliance with the
federal government's requirements, of which possibly changes
annually. He opined that probably the legislature does not want
to come back here and establish those maximum standards every
year because they are indexed to inflation. In the event the
legislature allows the department the regulatory authority, it
can keep up with the federal changes with regulations, as
opposed to coming back to the legislature every year, he
described.
2:48:29 PM
REPRESENTATIVE REINBOLD offered that "where the rub hits with me
is I don't want any -- any less authority" and this shifts
authority from the legislature to the executive branch "that has
a whole lot of power." and that she is a local control person.
She then asked whether that was his understanding.
REPRESENTATIVE KITO answered that that was his understanding.
As a sitting legislator, he pointed out, there are various
concerns as to whether or not to put automatic increments into
state law, except in this case, the federal government does have
an automatic increment and this does take control away from the
legislature to adjust every year. He asked whether this was
something the legislature really wants to deal with every year,
given it has the budget and such to deal with. Statutorily, he
acknowledged, he does not know of another way to effectively
deal with the department meeting compliance, unless the
legislature goes in and far exceeds the maximums of the federal
government in the hopes it wouldn't catch up with Alaska for a
few years and allow the department to work below that number.
He described that it was sloppy because it establishes a
standard that a legislature in two to four years down the road
may have forgotten about, thereby, leaving a number out there
that people may not change, and possibly may not remember why it
was established. He expressed that it is important, in this
situation, to allow the department that flexibility.
2:51:12 PM
REPRESENTATIVE REINBOLD offered concern about constantly
changing fees and yielding to the federal government rather than
keeping things local. She offered further concern about
increasing penalties and how it would impact businesses when
Alaska was in a recession.
2:52:17 PM
MS. KELLY responded to Representative Reinbold as follows:
This bill is very strictly written, so that while it
is moved to regulations, the department is really only
given one option which is to set the federal amounts,
and no more. So, that does limit that.
But, I would like to speak to your concern about
raising penalties because you're right. Quite
frankly, all these penalties will automatically --
this first adjustment will be a 78 percent increase.
And, I can't sugarcoat that, and keep in mind these
are maximums, these are not the actual penalties. So,
when you see those numbers, that sticker shock isn't
what most businesses are seeing when a cost shows up.
That being said, it -- it's a tough call, but it's
either us issuing those higher penalties, or it's the
federal government issuing those higher penalties and
taking that money back to the federal government
instead of depositing it as into the state general
fund.
Second of all, I -- I have several studies here that
show that an employer who receives a penalty from OSHA
or from AKOSH, in this case, actually sees a pretty
large savings over the next several years in reduced
injury and illness and; therefore, reduced workers'
compensation costs that far exceed the amount in
penalties that they paid. So, there's actually an
economic benefit for an employer paying those
penalties because it -- I mean, some employers, a few,
actually see these visits from OSHA as a low cost
consultation service. It may have been involuntary --
involuntary, but in the end, they are able to get
assistance and additional knowledge on what the
requirements are and how to better keep their
employees safe. So, those workers' compensation costs
are really much higher. The cost of an injury and
illness are way higher than what the penalties are.
2:54:25 PM
REPRESENTATIVE REINBOLD agreed that it as sticker shock. Now,
she said, the big gun was being used by increasing penalties by
78 percent, and she had received many complaints about these
agencies being trigger happy.
2:54:53 PM
CHAIR CLAMAN commented that the bill presents an interesting
situation in that the federal government doesn't state that
Alaska must raise its statute, it leaves it up to Alaska to
choose with the caveat that if Alaska doesn't follow the federal
government it will come in and take over. The price for
maintaining some degree of autonomy is that Alaska must be in
compliance with the federal limits. The legislature could make
the choice to let the federal government come in but, he
surmised, most of the public would prefer the legislature
maintain control of this particular element, and he offered
concern about the cost of compliance. He then referred to a
death at an Anchorage construction site because the employer was
grossly out-of-compliance and when looking at those high fines,
they were appropriate. Everyone wants employers to succeed but
not by putting their workers in dangerous situations, he
stressed.
2:56:22 PM
REPRESENTATIVE EASTMAN referred to the statement that the state
had only one option in dealing with the maximum amount
established on the federal side, and noted that the language in
the bill read as follows: "not more than the maximum amount."
He commented that it would be appealing to save lots of money by
eliminating the state work if the state was just doing exactly
what the federal government would be doing anyway. In the event
the state has another governmental partner willing to do work
for the state, he said he is all for it in some circumstances.
He then asked whether the state was expected to access fines at
that maximum amount if the department or other persons setting
those amounts chose to set a low amount. He further asked
whether the federal government would come in and say that Alaska
was out of compliance because it was not fining enough, even
though the legislature gave statutory authority to fine to that
maximum amount.
2:57:34 PM
MS. KELLY addressed the first part of Representative Eastman's
question, and related that she does not believe the department
was doing exactly what the federal government was doing, such
that the department develops local safety and health standards
unique to Alaska's industries. It also provides coverage to
both state and local public employees that federal OSHA would
not provide, and as far as the ability of the commission to set
lower amounts, Representative Eastman was correct. This puts
the department between two limits, and the Alaska statutory
limit would be the higher limit, and the federal grant
requirements and jurisdictional requirements would be the lower
limit. Therefore, if a commissioner did decide to set lower
amounts by regulation, then the federal equivalents would decide
that Alaska was not complying with its requirements. She said
that the division ran some numbers and assessed that it was less
than 10 percent of the maximum penalties. She reiterated that
the numbers of the sticker shock are theoretical maximums and
reserved for egregious cases, such as the case Chair Claman
referred to earlier. She explained that that situation was what
the statutory maximums were there for, and a situation such as
that would be the only time the division would assess such high
penalties.
2:59:28 PM
REPRESENTATIVE KREISS-TOMKINS asked the industry's perspective
on this because he did not see documents in support or
opposition.
MS. KELLY responded that the perspective from the industry was
that no one loves OSHA, but in 1999 the overwhelming response
was in favor of Alaska jurisdiction. In addition, the division
does provide free consultation service wherein it shows up to an
employer, with no penalties or citations involved, and assists
the employer in coming into compliance and learning how to keep
their employees safe and healthy on the job. She described it
as a popular program because it helps folks in the seafood
processing industry, in particular, come into compliance and
determine how to keep their people safe in that high hazard
industry. The OSHA is not popular, but federal OSHA is less
popular than AKOSH, she remarked.
3:01:05 PM
REPRESENTATIVE KREISS-TOMKINS requested the quantity of
consultations AKOSH performs annually.
MS. KELLY replied that in addition to consultation, AKOSH also
offers training to the public and employers which reaches an
additional set of people. She said she could provide this
information after the meeting.
3:02:01 PM
CHAIR CLAMAN advised Ms. Kelly that she could provide the answer
to his query at the next meeting. He continued that
Representative Reinbold raised an interesting question of going
through the regulation process and, he commented, that "there's
a level that what we're essentially doing is saying, in the
legislative sense, 'Uncle, we'll -- we'll use your maximum
rates.'" He described a component in which one might ask, why
the legislature needs to go through the exercise of a
regulation, why not just have a statutory provision which read
that the Alaska maximum rate would be the maximum rate
established by whatever federal statute setting this up. At
some point, he asked, why doesn't the legislature just say,
"Uncle as a matter of Alaska statute?" Thereby, he remarked,
the regulatory process would be unnecessary because the
legislature in recognizing the federal government's maximum,
would be the maximum Alaska would have.
3:03:20 PM
MS. KELLY explained that it was a balancing test the division
performed while it looked at what other states were working on,
and the division considered what might be the most acceptable to
folks. Quite frankly, she advised, the division ended up
balancing on the side of the regulatory process, but it was not
opposed to putting it into the statute.
REPRESENTATIVE REINBOLD reiterated that it is critical the
legislature writes the statutes, determines the budget, and not
just at the beck and call of the federal government. She
pointed out that the legislature needs to keep as much local
control and state control as possible, and she agreed that it is
a balancing act.
3:05:05 PM
REPRESENTATIVE KOPP surmised that the committee was simply
adopting a maximum penalty schedule, and nothing at all about
what the discretion was in that range. He said he understands
that there is an approximate 60 percent discount of the penalty
schedule for small businesses as a base line.
3:05:47 PM
REPRESENTATIVE KITO remarked that the legislature was
establishing, either through regulation or however the committee
ends up doing this bill, a federal maximum penalty. He
reiterated Ms. Kelly, and said that even with the current
penalty system, the assessments were less than 10 percent of the
maximums.
[HB 121 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB121 ver O 2.27.17.PDF |
HJUD 3/8/2017 1:00:00 PM HJUD 3/13/2017 1:00:00 PM |
HB 121 |
| HB121 Sponsor Statement 3.6.17.pdf |
HJUD 3/8/2017 1:00:00 PM HJUD 3/13/2017 1:00:00 PM |
HB 121 |
| HB121 Sectional Analysis 3.6.17.pdf |
HJUD 3/8/2017 1:00:00 PM HJUD 3/13/2017 1:00:00 PM |
HB 121 |
| HB121 Supporting Document-Federal Memo to State 2.23.17.pdf |
HJUD 3/8/2017 1:00:00 PM HJUD 3/13/2017 1:00:00 PM |
HB 121 |
| HB121 Supporting Document-OSHA Fact Sheet 3.6.17.pdf |
HJUD 3/8/2017 1:00:00 PM HJUD 3/13/2017 1:00:00 PM |
HB 121 |
| HB121 Fiscal Note DOLWD-OSH 2.24.17.pdf |
HJUD 3/8/2017 1:00:00 PM |
HB 121 |
| HB020 Draft Proposed CS ver. J 3.1.17.pdf |
HJUD 3/8/2017 1:00:00 PM |
|
| HB020 Amendments 1-13 3.7.17.pdf |
HJUD 3/8/2017 1:00:00 PM |
HB 20 |
| HB020 Supporting Document-Emails of Support 3.7.17.pdf |
HJUD 3/8/2017 1:00:00 PM |
HB 20 |