01/15/1998 01:38 PM Senate L&C

           SB 205 - OCCUPATIONAL HEALTH & SAFETY AUDITS                        
                                                                               
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee                  
meeting to order at 1:38 p.m. and announced SB 205 to be up for                
consideration.   He said that the Senate Judiciary Committee                   
decided to deal with health and safety self-audits separately from             
environmental self-audits because of concerns from the Department              
of Labor and the Department of Health and Social Services.  He said            
that he believes both the environment and people's health are very             
important. The incentives provided in this legislation are limited             
immunity and privilege from using information in legal proceedings.            
                                                                               
MR. MIKE PAULEY, staff to Senator Leman, explained that SB 205 is              
modeled after the environmental self-audit bill enacted last year              
by the legislature.  For a starting point they took the                        
environmental audit statute and inserted the term "occupational                
health and safety" wherever the term "environment" would otherwise             
appear.  The environmental audit bill was reviewed and revised by              
five different committees of referral, first in the 19th                       
Legislature and then again in the 20th Legislature.  It represents             
the end-result of years of dialogue among the sponsor, the                     
Department of law, the Department of Environmental Conservation,               
and affected industries throughout the State.                                  
                                                                               
SB 205 provides two incentives to encourage individuals,                       
businesses, and local governments to review their operations and               
examine whether worker safety is being protected.                              
                                                                               
Number 89                                                                      
                                                                               
The first incentive is a qualified privilege.  If a regulated                  
entity conducts an audit report, it enjoys a limited evidentiary               
privilege.  That means that the self-critical analysis in an audit             
report cannot be used against it in a civil or administrative                  
proceeding.  This evidentiary privilege is similar to a privilege              
for environmental audit reports that has already been recognized in            
23 other states and which is also being debated now in the U.S.                
Congress.  It is designed to overcome a structural barrier which               
discourages many companies from undertaking an auditing program.               
Self-auditing can be very expensive for some companies, and there              
is a reluctance to undertake such an investment when there is a                
fear that audit documents will simply be used by the government as             
a "roadmap to prosecution."  An audit report by its very nature is             
a self-incriminating document.  It identifies a problem, identifies            
what individuals or policies may have caused a problem, and                    
recommends corrective action.                                                  
                                                                               
The privilege provision had strict limitations.  It doesn't apply              
to criminal proceedings, it can only be claimed if the person                  
conducting the audit provides 15-day advance notice to the State of            
their plans to do an audit, and the audit must be completed within             
90 days unless a longer period of time is negotiated with the                  
State.  It does not extend to information that a State regulatory              
agency discovers independently nor does it apply to data or                    
information that is already required to be maintained or be made               
available to State regulators under existing laws and regulations.             
The audit privilege can be overcome if a judge determines that it's            
being asserted for a criminal or a fraudulent purpose and if he                
determines the audit report reveals evidence that violations were              
discovered, but not promptly corrected.                                        
                                                                               
The second part of the bill provides the limited immunity.                     
Companies that discover problems through the process of self-audit,            
who promptly report those problems to the State and who take prompt            
action to correct the problem, will be immune from civil or                    
administrative penalties.  Like the privilege incentive, the                   
immunity provision comes with a lot of strings attached.  The                  
immunity is not allowed in criminal proceedings and does not apply             
if the violation in question was already discovered independently              
by the regulatory agency.  Prompt efforts must be initiated to                 
correct the problem and prevent its future recurrence and, most                
importantly, immunity is not available for violations that resulted            
in, or threatened to result in, substantial injury to persons                  
onsite or to persons, property, and the environment offsite.                   
                                                                               
A 1995 study by Price Waterhouse surveyed 369 major companies                  
nationwide about their self-auditing practices.  The study found               
that nine percent of companies conducting audits had experienced               
the involuntary disclosure or discovery of those documents.  Twelve            
percent of companies reported that they had voluntarily disclosed              
the results of audits and then had the disclosed information used              
for enforcement purposes against them.  This sends an unmistakable             
message to companies that proactive efforts to achieve compliance              
may be punished by government regulators.                                      
                                                                               
MR. PAULEY concluded saying that the bill's objective is to promote            
a partnership between industry and the State - to work together as             
a team to reduce workplace injuries and fatalities.                            
                                                                               
SENATOR HOFFMAN asked what the time-frame was for reporting                    
promptly and taking prompt action.                                             
                                                                               
MR. PAULEY replied that was not defined because of the wide variety            
of problems that might be reported.  The immediacy of response                 
depends on how serious the problem is.  Also, other factors may                
contribute to the timing of the action, such as when construction              
may take place or weather delays.                                              
                                                                               
Number 200                                                                     
                                                                               
CHAIRMAN LEMAN said he did not want the incentives provided by the             
bill to imperil the lives or the health of anyone.  He said that he            
thought making the law in this area consistent with other areas may            
help with self-auditing incentives.                                            
                                                                               
MR. PAULEY agreed.  He added that it's been reported to him that               
companies in the State that currently do audits don't just audit               
for environmental compliance and then come back a month or two                 
later and do a health and safety compliance audit.  Their in-house             
audit teams are usually called environmental health and safety                 
(EHS)units.  Sometimes it's hard to distinguish between the two.               
                                                                               
CHAIRMAN LEMAN said there is room for improvement in the fishing               
and logging industries, two of the most dangerous occupations in               
Alaska.  Alaska's fatality rate is four times the national average,            
he said.  He praised Alyeska Pipeline Service Company's "Nobody                
Gets Hurt" program with the objective of thousands of people hours             
of employment without lost-time accidents and providing incentives             
to employees to do that.                                                       
                                                                               
SENATOR MACKIE asked hypothetically what would be the effect if                
someone got hurt while a company was in the process of coming up               
with a correction to a situation.                                              
                                                                               
MR. PAULEY answered him by referring the Committee to page 8, lines            
7 where it says immunity is not available if the violation resulted            
in or poses or posed an imminent or present threat of substantial              
injury to one or more persons on the site audited....  Line 10 also            
says that a disclosure is voluntary for the purposes of this                   
section only if the disclosure is made promptly after knowledge of             
the information disclosed is obtained by the owner or operator.                
Line 31 also notes that the violation must be corrected within 90              
days or they have to enter into a compliance agreement with the                
Department or municipality that allows for a longer period of time.            
                                                                               
SENATOR MACKIE said his concern was if we left someone to continue             
operation while an unsafe condition existed and not hold them                  
responsible for the safety of workers.                                         
                                                                               
MR. PAULEY responded that he would have to defer that answer to                
OSHA and the Department of Labor about what their authority is to              
order facilities to cease operations to address unsafe work places.            
That is beyond the scope of this bill.                                         
                                                                               
SENATOR MACKIE said he wanted that addressed in a future hearing.              
                                                                               
CHAIRMAN LEMAN noted that when the State of Alaska took on the                 
program for occupational safety and health primacy, our program had            
to be "as effective as" the federal program.  He asked if this bill            
would still allow our program to be "as effective as" the federal              
program.                                                                       
                                                                               
MR. PAULEY replied that he believed it would, although there is a              
difference in interpretation of that phrase.  He thought we should             
use a performance-based criteria, judging by the end result of a               
safer work place.  If the policies of this State are reducing both             
injuries and fatalities at the work place, this is not only "as                
effective as", but "more effective than,"  the federal program.                
The Department of Labor maintains that it doesn't apply to the end             
result, but rather to the mechanisms of enforcement.  Under this               
interpretation, if the federal government says that a certain                  
violation requires a certain penalty or fine and a State law                   
provides for anything different, then it by definition is not as               
effective as.