CSSB 41(FIN) - ENVIRONMENTAL AUDITS Number 1726 CHAIRMAN GREEN advised members they would next consider CSSB 41(FIN), "An Act relating to environmental audits to determine compliance with certain laws, permits, and regulations." He apologized to people in the gallery, as well as to the committee members, because of falling behind; however, it had been due to circumstances beyond his control. He announced that they would take testimony until 2:15 p.m., and reconvene at 5:30 p.m. CHAIRMAN GREEN pointed out that public testimony had been closed on SB 41, and advised members that amendments that had been discussed during the previous hearing had been incorporated into a new House draft committee substitute, Version "K". REPRESENTATIVE JEANNETTE JAMES asked if any of the prior amendments had not been included in the new House draft committee substitute. CHAIRMAN GREEN advised members that prior amendments which had been identified as proposed Amendments 3, and 9 had not been included in the revised version, as well as other amendments that had been added since that time. He noted that two of those amendments were controversial, Amendment 3, and Amendment 9, and there were also a couple of minor amendments, as well as two Amendments that had been submitted by Representative Berkowitz that had not been incorporated into the new House draft committee substitute, Version "K". REPRESENTATIVE NORMAN ROKEBERG moved to adopt HCS CSSB 41 ( ), Version "K", as the committee's working document. There being no objection, HCS CSSB 41 ( ), Version "K", was adopted as the committee's working document. Number 1882 MICHAEL PAULEY, Legislative Assistant to Senator Loren Leman, Prime Sponsor, pointed out that as stated by Chairman Green, there were nine proposed amendments at the previous hearing, and of those nine amendments, only amendments 3 and 9, as they were designated on Monday, were considered controversial by the sponsor; however, the other seven amendments were amendments that the sponsor, the administration and affected industries had all reviewed and had no problem with those. MR. PAULEY stated that the substantive changes could all be found on page 10 of Version "K", beginning on lines 3 through 6. He advised members that the wording of that paragraph had changed slightly and used to contain the words "repeatedly" or "continuously" committed, and those had been deleted and replaced with the word pattern. Mr. Pauley advised members that had addressed a concern brought forth by the some of the industries because certain violations were measured for each day they were committed. He explained that if a piece of machinery was not set at the right setting, that it would considered a violation each, and every day that it was not set right, even though one compliance issue was involved. Mr. Pauley advised members that the use of the word "pattern" was more accurate than the word "repeatedly". MR. PAULEY pointed out that the second change occurred on page 10, lines 10 and 11. On line 10 the word "authorized" had been added; "the violation was authorized or committed intentionally,", and that addressed a situation where an owner or operated authorized someone else to violate. On line 11, the word recklessly had been added, whereas previously it stated "intentionally or knowingly". Mr. Pauley advised members that the third and final substantive change could be found on page 10, beginning on line 21, in which a new subsection (b) had been added, and read as follows: (b) There is no immunity under AS 09.25.475 from an administrative or civil penalty for the coalition of an administrative or court order or for violation of a term or condition of an administrative or court order. Mr. Pauley explained that that addressed where an audit had been conducted and a problem was found, it would be reported and immunity would be claimed; however, that same problem was something that six months prior to starting the audit report was the subject of an order which required the cleanup process. A violation, in that sense, could not be claimed as an unknowing violation, or one that had just been discovered the subject of an enforcement order. MR. PAULEY stated that the other changes were largely of a technical nature, and unless the committee wished, that in the interest of time, he would conclude his testimony. CHAIRMAN GREEN pointed out that subsection (c), on page 10, was subsection (b) in the previous version, and he wanted to clarify that the mitigation was still included in that bill section. REPRESENTATIVE ETHAN BERKOWITZ moved to amend draft HCS CSSB 41 ( ), page 4, line 4, following the ".", insert; The audit report must indicate in writing the date on which it was completed. Page 7, line 14, delete the word [promptly]; page 7, lines 14-15, delete [after discovery of the noncompliance], and insert; within the time limits applicable under AS 09.25.475(d). Page 8, line 3, delete, [promptly after knowledge of the information disclosed is obtained by the owner or operator], insert; within 10 days after the audit report containing the disclosed information was completed. Page 8, line 15, delete, [promptly], insert; within 10 days after the audit report was completed. Page 8, line 17, delete, [promptly], insert; within 10 days after the audit report was completed. Page 8, line 21, following the word "days", insert after the audit report was completed. REPRESENTATIVE JAMES objected. REPRESENTATIVE BERKOWITZ expressed that Amendment 10 was, basically, a technical amendment that would make sure that audits were dated, and rather than relying on the variation of what people might consider to be "prompt" notification, or reporting, that he believed the standard that the EPA used was within 10 days. REPRESENTATIVE BERKOWITZ pointed out that his line references pertained to Version "H", so adjustments would be necessary because they were considering Version "K". REPRESENTATIVE JAMES advised members she would rather maintain the word "prompt", rather than 10 days. Number 2227 CHAIRMAN GREEN advised members that "promptly" could be adequate time for a small "Mom and Pop" operation; however, a large corporation's audit may be the size of a phone book, and to require a report of that magnitude to be completed and provided promptly might not be practical. He noted that he had a problem with a fixed time because of the wide scope of the kinds of companies that would be involved. MR. PAULEY advised members the sponsor would be opposed to Amendment 10, and one of the reasons was what Chairman Green expressed. He stated that audit reports did vary in size, and for a large company, such as Alyeska, the process could take longer than 10 days. Mr. Pauley advised members that he had requested a number of sample disclosures from the state of Texas, which he distributed to the staff of committee members. He noted that in those four disclosure samples, there was a considerable variance; one was disclosed in two days after completion of the report, and the longest period was 50 days. MR. PAULEY pointed out that what he had heard from at least two attorneys, who work with corporations, was if "promptly" was left undefined, the tendency would be erring on the side of interpreting that conservatively. He stated that a company would not want to lose immunity based on a technical disqualification by the agency because they might not feel the report was submitted promptly. Mr. Pauley felt it would be best to leave it as an administrative discretion where DEC would have the discretion to define what they felt was prompt or not, given the nature of the audit and complexity of the document. REPRESENTATIVE ROKEBERG asked if there might be a case where there could be an unclear area of responsibility between the contractor and the principal. He stated that he could conceive of an instance where there could be a contractual obligation between a contractor and a principal that prior to any revelations of environmental audits, that they would be informed and also have an opportunity to review the report. Representative Rokeberg agreed that a set time frame would be problematic. He pointed out that the House Labor and Commerce Committee had an International Letter of Credit issue before them on the UCC, and one of the topics of debate was when the payments of the monies would be actually transferred from one end to the other, and they were going from 30 days down to 7 days in the Uniform Act. Representative Rokeberg advised members that they were considering periods of time, which even in a monetary instance, needed a certain amount of time in order to be verified and handled in the proper manner. MR. PAULEY agreed that there were relationships, particularly on the North Slope, where there were contractors and principals who each had their different responsibilities under the laws. He stated that they each could be doing audit reports and under SB 41, they would be allowed to share those reports without losing the privilege otherwise. Mr. Pauley agreed that it could take some time to sort out who had responsibility for which area. REPRESENTATIVE BERKOWITZ asked if Ms. Adair might address the proposed amendment. Number 2455 JANICE ADAIR, Director, Division of Environmental Health Department of Environmental Conservation, advised members that the department shared the same concerns as expressed by Representative James, that sometimes promptly meant less than 10 days. She stated that if there was a situation where there was an ongoing violation that was causing harm, the department would want immediate attention to whatever the violation was. TAPE 97-52, SIDE B Number 000 MS. ADAIR stated that they were talking about promptly initiating appropriate efforts to achieve compliance, or within 10 days, that she felt it was appropriate that things be done promptly, or within some set period of time. CHAIRMAN GREEN asked Mr. Adair if using the word "promptly" would pass muster because in some cases an audit could not be submitted within 10 days. MS. ADAIR agreed that sometimes promptly might be "right now", and sometimes it could be a situation where the company needed to order a part, or the need to wait until spring for construction purposes; however, in no case could the company continue something that had caused injury, but to correct the problem "promptly" might be impacted by conditions outside the company's immediate control. REPRESENTATIVE BERKOWITZ withdrew Amendment 10. There being no objection, Amendment 10 was withdrawn. REPRESENTATIVE BERKOWITZ moved to adopt Amendment 11, HCS CSSB 41, page 7, line 6, following the word "court", insert; , hearing officer, or arbitrator; page 7, following line 18, insert a new paragraph to read: (4) audit report contains evidence that is relevant to a claim by an employee of the owner or operator that the employee's compensation, the employee's terms, conditions, or privileges of employment, or decisions about the employee's opportunities for promotions, pay increases, or changes of duties were adversely affected by the employee's participation in the audit; and renumber the following paragraphs accordingly. Page 7, following line 23, insert a new subsection to read: (b) An arbitrator may require disclosure of confidential self-evaluation and analysis contained in an audit report in an employee grievance proceeding if the arbitrator determines, after an in camera review consistent with the appropriate rules of procedure, that the audit report contains evidence that is relevant to a claim by an employee of the owner or operator that the employee's compensation, the employee's terms, conditions, or privileges of employment, or decisions about the employee's opportunities for promotions, pay increase, or changes of duties were adversely affected by the employee's participation in the audit. Page 7, line 25, following "(a)", insert; or (b), page 7, following line 25, insert a new subsection to read: (d) In this section, "employee" includes a former employee. REPRESENTATIVE PORTER objected for the purpose of discussion. REPRESENTATIVE BERKOWITZ advised members that proposed Amendment 11 would protect whistle blowers. He stated that if there was a whistle blower incident which resulted in retaliatory employee action, that the audit itself might be relevant material and the whistle blower should have access to it for that proceeding. Number 108 MR. PAULEY advised members the sponsor would be opposed to Amendment 11. He stated that they would be adding in an entirely new element to the bill, and directed members attention to lines 1 and 2 of the amendment which would provide the concept of an arbitrator. Mr. Pauley pointed out that there were some people who had a problem with including an administrative hearing officer in the bill, that it ought to be limited to the courts. Mr. Pauley pointed out that because he had only received a copy of the amendment that morning, he had not had the time to speak with the lawyers they had worked with on the proposed legislation to ask them what the impact would be of including an entirely new concept to the bill. MR. PAULEY stated that the bill was not about whistle blowers, that in his view, it neither granted or removed any rights which whistle blowers already had under separate laws. He directed members attention to page 7, line 22, that included a provision under the exceptions section to overcome privilege if it was shown that it would result in a miscarriage of justice or the denial of a fair trial to the party challenging the privilege. REPRESENTATIVE BERKOWITZ asked that members refer to page 2, the last two lines, "the privileged information is not admissible as evidence or subject to discovery in (1) a civil action. Representative Berkowitz advised members that would include employment action, in his reading of the language, and stated that when a net is thrown out as broadly as "any civil action", whether legal or equitable, he was attempting to make sure that the wrong fish did not get caught. He was fully insistent that the rights of whistle blowers be protected, especially in a circumstance where the individual was subsequently unable to defend him or herself. Representative Berkowitz pointed out that while the mention of an arbitrator might be somewhat troubling to the bill sponsor, some times those employment hearings were done with an arbitrator which was equivalent to a hearing officer. Number 252 REPRESENTATIVE CROFT stated that it seemed to him that Amendment 11 followed the in camera review procedures, and arbitrator to him was not as alarming as it appeared to be with the bill sponsor, that it could simply mean a court substitute where ever appropriate, and read it as being equivalent to a hearing officer. He noted that the in camera review was required to be done under the appropriate rules of procedure and, whomever, would be bound by the same rules. Representative Croft stated that language appeared to be taken from the bill itself with respect to an audit report proceeding; "If the court or administrative hearing officer determines, after an in camera review consistent with the appropriate rules of procedure". Representative Croft pointed out that he was glad to hear the sponsor say that retaliation, discrimination and those types of things would likely be under the catch all; however, he would be more comfortable if it was specifically stated that they would fall under the catch all. He did not believe Amendment 11 would burden the bill, but helped to clarify an area that was so broad, and it ought to state where the exceptions applied. REPRESENTATIVE PORTER spoke in opposition to proposed Amendment 11. He stated that it was necessary to look at those types of provisions in their best light, and then consider them in their worst light, and if they could be subject to something that could be abused. Representative Porter advised members that he could think of no more likely situation than employees who may have not received promotions, pay increases, or changes in duties that they did not like to use whatever means they had at their disposal to mess with the employer. He advised members that he liked the balance that was in the bill which stated that those were things that were not to be used in civil cases and it also had an exception, and he felt that would be looked at as something serious, not some wage dispute, et cetera. REPRESENTATIVE JAMES agreed with the comments of Representative Porter, and expressed that she was comfortable with the bill and Amendment 11 was not necessary. She stated that she also agreed with the sponsor in that SB 41 was not about whistle blowing, but a bill that would try to make whistle blowing not an issue. REPRESENTATIVE BERKOWITZ advised members that it was interesting to him that the assumption was that the individual employee who stepped forward was the one who was stepping out of line in a whistle blowing circumstance, and it might indeed, be a life and death situation, rather than the company that's responsible being the one who was not adhering to the rules. He stated that the good honorable companies, as described by Representative Porter and Representative James, would not be in a whistle blower situation because they would be complying with the rules. Representative Berkowitz advised members that his intent was for those companies that did not pay attention to the rules. REPRESENTATIVE BERKOWITZ pointed out that they were already granting immunity by telling people who had broken the law to confess and all would be forgiven. He stated if members were to apply that provision to the criminal code, he felt they would see more generally, an entirely different result. Representative Berkowitz explained that his intention was that in the instance where the corporation was misbehaving, and in the instance where the corporation was taking retaliation against someone, that person should have recourse to facts when it gets to the point of having to go to court. He further stated that he was not saying that good companies should be pilloried in wrongful cases, they would still be subject to an in camera review and still subject to all the protections that a corporation was entitled to in a suit. It would only be in the instance where a corporation had done something wrong that the whistle blower protection would kick in and was not a blanket exemption for whistle blowers. He recognized that the bill was not about whistle blowing, but about protecting the environment. Representative Berkowitz advised members that whistle blowers would be one last line of protecting the environment, and urged that members consider Amendment 11 in that light. REPRESENTATIVE CROFT pointed out that the line references were three lines off and one could just add three lines to those referred to and it would coincide with Version "K", HCS CSSB 41 (). CHAIRMAN GREEN believed that whistle blowers were currently afforded some protection in statute. REPRESENTATIVE CROFT agreed; however, advised members that "whistle blower" was specifically defined, but there was no generic whistle blower standards provided in the law. CHAIRMAN GREEN asked if the objection was maintained. REPRESENTATIVE PORTER maintained his objection, so Chairman Green requested a roll call vote. In favor: Representatives Berkowitz and Croft. Opposed: Representatives Porter, Rokeberg, James and Chairman Green. Amendment 11 failed adoption by a vote of 4 to 2. Number 598 CHAIRMAN GREEN advised members the House Judiciary Committee would stand in recess until 5:30 p.m. CHAIRMAN GREEN reconvened the House Judiciary Committee meeting at 5:45 p.m. Members present at the call to order were Representatives Bunde, James, Croft, Berkowitz and Chairman Green. Representatives Bunde and Rokeberg arrived at 5:47 p.m. CHAIRMAN GREEN reminded members they were considering amendments to HCS CSSB 41 prior to going into recess. He noted that one of the amendments that had met with controversy had been revised to the point where both the sponsor and the department were in agreement. Chairman Green advised members that amendment would be considered Amendment 3-A. REPRESENTATIVE CROFT advised members that there were two standards of proof, one involved what would be necessary to get an in camera review, and the second would be that the judge would have to decide if the violation should be revealed to the public. He stated that it would be relatively easy to get a judge to look at a violation, but difficult to get the judge to reveal it to the public. REPRESENTATIVE CROFT moved to adopt Amendment 3-A, HCS CSSB 41 ( ), page 7, after line 23, insert a new subsection (b) to read: (b) A party seeking an in camera review as provided under (a) of this section shall provide to the court of administrative hearing officer a factual basis adequate to support a good faith belief by a reasonable person that the documents or communications for which disclosure is sought are likely to reveal evidence to establish that an exception in (a) of this sections applies. Renumber subsections accordingly. And on page 7, line 24, reword the subsection as follows; (c) A party seeking disclosure of confidential self-evaluation and analysis during an in camera review under this section has the burden of providing that an exception in (a) of this section applies. There being no objection, Amendment 3-A, HCS CSSB 41 ( ) was adopted. Number 791 CHAIRMAN GREEN advised members they would next consider Amendment 9, HCS CSSB 41 ( ). REPRESENTATIVE BERKOWITZ moved to adopt Amendment 9, HCS CSSB 41, page 7, line 30, following "for the violation disclosed", delete the comma and insert or. Page 7, lines 30 and 31, and page 8, line 1, delete [, and for a violation discovered because of a disclosure that was unknown to the owner or operator making the disclosure]. REPRESENTATIVE ROKEBERG objected for the purpose of discussion. He asked which version of the bill the amendment addressed. REPRESENTATIVE BERKOWITZ advised members that the amendment referred to "H" version, and again, members could just add three to the line number referenced and it would coincide with version "K". MARIE SANSONE, Assistant Attorney General, Natural Resources Section, Department of Law, advised members that the amendment before the committee grew out of a meeting that Janice Adair had with the Environmental Protection Agency. Ms. Sansone pointed out that Ms. Adair had asked the regional council in Seattle, Washington, to review the bill, who had secured review from the EPA headquarters in Washington D.C. Ms. Sansone explained that the EPA had very few concerns; however, this was one area of concern they did express. MS. SANSONE stated that for the purpose of convenience, they had termed it the "fruit of the poisonous tree" problem, which was when there was a disclosure, or evidence that disclosed a violation, sometimes an issue could arise when subsequent violations were discovered and if they would stem from the initial disclosure, or tainted somehow so that there could not be immunity. Ms. Sansone advised members that immunity could be granted for violations disclosed, but it also included language that would allow someone to disclose a factual scenario, or circumstances, conditions and occurrences, and as long as those were disclosed and met the other criteria of the bill, and the company could receive immunity for that disclosure even though it did not specifically identify the violation. MS. SANSONE stated that the concern was what would happen if there should be discoveries by the agency, or by the municipality, who might some years later decide to look at whether the company had cleaned up the violation, and corrected the problem so it would not reoccur. Ms. Sansone advised members that the department felt that was outside the scope of what was intended by the bill, and should not be immunized, and by leaving the last clause in the bill it created an ambiguity. Ms. Sansone believed the sponsor objected to Amendment 9. Number 1113 REPRESENTATIVE JAMES was not specifically clear as to what the proposed amendment was doing and asked that Ms. Sansone repeat her explanation of the amendment. MS. SANSONE explained that subsection (a) was an introduction to what immunity could be obtained for. She stated that an owner or operator who came forward and made a voluntary disclosure of a violation of environmental law, could disclose the actual law that was being violated by reference, or could come in and not, actually, identify the law, but describe circumstances, conditions or occurrences that constituted the violation. Ms. Sansone advised members if that company met all the other requirements of the bill, he could be immunized from the penalty. She stated that the question arose in the last clause where a violation was discovered because of a disclosure that was unknown to the owner or operator. Ms. Sansone advised members that Amendment 9 proposed the deletion of that last clause so the owner or operator would be limited to the four corners of his disclosure whether through a description of the violation or actually identifying the specific regulation he believed he was in violation of. MS. SANSONE further explained that the problem with the last clause, if it was subject to abuse, could cover violations well beyond any disclosure. He may have disclosed having oil stains on one site, and later when DEC was inspecting another site remembered a prior disclosure and looked for that at another site, which was not intended to be immunized under the purpose of the bill. Ms. Sansone advised members that the concern was that the owner or operator could make the argument that the reason DEC even bothered to look was because the department knew he had previously disclosed a violation on another area or property. Number 1333 REPRESENTATIVE JAMES advised members if the person did not conduct a self audit on a particular piece of property, he would have no immunity on that parcel, only the one he reported violations on. So, she did not see a situation occurring as described by Ms. Sansone. CHAIRMAN GREEN advised members that he would tend to agree with Representative James. He stated that the example provided by Ms. Sansone appeared that there might be intent, and he believed there would have to be some trust involved. Chairman Green advised members that an unknown violation that had been discovered by the violator because of another self audit disclosure should not be subject to penalty, but instead be given the opportunity to disclose at the time of discovery, clean it up and be granted immunity because he was honestly unaware of the violation. Chairman Green stated that if it was the true intent to clean up the environment and correct environmental problems, that should be allowed, rather than having a cloud hanging over someone's head. REPRESENTATIVE CROFT stated with respect to Representative James statement whereby the owner or operator wanted immunity from both sites that he should disclose both sites, and he felt Amendment 9 would address such a situation; however, if the amendment was rejected, he was glad to put on the record that the "fruit of the poisonous tree" did not extend to things that were not some how related in a location sense and in a logical sense to the original violation. REPRESENTATIVE ROKEBERG advised members that he looked at it as almost constructive amnesty, which was really the intent of the bill. He stated that the intent of the bill was to encourage disclosure, and asked if there were other safeguards provided within the bill so a situation would not occur as described by Ms. Sansone. MS. SANSONE advised members there were many safeguards in the bill and that the sponsor had been very cooperative in working with the department to make sure they were appropriate. She stated that she brought the issue to the attention of the committee because of a concern expressed by the EPA attorneys. She stated that Amendment 9 was one solution that would address their concern in a very literal way, although the department did feel the bill had a lot of protections against abuse. Ms. Sansone pointed out that with the record indicating that one disclosure would not allow an owner or operator to immunize countless, unrelated violations, that the record would provide the same protection as was being sought through Amendment 9. CHAIRMAN GREEN advised members that subsections (b) and (c) would impose the protection of the environment because immunization would not work if it was a threat to substantial injury, et cetera, and it goes on to say that, "disclosure must be done promptly", so he felt that would do away with the two year problem. REPRESENTATIVE ROKEBERG advised members that in a real estate transaction, it was typical to have a piece of real property that was contaminated in some manner, and there was the requirement for remediation of the problem prior to the sale of the property. He stated that the actual cause or timing of the violation could have taken place a number of years previously. He pointed out that if he was going to buy the parcel, he would want to conduct a self audit and then fix the problem so he could be in compliance, but would not want to be penalized for bringing it to the attention of the department. Number 1857 CHAIRMAN GREEN believed the bill would act just as Representative Rokeberg explained because he thought that when bringing a problem to the attention of the agency, and requested assistance as to the means of cleanup, that immunity would be granted because conditions for being granted immunity would have been satisfied. REPRESENTATIVE CROFT believed that was exactly right because for things reasonably within the scope of a single disclosure did not mean that every piece of property a person owned would be immunized. CHAIRMAN GREEN asked if the objection to the adoption of Amendment 9 was maintained. Representative James maintained her objection, so a roll call vote was taken. In favor: Representatives Croft and Berkowitz. Opposed: Representatives James, Bunde, Rokeberg, and Chairman Green. Amendment 9, HCS CSSB 41 failed adoption by a vote of 4 to 2. Representative Porter was absent during this vote. Number 1945 CHAIRMAN GREEN advised members they would next consider Amendment 12-A. REPRESENTATIVE BERKOWITZ offered Amendment 12-A, HCS CSSB 41, page 4, line 11, following "AS 09.25.455(b), insert (3) or AS 09.25.475 -- 09.25.480. Representative Bunde objected for the purpose of discussion. REPRESENTATIVE CROFT pointed out that the next three amendments, 12-A, 13 and 14 were non-objectionable, and things could possibly be expedited if addressed as a package. MS. SANSONE advised members that the next three amendments had been prompted by information that Mr. Bundy, the U.S. Attorney, had included in his letter. She explained that one of the concerns he raised was whether a person could use the self audit information in any way during agency follow up inspection. Ms. Sansone stated that one area of the bill that talked about that was in the proposed section AS 09.25.450, which created the audit privilege. Ms. Sansone stated that in subsection (h), it began "unless the privilege has been waived under 455(a), which is a provision that allows owners and operators to expressly waive the privilege, or a disclosure is made under 455(b)", which in the context of a government agency was under a claim of confidentiality that the disclosure was kept confidential under the Public Records Act, that if there had been a disclosure under either scenario, the government agency could use the audit report during a subsequent inspection. Ms. Sansone stated that in looking through the bill, she realized that another type of disclosure could be made by an owner or operator in the context of the immunity sections, which were .475 and .480. She advised members that they could address some of Mr. Bundy's concerns by inserting a reference to those sections in the bill. MS. SANSONE stated that most likely, an owner or operator, in an immunity situation if they made a disclosure, would either come out and expressly waive the privilege under .455(a), or they would prepare the claim of confidentiality statement, and Amendment 12-A would, possibly, cover anything that might slip through the cracks. She explained that they were disclosures that were allowed and recognized under the statute. TAPE 97-53, SIDE A Number 000 CHAIRMAN GREEN stated without objection, Amendment 12-A, HCS CSSB 41 was adopted. REPRESENTATIVE BERKOWITZ moved to adopt Amendment 13, HCS CSSB 41, page 4, following line 27, insert a new subsection (k) to read: (k) There is no privilege under this section for documents or communications in a criminal proceeding. There being no objection, Amendment 13, HCS CSSB 41 was adopted. REPRESENTATIVE BERKOWITZ moved to adopt Amendment 14, HCS CSSB 41, page 7, line 14, following "the environment offsite", insert; , or evidence of the causes and circumstances leading to such injury or imminent or present threat of such injury. There being no objection, Amendment 14, HCS CSSB 41 was adopted. REPRESENTATIVE CROFT moved to adopt Amendment 15, HCS CSSB 41, page 14, following line 7, insert new bill sections to read: *Sec. 3. Section 1 of this Act and AS 09.25.450, 09.25.455, 09.25.460, 09.25.465, 09.25.475, 09.25.480, 09.25.485, and 009.25.490, enacted by sec. 2 of this Act, are repealed three years after the effective date of this Act. * Sec. 4 TRANSITIONAL PROVISION. Notwithstanding sec. 3 of this Act, (1) the privileged information in an audit report that was completed before three years after the effective date of this Act retains its privileged nature after that date to the same extent as if the statutes repealed in sec. 3 of this Act had not been repealed; and (2) the immunity applicable to voluntary disclosure under AS 09.25.475, enacted by sec. 2 of this act, remains in effect for a voluntary disclosure made before three years after the effective date of this Act to the same extent that the immunity applied before AS 09.25.475 was repealed. Renumber the following bill section accordingly. Page 14, line 10, following "Act", insert; and before repeal of AS 09.25.450 - 09.25.490 under sec. 3 of this Act. REPRESENTATIVE CROFT noted that the line references cited to Version "H". He explained that Amendment 15 would provide for a sunset date. Representative Croft pointed out that the state of Idaho was allowing their legislation to sunset, either because of problems with the bill, or it did not provide its intended benefit. He advised members that he would like the state of Alaska to have the option to sunset this Act. Representative Croft advised members that the language was crafted in a manner where an owner or operator would not lose the privileges or immunities that had occurred over the three year period. He stated that information that was privileged during that period would remain privileged, and events that became immunized would remain immunized. Representative Croft stated that the amendment would force the legislature to revisit the issue at a time certain, which he felt was prudent, in particular with the evidence the committee had heard that other states had decided, for various reasons, to change their laws or allow them to sunset. Number 390 REPRESENTATIVE JAMES did not have a problem with implementing a sunset provision; however, did not know if three years was an appropriate length of time. She pointed out that if there happened to be a lot of problems within three years, the legislature had the right to address the issue anyway. REPRESENTATIVE ROKEBERG felt what members were considering was excellent legislation, it was not a board or commission, and any statutory enactment put on the books should be reviewed for its efficacy and currency and the realm of its use, not just some arbitrary cutoff date, which politicizes it and brings it back into the arena. He stated that if the bill did not work in three years it should be repealed, not sunsetted. REPRESENTATIVE BUNDE asked that the sponsor of the bill speak to proposed Amendment 15. MR. PAULEY advised members the sponsor would oppose Amendment 15. He advised members that he became somewhat nervous when he heard the state of Idaho brought up as a model to follow, because, to the best of his knowledge, Idaho was the only state that passed their law with a sunset provision. Mr. Pauley stated that while researching the issue, he found that one of the reasons that the sunset provision was enacted was that the governor did not like the bill, and it was the type of deal where the only way the governor would sign the bill was if it included a sunset provision. MR. PAULEY had advised members that subsequent to the passage of that bill, Idaho was one of the states that came under intense EPA scrutiny, and it became a situation, politically, in Idaho where the EPA was questioning whether the state would retain its primacy for certain programs and other threats, which basically created a lot of negative publicity for their law. MR. PAULEY stated that he believed comments made by Representative Rokeberg represented the views of the sponsor; if SB 41 was good legislation it ought to be passed, and if it did not work, it would be repealed. He stated that there was no reason to include a sunset clause. Mr. Pauley advised members that he had spoken to a gentleman in Michigan who was in charge of implementing their state's self audit law who had had 25 years of experience in environmental enforcement, and he thought their law had been a success. When asked if the law had generated any excess or needless litigation in his state, the response was no, that his agency had not had to enter into a single case of litigation for either the immunity or privileged elements. Mr. Pauley pointed out that he had had similar reactions from the environmental personnel in the state of Texas. Mr. Pauley believed those laws were positive, and did not see any reason for adding on a sunset provision. Number 670 CHAIRMAN GREEN pointed out that earlier the committee had heard that some states were thinking about changing their self audit laws, or doing away with them completely. He asked that Mr. Pauley refresh members' memories on that matter. MR. PAULEY explained that that was an element expressed in Mr. Bundy's letter that by selectively giving emphasis to certain facts, Mr. Pauley felt he told a story that was not quite realistic in nature. He stated that Texas was changing its laws because the EPA came in and threatened that they were going to revoke Texas' authority to implement certain state delegated programs. Because of that, after months of negotiations, the state of Texas worked out a deal with the EPA, where if they made certain changes to their law the EPA would not challenge the primacy approach. Mr. Pauley pointed out that a lot of those changes were largely things that had been added into SB 41 through the committee process. He felt that made it highly likely that Alaska would not face those same types of problems with the EPA, but wanted to clarify that the fact that some other states were revisiting their disclosure laws and making changes, was not because of their dissatisfaction, but because they were getting brow-beaten by the federal government. Number 764 REPRESENTATIVE BERKOWITZ pointed out that the way he read what Mr. Bundy said in his letter was a pretty straightforward fact that the Governor of New York did not want to have those immunities, as well as some of the other states, and if that was because the EPA was coming down, Alaska should probably contemplate what would happen if the EPA attempted to interfere in Alaska's law. REPRESENTATIVE BUNDE referred to the Idaho experience and wondered if it would be more likely that SB 41 would be signed by the governor if a sunset provision was included. MS. SANSONE advised members that the EPA could make things very difficult when they have questions about what the law meant and request endless attorney general opinions interpreting the law, which she fully expected they would be doing. Ms. Sansone stated that that was a concern because there was the Title 5, Air Quality permitting program and primacy of the state's drinking water program. She felt a sunset provision would allow for a greater level of comfort, and if problems did begin to surface everyone would understand they would be dealt with. Ms. Sansone stated that the bill could not simply be repealed once enacted without addressing people's privilege or immunity because they would have relied on the bill and taken actions in good faith. Number 912 REPRESENTATIVE ROKEBERG advised members that it had been his experience that the environmental community in the state of Alaska would be looking at the bill and law under a fine toothed comb, or microscope, for the next couple years to determine how successful it was in accomplishing its goals. He would venture to say that because of the importance of the legislation and what it would do, there would be more than enough oversight to determine whether it was worth it or not. Representative Rokeberg suggested that the maker of the amendment 15, keep the amendment to use as a bill repealer, at such time, if he wished. Representative Rokeberg opposed Amendment 15. REPRESENTATIVE BERKOWITZ advised members that he was concerned with the prospect of the EPA breathing down the state's neck, and if including a sunset provision would keep them more distant was worth contemplating. He pointed out that once in a spitting contest with the federal government there were no winners and he was not anxious to take them on in a way that would not be constructive. Representative Berkowitz stated that if it was found that a sunset provision was keeping the EPA at bay, the legislature could renew the sunset provision at the appropriate time, three years, five years, et cetera, and it would be an easy step to take. REPRESENTATIVE ROKEBERG advised members that the EPA would not be kept off the state's back, and in fact were on the state of Alaska and actually housed in the DEC building in Juneau. He stated that the whole concept that Alaska would gain any currency with the federal government over the acceptance of a sunset provision he did not see happening, or even valid. REPRESENTATIVE BERKOWITZ advised members that through testimony, it was his understanding that the EPA did visit states, excessively, that did not have sunset provisions, and states that had adopted immunity provisions, which was the cause of his concern. Number 1081 REPRESENTATIVE JAMES did not believe the legislature should make a law based on threats they might feel from the EPA. She thought the legislature ought to make law in a manner it was felt that goals could be reached. Representative James stated if the law was repealed because it was not working, it would be necessary to take an action against it. She advised members that if a law sunsetted, and the legislature did not take action, the law would be gone, and she would rather have a situation where if something was wrong action was necessary, rather than a lack of action and the possibility of letting something good go away. Representative James pointed out that even with a three year sunset clause, they were not talking about the present legislature or the 21st Legislature, but the 22nd Legislature, and stated that she would feel more comfortable if she had a commitment from the governor that it did not make any difference. Representative James did not feel three years was adequate time to see if the process was working. She expressed that the goal of the bill was to have more compliance with environmental laws because of the incentive of providing for self audits and disclosure. REPRESENTATIVE BUNDE asked whether the maker of the amendment would consider a friendly amendment for the bill to sunset in five years, rather than three. REPRESENTATIVE CROFT accepted that as a friendly amendment to Amendment 15, and stated that five would replace "three" on lines 5, 8 and 11. REPRESENTATIVE ROKEBERG objected to the friendly amendment to Amendment 15. He stood by his original statement of whether or not the bill needed a sunset clause at all. REPRESENTATIVE ROKEBERG withdrew his objection to the friendly amendment to Amendment 15, so changing three years to five years was adopted to Amendment 15. CHAIRMAN GREEN pointed out that would bring members back to consideration of Amendment 15 and asked if the objection was maintained. Representative James and Rokeberg maintained their objection to Amendment 15. REPRESENTATIVE CROFT advised members he believed that there were EPA differences on various substantive aspects of the bill, but he did not believe that there were EPA requirements of a repealer, or that they had any interest in the sunset provision. He stated that he did not know the governor's position, although he felt a sunset provision would be more acceptable. Representative Croft pointed out that there were also very substantial risks to the environment that result from blanket immunities, and sunset provisions were seen in major dangerous sorts of areas, where the state was worried about the effects and not just have the opportunity to take second look, but be forced to take that second look. Representative Croft advised members that he believed the legislature ought to be forced, once in the life of the legislation, to look at what it had done and determine at that point if they wanted to maintain the law. REPRESENTATIVE CROFT stated that the fact that the 23rd Legislature would be reviewing the law seemed to be a positive for the amendment, because it would be a whole new group that would be forced to consider if the law was still good and accomplishing its intent. MR. PAULEY reemphasized that the sponsor was opposed to the amendment. He reiterated that there was wide spread support of the proposed legislation from the State Chamber of Commerce to the Alaska Oil and Gas Association, the mining sector, forestry industry and seafood processors because it was a good idea, not for two years, or five years, but for as long as they intend to be doing business in the state of Alaska and trying to be good partners with the community and fulfilling their role in protecting the environment. Mr. Pauley stated that to add a sunset provision, in the sponsor's view, would be sending a message that there was an element of doubt as to whether or not the law would work. He stated, as indicated before, he had letters he would be happy to share with committee members from the Governor of Michigan, New Hampshire, and also an article about the Governor of Colorado, of whom were all strongly defending their state's audit laws. MR. PAULEY stated with regard to the EPA, the Senator's office believed if a sunset provision were added, that if anything, it would make it more likely that the EPA would add extra scrutiny, rather than less likely because the EPA's objective was to try to defeat the laws. If they knew the law included a sunset clause, he felt it would increase the chance they would possibly conduct double the number of inspections, increasing enforcement efforts and other things in an attempt undermine public support for the bill. Mr. Pauley pointed out that was exactly what he felt had been the case in the state of Idaho. MR. PAULEY stated that if SB 41 would become law without the sunset provision, it would be necessary to acknowledge the fact, as stated by Ms. Adair, that when she met with the Region 10 EPA Council, they grudgingly admitted that from their perspective, SB 41 was the best crafted self audit law that they had seen in the country. Number 1666 MR. PAULEY stated with regard to the Governor's position, Janice Adair testified in the Senate Finance Committee that the administration did not have a philosophical difference with the sponsor on the bill. He noted also, that he had repeatedly heard from Mike Abbott, with the administration, that he was optimistic that the governor would sign the bill. Number 1728 MS. SANSONE added that some of the states that had been very active and aggressive in the field, like Colorado and Texas, had approached the EPA with the proposal that the EPA should allow a test period of two or three years to see how the law was operating and if it was producing results, or if some of the fears that the EPA had expressed were materializing. Ms. Sansone stated that the notion of revisiting the law had been advanced by a number of the more aggressive states, and those states felt confident that they would see results. Ms. Sansone advised members that the transitional provisions would be important, and if the bill was to be sunsetted or later revisited, that the advanced notice to the people would be very important. CHAIRMAN GREEN asked if the objection was maintained to Amendment 15, HCS CSSB 41. Representative Rokeberg maintained his objection, so Chairman Green requested a roll call vote. In favor: Representatives Bunde, Croft and Berkowitz. Opposed: Representatives Rokeberg, James and Chairman Green. Representative Porter was not in attendance during this vote. Amendment 15, HCS CSSB 41 failed adoption by a vote of 3 to 3. REPRESENTATIVE ROKEBERG moved to report HCS CSSB 41 (JUD) out of committee with individual recommendations and attached fiscal notes. There being no objection, HCS CSSB 41 (JUD) was reported out of committee.