SB 41 ENVIRONMENTAL & HEALTH/SAFETY AUDITS  MR. MIKE PAULEY, staff to Senator Leman, sponsor of SB 41, noted submitted a packet of 24 amendments from various sources: the sponsor, industries affected by the bill, DEC, and the Department of Law. (A COPY OF THE AMENDMENTS IS ATTACHED TO THE END OF THIS DOCUMENT.) CHAIRMAN TAYLOR said the subject of the second amendment was reasonable: 90 days instead of 30. MR. PAULEY said DEC does not oppose amendments 1 and 2. CHAIRMAN TAYLOR asked what impact deleting the word "only" in amendment #4 would have. MR. PAULEY explained it refers to the circumstances in which one could disclose the audit report, but not waive the privilege. MR. PAULEY said amendment #5 specifies privileged information can only be disclosed to a lawyer or someone who works for that lawyer. Amendment #6 provides that if an audit report is shared with someone else under terms of a confidentiality agreement, anyone who violates that agreement is liable for damages. He thought that provision was omitted inadvertently. MR. PAULEY continued explaining the amendments. Amendment #7 clarifies that all parties agree that the privilege described in this bill does not shield underlying facts. Amendment #8 relates to privilege for information relating to pipeline tariffs. Amendment #9 provides that privilege and immunity can be overcome if the violation in question poses an imminent threat of injury, and is one of the things EPA looks for. Amendment #10 adds an administrative hearing officer, in addition to the courts. Amendment #11 is a semantic change for the purpose of consistency. Amendment #12 specifies which portions of an audit can be viewed during an investigation. Amendment #13 addresses EPA's concern by conditioning immunity. Amendment #14 pertains to the notice requirement for audits. Amendment #15 establishes that nothing in the bill will prevent a regulatory agency from seeking injunctive relief or issuing an emergency order in situations involving imminent and substantial danger. Amendment #16 clarifies conditions for immunity for repeat violations by companies with facilities located in other states. Amendment #17 is a grammatical correction. Amendment #18 replaces "offense" with "violation" to conform with civil procedure language in Alaska. Amendment #19 deals with economic benefit if the non-compliant owner/operator has gained an economic benefit from non- compliance. Amendment #20 allows electronic filing of audit disclosures. Amendment #21 adds language to the definition of what might be included in an audit report. Amendment #22 adds material to the definition of "confidential self-evaluation and analysis" to specify employee interview notes or field notes are included in the definition of privileged audit information. CHAIRMAN TAYLOR clarified the interviewer's words are provided immunity, but not necessarily the documents of the interviewee. MR. PAULEY continued. Amendment #23 deletes any reference to DHSS. Amendment #24 contains definitions for the words "intentionally," "knowingly," and "recklessly" from the criminal code. Number 240 SENATOR TAYLOR said his intention was to entertain a motion to adopt all 24 amendments. If any member has objection to any specific amendment within that package, he would withdraw it from the motion and address it individually. SENATOR ELLIS objected to amendments #7 and #8 because Ms. Adair of DEC had to drop off the teleconference and was unable to comment. SENATOR PEARCE moved to adopt Amendments 1-24, except for #7 and Number 260 SENATOR MILLER moved to adopt Amendment #7. SENATOR ELLIS objecte for the purpose of hearing DEC's comments. Number 279 MS. MARIE SANSONE, Department of Law, said the inclusion of the term "objective facts" was very important because they do not want subjective opinions. CHAIRMAN TAYLOR asked her to give him an example of how one could write a self-audit report and not make reference to objective facts that make up the report. MS. SANSONE answered the portion of the report that is to remain privileged concerns the auditor's evaluation: findings, conclusions, opinions, and the recommended plan for corrective action. The actual facts gathered and relied on to make conclusions would not be privileged. CHAIRMAN TAYLOR asked why a pulp mill would hire an expert to gather samples hourly to review its operations and ensure compliance if that data is not privileged. Why hire anyone to do anything other than give conjecture and recommendations if that is the only thing that can be shielded? Number 311 MS. SANSONE explained if the privilege is used to shield objective facts, it can be used to sweep up a lot of valuable information used to determine violations. To allow privilege to shield that information would jeopardize the credibility of the enforcement program. People should have access to objective facts but not to the auditor's thoughts about sampling methods or conclusions about the samples. Number 319 CHAIRMAN TAYLOR repeated if the facts are not going to be privileged, he does not believe anyone will ever hire someone to come in and do tests. Number 364 MS. SANSONE explained the purpose of the audit privilege is to encourage people to evaluate their own conduct and undertake activities to correct and prevent violations. Most businesses have an incentive to do that anyway. The Administration does not believe that incentive should extend to the objective facts. SENATOR ELLIS reminded the Chairman there was a packet of amendments from him as well. CHAIRMAN TAYLOR asked the question. SENATOR ELLIS maintained his objection. SENATORS PEARCE, MILLER, PARNELL AND TAYLOR voted yes; SENATOR ELLIS voted no. The motion to adopt Amendment #7 passed. CHAIRMAN TAYLOR announced the remaining amendments would be heard at the next hearing and adjourned the meeting at 3:44 p.m. The following amendments were submitted by Senator Leman. A M E N D M E N T #1 Page 3, line 7: Following "certified mail": Insert: "with return receipt requested" Page 3, line 7: Following "to the": Insert: "commissioner's office of the" A M E N D M E N T #2 Page 3, lines 12-13: Change wording as follows: Once initiated, an audit shall be completed within a reasonable time, but no longer than 90 days [30 DAYS] unless a longer period of time is agreed upon between the owner or operator and the department. A M E N D M E N T #3 Page 3, lines 30-31: Change wording as follows: A person claiming the privilege described in this section has the burden of establishing [PROVING] the applicability of the privilege. A M E N D M E N T #4 Page 4, lines 23-27: In subsection (b), delete the word "only": (b) Disclosure of the part of an audit report or information consisting of confidential self-evaluation or analysis does not waive the privilege established by AS 09.25.450 if the disclosure is made [ONLY] (1) to address or correct a matter raised by the environmental or health and safety audit and is made [ONLY] to.... A M E N D M E N T #5 Page 4, line 30: Delete all material. Insert: "(B) the owner or operator's lawyer or the lawyer's representative;" A M E N D M E N T #6 Page 5, after line 22: Add a new subsection (d) as follows: (d) A party to a confidentiality agreement described in (b)(2) of this section who violates that agreement is liable for damages caused by the disclosure and for other penalties stipulated in the confidentiality agreement. A M E N D M E N T #7 Page 5, line 25: Delete the reference to "objective facts" in 09.25.460 (a): (a) There is no privilege under AS 09.25.450 for that part of an audit report that contains the following: [ (1)OBJECTIVE FACTS; ] A M E N D M E N T #8 Page 6, lines 15-16: Reword subsection (b) as follows: The parts of an audit report that consist of information necessary to determine pipeline rates, tariffs, fares, or charges are not privileged and are admissible as evidence and subject to discovery in a proceeding relating to pipeline rates, tariffs, fares, or charges. [AN AUDIT REPORT IS NOT PRIVILEGED AND IS ADMISSIBLE AS EVIDENCE AND SUBJECT TO DISCOVERY IN A PROCEEDING RELATING TO PIPELINE RATES, TARIFFS, FARES, OR CHARGES.] A M E N D M E N T #9 Page 6, line 24: Following "offsite": Insert: "or the imminent or present threat of such injury" Page 7, line 13: Following "offsite": Insert: ", or if the violation poses an imminent or present threat of such injury" A M E N D M E N T #10 Page 6, line 17: Following "court": Insert "or administrative hearing officer" Page 6, line 19: Following "civil": Insert "or administrative" Page 6, line 19: Following "court": Insert "or administrative hearing officer" Page 9, line 7: Following "court": Insert "or administrative hearing officer" A M E N D M E N T #11 Page 7, line 16: Following "obtained by the ": Delete "person" Insert "owner or operator" A M E N D M E N T #12 Page 7, line 26 through page 8, lines 4: Delete all material. Page 8, lines 14 - 19: Reword paragraph as follows: (4) cooperate with the appropriate agency in connection with an investigation of the issues identified in the disclosure; an agency may request that the owner or operator allow the agency to review, under an agreement as described in AS 09.25.455(b)(3), the part of the audit report that describes the implementation plan or tracking system developed to correct past noncompliance, improve current compliance, or prevent future noncompliance. [RELEVANT PORTIONS OF THE CONFIDENTIAL SELF-EVALUATION AND ANALYSIS AS NECESSARY TO DETERMINE THAT APPROPRIATE CORRECTIVE ACTIONS HAVE BEEN IDENTIFIED]. A M E N D M E N T #13 Page 8, after line 8: Add a new paragraph (d) (2) as follows: (2) promptly initiate appropriate efforts to discontinue, abate, or mitigate any conditions or activities causing injury or likely to cause imminent injury to one or more persons at the site audited or to persons, property, or the environment offsite. A M E N D M E N T #14 Page 8, lines 20-22; Page 9, lines 1-2: Reword subsection (g) as follows: (g) During the period between receipt of the audit notice required under AS 09.25.450(b) and the specified end date of the audit [AUDIT PERIOD SPECIFIED IN THE NOTICE REQUIRED UNDER AS 09.25.450(b)], the department may not initiate an inspection, monitoring, or other investigative activity concerning the audited facility, operation, or property based [SOLELY] on the receipt of a notice under AS 09.25.450. The department has the burden of proving that an inspection, monitoring, or other investigative activity concerning the audited facility, operation, or property initiated after receiving a notice under AS 09.25.450 was not initiated based [SOLELY] on receiving the notice. A M E N D M E N T #15 Page 9, after line 5: Insert new subsection: (i) This section may not be construed to prevent a regulatory agency from(1) seeking injunctive relief; or (2) issuing an emergency order in situations involving an imminent and substantial danger to public health or welfare or the environment. A M E N D M E N T #16 Page 9, lines 11-13: Amend 09.25.480(a)(1)(B) as follows: (B) within the 36 months preceding the violation, repeatedly or continuously committed, at the same facility or associated facilities located in the state, the specific violation or closely related violation for which immunity is sought; or [VIOLATIONS THAT ARE THE SAME AS, OR SIMILAR TO, THE VIOLATION FOR WHICH THE IMMUNITY IS SOUGHT;] A M E N D M E N T #17 Page 9, line 15: Following "into compliance and": Delete: "and this failure" Insert: "so as to constitute" A M E N D M E N T #18 Page 9, lines 17-20: Reword paragraph (a)(2) as follows: (2) the violation [OFFENSE] was committed intentionally or knowingly by a member of the owner's or operator's management or an agent of the owner or operator and the owner's or operator's policies or failure to have in place systems reasonably designed to prevent such violations [LACK OF PREVENTION SYSTEMS CONTRIBUTED MATERIALLY TO THE OCCURRENCE OF THE VIOLATION.] A M E N D M E N T #21 Page 10, lines 13-16: Add new language to 09.25.490 (a)(1)(A) as follows: (A) a report, prepared by an auditor, monitor, or similar person, including the scope of the audit, the dates the audit began and ended, the information gained in the audit, findings, conclusions, recommendations, exhibits, and appendices; the types of exhibits and appendices that may be contained in an audit report include supporting information that is collected or developed for the primary purpose of and in the course of an environmental or health and safety audit, including (i) interviews with current or former employees; (ii) field note and records of observations; (iii) findings, opinions, suggestions, conclusions, guidance, notes, drafts, and memoranda; (iv) legal analyses; (v) drawings; (vi) photographs; (vii) laboratory analyses and other analytical data; (viii) computer generated or electronically recorded information; (ix) maps, charts, graphs, and surveys; and (x) other communications and documents associated with an environmental or health and safety audit; A M E N D M E N T #22 Page 10, lines 22-27: Add new language to definition of "confidential self- evaluation and analysis" as follows: (2) "confidential self-evaluation and analysis" means the part of an audit report that consists of interviews with current or former employees; field notes and records of observations made by the auditor; findings, opinions, suggestions, conclusions, guidance, notes, drafts, and analyses performed by the auditor; memoranda and documents that evaluate or analyze all or part of the material described in the audit report, including implementation issues or an audit implementation plan or tracking system to correct past noncompliance, improve current compliance, or prevent future noncompliance with an environmental or health and safety law, and that is... A M E N D M E N T #23 Page 11, line 2: Delete the words "Department of Health and Social Services": (3) "department" means the Department of Environmental Conservation, the Department of Labor, [AND THE DEPARTMENT OF HEALTH AND SOCIAL SERVICES,] as appropriate; A M E N D M E N T #24 Page 11, line 21: Delete all material. Page 11, line 22: Delete all material. Page 11, line 28: Delete all material. Re-number definitions accordingly. Page 12 following line 3: Add a new subsection as follows: "(c) For purposes of this chapter, unless the context requires otherwise, (1) a person acts "intentionally" with respect to a result described by a provision of law defining a violation when the person's conscious objective is to cause that result; when intentionally causing a particular result is an element of a violation, that intent need not be the person's only objective; (2) a person acts "knowingly" with respect to conduct or to a circumstance described by a provision of law defining a violation when the person is aware that the conduct is of that nature or that the circumstance exists; when knowledge of the existence of a particular fact is an element of a violation, that knowledge is established if a person is aware of a substantial probability of its existence, unless the person actually believes it does not exist; a person who is unaware of conduct or a circumstance of which the person would have been aware had that person not been intoxicated acts knowingly with respect to that conduct or circumstance; (3) a person acts "recklessly" with respect to a result or to a circumstance described by a provision of law defining a violation when the person is aware of and consciously disregards a substantial and unjustifiable risk that the result will occur or that the circumstance exists; the risk must be of such a nature and degree that disregard of it constitutes a gross deviation from the standard of conduct that a reasonable person would have been aware had that person not been intoxicated acts recklessly with respect to the risk.