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.