ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 10, 2021
5:49 p.m.
DRAFT
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage
Representative Liz Snyder (via teleconference)
Representative David Nelson
Representative James Kaufman
Representative Ken McCarty
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): WORKPLACE SAFETY IN THE SEAFOOD INDUSTRY
- HEARD
CS FOR SENATE BILL NO. 24(L&C)
"An Act relating to holding corporate meetings by remote
communication; allowing voting by remote communication at
corporate meetings; making shareholder lists available
electronically; relating to for-profit and nonprofit
corporations; relating to business and industrial development
corporations; relating to Native corporations; relating to the
Alaska Banking Code; and providing for an effective date."
- HEARD & HELD
CONFIRMATION HEARING(S):
Marijuana Control Board
Nicholas Miller - Anchorage
- CONFIRMATION(S) ADVANCED
Occupational Safety and Health Review Board
Thomas Trosvig - Kodiak
- CONFIRMATION(S) ADVANCED
State Board of Physical and Occupational Therapy
Enlow Walker - North Pole
- CONFIRMATION(S) ADVANCED
Board of Registration for Architects, Engineers & Land Surveyors
Elizabeth Johnston - Fairbanks
- CONFIRMATION(S) ADVANCED
Workers' Compensation Appeals Commission.
James Rhodes - Ketchikan
- CONFIRMATION(S) ADVANCED
PREVIOUS COMMITTEE ACTION
BILL: SB 24
SHORT TITLE: VIRTUAL MEETINGS FOR CORPORATIONS
SPONSOR(s): SENATOR(s) WILSON
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) L&C
02/08/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/08/21 (S) Heard & Held
02/08/21 (S) MINUTE(L&C)
02/17/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/17/21 (S) Moved CSSB 24(L&C) Out of Committee
02/17/21 (S) MINUTE(L&C)
02/22/21 (S) L&C RPT CS 5DP NEW TITLE
02/22/21 (S) DP: COSTELLO, GRAY-JACKSON, STEVENS,
REVAK, HOLLAND
03/01/21 (S) TRANSMITTED TO (H)
03/01/21 (S) VERSION: CSSB 24(L&C)
03/03/21 (H) READ THE FIRST TIME - REFERRALS
03/03/21 (H) L&C
03/10/21 (H) LABOR & COMMERCE AT 05:45 PM BARNES 124
WITNESS REGISTER
JOSEPH KNOWLES, Director
Labor Standards and Safety Division (LSSD)
Department of Labor & Workforce Development (DLWD)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
on Workplace Safety in the Seafood Industry.
DENNIS SMYTHE
Anchorage, Alaska
POSITION STATEMENT: Testified during the presentation on
Workplace Safety in the Seafood Industry.
JOHN STALLONE
Mesquite, Nevada
POSITION STATEMENT: Testified during the presentation on
Workplace Safety in the Seafood Industry
SENATOR DAVID WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced SB 24.
JASMIN MARTIN
Staff
Senator David Wilson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the Sectional Analysis for SB 24
on behalf of Senator Wilson, prime sponsor.
LAURIE WOLF, President and CEO
Foraker Group
Anchorage, Alaska
POSITION STATEMENT: Provided testimony and answered questions
during the hearing on SB 24.
FRANCES MAHONEY
Foraker Group
Anchorage, Alaska
POSITION STATEMENT: Provided testimony during the hearing on SB
24.
ACTION NARRATIVE
5:49:42 PM
CO-CHAIR SPOHNHOLZ called the House Labor and Commerce Standing
Committee meeting to order at 5:49 p.m. Representatives Fields,
Spohnholz, Schrage, Snyder, Nelson, Kaufman, and McCarty were
present at the call to order.
^PRESENTATION(s): Workplace Safety in the Seafood Industry
PRESENTATION(s): Workplace Safety in the Seafood Industry
5:54:38 PM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be a presentation on Workplace Safety in the Seafood
Industry.
CO-CHAIR SPOHNHOLZ explained that this topic is before the
committee in light of the recent decision made by Tamisha
Ledbetter, Commissioner of the Department of Labor & Workforce
Development (DLWD), to waive a $450,000 fine against Copper
River Seafoods as recommended by Alaska Occupational Safety and
Health (AKOSH) division staff.
5:58:06 PM
CO-CHAIR FIELDS offered his understanding that during a meeting
in the summer of 2020, the director of the Division of Labor
Standards and Safety had told the House State Affairs Standing
Committee that DLWD could use the "general duty clause" to
protect workplace safety in the context of the COVID-19
pandemic. He asked for an outline of the general duty clause.
5:58:42 PM
JOSEPH KNOWLES, Director, Labor Standards and Safety Division
(LSSD), Department of Labor & Workforce Development (DLWD),
responded that the general duty clause is an Occupational Safety
and Health Administration (OSHA) general duty that requires
employers to provide a work environment that is free of
recognized hazards. He explained that it is often used in
situations where a recognized hazard is not covered by existing
standards.
CO-CHAIR FIELDS shared his understanding that during the time
Mr. Knowles was telling the House State Affairs Standing
Committee that it could use the general duty clause for
enforcement during COVID-19, the division was investigating some
potentially serious COVID-19 related workplace safety issues
before preparing a citation based on a "willful violation" of
the general duty clause. He asked if Mr. Knowles could describe
what "willful" means in the context of the laws that LSSD
enforces.
MR. KNOWLES responded that "willful" is when an employer has
demonstrated an intentional disregard for the requirements of
OSHA laws or a plain indifference for employees' safety and
health.
6:00:24 PM
REPRESENTATIVE MCCARTY commented that he just received his
committee packet and has not yet had the chance to review the
documents included in the packet.
6:00:48 PM
REPRESENTATIVE KAUFMAN asked about the timing of the case. He
shared his understanding that the inspection [into Copper River
Seafoods] was being done, but the report was not being processed
until much later in the year. He asked if Mr. Knowles could
explain.
MR. KNOWLES responded that he did not have the full case file
with him at the moment, but he recalled that LSSD performed an
inspection on Copper River Seafoods in August 2020 and proposed
a citation, which was presented to Commissioner Ledbetter for
her approval "on or about" December 27, 2020. During the
commissioner's review, it became clear that the initial
information provided in the proposal was "largely incomplete."
He continued that "on or about" January 12, 2021, the division
realized that it had made a procedural mistake by not originally
presenting the commissioner with a significant portion of the
inspection. He said that the memorandum ("memo") the
commissioner released on January 18, 2021, gave her decision on
the proposal, and he expressed that this decision was well
within her range of legal options and authority.
REPRESENTATIVE KAUFMAN shared that he has worked as an auditor
and has done inspections on facilities and performed assessment.
He expressed, "It strikes me as curious to say the least." He
explained that when he found items of importance [in his
inspections], he passed that information off to leadership
quickly because it's important and lets management know that the
job is being done well. He stated that the delay and timing of
such a finding was puzzling to him.
MR. KNOWLES responded that the division learned a lot during the
inspection, and it has already begun to take steps to improve
the process moving forward.
6:03:52 PM
REPRESENTATIVE MCCARTY asked for clarification about Mr.
Knowles' earlier statement that the inspection packet was not
complete when it was presented to the commissioner, and that
information was updated and brought to the commissioner at a
later date. He asked how it became known that the packet was
not complete.
MR. KNOWLES responded that it became apparent after the
division's discussions with the commissioner over the proposal.
He said that information within the initial packet was in
conflict and was not "adding up." He said the division then
began to look at the information that had been sent, and that
was when it became clear that the packet did not initially
include the "related concurrent infection" requirement for the
division's own internal field operations manual. This, he said,
is when the division provided the rest of the information to the
commissioner.
REPRESENTATIVE MCCARTY asked for clarification that Mr. Knowles
was saying that the division had to go back and identify the
protocol that "was or was not" followed to put together the
necessary information for the commissioner. He asked if that
involved going back to [Copper River Seafoods] where the audit
was performed to conduct further follow-up investigations.
MR. KNOWLES responded no, the division did not return to the
company. He said that what had happened on August 7, 2020, was
two concurrent related inspections, and through a
misinterpretation of the division's field manual, the inspection
that pertained to the willful general duty proposal was the only
inspection that was provided to the commissioner. He expressed
that both inspections should have been included because the
inspections were concurrent and related.
6:06:24 PM
REPRESENTATIVE SNYDER asked Mr. Knowles how many levels of
review the proposed citations went through before being blocked
by the commissioner.
MR. KNOWLES responded that he did not have the case file in
front of him with the pertinent notes. He said that this was a
unique and significant inspection and his first effort to
compile general duty willful citation. There were a lot of
questions within the division between himself and the chief of
enforcement, he explained, which resulted in sending the package
forward to the commissioner incorrectly.
6:07:47 PM
REPRESENTATIVE SCHRAGE asked, although Mr. Knowles doesn't have
the details in from of him, whether Mr. Knowles could offer a
general number of how many levels of review there were. He
asked if there was at least one level of review.
MR. KNOWLES responded that there was an initial level of review
by the Chief of Enforcement, and then there were other levels of
review in which Mr. Knowles was involved personally. He
explained that the review that he was part of focused on the
willful duty proposal due to the misinterpretation of policies
and procedures.
6:09:03 PM
REPRESENTATIVE NELSON asked Mr. Knowles how many investigations
"during that time frame" he had done that were specifically
related to COVID-19. He specified he was asking about the
summertime period when COVID-19 started to "level out."
MR. KNOWLES responded that he doesn't have all of the details in
front of him, but he is confident that there were two
inspections during that timeframe in the seafood industry.
REPRESENTATIVE NELSON asked whether, in general, investigations
are initiated due to a referral or anonymous tips, or whether
all businesses get regular inspections.
MR. KNOWLES responded that the enforcement process begins when a
complaint or a referral is received.
REPRESENTATIVE NELSON considered Mr. Knowles earlier statement
that two other seafood industry businesses were inspected during
that general three-month period, and he asked if there were only
three inspections during that time.
MR. KNOWLES reiterated that he did not have the specific
information in front of him at the moment, but said he could get
that information to Representative Nelson if he would like to
see it.
6:11:24 PM
CO-CHAIR SPOHNHOLZ shared her understanding that the package
that was brought to the commissioner didn't include all of the
necessary materials, which was the reason for not advancing the
citation. She asked Mr. Knowles if there have been any other
citations like this.
MR. KNOWLES responded that this is his first experience with a
citation proposal of this nature.
CO-CHAIR SPOHNHOLZ rephrased her question and asked Mr. Knowles
if there have been any other citations that have been
procedurally ruled out of order while he has been working for
the department.
MR. KNOWLES responded that this is the first proposed citation
package that required the commissioner's approval
CO-CHAIR SPOHNHOLZ asked Mr. Knowles if that was based off the
new standards that were a result of the change in procedures.
She asked him to describe the threshold at which the
commissioner gets involved.
MR. KNOWLES responded that again, there had not been a proposed
citation package that has required the commissioner's approval
before under the new threshold.
CO-CHAIR SPOHNHOLZ asked if there were any [citations that
required the commissioner's approval] under the previous
threshold.
MR. KNOWLES responded no.
CO-CHAIR SPOHNHOLZ concluded that "that hadn't happened
previously, even under the old standard."
6:13:56 PM
CO-CHAIR FIELDS asked Mr. Knowles how many citations there were
and if something was missing in one citation, why the
commissioner didn't allow issuance of the other citations, which
included both COVID-19 and non-COVID-19 related citations.
MR. KNOWLES responded that the decision the commissioner made
was after she had a full legal consultation and was advised that
she could approve some, none, or all of the proposal. He said
that he can't speak to the commissioner's reasoning as to why
the decision [to not issue any citations] was made, but he
suggested the memorandum the commissioner wrote [included in the
committee packet] could provide some details on her concerns and
the shortcoming of the process.
CO-CHAIR FIELDS asked Mr. Knowles whether he knows how many
times the commissioner consulted with the Office of the
Governor, in coordination with the Department of Law (DOL) or
not, before making the decision not to issue a single citation.
MR. KNOWLES responded, "None."
CO-CHAIR FIELDS asked for clarification that Mr. Knowles knows
that the commissioner never coordinated with the Office of the
Governor, even though the commissioner was in contact with DOL.
MR. KNOWLES responded, "Yes, my answer is 'no' to that
question."
6:15:32 PM
REPRESENTATIVE MCCARTY shared his understanding that there has
been a change in procedure within the department. He asked Mr.
Knowles if his understanding is correct, and if so, when did
that procedural change occur.
MR. KNOWLES responded that the department revised its field
operation manual in the latter part of January 2021. He said
that he will have to get back to the committee with the exact
date. He explained that the changes that occurred were the
following: reducing the threshold from $250,000 to $50,000 in
proposed fines, and changing the verbiage from requiring consult
with the commissioner to requiring the approval of the
commissioner. He said that internally, the department has taken
action to establish a 120-day internal timeline for earlier
review of what will become the final proposal to the
commissioner. This would create a "significant novel action
template" to improve support document content in the proposal
when it goes forward. He noted that this will include earlier
engagement with the commissioner. He stated that in short,
"we've all learned from this," and have asked for support from
federal partners to help improve the process.
6:17:08 PM
CO-CHAIR SPOHNHOLZ noted that the January 18, 2021, memo from
Commissioner Ledbetter to Mr. Knowles can be found in the
committee packet.
6:17:22 PM
REPRESENTATIVE MCCARTY asked Mr. Knowles whether this is
something that is seen in the seafood industry all over Alaska.
MR. KNOWLES asked for clarification on whether Representative
McCarty is referring to general duty willful citations.
REPRESENTATIVE MCCARTY responded that he knows that there have
been some places in Alaska that have shut down canneries due to
concerns regarding COVID-19, and he asked if there have been
concerns like that that have come about due to inspections by
LSSD.
MR. KNOWLES responded that the division has handled COVID-19
complaints and referrals in a collaborative manner, which has
been a successful way to help employers draft COVID-19 workplace
plans. He stated that the fact that one case was presented to
the commissioner makes him think this [Copper River Seafoods]
case was an outlier.
REPRESENTATIVE MCCARTY asked Mr. Knowles whether he had
citations "with other places throughout the state" due to COVID-
19 concerns. He asked if that also involves a lot of changes in
the industry due to COVID-19 guidelines.
MR. KNOWLES responded that LSSD has issued no general duty
citation packages for COVID-19.
6:19:45 PM
REPRESENTATIVE KAUFMAN shared that the timeline as well as the
combined amount of the fines were surprising to him. He asked
Mr. Knowles how common those numbers are and whether he has any
idea if that relates to other jurisdictions in the nation
performing similar inspections of food processing facilities.
MR. KNOWLES responded that that particular dollar amount is
"extremely unusual". He stated that through December 2020, the
violations issued by OSHA averaged approximately $13,000 in
fines. He said he queried a database and found that through
February 2021, there had been 100 citations issued resulting
from COVID-19, only one of which was a willful duty citation;
all of the others were general duty citations.
6:21:33 PM
REPRESENTATIVE SCHRAGE asked Mr. Knowles to speak about how the
fines are determined and how the dollar amount is set.
MR. KNOWLES responded that the LSSD uses the penalties
supplement, which illustrates that fines can vary in amount as
there are a multitude of factors that go into determining what
that penalty may be. Some variables include the gravity of the
violation, the size of the employer, the "good faith" of the
employer, the employer's history in previous violations, and the
nature of the violation type. He said that specifically, a
willful duty violation alone carries a maximum penalty of
$134,000.
REPRESENTATIVE SCHRAGE shared his understanding that the average
fee or fine is $13,000. He asked Mr. Knowles whether Copper
River Seafoods is considered an average sized company.
MR. KNOWLES responded that he did not have the exact details in
front of him at the moment regarding the size of Copper River
Seafoods. He said that the sizing variable deals with employers
that have up to 250 employees, and then other higher ranges.
There is a disparity because a serious willful violation carries
a maximum penalty of $134,937 and a serious violation carries a
maximum penalty of $13,494. He shared his understanding that
the majority of violations issued nationally regarding COVID-19
have been categorized as serious, not willful, at the $13,494
penalty level.
6:24:37 PM
REPRESENTATIVE NELSON asked whether Mr. Knowles could describe
the difference between serious and willful. He asked what
pushed [Copper River Seafoods] over the edge from a serious
violation to a willful violation.
MR. KNOWLES responded that he did not have the specifics in
front of him on each particular inspection that has been
conducted. He said that he does know that LSSD determined that
it warranted the commissioner's consideration but ultimately it
is just a proposal until a citation package is ultimately
issued.
6:26:02 PM
REPRESENTATIVE SNYDER commented that she wished the committee
had the documents [with details for Mr. Knowles to reference].
6:26:21 PM
CO-CHAIR SPOHNHOLZ commented that it's interesting that the
committee was invited to speak about a specific case and the
specific case files are not available. She noted that
protecting confidentiality is important, but that the committee
needs to understand concrete facts and that the questions
members are asking are not designed to put anyone on the spot,
but just to understand what happened. She shared her
understanding that moving from a serious to a willful violation
involves knowing that an entity is not complying and doing it
anyways. Her reading of the records is that [Copper River
Seafoods] knew that it had COVID-19 positive employees and that
the contractor that it used, which is the same contractor used
in the Alaska State Capitol, identified COVID-19 positive cases
in a workplace where employees are not able to implement
physical barriers such as social distancing. She said that the
action of knowing that there were sick employees working and
allowing these employees to continue working warrants the
classification of willful violation.
6:27:48 PM
CO-CHAIR FIELDS clarified that one of the citations was for a
machine that ripped an employee's arm off because it did not
have proper lockdown/tagout procedures, which was identified by
Alaska Occupational Safety and Health (AKOSH) [within LSSD], but
the employer did not fix it. He explained that this is one of
the reasons for the violation, among the issues surrounding
COVID-19. He stated that he appreciated that Mr. Knowles was
taking responsibility for the situation, but he did not "buy
that premise." He noted that there were four levels of approval
that these citations went through. He said that many of these
employees have been there for years. He invited Mr. Knowles to
explain at any time what was missing from the citation package.
He asked why the commissioner felt it was appropriate to block a
citation for such an "egregious" workplace safety violation as
the aforementioned situation with the machine that lacked proper
lockdown/tagout procedures.
MR. KNOWLES reiterated that the commissioner had full
consultation with law and was advised that she could approve
some, none, or all citations.
CO-CHAIR FIELDS said that that did not answer his question, and
he rephrased the question.
MR. KNOWLES responded that he can't speak in detail, and he
reiterated that the memorandum from the commissioner provided
some details on the concerns she had surround the process and
procedures of the department.
CO-CHAIR FIELDS asked why the commissioner thought that it was
acceptable, for an employer who had already been warned to
improve its screening procedures and to keep COVID-19 infected
employees off the jobsite, to entirely block a penalty after the
employer willfully allowed COVID-19 infected employees on the
jobsite for multiple days without the option of social
distancing.
MR. KNOWLES reiterated that the commissioner had full
consultation with the law and could approve some, none, or all
citations. He said that she was within her range of legal
options and authority.
CO-CHAIR FIELDS commented that it is unprecedented for a
commissioner to block citations in this manner, and it is not
supported by the statutes. He concluded that the committee
needs an explanation from the commissioner and the
administration as to why a novel interpretation of workplace
safety statutes was warranted.
6:30:59 PM
REPRESENTATIVE NELSON read from a document in the committee
packet, stating, "Copper River Seafoods did a poor job of
keeping employees safe from COVID infections this summer." He
continued reading:
The main Anchorage plant was closed for a total of 13
days to the end of July and beginning of August and
the entire year of operation during the pandemic.
None of the other CRS plants suffered any serious
outbreak and operations continued without a single day
interruption.
REPRESENTATIVE NELSON expressed that he would like to see
documents that show what caused the categorization to progress
from a serious to a willful violation.
6:32:11 PM
CO-CHAIR SPOHNHOLZ asked Mr. Knowles to address the difference
between a serious and willful violation.
MR. KNOWLES asked for clarity on whether Co-Chair Spohnholz
would like him to restate the definition of willful and serious
violations or was asking him to explain why the commissioner
made the decision that she made.
CO-CHAIR SPOHNHOLZ responded that the committee was interested
in learning more about the definitions. She suggested that Mr.
Knowles provide an answer in writing that could be distributed
to the committee if he was not comfortable providing an answer
today. She expressed that she was disappointed by his lack of
candor given the seriousness of the issue. She shared her
understanding that the employees at Copper River Seafoods are
low-wage workers, do not have health insurance, are not part of
a union, and generally do not have any advocates, and it is the
job of DLWD to ensure that Alaska has safe workplaces so that
Alaska can remain open for business. She shared that she finds
it concerning to hear that a citation that seemed to have risen
to a serious level was waived and that the commissioner was well
within her rights to waive it. She said it was her perception
that this did not meet the objective of DLWD to make sure that
Alaska's workers are safe. Additionally, she noted that people
of color and immigrants have been disproportionally affected by
COVID-19, and that is exacerbated by not having health insurance
and not being able to get appropriate treatment if COVID-19 is
contracted. She expressed that it seems to her that Alaska has
allowed an unsafe workforce [Copper River Seafoods] to go
uncited.
6:35:26 PM
REPRESENTATIVE NELSON agreed and stated his intent to ensure
that the seafood industry is sustainable for years to come. He
noted that there are other seafood processing places around the
world that have adapted to COVID-19 mitigation efforts, and some
processing plant employees implemented personal protection
equipment (PPE) prior to the pandemic, such as face shields. He
mentioned Copper River Seafoods' efforts, such as testing,
staggered work breaks, and hand washing. He concluded that
there are some things that can't be controlled, but good
mitigation efforts can be implemented.
6:36:58 PM
CO-CHAIR SPOHNHOLZ pointed out that the commissioner and Copper
River Seafood were invited to testify during the meeting, but
both declined.
6:37:38 PM
DENNIS SMYTHE stated that he was hired in May 1975 by AKOSH and
was promoted to Assistant Chief two years later. He informed
the committee that he was promoted to chief of enforcement of
AKOSH after eight years, which included safety and health
enforcement and consultation. He also served as the acting
commissioner during the transfer of power for three different
governors. He spoke about the OSHA act of 1970, which he said
provided for a state to adopt its own programs under the 18E
group. He explained that the first certification for Alaska was
August 10, 1973, and the final approval happened on September
28, 1984. He went on to remind the committee of an earlier
question asking him whether he found this case unusual or
troubling, and he said that he finds it extremely unusual and
troubling [that the commissioner would block a citation]. He
offered the reasoning that it can endanger the program and the
protection that's being offered to employees working in Alaska.
CO-CHAIR SPOHNHOLZ asked for clarification Mr. Smythe was
describing the federal act that allowed Alaska to implement its
own workplace safety program rather than have workplace safety
in the state be managed by the federal government.
MR. SMYTHE responded yes.
6:41:35 PM
CO-CHAIR FIELDS asked Mr. Smythe whether he had ever seen a
commissioner block a citation before.
MR. SMYTHE responded that although he has not seen the entirety
of the [Copper River Seafoods] case, he has never heard of
anything like it. He said that if he had, he would've turned in
his badge and credentials or at least attempted to get it
"straightened out." He shared his understanding that AS
18.60.091 and AS 18.60.095 clearly mandate that the Department
of Law must enforce the law. He said that he doesn't perceive
the blocking of citations to be consistent with the statutes.
6:42:48 PM
REPRESENTATIVE NELSON asked Mr. Smythe what the highest fine he
issued for a single citation was.
MR. SMYTHE responded that doesn't recall the exact number, but
he investigated fatalities that were revealed to be criminal in
nature. He shared that Alaska was the first state to issue
criminal violations against companies.
REPRESENTATIVE NELSON stated that he is specifically referring
to cases where fatalities did not occur. He said that he is
referring to companies that incur a monetary fine.
MR. SMYTHE responded that he doesn't remember what the penalty
was for criminal violations, but that it was well above what is
considered a willful violation. He gave an example of a
fatality that occurred when an employee of Kodiak Oilfield
Haulers drove a truck that caused an individual's death, and he
shared that he showed the Chief of Enforcement how to manage the
situation. He gave another example of an employee who was sent
down a pipeline where harmful gasses were present, and the
employee passed away. He said that that case was more than a
criminal violation.
6:45:52 PM
REPRESENTATIVE MCCARTY asked whether Mr. Smythe had had a chance
to look at the documentation regarding the [Copper River
Seafoods] case specifically in order to make informed comments,
or whether the information that he was providing was intended to
be more general.
MR. SMYTHE responded that he had not seen documentation for the
case and had only heard the current director's testimony.
6:47:39 PM
CO-CHAIR SPOHNHOLZ noted that in addition to blocking
enforcement of the citation, the commissioner had asked AKOSH to
screen all penalties of $50,000 or more and asked that all of
those penalties go through the commissioner's office. She asked
Mr. Smythe if this was a typical and appropriate way to handle
penalties.
MR. SMYTHE responded that no, this was not a common practice.
He stated, "If I had politics running my show, I would resign."
CO-CHAIR SPOHNHOLZ referenced the OSHA Act of 1970 and shared
her understanding that former State of Alaska Governor Jay
Hammond was a big proponent of ensuring workplace safety in
Alaska. She asked Mr. Smythe whether concerns that workplace
safety enforcement becoming political in Alaska could
potentially risk the state's primacy on this issue.
MR. SMYTHE responded absolutely. He noted that Kansas, for
example, does not have logging or seafood processing issues, and
Alaska doesn't have wheat farming issues, but Kansas does. He
said that it depends [on the location]. He shared his
understanding that this is why OSHA is closely looking at
Alaska's program. He said that federal OSHA dollars fund
Alaska's program at 50 percent for enforcement and 90 percent
for consultation and training, and he shared concerns that these
dollars could be taken away, which would cause the program to
fail.
6:50:01 PM
CO-CHAIR FIELDS, referencing Representative Nelson's earlier
question about fines, noted that when Co-Chair Fields worked at
the DLWD, there was a fine for a single willful violation of
over half a million dollars. He said that the Copper River
Seafoods case involves the exposure of almost 100 people to an
infectious disease.
CO-CHAIR SPOHNHOLZ commented that it is helpful to know that
there is other precedent.
6:50:27 PM
REPRESENTATIVE NELSON responded that he found a news article
that mentioned a meatpacking plant in California that incurred a
fine of $115,000 in the summer of 2020 during the pandemic. He
relayed that the article said that was the largest meat
processing plant citation and fine in the nation at the time.
6:51:24 PM
JOHN STALLONE stated that he started working for AKOSH in 1996
and was a safety enforcement officer for about three and a half
years before he became the chief of enforcement. He said that
he also did discrimination investigations and serious accident
investigations.
CO-CHAIR SPOHNHOLZ asked Mr. Stallone whether, when he was the
chief of enforcement, he ever heard about the commissioner
blocking enforcement or a citation.
MR. STALLONE responded no. He said he worked with three
different commissioners and never had the Office of the
Commissioner interfered in this manner on an enforcement action.
He noted that there are usually two reports conducted, one for
safety, and one for health. The health report is usually
administered by the industrial hygienist that works for the
department, and the safety report is usually administered by
safety enforcement officers. He explained that in the
particular instance of Copper River Seafoods, [the inspection]
was a referral and the chief of enforcement made the decision to
send two officers to the premises: one for safety and one for
health. When the officers conclude the inspection, they prepare
a report structured using the federal format, because this
information is shared throughout the nation.
MR. STALLONE shared his confusion about AKOSH's decision to not
send the commissioner's office the safety report initially, but
to only send the health report, and then send the safety report
later. He reiterated that the commissioner, by law, has the
option to eliminate, reduce, or uphold all of the citations, and
shared his understanding that the commissioner waited for the
statute of limitations to run its course and threw out two
complete reports. He stated that he has a problem with this.
6:54:53 PM
MR. STALLONE stated that the commissioner waiting for the
statute of limitations to run out to throw away complete reports
sets a dangerous precedent. He postulated that other employers
could bring this up at a future date and suggest that the
commissioner wait for the statute of limitations to run out like
she did for Copper River Seafoods. He referred back to the
earlier question from Representative Nelson regarding the
largest fine, and shared his recollection that the highest fine
ever written was close to a million dollars, and it charged the
Department of Corrections. He noted that instead of enforcing
the fine, the Department of Corrections was permitted to correct
everything that was cited. He recalled that he was in the field
at the time, and he went to various communities in the state to
verify that the items of concern had been abated. He recalled
another instance regarding a company called Whitewater
Engineering, which was cited for a fatality and also charged
with criminally negligent homicide. He noted that when this
happens, the chief always consults with the Office of the
Attorney General, and one or more assistant attorney generals
are assigned to handle potential legal questions. He said that
he would consult with the attorneys and, as a courtesy, tell the
director about the situation, but never sought permission from
anyone to issue citations. He shared that he had signed several
willful violations and sent them out. He said that there is a
legal system in place and there are other processes at play
besides the commissioner's decision.
6:58:36 PM
REPRESENTATIVE MCCARTY asked Mr. Stallone whether it is known
for certain that the commissioner didn't respond within the
statute of limitations of 180 days.
MR. STALLONE responded that he is not privy to that info, but
that that's what he was told by the people who work there. He
noted that the law is specific in that if a citation isn't
issued within six months from the date of the inspection, it is
"null and void," and this was his understanding of what happened
in the case of Copper River Seafoods. He explained that if
citations were issued in this situation, the legal process could
have occurred, including the Occupation Safety and Health Review
Commission [within OSHA] and, if it was deemed necessary,
Superior Court.
REPRESENTATIVE MCCARTY asked Mr. Stallone about the
commissioner's concerns and questions asked of the Office of the
Attorney General.
MR. STALLONE responded that he is not privy to that information,
but according to Mr. Knowles, the law told the commissioner that
she could, "let [the citation] stand, she could reduce it, or
she could dismiss it." He said that if the commissioner chose
to dismiss it in writing, his question would be, "Why?" He
acknowledged that the COVID-19 pandemic presents a novel
situation, but said the other issue to consider is the other
citations [that were dismissed], such as the lockdown/tagout
failure that resulted in amputation of a man's arm, as mentioned
by Mr. Knowles.
7:02:15 PM
REPRESENTATIVE SCHRAGE shared his understanding that the
objective of the department is to protect workers, which is done
through identifying violations and taking enforcing actions. He
asked Mr. Stallone why, if this were the objective of the
department, the commissioner would not let the fines go through
knowing that there is an issue to be addressed. He questioned
the choice to not let the company advance through the legal
process and argue its case. He noted that there has been no
recourse in the case of Copper River Seafoods, and there is
therefore no [incentive] for them to take corrective action.
MR. STALLONE responded that yes, it is the commissioner's
responsibility, under statute the commissioner can be held
personally liable if he/she doesn't do what the law requires.
REPRESENTATIVE SCHRAGE noted that this sets a dangerous
precedent that a simple paperwork error could provide grounds
for a complete dismissal of serious enforcement action for
serious violations that harmed many workers.
7:04:14 PM
REPRESENTATIVE KAUFMAN directed attention to a document that
depicts a register of non-conformance completion report from
AKOSH. He noted that the report includes "a whole bunch of
action items" that had been completed and wanted to highlight
that actions have been taken. He explained that he doesn't know
where the document originated.
MR. STALLONE offered clarification that when a report like this
is done, some of the items get "abated," which can happen when
an officer is still there. He explained that this doesn't
negate the fact that there was a violation at the time of
inspection. He expressed that he's glad that the report was
done and hopes that the problems are fixed, but reemphasized
that doesn't negate the fact that the law was broken.
CO-CHAIR SPOHNHOLZ asked Representative Kaufman to supply the
document that he was referencing to the committee.
7:06:43 PM
CO-CHAIR FIELDS stated that it was not his intent to "try" the
employer, and that the committee meeting is not the appropriate
place for that. He characterized the commissioner's decision as
denying the employer due process. He referred to AS 18.60.091
and AS 18.60.095, which he said clearly states that the
department must enforce the law, and he asked Mr. Stallone
whether he agrees with Mr. Smythe that the commissioner doesn't
have the authority to "ignore the laws" in a case like this.
MR. STALLONE responded that is correct; the statute is very
clear. He said that he agrees with Mr. Smythe that
commissioners are not supposed to negate the statutes, but
instead should enforce the statutes, along with the chief and
the director. He shared is understanding that now, if [the
fine] is over $50,000, it needs the commissioner's approval,
which he characterized as having never happened before. He said
that [when he was working as the chief of enforcement at AKOSH],
he would never call the commissioner for approval for a fine
over $50,000, or even a fine over $100,000.
CO-CHAIR FIELDS commented that Mr. Knowles had mentioned that
the commissioner had established the policy of running penalties
in excess of $250,000 through the commissioner, and he suggested
the committee ask when that policy was put into place. He noted
the new threshold of $50,000, but said that whatever the
threshold, this level of politization of enforcement seems to be
unprecedented in the state's history.
7:09:12 PM
CO-CHAIR SPOHNHOLZ thanked the testifiers.
7:10:24 PM
The committee took an at-ease from 7:10 p.m. to 7:14 p.m.
SB 24-VIRTUAL MEETINGS FOR CORPORATIONS
7:14:26 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be CS FOR SENATE BILL NO. 24(L&C), "An Act relating to
holding corporate meetings by remote communication; allowing
voting by remote communication at corporate meetings; making
shareholder lists available electronically; relating to for-
profit and nonprofit corporations; relating to business and
industrial development corporations; relating to Native
corporations; relating to the Alaska Banking Code; and providing
for an effective date."
7:14:44 PM
SENATOR DAVID WILSON, Alaska State Legislature, as prime
sponsor, introduced SB 24. He paraphrased from the sponsor
statement [included in committee packets], which read as follows
[original punctuation provided]:
The events of this past year have caused many
hardships but have also inspired innovation. It is
imperative that we use these innovations to improve
our operations and laws in the future. Senate Bill 24
capitalizes on one such of these innovations.
Senate Bill 24 allows corporations' shareholder
meetings and nonprofit member meetings to be held
virtually. Section 12 of SB 241 of the 31st
Legislature and subsequent emergency orders have
allowed for these virtual meetings, but that
authorization has expired. The ability to meet
virtually, as would be permanently allowed by the
passage of this bill, has proved invaluable to these
organizations. Senate Bill 24 enables corporations and
nonprofit organizations to operate more efficiently
and with greater flexibility than in the past.
7:16:21 PM
JASMIN MARTIN, Staff, Senator David Wilson, Alaska State
Legislature, presented the sectional analysis for SB 24 on
behalf of Senator Wilson, prime sponsor. She explained that SB
24 would affect three different parts of law: the Alaska
Corporation Code, the Business and Industrial Development Code,
and the Alaska Nonprofit Corporation Act. She read through the
sectional analysis, which read as follows [original punctuation
provided]:
Section 1: Modifies AS 10.06.223
? Relates to organizational meetings of Alaska
Corporations. Allows these to be held via remote
communication or via a hybrid of remote communications
and in person and modifies the notice requirements to
reflect this change.
Section 2: Modifies AS 10.06.230(e)
? Relates to the bylaws of a corporation. Allows
corporations to write bylaws pertaining to remote
communications.
Section 3: Modifies AS 10.06.405(a)
? Relates to meetings of shareholders. Allows meetings
of shareholders to be held via remote communication.
Section 4: Modifies AS 10.06.405(b)
? Relates to meetings of shareholders. Allows the
board of a corporation to set a time for meetings if
the time is not set in the bylaws.
Section 5: Modifies AS 10.06.410(a)
? Relate to notice of shareholder meetings. Directs
corporations to include the manner and definition of
"present" in meeting notices.
Section 6: Modifies AS 10.06.413(a)
? Relates to the list of shareholders entitled to vote
at a meeting or on adjournment. Allows this list to be
available electronically to shareholders.
Section 7: Modifies AS 10.06.415(a)
Interim:
? Relates to quorums in meetings. Allows shareholders
present through remote communication to be a counted
towards a quorum.
Section 8: Modifies AS 10.06.418(b)
? Relates to voting by proxy. Allows proxies to be
revoked by attending meetings remotely in addition to
in person.
Section 9: Modifies AS 10.06.420(c)
? Relates to voting shares. Allows a shareholder to
vote virtually.
Section 10: Modifies AS 10.06.420(d)
? Relates to voting shares. Allows a virtual attendee
to vote at an election for directors.
Section 11: Modifies AS 10.06.420(f)
? Relates to voting shares. Allows shares held by an
administrator, executor, guardian, or conservator to
be voted by remote communication. Allows shares
standing in the name of a trustee to be voted by
remote communication.
Section 12: Modifies AS 10.06.420(j)
? Relates to voting shares. Adds conforming language
pertaining to voting by proxy via remote
communication.
Section 13: Adds a new section (k) to AS 10.06.420
? Relates to voting shares. Allows shareholders and
shareholder proxies to participate in meetings via
remote communication.
Section 14: Modifies AS 10.06.470(a)
? Relating to meetings of executive and other board
committees. Allows these meetings to be held via
remote communication.
Section 15: Modifies AS 10.06.960(n)
? Relates to corporations organized under Alaska
Native Claims Settlement Act. Allows amendments to the
articles of incorporation for corporations organized
under ANCSA and incorporated under former AS 10.05.005
to add a provision relating to the personal liability
for monetary damages to the corporation or
stockholders to be voted on via remote communication.
Section 16: Modifies AS 10.06.960(o)
? Relates to corporations organized under Alaska
Native Claims Settlement Act. Allows amendments to the
articles of incorporation of a village corporation
organized under ANCSA and incorporated under former AS
10.05.005 to add a provision authorizing the
classification of directors under AS 10.06.455 to be
voted on via remote communication.
Section 17: Modifies AS 10.06.960(p)
? Relates to corporations organized under Alaska
Native Claims Settlement Act. Allows Native
corporations incorporate under former AS 10.05 prior
to July 1, 1989 to vote to modify quorum requirements
via remote communication.
Section: 18 Adds a new definition to AS 10.06.990
? Defines "remote communication".
Section 19: Modifies AS 10.10.100(b)
? Relates to entities organized under the Business and
Industrial Development Corporations Act. Allows
stockholders to vote by remote communication.
Section 20: Adds a new section (c) to AS 10.10.100
? Relates to executing a proxy by electronic
transmission. Outlines how a proxy is to be executed
by electronic transmission.
Section 21: Modifies AS 10.20.066
? Relates to nonprofit meetings notices. Establishes
that meeting notices should include the manner by
which the meeting will be held.
Section 22: Modifies AS 10.20.071(b)
? Relates to voting by proxy. Allows a member to vote
by remote communication or by proxy executed by
electronic transmission.
Section 23: Modifies AS 10.20.071(e)
? Relates to establishing a quorum. Allows members
present through remote communication to be a counted
towards a quorum.
Section 24: Adds a new section (f) to AS 10.20.071
? Relates to establishing a proxy. Defines how a proxy
could be established by remote communication.
Section 25: Modifies AS 10.20.076
? Relates to establishing a proxy. Conforming to allow
members present via remote communication to count
towards a quorum.
Section 26: Modifies AS 10.20.116(a)
? Relates to regular and special meetings of boards of
directors. Allows meetings to be held in person, by
remote communications, or a hybrid of both.
Section 27: Modifies AS 10.20.166(a)
? Relates to organizational meetings. Allows
organizational meetings to be held via remote
communication.
Section 28: Adds a new definition to AS 10.20.920
? Defines "remote communication".
Section 29: Adds a section to uncodified law.
? Adds a saving clause for retroactivity in section
30.
Section 30: Adds a section to uncodified law.
? Makes this act retroactive to March 11, 2020.
Section 31: Adds an immediate effective date.
7:21:13 PM
MS. MARTIN, in response to Co-Chair Spohnholz, gave the
definition of "remote communication" found in Section 18, on
page 7, lines 25-30, of CSSB 24(L&C), which read as follows:
*Sec. 18. AS 10.06.990 is amended by adding a new
paragraph to read:
(51) "remote communication" means communication
by means of electronic communication, conference
telephone, videoconference, the Internet, electronic
transmission, or other means by which persons not
physically present in the same location may
communicate with each other on a substantially
simultaneous basis.
7:21:51 PM
REPRESENTATIVE SCHRAGE shared his understanding that, prior to
the COVID-19 emergency declaration, electronic meetings were a
possibility, and under the lapse of the declaration, "there was
some error to where it was no longer allowed." He asked for
clarification on whether that was true.
MS. MARTIN responded that it was permissible for nonprofit
corporations but not permissible for corporations that work for
profit.
7:23:02 PM
REPRESENTATIVE KAUFMAN asked whether there was any concern about
verification regarding signatures for voting remotely.
SENATOR WILSON responded that he has not received any of those
types of complaint. He shared that he has actually received a
lot of support from a variety of shareholders, corporations, and
nonprofits. He said that the signature authentication process
is up to an entity's bylaws and that [under CSSB 24(L&C)], that
decision would remain that of an individual entity.
7:24:25 PM
CO-CHAIR SPOHNHOLZ offered clarification that bylaws are similar
to a constitution for a corporation, and each corporation has
its own bylaws to which to adhere. She said that the proposed
legislation would allow that to continue. She noted that the
committee would be hearing some testimony from the Foraker Group
as to why CSSB 24(L&C) was necessary to clear up any ambiguity.
7:25:34 PM
LAURIE WOLF, President and CEO, Foraker Group, explained that
the Foraker Group has been advising nonprofits on how to hold
meetings, based on Alaska law, for the past twenty years. She
noted that each nonprofit is required to have both articles of
incorporation and bylaws, which are legally binding documents
that can't supersede state or federal law. She explained that
bylaws govern nonprofits and are vetted by the revenue service
when granting nonprofit exempt status. Important rules for
establishing meetings are included in bylaws, she said, and
state law needs to be "simple, broad, and flexible" enough for
every corporation to follow it. She continued that Alaska law
has been broad enough to allow for remote meetings for three
decades; however, during 2020 the legislature passed a measure
authorizing remote meetings for corporate boards as part of the
disaster declaration in the thought that the state law was
prohibiting remote meetings. She said Foraker viewed this as "a
solution in search of a problem."
MS. WOLF recommended that two aspects be present in any
forthcoming proposals: a quorum of board members as defined by
bylaws must be gathered to make lawful decisions, and all
persons participating can hear and speak to each other at the
same time in real time. She said that only when these two
characteristics are present can there be certainty that an
entity is operating as "one voice." She noted that CSSB 24(L&C)
would need to allow every group to be consistent with its
bylaws. She urged the committee to act broadly, to deter to the
bylaws of each organization as much as possible, and to create a
flexible framework for all of Alaska's corporations, which she
stated has been the case for many decades. She said that the
easy, simple, and complete solution would be to add a definition
of "in person" to AS 10.20.290, which would mean a physical
presence or where a person may participate by means of
conference, telephone, or similar communication equipment, by
means of which all persons participating in the meeting can hear
each other at the same time.
7:31:15 PM
CO-CHAIR SPOHNHOLZ asked Ms. Wolf to send in the proposed
addition to the bill to ensure that the language included in the
bill meets the Ms. Wolf's criteria.
MS. WOLF responded that her understanding was the phrase
"substantially simultaneous" was currently in CSSB 24(L&C), and
she emphasized that is not what the Foraker Group is
recommending. In response to Co-Chair Spohnholz, she explained
there could be confusion. She said, for example, that the
Foraker Group has had many questions about whether this would
include voting by e-mail. She said that "the previous law" was
clear that e-mail voting was not simultaneous communication and
was not a place where a quorum could be established. An
advisory vote with unanimous consent could be taken through
email, she continued, but it would still need to be ratified in
a meeting where there was simultaneous communication and the
opportunity to vet, defend, and update a decision.
CO-CHAIR SPOHNHOLZ clarified that an e-mail communication is not
simultaneous, because not everyone is hearing the same thing at
the same time, thus it can lead to miscommunications and may
exclude individuals who are not able to communicate in a timely
manner.
MS. WOLF added that a quorum cannot be established over e-mail
and a meeting cannot be called to order via e-mail.
7:35:13 PM
FRANCES MAHONEY, Foraker Group, noted that he has been
practicing law in Alaska for forty years and that most of his
practice for the last twenty of those years has related to
nonprofits. He said that he applauds Senator Wilson and his
staff for the drafting of CSSB 24(L&C), because it's important
for nonprofits. He noted that if there is a change in
legislation, there is a presumption that the prior law did not
allow what was amended in the new law. He continued that it is
important to have an allowance for conducting meetings that are
not physically present to qualify as a quorum or as physically
present to vote. He said that he would prefer a more simplified
process and that "the least change is usually the best change."
He agreed that Ms. Wolf's suggestion to add a definition of "in
person" to AS 10.20.290 seems appropriate and would achieve the
same goal as Sections 21-23 of CSSB 24(L&C). He emphasized the
importance of ensuring discussion during a meeting, and he said
the proposals made would allow that to occur and would help
avoid possible confusion.
7:38:17 PM
CO-CHAIR SPOHNHOLZ announced that SB 24 was held over.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^Marijuana Control Board
Marijuana Control Board
^Occupational Safety & Health Review Board
Occupational Safety & Health Review Board
^State Board of Physical Therapy & Occupational Therapy
State Board of Physical Therapy & Occupational Therapy
^State Board of Registration for Architects, Engineers & Land
Surveyors
State Board of Registration for Architects, Engineers & Land
Surveyors
^Worker's Compensation Appeals Commission
Worker's Compensation Appeals Commission
7:38:52 PM
CO-CHAIR SPOHNHOLZ announced that the final order of business
would be consideration of the governor's appointees to various
boards and commissions.
CO-CHAIR SPOHNHOLZ noted the committee had heard testimony from
the appointees during the March 5, 2021, House Labor and
Commerce Standing Committee meeting.
CO-CHAIR SPOHNHOLZ stated that the House Labor and Commerce
Standing Committee had reviewed the qualifications of the
following governor's appointees and recommends the names be
advanced to a joint session of the House and Senate for
consideration: Nicholas Miller to the Marijuana Control Board;
Thomas Trosvig to the Occupational Safety & Health Review Board;
Enlow Walker to the State Board of Physical Therapy &
Occupational Therapy; Elizabeth Johnston to the State Board of
Registration for Architects, Engineers & Land Surveyors; and
James Rhodes to the Worker's Compensation Appeals Commission.
She reminded members that signing the reports regarding
appointments to boards and commissions in no way reflects
individual members' approval or disapproval of the appointees,
and the nominations are merely forwarded to the full legislature
for confirmation or rejection. [The confirmations were
considered advanced.]
7:40:36 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
7:41 p.m.