SENATE LABOR AND COMMERCE COMMITTEE January 30, 1997 1:37 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Jerry Mackie, Vice Chairman Senator Mike Miller Senator Tim Kelly MEMBERS ABSENT Senator Lyman Hoffman COMMITTEE CALENDAR SENATE BILL NO. 41 "An Act relating to environmental audits and health and safety audits to determine compliance with certain laws, permits, and regulations." PASSED CSSB 41 (AM) FROM COMMITTEE SENATE BILL NO. 55 "An Act relating to the definition of certain state receipts; and providing for an effective date." SCHEDULED, BUT NOT HEARD PREVIOUS SENATE COMMITTEE ACTION SB 41 - See Senate Labor & Commerce Committee minutes dated 1/23/97, and 1/28/97. SB 55 - No previous action to consider. WITNESS REGISTER Ms. Annette Kreitzer, Staff Senate Labor and Commerce Committee State Capitol Bldg. Juneau, AK 99811 POSITION STATEMENT: Explained changes in CSSB 41. Ms. Janice Adair, Director Division of Environmental Health Department of Environmental Conservation 222 Cordova Anchorage, AK 9501 POSITION STATEMENT: Commented on SB 41. Mr. Dwight Perkins, Special Assistant Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Commented on SB 41. Ms. Toby Steinberger, Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Commented on SB 41. Mr. Al Dwyer, Director Division of Labor Standards and Safety Department of Labor P.O. Box 107021 Anchorage, AK 99510-7021 POSITION STATEMENT: Commented on SB 41. Ms. Marie Sansone, Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Commented on SB 41. Mr. Jack Phelps, Executive Director Alaska Forest Association 111 Stedman, Ste 200 Ketchikan, AK 99901 POSITION STATEMENT: Supported SB 41. Mr. Jay Frank, Director Policy and Analysis Concerned Alaskans for Resources and Environment P.O. Box 9266 Ketchikan, AK 99901 POSITION STATEMENT: Supported SB 41. Mr. Barry Noll Federal Occupational Safety and Health 3601 C Street Anchorage, AK POSITION STATEMENT: Commented on SB 41. Ms. Susan Schrader, Executive Director Alaska Environmental Lobby P.O. Box 22151 Juneau, AK 99802 POSITION STATEMENT: Opposed SB 41. Ms. Nancy Weller Division of Medical Assistance P.O. Box 110660 Juneau, AK 99811-0660 POSITION STATEMENT: Commented on SB 41. Mr. Mike Pauley, Staff Senator Loren Leman State Capitol Bldg. Juneau, AK 99811 POSITION STATEMENT: Commented on SB 41. ACTION NARRATIVE TAPE 97-3, SIDE A Number 001 SB 41 ENVIRONMENTAL & HEALTH/SAFETY AUDITS  CHAIRMAN LEMAN called the Senate Labor and Commerce Committee meeting to order at 1:37 p.m. and announced SB 41  to be up for consideration and noted the proposed CS before them incorporating a number of changes. SENATOR MACKIE moved to adopt the work draft 299E 1/30/97 as the CS. There were no objections and it was so ordered. MS. ANNETTE KREITZER, Staff to the Senate Labor and Commerce Committee, said they did extensive work with the Department of Law and the Department of Environmental Conservation and achieved consensus on many points. Two major areas of concern with DEC, and possibly DOL, are: the trigger to make immunity unavailable if a federally delegated program requires imposition of a penalty for a violation; and the definition of the term "commence" when it is used in conjunction with commencing an audit. Both of these concerns could be worked on in the next committee (Judiciary). MS. KREITZER directed the committee's attention to the explanation of changes to SB 41 that was before them. She noted that the Department of Law changes restructured the bill so it flowed smoother, was more consistent and much easier to understand. Number 356 SENATOR MACKIE moved the intent on page 11, line 2 state that th Department means either the Department of Environmental Conservation, Department of Labor, or the Department of Health and Social Services. There were no objections and the motion carried as amendment #1. Regarding the trigger to make the immunity available if a federally delegated program requires imposition of a penalty for a violation, CHAIRMAN LEMAN said, it was his intent to have the Judiciary Committee consider this issue specifically. He said he didn't intend that it be triggered just if the program requires an imposition, but if we don't include it, it would jeopardize the primacy of the State of Alaska in administering that program. CHAIRMAN LEMAN also noted that throughout the CS the term for giving notice is "by mail" and since we now have many electronic forms of transmission, fax and e-mail, that are probably more efficient, faster, and perhaps less costly, he thought they could be incorporated into the bill as long as the items were receipted. MS. JANICE ADAIR, Director, Division of Environmental Health, said the CS was getting close from their perspective, although primacy language was still a problem. One thing in particular was overlooked on page 4, line 30 where it says "legal representative of the owner or operator." That is a fairly broad phrase where they thought the term "attorney" was the intent. They still have concerns about the burden of proof, and she added, that she was willing to continue to work on that. Number 434 MR. DWIGHT PERKINS, Special Assistant, Department of Labor, emphasized that they are also willing to work on SB 41 with the sponsor. He provided the Committee with a letter from the U.S. Department of Labor noting its concerns with privileges and immunities relating to disclosure of certain self-audits. It says that the privileges and immunities proposed in this bill would significantly impair the credibility and effectiveness of Alaska's OSHA enforcement program. It concluded, "Because an effective enforcement program is a statutory mandate for all State plans, enactment of such a provision by the State would seriously undermine the continued provability of the Alaska OSHA program and may result in a recommendation to the Assistant Secretary that federal approval and funding of the Alaska program be withdrawn." MR. PERKINS said they would continue working with staff and the next committee of referral. They will also forward this draft back to the U.S. Department of Labor. On page 6, line 17 which says "a court with jurisdiction may require disclosure of self-evaluation" they preferred the old language used "a court or administrative hearing officer." Ms. Steinberger, their Assistant Attorney General, he said, was concerned that it would be very costly for State agencies to go to a court for these kinds of things. CHAIRMAN LEMAN asked Mr. Perkins what he meant by "less effective than the federal program." He deferred to MS. STEINBERGER who reviewed a federal statute referring to state jurisdiction of plans. Under the conditions for a state approved plan it says our enforcement has to be as effective as federal enforcement and we also have to have the right of entry and inspection. She thought that inspection included the right to conduct inspections and get all the information. Having an audit privilege would not allow the State to get all the information. Immunity would not allow the State to be as effective enforcement-wise because you would not be able to bring citations that federal OSHA would bring. Also, she said, the trigger language only addresses immunity and this privilege would jeopardize the program. So the trigger language should be broadened to include both. CHAIRMAN LEMAN said he would incorporate the trigger language in the request they send with the bill to the Judiciary Committee. He noted on page 4, line 12 it says this section may not be construed to prevent the agency from doing these things, including independently obtaining relevant facts and conducting necessary inspections. An audit privilege and immunity doesn't and shouldn't keep that from happening. MS. STEINBERGER responded that an inspection would include all documents. She explained that there are different levels of penalties and the burden of proof would be on the State. This means we would have to go to court or a hearing officer which would be very complex procedurally and we might not even be able to get the documents after that. Federal OSHA could get them with a simple request. SENATOR MACKIE asked if the State couldn't get that information independently just by conducting interviews. MS. STEINBERGER replied that people are often afraid to speak against their employer because they think there will be retaliation. Having an actual document is very helpful. A willful can be either civil or criminal; the criminal one would be if there was a death. CHAIRMAN LEMAN asked her to request language from Mr. Terrill that would help this legislation reach its goal of providing a safer workplace and providing employers an opportunity to get some things done without worrying about enforcement. SENATOR MACKIE also asked her to pass on to the federal agent that citizen legislators are trying to achieve a worthy goal and get turned off with the threat of taking away our funding. MS. STEINBERGER pointed out that the State Department of Labor has been given a lot of discretion in interpreting congressional statute and regulations, but a court of law would defer to the federal interpretation. TAPE 97-3, SIDE B Number 590 SENATOR MACKIE asked if she had been directed to make the bill not work or to find a way to make it work with their intent. MS. STEINBERGER answered that she would like to have it work; and she was concerned with the trigger language because it could take away our 18E Certification which means that the State can still do enforcement, but in cases where the State is not as effective, the federal agency will come in.  She explained that now Alaska has th best certification out of 11 different types. "We have exclusive jurisdiction, except for maritime, to do an OSHA inspection. This has been delegated to us by the federal government. The least that would happen is that we lose our 18E Certification and the feds would do the inspections. The more drastic remedy would be to take away our whole program," she said. She explained that of all the state plans, none of them have anything like this legislation. They may have an environmental one, but they do not have a health and safety one. Texas does not have 18E Certification; they do not do any enforcement. The federal government does all the enforcement in Texas. They are not the same as us. CHAIRMAN LEMAN restated he wanted the record to state that his meaning of "effect" was in the dictionary as "having an expected or intended effect, producing or designed to produce a desired effect" and that he didn't see how the bill disallowed any of those things. MS. STEINBERGER said she thought a court would defer to the federal interpretation. Number 546 MR. DWYER commented that he did not think the feds would take away our funding. He thought we would end up with concurrent jurisdiction, and under this legislation employers would be subjected to two agencies. Number 529 MARIE SANSONE, Assistant Attorney General, said she appreciated working with Senator Leman's staff and the many changes made in the bill are a good improvement. She said the reason they have worked really hard on this bill is because many courts have said that privileges are not to be created lightly because they're in derogation of the search for the truth. This means when you are in a court room, you swear to tell the whole truth and nothing, but the truth. When someone can assert the privilege, they are not going to tell the whole truth. A court, a jury, a hearing officer, or even a legislative body, whenever this privilege is claimed, will not be hearing the whole story about what happened. That is why it is so important to make sure this bill is clear and will not be abused. She thought they had made a lot of progress, but there was more work to do. Privileges are also important when talking about discovery or the stage of a case where you are trying to learn about what happened because it is generally thought that the more information you have at that stage of the proceeding, the more likely you are to have a settlement or a reasonable solution. There is no philosophical opposition to the bill, at all. To create a privilege is truly an extraordinary step and should be done to advance important public policies and should be as narrow as possible in order to achieve that. She thought a lot of progress had been made in that regard. MS. SANSONE explained language in this bill that was retained developed last year relating to the portion of the audit that will be privileged which is the analytic or the evaluative material, but not the underlying facts, was retained. Many of those provisions that appear in that definition come from a federal court decision called Rycold Chemicals 157FRD522, out of the Northern District Court in Florida in 1984. She thought that was a very fair approach. The criteria that are required were developed in the context of a specific court case involving clean up of a contaminated site. So the judge that created these criteria and the parties had a chance to work out some of the kinks. This may keep people from feeling that they are being forced into federal court because there may be broader discovery in federal court and not in State court. They had meant the definition of an environmental audit to be a little bit broader using the concept that what was privileged was a very narrow part of the audit, but the audit itself might be broad. She didn't think that was adequately communicated to the staff, working on this draft. Finally, MS. SANSONE, said that the concept for the audit privilege and immunity bills first came up in Oregon about four years ago. It came up when the Oregon legislature was creating a bill to make the environmental penalties for environmental crimes very serious - into felonies. As part of the compromise in the bill the industry extracted this concept of an audit privilege and immunity in exchange for having the much more severe penalties. Most of the bills developed in the states from then on have been about environmental law and based on environmental premises and problems and the particular procedures that are used in that field. When Texas came up with its bill, it was the first state to try to attempt to bring in health and safety. They simply tried to graft that on to a lot of previous bills that had all been environmental. The OSHA procedures and practices are very different from what is happening in the environmental arena. So some of the language that is in the bill may not be appropriate to the way our State OSHA does business. Some of the solutions are appropriate to DEC, but they may not be the same concerns or solution that are appropriate to the Department of Labor or the Department of Health and Social Services. Number 472 MR. JACK PHELPS, Executive Director, Alaska Forest Association (AFA), supported the concept of environmental and safety self audits embodied in SB 41. AFA believes environmental laws do not exist to provide job security to bureaucrats and their purpose is not to maintain a flow of federal dollars to the State of Alaska. Their true purpose is to protect the environment and the true purpose of safety laws is to protect people. Self audits promote those purposes. It's the legislature's responsibility to ensure that environmental and safety laws do not overreach these purposes and become unnecessary impediments to economic development. He expressed concern with dropping the liability clause for breach of confidentiality because there is no incentive without it. Number 426 MR. JAY FRANK, Director, Policy Analysis, Concerned Alaskans for Resources and Environment, supported SB 41. He did not think it would compromise the mission of the State agencies, but it requires them to refocus. MR. BARRY NOLL, Federal Occupational Safety and Health Act (OSHA) representative, said there are separate federal/state jurisdictions in Alaska. He is responsible for the maritime industries and the State is responsible for the occupational safety and health work that occurs on land. He noted that the State has a consultation program which already does a lot of what is being mentioned in this bill and yet it works within the framework of the existing OSHA organization. He said the consultation work is free and he thought this should be enhanced. He also said he had not had a chance to see the letter from Mr. Terrill. He agreed with Mr. Dwyer that the feds would most likely reduce the 18E Certification. MR. NOLL also wondered if there was an intent to open the door to third parties who could offer their audit services. He also wondered about the 90 days for the employer to abate hazards that have been identified. Now typically OSHA looks at 30 days, the logic being to reduce the employees' exposure to the hazard. Number 392 CHAIRMAN LEMAN answered that their intent is to make the opportunity available for an owner to conduct his own audit or to hire a third party to do it. He agreed that a lot of the workplace safety items should be corrected a lot sooner than 90 days, but there may be times it could take longer to complete something because of the construction season or something like that. SUSAN SCHRADER, Executive Director, Alaska Environmental Lobby, acknowledged the efforts of the staff to work with the different agencies involved. She said that current regulations are there in response to problems that have occurred with industries that pollute and put their employees at risk. These industries, through the years, have had ample time to do self audits, and many have. Those that have are now more competitive. This legislation, rather than encouraging those companies that haven't, will simply make it easier for them to continue to be irresponsible. She said this is a bill of secrecy. It will keep information vital to the public's health and safety from agency review and keep the same information away from our legal system which the public depends on to help remedy violations. It will limit the employees right to know and limit the right to know of a property owner who lives next door to a polluting industry. She said that this bill is one of amnesty which allows industry to conceal or condone non-compliance. She thought the supporters of this bill make a very large assumption - if a self-audit reveals non-compliance, that company will come forward. Past experience would suggest that prompt compliance is not always the course of action a company decides. Immunity from civil and administrative penalties is simply bad policy and effectively awards non-compliance. Finally, she said, that the language in the bill is confusing and will promote litigation. CHAIRMAN LEMAN said her statements misrepresent this bill egregiously in several major areas. Number one, he said, this bill has nothing to do with protecting polluters. That is covered under other law, regulation, and permits. This bill clearly specifies that it is not privileged material that will continue to be required of business. Regarding the right-to-know, there are other elements in law that require the reporting of materials like the community right-to-know ordinances, the local emergency planning committees, and others in legislative form (SB 39 on placarding with information that will be available by computer and modem). The statement that immunity is bad public policy is not consistent with what the departments are doing now. CHAIRMAN LEMAN said regarding Texas, which has a lot more industry, this law has not generated a lot of litigation. Number 253 NANCY WELLER, Division of Medical Assistance, said she had provided a letter from Commissioner Perdue outlining their concerns which are all related to the Medicaid Program, a $325 million program that funds health care for low income people. The functions are in three different areas: licensing and certification of health facilities, the auditing and utilization review, and the setting of rates. They are concerned that this bill will have some unintended consequences related to the Medicaid Program and feel this is not the intent. They, therefore, they request removing references to the Department of Health and Social Services from the CS. Number 234 CHAIRMAN LEMAN asked if there was anyway short of removing reference to the department that they could accomplish his objectives. MS. WELLER replied that they could define occupational health. Number 210 SENATOR MACKIE asked if just a line saying this has no effect on the Medicaid Program would work. MIKE PAULEY, Staff to Senator Leman, said in the draft there were no agencies specified. Then the Department of Health and Social Services approached them with their concerns. He said they had not been able to determine the linkage between their bill and the effects on the Medicaid Program that were just stated. CHAIRMAN LEMAN stated that he did not intend this legislation to adversely affect the Medicaid Program and thought they could work on specific language to express that. SENATOR MACKIE said that he wanted the State funding concerns in Mr. Terrill's letter reviewed so they would for sure not be impacted. He then moved to pass CSSB 41 (am) from Committee with individual recommendations. There were no objections and it was so ordered. SB 55 AMEND DEFINITION OF "PROGRAM RECEIPTS"  CHAIRMAN LEMAN announced that SB 55  would be rescheduled for n Tuesday and adjourned the meeting at 3:02 p.m.