Sectional Analysis for SB 205

An Act Relating to Occupational Health and Safety Audits to Determine Compliance with Certain Laws, Permits, and Regulations

Section 1: Statement of legislative findings and intent.

Performance-based standards are increasingly replacing the traditional command-and-control approach of enforcing occupational health and safety regulations; this shift will lead to the integration of health and safety protections with normal operating procedures.

The legislature intends to foster this integration by creating a responsible incentive program that will encourage voluntary, critical self-evaluations by regulated entities.

The public has a strong interest in promoting routine self-audits by regulated entities. This can best be achieved by recognizing a qualified privilege that will help preserve the free flow of information generated by self-audits. Additionally, self-auditing can be encouraged by extending limited immunity to those entities which voluntarily report and correct regulatory noncompliance.

Section 2: Establishes privileges and immunities for certain self-audits.

Sec. 09.25.450 Establishes a qualified audit report privilege.

The parts of an audit report consisting of confidential self-evaluation and analysis of compliance with occupational health and safety laws are privileged. These privileged materials are generally not admissible as evidence or subject to discovery in civil or administrative proceedings.

To qualify for the privilege under this section, as well as the limited immunity under Section 09.25.475, regulated entities must provide 15 days advance notice to the department before commencing a self-audit. The audit must be completed within a reasonable time, but no longer than 90 days unless a longer period of time is negotiated with the department.

The person claiming the audit privilege has the burden of proving its applicability.

All audit report documents containing confidential self-evaluation and analysis must be labeled "AUDIT REPORT: PRIVILEGED DOCUMENT".

Regulatory agencies and their employees cannot require an owner or operator to waive privilege as a condition of a permit, license, or approval.

Regulatory agencies and their employees generally may not review or use the parts of an audit report consisting of confidential self-evaluation and analysis during an inspection of a regulated facility, operation, or property.

This section does not prevent a regulatory agency from conducting necessary inspections, taking appropriate enforcement actions, etc., except as provided in AS 09.25.475.

No privilege is authorized for uninterrupted or continuous audits.

There is no privilege for documents or communications in a criminal proceeding.

Sec. 09.25.455 Establishes an exception to the privilege through the use of waivers.

The audit privilege can be waived in writing by the owner or operator who prepared the audit report or caused it to be prepared.

Disclosure of the part of an audit report consisting of confidential self- evaluation and analysis does not cause the privilege to be waived if the disclosure is made to an employee, contractor, lawyer, or other person involved in addressing or correcting any matter raised in the audit.

Disclosure does not cause the privilege to be waived if it is made under terms of a confidentiality agreement with an insurer or underwriter, a partner or potential partner, a lender or potential lender, etc.

Disclosure does not cause the privilege to be waived if it is made under terms of a written claim of confidentiality with a government agency or official.

Sec. 09.25.460 Describes materials not protected by privilege.

Privilege does not apply to documents or other information required by an agency to be reported or maintained as part of an existing occupational health and safety law.

Privilege does not apply to information a regulatory agency obtains from its own observation or monitoring, or from a party not involved in preparing the audit report.

Privilege does not apply to documents or information that are independent of the audit; nor does privilege apply to documents or information developed or maintained in the course of a regularly conducted business activity.

Sec. 09.25.465 Establishes an exception to the privilege through disclosure required by a court or an administrative hearing officer.

A court or administrative hearing officer may conduct an in camera review of audit report documents for which privilege is claimed. Disclosure can be required if it is determined that the privilege is asserted for a criminal or fraudulent purpose, or if the audit report reveals evidence of noncompliance which was not corrected promptly.

Disclosure may also be required if the information for which privilege is claimed constitutes evidence of a substantial injury to one of more persons at the site audited, or to persons, property, or the environment offsite.

Disclosure may be required if the privilege would result in a miscarriage of justice or the denial of a fair trial to the party challenging the privilege.

The party seeking an in camera review must provide a factual basis adequate to support a good faith belief by a reasonable person that the documents are likely to reveal evidence to establish that an exception to the privilege applies.

After an in camera review is granted, the party seeking disclosure has the burden of proving that an exception to the privilege applies.

Sec. 09.25.475 Establishes limited immunity for voluntarily reported violations.

An entity voluntarily disclosing violations identified through a self-audit will be immune from civil and administrative penalties, provided that action is promptly taken to correct the noncompliance and prevent its future recurrence. Noncompliance must be corrected within 90 days unless a longer period of time is provided for in a compliance agreement.

Disclosure of noncompliance must be reported in writing by certified mail to the appropriate regulatory agency. Disclosure must occur promptly after discovery of the noncompliance.

Immunity is not available for violations independently detected by an agency prior to disclosure.

Immunity is not available for violations resulting in substantial injury at the site audited or to persons, property, or the environment offsite.

Agencies may not initiate an inspection or other investigative activity based solely on the receipt of an audit notice.

Sec. 09.25.480 Exceptions to Immunity & Mitigation of Penalties

Immunity under 09.25.475 is not available if a court finds that the owner or operator claiming immunity has intentionally, knowingly, or recklessly committed or authorized the violation.

Immunity is not available if the owner or operator has in the previous 36 months committed a pattern of violations which are the same or closely related to those for which immunity is sought, nor is immunity available for an owner or operator who has failed to achieve compliance and that failure constitutes a pattern of disregard for occupational health and safety laws.

Penalties for violations that are voluntarily reported but which are not eligible for immunity may nevertheless be mitigated by attempts at remediation, cooperation with government officials investigating the disclosed violation, the nature of the violation, and other relevant considerations.

There is no immunity for violating the terms or conditions of an administrative or court order.

Sec. 09.25.485 Relationship to other recognized privileges.

This section clarifies that the act has no effect in limiting or abrogating any other existing privilege in statute or common law, such as the work product doctrine or attorney-client privilege.

Sec. 09.25.490 Definition of terms.

"audit report" is a report that includes documents and communications produced from an occupational health and safety audit, including an implementation plan or tracking system to correct past noncompliance and prevent future noncompliance.

"occupational health and safety audit" means a voluntary audit an owner or operator conducts or causes to be conducted that is designed to assess compliance with occupational health and safety laws; the audit is a systematic and objective review that reflects the owner's or operator's due diligence in preventing, detecting, and correcting violations.

"confidential self-evaluation and analysis" means the part of an audit report that consists of 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 occupational health and safety laws.

Section 3: Applicability.

Clarifies that the privilege and immunity created in Section 2 of the act apply only to audits conducted on or after the effective date.

Prepared by: Mike Pauley, Staff to Sponsor Senator Loren Leman

Last updated: January 14, 1998