Sponsor Statement for SB 205

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

Although workplaces have become progressively safer in recent years, there is still room for improvement. Senate Bill 205 establishes two incentives to encourage regulated entities to conduct voluntary assessments of their internal operations, in an effort to secure full compliance with occupational health and safety regulations.

The first incentive is limited immunity. Entities that conduct voluntary self-audits will be immune from civil and administrative penalties for violations discovered, provided several conditions are met. The instances of noncompliance must be discovered through a self-audit, and reported promptly to the appropriate regulatory agency. The regulated entity must take action to correct the identified problem and prevent its future recurrence. Immunity is not available for violations causing substantial off-site damage or serious on-site injury. In addition, no immunity is available for violations that are knowingly committed or that result from recklessness. Immunity can be denied to regulated entities with a history of similar violations, or a pattern of disregard for workplace safety laws.

The second incentive is qualified privilege. Certain portions of the reports generated from voluntary self-audits will be considered privileged and therefore not admissible as evidence or subject to discovery in civil or administrative proceedings. This provision recognizes that the evaluative portion of an audit report is, by its very nature, self-incriminating: it discovers problems, identifies what personnel or management deficiencies may be responsible, and recommends corrective action. Studies show that many businesses opt not to perform audits out of fear that the resulting reports will be used by agencies or hostile third parties as a "road map to prosecution." As with the immunity benefit, the privilege has limitations. Privilege can be overcome if asserted for a fraudulent purpose, or if the regulated entity has failed to take required actions to correct areas of noncompliance.

As the budgets of regulatory agencies are reduced at both the federal and state level, the importance of encouraging self-policing becomes ever more important. Senate Bill 205 creates incentives for companies and individuals acting in good faith to police themselves and maintain full compliance with highly complex regulations. This in turn allows government regulators to focus increasingly scarce resources toward investigating and prosecuting the small minority of genuine "bad actors."

Senate Bill 205 is structurally similar to Senate Bill 41, a bill the Legislature enacted into law in 1997 to encourage Alaska individuals, businesses and local governments to conduct environmental compliance audits. Senate Bill 205 applies the self-audit concept to workplace safety issues, which are sometimes interrelated with environmental protection issues and often of more immediate importance.