Legislature(2017 - 2018)BARNES 124

02/27/2017 03:15 PM LABOR & COMMERCE

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         HB 121-OCC. HEALTH AND SAFETY CIVIL PENALTIES                                                                      
3:17:19 PM                                                                                                                    
CHAIR KITO  announced that the  first order of business  would be                                                               
HOUSE BILL NO.  121, "An Act relating to  occupational safety and                                                               
health  enforcement penalties;  and  providing  for an  effective                                                               
3:17:53 PM                                                                                                                    
BIANCA CARPENETI,  Staff, Representative  Sam Kito,  Alaska State                                                               
Legislature, presented  HB 121 on  behalf of the House  Labor and                                                               
Commerce  Standing Committee,  sponsor,  on which  Representative                                                               
Kito serves  as chair.   She said the  bill was requested  by the                                                               
Department  of  Labor  &   Workforce  Development  (DLWD),  which                                                               
previously presented  the concept of  the bill to  the committee.                                                               
On January 20, 2017, the  committee authorized the chair to draft                                                               
a bill on its behalf to  bring the State of Alaska's Occupational                                                               
Safety  and   Health  Administration   (OSHA)  state   plan  into                                                               
compliance with federal requirements.   She expressed that HB 121                                                               
would  ensure Alaska's  continued eligibility  for federal  grant                                                               
funds,  which  help  protect  workers  from  workplace  injuries,                                                               
illness, and fatalities.                                                                                                        
3:18:54 PM                                                                                                                    
DEBORAH KELLY,  Director, Division  of Labor Standards  & Safety,                                                               
Department  of  Labor  & Workforce  Development  (DLWD),  offered                                                               
details on HB  121.  She explained that for  violations of safety                                                               
and health laws, there is  one minimum and five maximum penalties                                                               
set in  statute.  Under  HB 121, DLWD  would set the  minimum and                                                               
maximums by regulation  and the bill would limit  the minimum and                                                               
maximums  for  each penalty  type  to  the corresponding  federal                                                               
penalty amount.  She offered that  the bill is purely for federal                                                               
MS.  KELLY  stated that  Alaska  Occupational  Safety and  Health                                                               
(AKOSH) is Alaska's state plan  which receives federal grants and                                                               
is responsible for  the safety and health  standards that protect                                                               
almost all Alaskan workers.   She remarked, "Alaska's program may                                                               
develop  and  implement  safety and  health  standards  that  fit                                                               
Alaska's   unique   environment   using   input   from   Alaska's                                                               
industries, workers,  and from the  public."  She  explained that                                                               
AKOSH inspects all  private and public workplaces  in Alaska with                                                               
a  few   federal  exceptions;  AKOSH  can   issue  citations  and                                                               
penalties if,  during an inspection,  an employer is found  to be                                                               
violating a standard.  A state  plan such as AKOSH is required to                                                               
be at least as effective as federal OSHA.                                                                                       
MS.  KELLY  reported  that  in   2015,  Congress  passed  an  Act                                                               
requiring  many   federal  agencies   to  adjust   penalties  for                                                               
inflation  going back  to 1990  and to  continue to  adjust those                                                               
penalties yearly  along with a  consumer price index (CPI).   She                                                               
     OSHA  complied and  raised their  penalties in  July of                                                                    
     last  year.   Alaska's requirement  to be  at least  as                                                                    
     effective includes  maximum penalty  amounts.   In your                                                                    
     packet  is the  department's  notification we  received                                                                    
     from  the  U.S. Assistant  Secretary  of  Labor of  our                                                                    
     requirement to adjust our penalties  to equal or higher                                                                    
     than  federal penalties.   As  of January  1, 2017,  we                                                                    
     fell  out  of  compliance  with that  requirement.    A                                                                    
     failure to  come into  compliance will  eventually risk                                                                    
     the  over  $2  million  in federal  grant  funds  AKOSH                                                                    
     receives every  year.  This bill  allows the department                                                                    
     to set  the current federal  amount in regulation  - no                                                                    
     more and no less.  [It]  simply allows AKOSH to come in                                                                    
     compliance with  federal law and stay  in compliance as                                                                    
     penalties change from year to year.                                                                                        
3:21:53 PM                                                                                                                    
REPRESENTATIVE SULLIVAN-LEONARD stated her  concern that under HB
121, some  penalty fees  would increase  70 to  80 percent.   She                                                               
asked  whether the  penalties were  previously tied  to a  CPI in                                                               
MS. KELLY answered  that the adjustment for  inflation going back                                                               
to 1990  is approximately a  73 percent increase.   She explained                                                               
that  CPI  is part  of  the  Federal Civil  Penalties  [Inflation                                                               
Adjustment]  Act   passed  by   Congress,  which   initiated  the                                                               
requirement  to tie  the penalties  to future  CPI changes.   She                                                               
offered her understanding  that a previous draft of  [HB 121] did                                                               
not specify the [CPI requirement].                                                                                              
REPRESENTATIVE  SULLIVAN-LEONARD restated  her concern  regarding                                                               
the increase  in penalties.   She noted  her desire to  hear from                                                               
industry about the effects of HB 121.                                                                                           
3:23:56 PM                                                                                                                    
CHAIR  KITO  noted  that  many  states,  including  Alaska,  have                                                               
adopted the  enforcement of OSHA laws.   He asked, "If  we do not                                                               
comply,  do   we  risk   losing  our   program  to   the  federal                                                               
Occupational Safety and Health Administration?"                                                                                 
MS.  KELLY  responded, "That's  correct."    She stated  that  if                                                               
Alaska  does not  comply, then  the  state could  lose its  grant                                                               
funds  and  authorization,  which  would  lead  to  federal  OSHA                                                               
reclaiming authority  and increasing  the penalty amounts  to the                                                               
federal levels at that time.                                                                                                    
CHAIR  KITO offered  his conclusion  that the  penalties will  be                                                               
increased either way.                                                                                                           
MS.  KELLY agreed.   When  asked if  the penalty  amounts can  be                                                               
adjusted, she explained:                                                                                                        
     These are  maximum penalties with the  exception of the                                                                    
     one minimum penalty.  They  are maximum penalties, they                                                                    
     are not  usually the amount that  the employer actually                                                                    
     pays.   There  are multiple  reductions that  are built                                                                    
     into  that  maximum  penalty -  starts  out  with  that                                                                    
     maximum  and then  it's reduced  for business  size, so                                                                    
     small businesses  are not paying  as much  in penalties                                                                    
     as   large  businesses.     It's   reduced  for   other                                                                    
     mitigating factors.   And we  also have  the discretion                                                                    
     to  reduce  during  an  informal  conference  with  the                                                                    
     employer if  they come in  and talk about  their safety                                                                    
     program or their plans to comply in the future.                                                                            
3:25:42 PM                                                                                                                    
REPRESENTATIVE KNOPP asked where  retroactive measures would come                                                               
in and  how a maximum  assessment for  a violation would  be set.                                                               
He remarked, "I  struggle with the federal  regulation stating we                                                               
must go back to  1990 to adjust for CPI going  forward to set our                                                               
maximum penalty."   He supposed  that the federal  government set                                                               
the maximum  to make sure  [Alaska] meets it.   He asked  to see:                                                               
the  federal maximums  and minimums,  Alaska's current  fees, and                                                               
the proposed  fees as adjusted to  CPI from 1990.   He voiced his                                                               
concern that the  analysis of potential generated  revenue in the                                                               
fiscal  notes  may  not  be   accurate  since  the  fees  can  be                                                               
"bargained down."   He asked  how the  numbers were reached.   He                                                               
requested  to see  the language  in the  Federal Civil  Penalties                                                               
Adjustment Act to compare the maximum rates.                                                                                    
MS.  KELLY answered  that the  numbers in  the fiscal  notes came                                                               
from the  actual penalties paid  by the employees in  2016, which                                                               
she  stated   is  realistic  revenue  actually   received.    She                                                               
explained  that the  percent difference  between the  maximum and                                                               
the actual  amount brought  in from  the employers  stays roughly                                                               
the  same  each   year;  therefore,  she  supposed   that  it  is                                                               
reasonable to  predict that  raising the  premiums by  73 percent                                                               
would  lead to  actual revenue  increasing  by 73  percent.   She                                                               
noted that the first fiscal year's  revenue is half of the second                                                               
year's  because   the  rate  adjustments   in  HB  121   are  not                                                               
anticipated  to be  implemented until  halfway through  the first                                                               
fiscal year.                                                                                                                    
MS. KELLY stated  that she doesn't understand  the question about                                                               
retroactive measures.   She explained  that OSHA has  a factsheet                                                               
showing the  details of the  maximum increases to.   She informed                                                               
that  serious  violations,  failure   to  abate  violations,  and                                                               
violations of  posting requirements  currently have a  maximum of                                                               
$7,000  per violation;  the new  federal maximum  is $12,471  per                                                               
violation  for  those  violation   types.    The  more  egregious                                                               
violations, willful  violations, and repeat  violations currently                                                               
have a maximum of $70,000  per violation, which would increase to                                                               
$124,709 per  violation.  She  remarked, "That's just  taking the                                                               
inflation adjustment  from 2015 back  to 1990 which comes  out to                                                               
that factor."                                                                                                                   
3:30:19 PM                                                                                                                    
REPRESENTATIVE KNOPP  again asked what the  federal numbers would                                                               
MS.  KELLY  stated that  her  previous  explanation detailed  the                                                               
federal numbers the state would use  under HB 121.  She explained                                                               
that the  initial numbers  - $7,000  and $70,000,  respectively -                                                               
are the current state numbers.                                                                                                  
REPRESENTATIVE KNOPP asked whether  the 73 percent increase would                                                               
bring the state into compliance with the federal mandates.                                                                      
MS. KELLY answered that's correct.                                                                                              
3:31:14 PM                                                                                                                    
CHAIR KITO opened public testimony on HB 121.                                                                                   
3:31:35 PM                                                                                                                    
CHAIR KTIO announced that HB 121 was held over.                                                                                 

Document Name Date/Time Subjects
HB121 Sponsor Statement 2.22.17.pdf HL&C 2/27/2017 3:15:00 PM
HB 121
HB121 Sectional Analysis 2.22.17.pdf HL&C 2/27/2017 3:15:00 PM
HB 121
HB121 Fiscal Note DOLWD-OSH 2.24.17.pdf HJUD 3/13/2017 1:00:00 PM
HL&C 2/27/2017 3:15:00 PM
HB 121
HB121 Support Document - Federal memo to state plans 2.23.17.pdf HL&C 2/27/2017 3:15:00 PM
HB 121
HB114 Sponsor Statement 02.21.2017.pdf HL&C 2/27/2017 3:15:00 PM
HB 114
HB114 Sectional Analysis 02.21.2017.pdf HL&C 2/27/2017 3:15:00 PM
HB 114
HB114 Fiscal Note DOLWD-MI 2.24.17.pdf HL&C 2/27/2017 3:15:00 PM
HB 114