Legislature(2017 - 2018)SENATE FINANCE 532

04/11/2018 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 9:30 a.m. --
+= HB 285 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
<Bill Hearing Canceled>
+= HB 286 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= HB 121 OCC. HEALTH AND SAFETY CIVIL PENALTIES TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 4/12/18 at 9 a.m.>
+= HB 128 SHELLFISH ENHANCE. PROJECTS; HATCHERIES TELECONFERENCED
Moved HB 128 Out of Committee
HOUSE BILL NO. 121                                                                                                            
                                                                                                                                
     "An Act relating to occupational safety and health                                                                         
     enforcement penalties; and providing for an effective                                                                      
     date."                                                                                                                     
                                                                                                                                
10:26:53 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   SAM    KITO,   SPONSOR,    introduced   the                                                                    
legislation:                                                                                                                    
                                                                                                                                
     House Bill 121 brings  Alaska's Occupational Safety and                                                                    
     Health (AKOSH) state plan  into compliance with federal                                                                    
     requirements,   ensuring   continued  eligibility   for                                                                    
     federal  grant funds  and  helping  to protect  workers                                                                    
     from workplace injuries, illnesses, and fatalities.                                                                        
                                                                                                                                
     In 2015,  Congress passed  the Federal  Civil Penalties                                                                    
     Inflation  Adjustment Act  Improvements Act,  requiring                                                                    
     many   federal  agencies   to   adjust  penalties   for                                                                    
     inflation going back to  1990, and requiring subsequent                                                                    
     yearly   adjustments  according   to  changes   in  the                                                                    
     Consumer  Price Index.  Occupational Safety  and Health                                                                    
     Administration  complied  by  adjusting  their  maximum                                                                    
     penalties  in July  2016, including  a six-month  grace                                                                    
     period for  states to comply.  In order to  comply with                                                                    
     federal program requirements, AKOSH  must have at least                                                                    
     equivalent  maximum and  minimum penalties.  AKOSH fell                                                                    
     out of  compliance with this requirement  on January 1,                                                                    
     2017, when the six-month buffer period expired.                                                                            
                                                                                                                                
     Maximum  and   minimum  penalties  for   violations  of                                                                    
     Alaska's  occupational  safety   and  health  laws  are                                                                    
     specified  in AS  18.60.095, the  Penalties section  of                                                                    
     Prevention of  Accident and Health Hazards.  House Bill                                                                    
     121  allows  the  Department  of  Labor  and  Workforce                                                                    
     Development to  set penalty amounts by  regulation, and                                                                    
     limits the penalties  to corresponding federal maximums                                                                    
     for each  violation type.  This enables  the department                                                                    
     to adjust  to federally required changes  while placing                                                                    
     a cap on increases.                                                                                                        
                                                                                                                                
10:28:05 AM                                                                                                                   
                                                                                                                                
DEBORAH  KELLY, DIRECTOR,  DIVISION  OF OCCUPATIONAL  SAFETY                                                                    
AND HEALTH,  DEPARTMENT OF LABOR AND  WORKFORCE DEVELOPMENT,                                                                    
(DLWD) explained that in 2015  congress passed an inflation-                                                                    
adjustment act  that required many agencies  to adjust their                                                                    
penalties  for  inflation.  She  stated  that  in  2016  the                                                                    
Occupational   Safety  and   Health  Administration   (OSHA)                                                                    
adjusted their  maximum penalties, and required  state plans                                                                    
to  do the  same. She  stated  that Alaska  was required  to                                                                    
follow suit by January 1,  2017. She explained that the bill                                                                    
brought  the   state  into   compliance  by   requiring  the                                                                    
department to set the maximum  OSHA penalties by regulation,                                                                    
and  capped those  maximum  penalties  at the  corresponding                                                                    
federal  levels.  She stressed  that  the  bill allowed  the                                                                    
state to come into  compliance with federal requirement, and                                                                    
to stay  in compliance with the  yearly required adjustments                                                                    
by the CPI.                                                                                                                     
                                                                                                                                
Senator von  Imhof noted  the three  types of  violations on                                                                    
the fact sheet  for the current maximum penalty  and the new                                                                    
maximum penalty. She  asked whether it was  Alaska data, and                                                                    
whether there were additional issues  in the bill. Ms. Kelly                                                                    
replied that the fact sheet was  from the year prior, so the                                                                    
number was  adjusted in the  fiscal note. She  remarked that                                                                    
each bill section was a  different category. She stated that                                                                    
the  categories:  willful  and  repeat  violations,  serious                                                                    
violations,  other  than   serious  violations,  failure  to                                                                    
correct a violation, and posting requirement violations.                                                                        
                                                                                                                                
Senator  von  Imhof  requested   a  one-page  table  of  the                                                                    
categories, the fee penalties, and  the range of the state's                                                                    
noncompliance. She  noted that  there was an  assertion that                                                                    
the  state would  save $619  in state  funds. She  asked for                                                                    
more  information. Ms.  Kelly replied  that it  was $619,000                                                                    
yearly  that  the  state  would   lose  in  state  funds  by                                                                    
reverting the enforcement program to federal OSHA.                                                                              
                                                                                                                                
Senator von Imhof  wondered whether the net  loss meant that                                                                    
the  state was  not paying  the penalties  or was  the state                                                                    
receiving revenues. Ms. Kelly  replied that the cost savings                                                                    
would  be in  the  reduction of  the  personal services  and                                                                    
associated  costs. The  penalties  would go  to the  federal                                                                    
treasury  rather  than  the state  penalty.  Therefore,  the                                                                    
reference was to the state funds and not private business.                                                                      
                                                                                                                                
Senator  von Imhof  surmised that  the  reference was  about                                                                    
noncompliance  with   the  federal  government.   Ms.  Kelly                                                                    
replied, "broadly yes."                                                                                                         
                                                                                                                                
Senator Micciche  asserted that  moving jurisdiction  to the                                                                    
federal government would not  result in "noncompliance." Ms.                                                                    
Kelly replied  that the  decision to have  a state  plan was                                                                    
always up to the state.                                                                                                         
                                                                                                                                
Senator Micciche  wondered whether  the $1.31 million  was a                                                                    
constant, and whether it was  an average over ten years. Ms.                                                                    
Kelly replied  that she  believed that  it was  a three-year                                                                    
average. She  stated that there  was a calculation  based on                                                                    
the actuals for,  she believed, three years.  She noted that                                                                    
they  varied year  to year,  because one  case could  add or                                                                    
subtract $100,000 penalty amount for the year.                                                                                  
                                                                                                                                
10:35:10 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:36:03 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
10:36:05 AM                                                                                                                   
                                                                                                                                
Ms. Kelly  stated that the  numbers in the letter  were from                                                                    
the fiscal note from the  previous year, and the number used                                                                    
the  FY 16  actual penalties  collected. The  current year's                                                                    
fiscal noted  used a two-year  average of the  previous year                                                                    
and FY 16.                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon queried the  reason for the inconsistency                                                                    
in the number  of years. Ms. Kelly replied that  there was a                                                                    
desire to use as many  fiscal years as possible, but because                                                                    
of the  IRIS migration there  was a desire for  a consistent                                                                    
number; therefore, a maximum number  of years was used under                                                                    
the new financial accounting system.                                                                                            
                                                                                                                                
Vice-Chair Bishop remarked that  there was state control, so                                                                    
the  OSHA standards  must be  met  at a  minimum. The  state                                                                    
standards could be  higher than the OSHA  standards. He felt                                                                    
that the bill was a housekeeping issue.                                                                                         
                                                                                                                                
Co-Chair  MacKinnon   noted  that  the  state   was  not  in                                                                    
compliance, so queried the  federal government's reaction to                                                                    
the noncompliance.  She recalled that the  sponsor suggested                                                                    
a   consequence  of   inaction,  like   withholding  federal                                                                    
financial  support.  Ms.  Kelly  replied  that  the  out  of                                                                    
compliance date was January 1,  2017. The federal government                                                                    
noted  that the  state  was working  toward  a solution,  so                                                                    
there was understanding in the meantime.                                                                                        
                                                                                                                                
Co-Chair MacKinnon  wondered whether the  federal government                                                                    
required that it be in  regulation, rather than statute, for                                                                    
setting  a fine.  Ms.  Kelly replied  in  the negative.  She                                                                    
stated  that  the regulatory  avenue  seemed  like the  most                                                                    
practical way to make yearly adjustments.                                                                                       
                                                                                                                                
Co-Chair  MacKinnon  noted   that  there  was  consternation                                                                    
related  to determining  regulations  rather than  statutes.                                                                    
She queried the reason  for choosing regulations rather than                                                                    
a  statutory change.  Representative Kito  replied that  the                                                                    
federal government was requesting  that agencies tracked the                                                                    
consumer  price index  (CPI), and  adjust  the penalties  to                                                                    
adjust to modifications of the  CPI. He remarked that it was                                                                    
unknown whether  that examination would  be on an  annual or                                                                    
other  periodic basis.  He  stated  that setting  regulation                                                                    
allowed for streamlined adjustments.                                                                                            
                                                                                                                                
10:44:00 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  noted  that the  department  could  not                                                                    
exceed   the  minimum   set  by   the  federal   government.                                                                    
Representative Kito agreed.                                                                                                     
                                                                                                                                
Senator  Micciche  looked at  Section  6,  page 3,  lines  1                                                                    
through 3,  which did not  cover the minimum. He  noted that                                                                    
the   minimum  was   giving  under   the   purview  of   the                                                                    
commissioner. He  wondered why there  was not a  matching of                                                                    
the two.                                                                                                                        
                                                                                                                                
Co-Chair MacKinnon  agreed, and stated that  she had already                                                                    
asked that  question. She wondered  whether the  minimum was                                                                    
the maximum.                                                                                                                    
                                                                                                                                
Representative Kito deferred to Ms. Kelly.                                                                                      
                                                                                                                                
Ms. Kelly explained that the  minimum penalty in statute was                                                                    
the  only  minimum penalty.  She  stated  that most  of  the                                                                    
minimum penalties  were zero, except for  the single willful                                                                    
violation minimum penalty.                                                                                                      
                                                                                                                                
Co-Chair MacKinnon requested a sectional analysis.                                                                              
                                                                                                                                
10:47:06 AM                                                                                                                   
                                                                                                                                
CAITLYN  ELLIS, STAFF,  REPRESENTATIVE  SAM KITO,  presented                                                                    
the Sectional Analysis (copy on file):                                                                                          
                                                                                                                                
     Section 1                                                                                                                  
     Amends AS  18.60.095 (a) to establish  that the maximum                                                                    
     and  minimum  civil   penalties  the  commissioner  may                                                                    
     assess an  employer for a  willful or  repeat violation                                                                    
     of occupational  safety and health provisions  shall be                                                                    
     set  by regulation  under a  new section  (i) added  by                                                                    
     this bill.                                                                                                                 
                                                                                                                                
     Section 2                                                                                                                  
     Amends AS  18.60.095 (b) to establish  that the maximum                                                                    
     civil penalty  the commissioner may assess  an employer                                                                    
     for  a serious  violation  of  occupational safety  and                                                                    
     health provisions  shall be set  by regulation  under a                                                                    
     new section (i) added by this bill.                                                                                        
                                                                                                                                
     Section 3                                                                                                                  
     Amends AS  18.60.095 (c) to establish  that the maximum                                                                    
     civil penalty  the commissioner may assess  an employer                                                                    
     for  an other  than serious  violation of  occupational                                                                    
     safety   and  health   provisions  shall   be  set   by                                                                    
     regulation under a new section (i) added by this bill.                                                                     
                                                                                                                                
     Section 4                                                                                                                  
     Amends AS  18.60.095 (d) to establish  that the maximum                                                                    
     civil penalty  the commissioner may assess  an employer                                                                    
     who  fails  to  correct  a  violation  of  occupational                                                                    
     safety   and  health   provisions  shall   be  set   by                                                                    
     regulation under a new section (i) added by this bill.                                                                     
                                                                                                                                
     Section 5                                                                                                                  
     Amends AS  18.60.095 (g) to establish  that the maximum                                                                    
     civil penalty  the commissioner may assess  an employer                                                                    
     for violations of posting requirements  shall be set by                                                                    
     regulation under a new section (i) added by this bill.                                                                     
                                                                                                                                
     Section 6                                                                                                                  
     Amends  AS 18.60.095  by adding  a  new subsection  (i)                                                                    
     that   directs  the   commissioner   to  establish   by                                                                    
     regulation  the maximum  civil  penalty  amounts to  be                                                                    
     imposed under  (a)    (d) and (g)  of this  section and                                                                    
     the minimum  imposed under (a). It  stipulates that the                                                                    
     maximum  civil penalties  may not  be greater  than the                                                                    
     corresponding  federal   penalties  and   must  include                                                                    
     adjustments  to  correlate   with  inflation  rates  as                                                                    
     specified under  the Federal Civil  Penalties Inflation                                                                    
     Adjustment Act Improvements Act of 2015.                                                                                   
                                                                                                                                
     Section 7                                                                                                                  
     Establishes  that   this  Act  applies   to  violations                                                                    
     occurring on or after the effective date of this Act.                                                                      
                                                                                                                                
     Section 8                                                                                                                  
                                                                                                                                
     Allows  the department  to adopt  regulations necessary                                                                    
     to implement this Act.                                                                                                     
                                                                                                                                
Co-Chair MacKinnon  wondered whether the CPI  would affect a                                                                    
rate  increasing or  decreasing.  Ms. Ellis  replied in  the                                                                    
affirmative, stating that it would be adjusted on annual                                                                        
basis accordingly.                                                                                                              
                                                                                                                                
Co-Chair MacKinnon asked for agreement. Ms. Kelly replied                                                                       
in the affirmative.                                                                                                             
                                                                                                                                
Vice-Chair Bishop surmised that it could not exceed the                                                                         
federal maximum penalties. Ms. Kelly agreed.                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Co-Chair MacKinnon discussed committee business.                                                                                
                                                                                                                                
SB 121 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB 121 - Additional Document - Sponsor's Reply to House Judiciary Committee Questions 3.10.17.pdf SFIN 4/11/2018 9:00:00 AM
HB 121
HB 121 - Sponsor Statement 3.6.17.pdf SFIN 4/11/2018 9:00:00 AM
HB 121
HB 121 - Sectional Analysis 3.6.17.pdf SFIN 4/11/2018 9:00:00 AM
HB 121
HB 121 - Support Document - Federal memo to state plans 02.23.17.pdf SFIN 4/11/2018 9:00:00 AM
HB 121
HB 121 - Supporting Document-OSHA Fact Sheet 3.6.17.pdf SFIN 4/11/2018 9:00:00 AM
HB 121
HB 121-DOLWD Response to SFIN 4.11.18.pdf SFIN 4/11/2018 9:00:00 AM
HB 121