BILL ANALYSIS Ó SB 54 Page 1 Date of Hearing: August 14, 2013 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Roger Hernández, Chair SB 54 (Hancock) - As Amended: August 5, 2013 SENATE VOTE : (vote not relevant) SUBJECT : Hazardous materials management: stationary sources: skilled and trained workforce. SUMMARY : Enacts specified provisions related to construction and related work performed by contract at specified stationary sources. Specifically, this bill : 1)Requires an owner or operator of specified stationary sources, when contracting for the performance of construction, maintenance and related work, to require that its contractors and any subcontractors use a "skilled and trained workforce" to perform all onsite work within an apprenticeable occupation in the building and construction trades. 2)Defines a "skilled and trained workforce" to mean a workforce that meets the following criteria: a) All the workers are either registered apprentices or "skilled journeypersons." b) As of January 1, 2014, at least 30 percent of the "skilled journeypersons" are graduates of approved apprenticeship programs, as specified. c) As of January 1, 2015, at least 45 percent of the "skilled journeypersons" are graduates of approved apprenticeship programs, as specified. d) As of January 1, 2016, at least 60 percent of the "skilled journeypersons" are graduates of approved apprenticeship programs, as specified. 3)Defines a "skilled journeyperson" as a worker who meets all of the following criteria: a) The worker either graduated from an approved apprenticeship program or has at least as many hours of SB 54 Page 2 on-the-job experience that would be required to graduate from an approved apprenticeship program. b) The worker is being paid at least a rate equivalent to the prevailing hourly wage rate, as defined. c) For work performed on or after January 1, 2018, the worker has completed within the prior two calendar years at least 20 hours of approved advanced safety training for workers at high hazard facilities. 4)Provides that the requirements of this bill shall not apply to oil and gas extraction operations. 5)Provides that the requirements of this bill shall not apply to contracts awarded before January 1, 2014, unless the contract is extended or renewed after this date. 6)Provides that the requirements of this bill shall not apply to the employees or the owner or operator of the stationary source or prevent the owner or operator from using its own employees to perform any work that has not been assigned to contractors while the employees of the contractor are present and working. 7)Provides that specified provisions of the bill related to the qualifications for skilled journeypersons shall not apply to either of the following: a) To the extent that the contractor has requested qualified workers from local hiring halls but is unable to obtain sufficient workers within 48 hours of the request. b) To the extent that compliance is impracticable because an emergency requires immediate action to prevent harm to public health or safety or to the environment. 8)Requires the Chief of the Division of Apprenticeship Standards to approve a curriculum of in-person classroom and laboratory instruction for approved advanced safety training for workers at high hazard facilities by January 1, 2016. 9)Makes related and conforming changes. 10)Makes related legislative findings and declarations. SB 54 Page 3 EXISTING LAW : 1)Establishes an accidental release prevention program implemented by the Office of Emergency Services and the appropriate administering agency in each city or county. 2)Provides that stationary sources subject to the accidental release prevention program are required to prepare a risk management plan (RMP) when required under certain federal regulations or if the administering agency determines that there is a significant likelihood of a regulated substances accident risk. FISCAL EFFECT : Unknown COMMENTS : The California Accidental Release Prevention (CalARP) Program was implemented on January 1, 1997 and replaced the California Risk Management and Prevention Program (RMPP). The purpose of the CalARP program is to prevent accidental releases of substances that can cause serious harm to the public and the environment, to minimize the damage if releases do occur, and to satisfy community right-to-know laws. This is accomplished by requiring businesses that handle more than a threshold quantity of a regulated substance listed in the regulations to develop a Risk Management Plan (RMP). An RMP is a detailed engineering analysis of the potential accident factors present at a business and the mitigation measures that can be implemented to reduce this accident potential. Among other things, the RMP contains safety information, a hazard review, operating procedures, training requirements, maintenance requirements, compliance audits, and incident investigation procedures. The CalARP program is implemented at the local government level by Certified Unified Program Agencies (CUPAs) also known as Administering Agencies (AAs). The CalARP program is designed so these agencies work directly with the regulated businesses. The CUPAs determine the level of detail in the RMPs, review the RMPs, conduct facility inspections, and provide public access to most of the information. Confidential or trade secret information may be restricted. SB 54 Page 4 Stated Need for the Bill According to the author, under existing law there are no requirements that employees of outside contractors working at chemical manufacturing and processing facilities, including refineries, have a minimum level of skills training, including safety training. This poses a risk to public health and safety as unskilled and untrained workers may be unfamiliar with the construction work associated with such facilities, general facility operations and emergency plans. Therefore, the author states that ensuring that outside contractors that work at chemical refineries have properly trained workers through approved apprenticeship programs will reduce public health and safety risks. This bill extends the Health and Safety Code provisions applicable to industrial facilities performing hazardous activities (e.g. refineries and chemical plants) to require that outside contractors performing on-site work at these facilities use a skilled and trained workforce. These facilities operate on a 24/7 basis and present potentially serious risks to public health and safety and to the environment. Outside contractors at these facilities should be using a qualified workforce, not unskilled, low-wage workers hired off the street or brought in from other states to save money. The bill defines a skilled and trained workforce to mean a workforce consisting of qualified journeypersons and apprentices registered in state-approved apprenticeship programs. Qualified journeypersons must be graduates of an apprenticeship program or have at least the same amount of experience as would be required to graduate from an apprenticeship program. They also must have completed at least 20 hours of advanced safety training in a curriculum approved by the Chief of the Division of Apprenticeship Standards. Contractors and subcontractors must pay their journeypersons at least the prevailing wage for the craft to ensure that there is no economic incentive to use less qualified workers for these high-hazard jobs. Beginning on January 1, 2014, at least 30 percent of a contractor's journeyperson workforce must consist of graduates of a state-approved apprenticeship program. That figure rises to 45 percent on January 1, 2015 and to 60 percent on January 1, 2016. SB 54 Page 5 These workforce requirements would not apply to the facility owner's or operator's own employees, who are likely to be familiar with high-hazard operations, only to outside contractors. These workforce requirements also would apply only to on-site work within an apprenticeable craft in the building and construction trades, i.e. a skilled craft for which the state has approved a multi-year program of classes and supervised on-the-job training to develop skilled journeypersons. The bill also contains exceptions for situations in which hiring halls cannot dispatch sufficient qualified workers within 48 hours and for emergencies. In addition, the bill contains the following legislative findings and declarations which provide the author and the sponsor's justification for several specific provisions of the bill: "(1) The use of unskilled and untrained workers at chemical manufacturing and processing facilities that generate, store, treat, handle, refine, process, and transport hazardous materials is a risk to public health and safety, and the risk to public health and safety is particularly high when workers are employed by outside contractors because they generally will be less familiar with the operations of the facility and its emergency plans and the owner or operator of the facility will have less incentive to invest in their training. (2) Requiring that workers employed by outside contractors at these facilities be paid at least at a rate equivalent to the prevailing journeyperson wage for the occupation, or be registered in an approved apprenticeship program, is necessary to provide an economic incentive for employers to use only the most skilled workers to perform work that poses a risk to public health and safety. The wage scale is also necessary to provide an economic incentive for the workers to obtain the mandatory advanced safety training required by Section 2 of this act. (3) Requiring that apprentices be registered in programs approved by the Chief of the Division of Apprenticeship Standards is necessary to ensure that these workers are receiving the proper training and on-the-job supervision SB 54 Page 6 and that the programs are subject to proper oversight. (4) The requirement that at least 60 percent of the journeypersons working for a contractor be graduates of an approved apprenticeship program is necessary to ensure that the majority of the journeypersons will have had appropriate classroom and laboratory instruction for their occupations. A phase-in for this requirement will avoid disruption of the industry." Proposed Applicability of this Bill As discussed above, this bill applies to specified facilities regulated under the California Accidental Release Prevention (CalARP) Program. The language of this bill states that it applies to the owner or operator of a "stationary source with one or more covered processes that is required to prepare and submit a [risk management plan] pursuant to" a specified provision of the Health and Safety Code (specifically Section 25531 et seq.). A "stationary source" is defined under Health and Safety Code Section 25532(k) by a cross-reference to a definition in federal regulations. That federal regulation defines "stationary source," in part, as follows: "Stationary source means any buildings, structures, equipment, installations, or substance emitting stationary activities which belong to the same industrial group, which are located on one or more contiguous properties, which are under the control of the same person (or persons under common control), and from which an accidental release may occur. The term stationary source does not apply to transportation, including storage incident to transportation, of any regulated substance or any other extremely hazardous substance under the provisions of this part. A stationary source includes transportation containers used for storage not incident to transportation and transportation containers connected to equipment at a stationary source for loading or unloading?" (40 C.F.R. § 68.3). A "covered process" is defined as a process that has specified regulated substances in more than a threshold quantity as SB 54 Page 7 determined by federal or state law. Health and Safety Code Section 25532(c). Existing law generally provides that if the Administering Agency (AA) determines that there is a significant likelihood of a regulated substances accident risk, it shall require the stationary source to prepare and submit an RMP. Health and Safety Code Section 25534. Therefore, the language of this bill specifies that it would apply to the owner or operator of a "stationary source with one or more covered processes that is required to prepare and submit a [risk management plan]" pursuant to these provisions of existing law. The legislative findings and declarations refers to the target of this bill as "chemical manufacturing and processing facilities that generate, store, treat, handle, refine, process, and transport hazardous materials." The author and the sponsor may wish to ensure that the current definition contained in the bill adequately and narrowly covers the intended facilities the legislation is designed to cover. Interagency Working Group on Refinery Safety In the aftermath of a serious chemical release and fire at Chevron's Richmond oil refinery in August, 2012, the Brown Administration formed an Interagency Working Group to examine ways to improve public and worker safety through enhanced oversight of refineries, and to strengthen emergency preparedness in anticipation of any future incident. The Working Group consisted of participants from 13 agencies and departments, as well as the Governor's office. Over an eight-month period, the Working Group met internally and with industry, labor, community, environmental, academic, local emergency response and other stakeholders. In July 2013, the Working Group issued a draft report with numerous findings and recommendations. The draft report may be accessed at: http://www.dir.ca.gov/DOSH/Reports/InteragencyWorkingGroupReport. pdf According to the author, this bill "augments the recommendations in Governor Brown's Interagency Working Group on Refinery Safety, which released a report in July 2013 titled 'Improving Public and Worker Safety at Oil Refineries.' The report lists SB 54 Page 8 several recommendations [to] improve public and worker safety through enhanced oversight of refineries, and to strengthen emergency preparedness in anticipation of any future incident." RELATED LEGISLATION : This bill contains language that is similar, but not identical, to language contained in AB 26 (Bonilla) of this year. However, AB 26 is limited to refinery projects funded by the AB 32 Greenhouse Gas Reduction Fund. AB 26 passed the Assembly by a 51-25 vote in May, but was not heard in the Senate Committee on Labor and Industrial Relations. ARGUMENTS IN SUPPORT : This bill is sponsored by the State Building and Construction Trades Council of California, who writes the following in support: "This legislation will improve the safety of chemical manufacturing facilities, including refineries, by creating a standard for training on the industrial work performed at these facilities and will encourage chemical manufacturers to hire California workers. Refinery safety has been an increasing problem in California and across the United States. Due to growing concerns and recent incidents that have risked the public's health, Governor Brown and members of the Legislature called for changes to improve safety at these facilities. An interagency group was formed to study this issue through various methods including meetings with stakeholders. The Labor Occupational Health Program at UC Berkeley, which helped facilitate both the labor and community stakeholder meetings, published a report, "Refinery Safety in California: Labor, Community and Fire Agency Views", and Governor Brown's Interagency Working Group on Refinery Safety followed up with their own draft report issued in July 2013, titled "Improving Public and Worker Safety at Oil Refineries." The Interagency Working Group report provided various recommendations, including the following statement, SB 54 Page 9 "Workers involved in maintenance, represented by building and construction trades unions, reported that training of most maintenance workers (non-refinery employees) is inadequate." They also reported, "refineries use mostly contract workers, including out-of-state workers, to conduct maintenance during planned shutdowns of a refinery process (also referred to as turnarounds), and that contract workers have less training and experience and, therefore, are less safe." [This bill] directly responds to the need for a trained and highly skilled workforce performing contracted out work to improve worker and public safety for the communities surrounding these facilities? ?The public policy supporting the law is the need to avoid unqualified workers performing skilled work inside high-hazard facilities. The contractors at these facilities should be using the most skilled and qualified workers." ARGUMENTS IN OPPOSITION : At the time of preparation of this analysis, there was no opposition on file to this measure. However, the similar measure discussed above (AB 26) generated significant opposition from, among others, the United Steelworkers. As the analysis of AB 26 prepared by the Senate Committee on Labor and Industrial Relations noted: "[Opponents] believe that this bill and the proponents are trying to 'blame the workers' for events such as the Chevron Richmond Refinery explosion and fire last year, despite scientific evidence to the contrary. The United Steelworkers (USW) argues that the US Chemical Safety Board's Interim Investigative Report clearly states that management's decisions were at full fault for the explosion and fire and, in fact, it is because of the skills of the highly trained steelworkers that there was no loss of life. The United Steelworkers also argue that this bill replaces permanent, long-term, certified and trained refinery workers with temporary, contract employees. Additionally, SB 54 Page 10 they argue that this bill jeopardizes refinery safety, refinery workers, and surrounding communities by minimizing inclusion of safety records as a mandatory qualifying factor for project contracts. USW would like to see the training requirement in the bill eliminated because 20 hours of training is not sufficient to adequately train someone. Overall, they argue that the substitution of proprietary, fully trained United Steelworkers with transient, migratory workers would do nothing to enhance public safety." REGISTERED SUPPORT / OPPOSITION : Support California Professional Firefighters California Teamsters Public Affairs Council International Association of Heat and Frost Insulators, Local 5 International Brotherhood of Boilermakers, Western States Section State Building and Construction Trades Council of California (sponsor) Opposition None on file. Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091