Legislature(2005 - 2006)CAPITOL 120

04/06/2005 01:00 PM JUDICIARY

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HB 33 - EFFECT OF REGULATIONS ON SMALL BUSINESSES                                                                             
2:21:35 PM                                                                                                                    
CHAIR McGUIRE announced  that the next order of  business would be                                                              
HOUSE BILL  NO. 33 "An Act  relating to the effect  of regulations                                                              
on  small  businesses;  and  providing  for  an  effective  date."                                                              
[Before the committee was CSHB 33(L&C).]                                                                                        
MICHAEL  PAWLOWSKI, Staff  to  Representative  Kevin Meyer,  House                                                              
Finance Committee,  Alaska State Legislature, sponsor,  relayed on                                                              
behalf  of  Representative  Meyer   that  the  federal  Regulatory                                                              
Flexibility  Act  was passed  in  1980  and requires  agencies  to                                                              
consider the impacts  and costs to small businesses  when drafting                                                              
regulations.    He  said  [the   Act]  does  not  predetermine  an                                                              
outcome,  but  brings  an  awareness of  the  interests  of  small                                                              
businesses  into the  process, and  allows  interested parties  to                                                              
sue   if  agencies   don't   follow   the   Act.     The   federal                                                              
administration  has  estimated   that  the  Act  has  saved  small                                                              
businesses over  $17 billion, he  said, because "just  filling out                                                              
a few less  forms, following a  few less of the  restrictions that                                                              
are  put  on  business  has saved  business  money."    This  cost                                                              
savings allows businesses to invest in jobs, people, and growth.                                                                
MR. PAWLOWSKI  said  that 37 states  have adopted  a similar  law.                                                              
The  model  legislation may  not  fit  Alaska, however,  since  it                                                              
shouldn't get in  the way of resource development  by slowing down                                                              
the permitting  processes,  he explained,  and mentioned  that the                                                              
House Labor  and Commerce Standing  Committee addressed  the issue                                                              
of judicial  review.  He characterized  HB 33 as a better  step in                                                              
the process of forming an Alaskan regulatory flexibility Act.                                                                   
2:25:01 PM                                                                                                                    
REPRESENTATIVE GARA  asked about the cost of  the studies required                                                              
under the bill.                                                                                                                 
MR.  PAWLOWSKI  acknowledged that  there  is  a fiscal  note,  but                                                              
offered  his belief  that it  applies  more to  the original  bill                                                              
than to  the version  before the  committee, because CSHB  33(L&C)                                                              
now relaxes  those requirements  to a  "general description."   He                                                              
posited   that  Alaskans   are   used  to   environmental   impact                                                              
statements,  and  that  economic  effect statements  ought  to  be                                                              
reviews  of  similar  depth.    He  mentioned  that  CSHB  33(L&C)                                                              
addresses  this issue  by softening  the language  and taking  out                                                              
judicial reviews, he said.                                                                                                      
REPRESENTATIVE GARA  said his concern is that the  studies will be                                                              
costly and  will delay  the promulgation  of regulations,  because                                                              
they  must  include a  general  description  and estimate  of  the                                                              
numbers  of the  affected businesses,  and  such will  be hard  to                                                              
determine unless "you shoot from the hip."                                                                                      
MR. PAWLOWSKI said  the costs have not been high  for other states                                                              
with  similar laws,  and  noted  that the  definition  of a  small                                                              
business  will be based  solely  on the number  of employees,  and                                                              
the Department  of Labor  & Workforce  Development keeps  accurate                                                              
statistics of  such that are  available on  line.  With  regard to                                                              
the analysis  of probable  economic effect,  he agreed  that there                                                              
is a chance  that the process will  be slowed down.   The question                                                              
then  becomes  whether   the  investment  of  time   is  warranted                                                              
compared to the  cost of going back and redoing  regulations.  The                                                              
approach  of regulators  is limited  by  their mission  statement,                                                              
and so  adding a little  information ahead  of time helps  them do                                                              
it right the first time, he opined.                                                                                             
REPRESENTATIVE  GARA  said  one   of  his  concerns  is  that  the                                                              
government must  be "flexible enough  to come up  with regulations                                                              
that  achieve   the  purposes  of   the  statute  that   they  are                                                              
implementing in  the most cost effective,  fairest way."   He said                                                              
he is  worried the  bill will encourage  agencies to  shortcut the                                                              
purposes  of  a  statute,  for example,  like  one  that  protects                                                              
people from  pesticides.  He  suggested adding language  to ensure                                                              
that the objectives of statutes are not compromised.                                                                            
MR. PAWLOWSKI  said it  seems clear  enough that  the bill  is not                                                              
intended to  compromise statutes  and that  agencies have  to meet                                                              
the  objectives   of  the   statutes.     The  language   requires                                                              
regulators to be  consistent with the health, safety,  and welfare                                                              
of the state, he concluded.                                                                                                     
REPRESENTATIVE  GARA  argued  that  clarifying  the  bill  further                                                              
would ensure  that an agency  also has  the duty to  implement the                                                              
statute as the statute reads.                                                                                                   
CHAIR  McGUIRE suggested  that  Mr.  Pawlowski take  that  comment                                                              
back to  the sponsor.   She opined that  more often than  not, the                                                              
regulations undermine the objectives of the statutes.                                                                           
2:35:51 PM                                                                                                                    
CHRISTOPHER   KENNEDY,   Senior    Assistant   Attorney   General,                                                              
Environmental Section,  Civil Division (Anchorage),  Department of                                                              
Law  (DOL),  said  Governor  Murkowski   strongly  supports  small                                                              
businesses  and  feels  it  is   important  to  safeguard  against                                                              
regulatory requirements  that put  unjustified or onerous  burdens                                                              
on  small business.   He  added  that the  administration is  very                                                              
close to an  agreement with the sponsor in  developing legislation                                                              
that  the governor  can support.   He  said the  main areas  under                                                              
discussion  are those of  determining which  kinds of  regulations                                                              
should be  subject to  this procedure, and  of creating  a shorter                                                              
list of  agencies that  would fall  under the  legislation.   Most                                                              
labor,  commerce, health  and social  services, and  environmental                                                              
health regulations  would be  covered, but  the governor  wants to                                                              
exclude resource development regulations.                                                                                       
REPRESENTATIVE  GRUENBERG asked  why the  bill doesn't also  apply                                                              
to proposed legislation.                                                                                                        
MR.  PAWLOWSKI  said  that  the  legislative  process  allows  for                                                              
deliberation.     The  concern   isn't  with  regard   to  elected                                                              
officials  but  instead  with regard  to  appointed  officials  or                                                              
bureaucrats  who have  to make  decisions without  the benefit  of                                                              
being  elected  and  being in  touch  with  their  constituencies.                                                              
Similarly,  regulations  promulgated  by  boards  and  commissions                                                              
have also been removed from this bill, he said.                                                                                 
CHAIR McGUIRE concurred  that the regulatory process  doesn't have                                                              
the same opportunities  for the public to weigh in  at as does the                                                              
legislative process.   She  surmised that the  goal [of  the bill]                                                              
is  to interject  more  analysis  at the  regulatory  phase.   One                                                              
other major  distinction is that  legislators can be voted  out of                                                              
office, but  it is  difficult to track  down a regulation  writer,                                                              
she added.                                                                                                                      
REPRESENTATIVE  GRUENBERG  said  exempting natural  resource  laws                                                              
may  permit large  companies to  have  regulations promulgated  to                                                              
drive out  smaller companies.   The  state's gas pipeline  project                                                              
may have  various-sized players, he  noted, for example,  and said                                                              
he has been  thinking about the legislature's negative  impacts on                                                              
municipalities.   He suggested  that HB  33 include  consideration                                                              
of the impacts on small municipalities and people in general.                                                                   
2:44:38 PM                                                                                                                    
REPRESENTATIVE GARA  asked Mr. Kennedy whether adding  the phrase,                                                              
"and not compromising" would be workable.                                                                                       
MR.  KENNEDY indicated  that he's  not  yet had  time to  consider                                                              
that but his initial  instinct is that the bill  already fits that                                                              
goal.   The  intent  was never  to  compromise  current or  future                                                              
statutes, he said.                                                                                                              
REPRESENTATIVE  GARA  said  he   still  has  that  concern.    The                                                              
language  should be put  in the  statute so  people don't  have to                                                              
fight over what  the legislative history meant,  he opined, adding                                                              
that  another  concern  of  his  is  that  by  ensuring  that  the                                                              
legislation doesn't  apply to the Department of  Natural Resources                                                              
(DNR)  because  of a  desire  to not  slow  that agency  down,  it                                                              
suggests  that requiring  studies  does slow  down the  regulatory                                                              
process, and will do so for every other agency.                                                                                 
MR. PAWLOWSKI said:                                                                                                             
          I think actually the concern on the resource                                                                          
      development side is more that objections to resource                                                                      
     development  in  Alaska  tend to  find  whatever  crack,                                                                   
     crevice, or hole  they can slip into to  stop, stall, or                                                                   
     get  in the  way of  any project.   [By]  adding even  a                                                                   
     tiny crevice,  even with explicit judicial  review taken                                                                   
     out of  the bill,  the concern is  always that  that can                                                                   
     be manipulated  at a  higher level  to file a  challenge                                                                   
     to halt the permit.                                                                                                        
REPRESENTATIVE GRUENBERG  suggested that the language  in the bill                                                              
should be drafted more carefully.                                                                                               
CHAIR McGUIRE indicated that CSHB 33(L&C) would be held over.                                                                   

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