Legislature(2005 - 2006)CAPITOL 17

02/16/2005 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved Out of Committee
Bills Previously Heard/Scheduled
HB  33-EFFECT OF REGULATIONS ON SMALL BUSINESSES                                                                              
CHAIR ANDERSON  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                                                               
CHAIR ANDERSON moved to adopt  CS for HB 33, Version 24-LS0239\G,                                                               
Bannister,  2/9/05,  as a  work  draft.   Hearing  no  objection,                                                               
Version G was before the committee.                                                                                             
MICHAEL  PAWLOWSKI, Staff  to  Representative  Kevin Meyer,  said                                                               
that  in  1980  the  federal government  enacted  the  Regulatory                                                               
Flexibility  Act (RFA),  which  directed  regulatory agencies  to                                                               
consider the  impact of  regulations on  small businesses  and to                                                               
study  the effect  those regulations  have on  the economy  while                                                               
looking at alternative  means to effect the regulatory  goal.  In                                                               
1996 the  Small Business Regulatory Enforcement  Fairness Act was                                                               
passed, and that  added a judicial review provision to  RFA.  The                                                               
Office   of  Advocacy   was  created   in   the  Small   Business                                                               
Administration, and  it estimated that  in 2002 the  new statutes                                                               
saved  small businesses  $21.1 billion  in compliance  costs with                                                               
federal  regulations.    Based  on the  success  of  the  federal                                                               
program,  the Office  of Advocacy  drafted model  legislation for                                                               
states,  which  is  incorporated  into  HB 33.    He  added  that                                                               
versions of this bill have passed in 37 states.                                                                                 
MR.  PAWLOWSKI  said  HB  33   requires  regulatory  agencies  to                                                               
consider the impacts  of regulations on small  businesses, and it                                                               
gives them  the freedom  and encouragement  to look  at alternate                                                               
methods for meeting the same regulatory  goals.  He turned to the                                                               
committee substitute (CS), which limits  the scope of the studies                                                               
that  are called  for  by adding  the  language "using  available                                                               
information  and   without  conducting   new  studies   that  are                                                               
extensive."    The  reason  for  adding  that  language  is  that                                                               
Alaskans are  "sadly intimately familiar" with  the environmental                                                               
impact  statement process.   Agencies  were  afraid such  studies                                                               
would take a few years, he said,  and it is not the intent of the                                                               
sponsor  "to hire  scores of  economists to  conduct studies"  on                                                               
regulations that might  cost businesses a few  thousand dollars a                                                               
year.  He said HB 33  is about giving agencies the flexibility to                                                               
use available information and common sense.                                                                                     
MR.  PAWLOWSKI pointed  out  a  second change  in  the  CS:   the                                                               
exclusion  of  the  regulations   promulgated  by  the  Board  of                                                               
Fisheries  and  the  Board  of   Game  because  the  boards  make                                                               
allocation decisions and automatically  have an adverse impact on                                                               
small business.   The board process is very open  and public, and                                                               
"can't really be subject to the  provisions of HB 33."  The third                                                               
change  removes  the  judicial  review  process  from  the  bill,                                                               
because  opening this  up to  the courts  is burdensome  and "not                                                               
appropriate to the level of discussion we were having."                                                                         
4:34:36 PM                                                                                                                    
REPRESENTATIVE  LYNN  asked  for   a  definition  of  "extensive"                                                               
regarding the language, "without  conducting new studies that are                                                               
MR.   PAWLOWSKI  said   that  when   agencies  are   promulgating                                                               
regulations, they  have access to  a lot of information,  but "we                                                               
don't  want  them  to  be conducting  economic  analysis  to  any                                                               
significant detail ...."                                                                                                        
REPRESENTATIVE LYNN  said that  language is  like finding  a grey                                                               
ghost in the fog.                                                                                                               
MR. PAWLOWSKI agreed.                                                                                                           
REPRESENTATIVE LEDOUX  said the intent  of the bill  is laudable,                                                               
although she didn't  like the phrase "may have  an adverse effect                                                               
on small  businesses," since  almost any  regulation may  have an                                                               
adverse  affect on  someone.   So would  all regulations  have to                                                               
have this type of study, she asked.                                                                                             
4:37:46 PM                                                                                                                    
MR.  PAWLOWSKI  said   probably  yes.    Many   who  start  small                                                               
businesses don't have resources or  experience, and they react to                                                               
regulations once  they have been  passed, he  stated.  "It  has a                                                               
wide-ranging effect,  and ... it  is amazing  to see some  of the                                                               
regulations that have been challenged in court."                                                                                
REPRESENTATIVE LEDOUX asked if there is a fiscal note.                                                                          
MR. PAWLOWSKI said the administration is still working on it.                                                                   
REPRESENTATIVE CRAWFORD said that it  seems that the bill changes                                                               
the  definition of  small  businesses from  50  employees to  100                                                               
employees.  He said he is concerned  that there will need to be a                                                               
fiscal statement for each new  regulation on how it affects small                                                               
MR. PAWLOWSKI said, "You are absolutely  correct."  It is a broad                                                               
policy  decision at  the federal  level, he  added, and  it is  a                                                               
question  of  how  responsive   and  considerate  the  regulatory                                                               
process should  be on small  businesses.  He said  the definition                                                               
of a small business is still being worked on.                                                                                   
4:40:09 PM                                                                                                                    
REPRESENTATIVE  GUTTENBERG  noted   that  regulations  are  often                                                               
directed at businesses, and this  bill might completely undermine                                                               
the purpose  of the  regulation.  The  restriction on  only using                                                               
current information  may preclude agencies from  finding out what                                                               
they need to know.  "You're hampering yourself,"                                                                                
REPRESENTATIVE ROKEBERG  asked if  people in small  business have                                                               
read this.                                                                                                                      
MR. PAWLOWSKI  said he is  getting letters of support  from small                                                               
businesses and would be happy to provide them.                                                                                  
REPRESENTATIVE  ROKEBERG  asked   about  occupational  licensing,                                                               
which must be  self-supported.  "I see absolutely  no net benefit                                                               
to  small  businesses if  their  licensures  and costs  of  doing                                                               
business is going  to be increased substantially  because of more                                                               
regulation--this is more regulation, not de-regulation."                                                                        
MR. PAWLOWSKI  said that  is a very  important point  because the                                                               
fiscal impact is outside of the  general fund spectrum, and it is                                                               
being worked on.   He added that the  administration will testify                                                               
later on that issue.                                                                                                            
CHAIR ANDERSON  said he thinks  people are privy to  the meetings                                                               
going on, and he characterized it as a work in process.                                                                         
REPRESENTATIVE ROKEBERG said he has been in small business for                                                                  
40 years and this scares him.                                                                                                   
[HB 33 was held over.]                                                                                                          

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