Legislature(1995 - 1996)
03/30/1995 08:06 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 267 - REGULATION REVIEW AND EXPIRATION Number 265 CHAIR JAMES announced the next bill on the agenda was HB 267. She called this a simple bill that would provide for all regulations to expire on June 30, unless extended by act of the legislature. This, she said, would provide a mechanism of oversight by the legislature and a means of eliminating those regulations not meeting the intent of the legislature. She said she had many conversations with the Administration on this bill and planned to just take testimony at that meeting. She would then take the suggestions from testimony and draft a proposed committee substitute for consideration by the committee at the next meeting. She asked if there was any questions or comments from the committee before they heard the testimony. Hearing none, she heard from those testifying on teleconference. Number 305 DELORES FIELDS, member of Alaska Independence Party, supported HB 267. She thought there were too many regulations, some of which were in conflict with the Constitution, and that they needed to be reviewed by the legislature. ART GRISWOLD, member of the Alaska Independence Party, thought HB 267 would allow for a regular evaluation of the regulatory process, without extra hassle by the legislature to try and repeal a regulation it disagrees with. He thought this bill would allow the legislature some oversight of regulations and grant the Governor the chance to veto, if they choose. He thought this bill had been developed with considerable thought and hoped it passed through committee without difficulty. He said this bill had the support of the Interior Region organization of the Alaska Independence Party. Number 342 CHAIR JAMES asked if anyone else on teleconference wished to testify on HB 267. Hearing none, she asked who wished to testify from the audience. DALE ANDERSON, Representative of the Alaska Commercial Fisheries Entry Commission, said the commission had been created twenty years ago, to help bring stability to the fishing industry. He thought HB 267 would be devastating to the agency, as the stability they were striving for would cease to exist. He could not see why anyone would invest in a permit, which may expire the next year along with the agencys regulations. He doubted the state loan agency could justify its investment of over $84 million in permits and fishing vessels under such a system. He said the commission could understand the need for checks and balances and regulatory reform, but thought such a broad bill was too much. He said a quasi-judicial commission such as theirs, demands permanence in order to safeguard the adjudicatory process in which they are involved. Thus, they asked for an exemption to their commission from the effects of HB 267, to help maintain the integrity and stability found in the limited entry system. BOB BARTHOLEMEW, Deputy Director for the Income and Excise Tax Division in the Department of Revenue, thought the greatest impact to their agency would be in sections 5, 6, and 8 of HB 267. He said currently, the agency has four programs with significant regulations, the Oil and Gas Tax Division, Corporate Income and Excise Tax Division, Permanent Fund Dividend Program, and the Charitable Gaming Division. He said the regulations for those programs had been established with considerable effort and should those regulations go away, they felt the revenue laws would not function and the state would experience a loss of revenue. He cited the production tax on North Slope Oil as an example. He thought it was necessary to either have the regulations in place, or move them into statute. Finally, he thought this would possibly create instability in the business climate of the state. He urged the committee to consider a way of allowing the legislature to be involved in the drafting process, before they are signed into law. He said the Department of Revenue would like to find a way of working within the current process, rather than having all regulations expire annually. CHAIR JAMES thanked Mr. Bartholemew for his comments on having the legislature get involved in the drafting of regulations. She said this was part of the concept behind HB 105, her comprehensive overall regulation reform bill. She explained the motivation behind HB 267 was that the legislature currently has no authority to change regulations. They can only make suggestions. She said there were two ways to change this, HB 267 and HJR 1, which would give the legislature the ability to annul regulations by concurrent resolution. She did not feel the legislature would expire those regulations having to due with the tax program. She pointed out, that in those states with this type of law, there was more of an attitude of cooperation between the legislature and the agencies in developing regulations that were more user friendly to the public. She asked if Mr. Bartholemew would feel better if there was a provision in the bill that would set a deadline as to when the bill had to pass the legislature. MR. BARTHOLEMEW thought the biggest concern of the Department of Revenue was the possibility of all regulations expiring annually. He thought there would be considerable discussion on the bill as it went through the committee process and debate as to which regulation should be included and which one left out. Thus, the agency would still be concerned about the possibility of all regulations expiring. CHAIR JAMES mentioned there were other states doing this already and it was working fine. She said that with regards to whether this would be a deterrent to industry, this had not been the case in Colorado and Utah, who had this law. She said in discussions with officials in Utah, they viewed this law as a business incentive. She pointed out that Salt Lake City and Denver were thriving business hubs of the West Coast. Thus, she did not see this bill as a deterrent to business. ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services, said he would not take much time testifying, as he had testified before the committee on earlier regulation reform bills and their concerns on this bill were largely the same. He stated their biggest concern was that the department participated in many federal programs and federally funded programs, and should their regulations expire, the department would face the risk of losing these funds. Another area of concern was there licensing programs, which would possibly be problematic if they could not readopt these regulations in substantially the same form. He felt an underlying theme of this bill was that the majority of regulations are bad and in need of review. He thought this was not the case, that it was only a very few. He suggested there be an exemption to regulations mandated by the federal government. Number 579 CHAIR JAMES said she thought he had made her point, in that many of the regulations were not problematic and would not be expired by the legislature. She thought he was in error in suggesting the legislature would not be as sensitive as the Administration in their oversight of regulations. She thought they would be more sensitive, in that they were responsible for lawmaking and the budget of the state. Thus, she did not feel it was a fair estimate to think the legislature was incompetent to deal with these issues. She pointed out the other option was HJR 1, allowing the legislature to annul regulations by resolution, which passed the 34 to 4 on the House floor. She felt there could only be meaningful oversight of regulations by the legislature if they had some form of a hammer to hold over the agencies. HB 267 was meant to provide a hammer for the legislature to allow for meaningful oversight of the regulatory process. She thought there had to be a system set up to allow for the legislature, agencies, and public to have meaningful input into the regulatory process. Number 594 WILLIS KIRKPATRICK, Director, Division of Banking, Securities, and Corporations, Department of Commerce and Economic Development, said his testimony would reflect the regulatory process and concerns of all of the agencies of the department. He mentioned the department decided, two years ago, that it was time to recodify the banking regulations of the state. During this process, it became quite evident, that banking is a rapidly changing industry. Thus, they decided to forego the legislative process in writing statutes and incorporate most of the changes in regulation. As an example, the legal investment list of where banks may invest funds is constantly changing and these changes are incorporated into regulations. As he became aware of HB 267, he also became aware that other states already had this law. One of these was Utah, which like Alaska has a system of state chartered banks and a bank holding company, Keycorp. This system requires state chartered banks to be consistent and uniform in their procedures. Being concerned about his regulations expiring annually, he called banking officials in Utah to see how the system worked for them. He said it was their understanding that the legislature introduced a bill specifying those regulations scheduled to sunset. This would relieve his concern about all of his regulations being up for possible sunset. He cited examples of how the Department of Commerce measures which state is the easiest state to do business in. He said their findings were that states with a consistent business climate are easier to do business in those that are constantly changing. Thus, he was concerned we could be hurting our business climate with this bill. He was also concerned about the provision of the bill that allows an agency to readopt a regulation, but not in substantially the same form. TAPE 95-38, SIDE B Number 000 CHAIR JAMES responded the law in Utah extended all regulations except those listed for sunset. She did not feel the banking and commerce laws were ever likely to be on the sunset list. She added that Utah had a further provision, that allowed the Governor to extend the life of a regulation the agency has scheduled for sunset, should the agencies justify the need for this regulation to them. She thought the legislature having the ability to do this, would lead to an environment of increased cooperation between the agencies and the legislature and most of these problems would be fixed before a regulation was scheduled for sunset by the legislature. She said this bill just provided the legislature with some oversight of the regulatory process they have delegated to the Administration. She saw this bill as a slight deviation from current process to give the legislature some meaningful input into the regulatory process. She pointed out that most of the regulations Mr. Kirkpatrick was referring to were already supported by statutory authority of the legislature. She said this bill was not meant to be a picking of individual philosophy, as much as it was meant to allow the legislature to verify regulations were meeting the intent of the legislature. Thus, she felt there would be very few regulations being sunsetted by the legislature under this criteria. Number 074 DEBORAH BEHR, Regulations Attorney, Department of Law, said she was pleased to offer comments on HB 267. She urged the committee to hold this bill over until the interim. She said her first concern about this bill was the number of regulations there were in state law. She mentioned there were about 10,000 pages of regulations in law currently. She was not sure how much work the Administrative Regulation Review Committee could accomplish over the interim in reviewing regulations. She said she had been told by by the sponsor that the committee would be reviewing those problematic regulations brought to its attention. If this was the case, she wondered why put a cloud over all regulations to deal with the few. After receiving this bill, she did some research on which of the states currently had this law in effect. She found there were four states, Colorado, Utah, Tennessee and Ohio. She was curious of the staffing this bill required to implement and said she found the state of Colorado told her they had 15 attorneys on staff who worked on this part-time. Utah had two full-time attorneys on staff to deal with regulations. She thought there would also be some additional costs to the Administration. One area of concern to her was Section 8 of the bill, that required the agencies to submit certain documentation to the committee after adopting, repealing, or amending a regulation. She thought this was unnecessary paperwork, which would add cost to the administration. On page 4, lines 25-27, there was a requirement that the agency identify persons who opposed or supported the regulation. She thought this was sometimes unable to be determined. She offered an example from her review of the regulations on abortion. She was also concerned about page 4, lines 28-30 require the identification of any Attorney Generals opinion or judicial decisions relevant to the regulation change. She thought again, the amount of paperwork for this requirement could be overwhelming and a cost to the Administration. She also saw a potential cost in the possibility of boards and commissions having to meet to provide information to the committee or to redraft a regulation that has been sunsetted. She was also concerned about the legal issues involved with this bill. She mentioned she had called the four states with this law to see if any of them had had a court challenge and none of them had. She was also concerned about whether doing an omnibus bill would violate the single-subject rule of legislation. She was aware of the fact that legislative legal counsel did not see a problem, but thought this was still an area of uncertainty. She thought this could create an unstable regulatory climate for business. She thought this bill could also violate the ALIVE v. Alaska case of 1980, in that she thought it removed the veto authority of the Governor. She thought, at best, these legal issues were unresolved. She thought there was a better method, where the Administrative Regulation Review Committee could review regulations and draft a statute to repeal those individual regulations. She thought the Governor would be unlikely to veto such a bill. She claimed this could give the legislature a more active oversight of regulations. She also expressed concern about the date of June 30 for the annual sunset of regulations. She offered to work with the committee over the interim on regulation reform. She also was concerned about the language in the bill, that prohibited the agency from readopting a regulation in substantially the same form. She offered to answer any questions of the committee. Number 316 CHAIR JAMES commented she did not see those kinds of disaster situations happening that Ms. Behr described, as she had more confidence in the legislatures ability to make decisions. She thought they would be just as prudent as the Administration if not more so. She said her past experience had been the legislature does not make those kinds of decisions that cause the kinds of disasters described. REPRESENTATIVE BRIAN PORTER thought there was a valid concern over the legislatures sunset of regulations without the Governors ability to veto. He thought there was a possible answer in borrowing Utahs provision of allowing the Governor to extend a regulation the legislature has scheduled for sunset, or by a provision that would sunset a regulation with a date set by the legislature for its expiration. MS. BEHR thought there was some merit in the idea of sunsetting a regulation on a date determined by the legislature, as done with various commissions, but said she could only address the bill as it was currently written. She was concerned about the provision of Utah, allowing the governor some input, that there was some legal problems with allowing the Governor to extend a sunset without having to go through the same committee hearing process the legislature has to do. She also failed to understand why, if this were a good idea, only four states have adopted similar laws to this. Number 361 REPRESENTATIVE JOE GREEN asked if any of the four states with this law had similar constitutional problems to ours with this bill. MS. BEHR said she asked them and was told there had never been a court challenge. She said she specifically addressed the single-subject rule and got mixed results. Some Attorney Generals didnt think there was a legal problem and others were unsure. None of them had experienced a legal challenge to the laws in their states. Ms. Behr thought this was an open legal question and that there would be legal opinions on both sides. CHAIR JAMES agreed and stated there was a memo in the committee packets from Legislative Legal Services, who did not feel there was a legal problem with the single-subject rule. They felt this was no different than any of the omnibus bills that extend commissions or the Administrative Procedures Act itself. REPRESENTATIVE GREEN still wondered if the reason the other states did not experience legal challenge on this law was because they had constitutions that granted differing authority to the legislature than ours. MS. BEHR stated her research had indicated that three of the states did not think there was a legal issue and the fourth thought it was an unresolved legal issue. She said she could not say what the decision of Alaska courts would be on this issue. CHAIR JAMES asked if there were any other questions for Ms. Behr. She called for Sharon Barton to testify. SHARON BARTON, Director of Administrative Services, Division of Administrative Services, Department of Administration, said she could add very little to the comments of her fellow colleagues in the administration. She wanted to echo their general concerns. She concurred the additional information required in Section 8 was going to be costly and thought a better method would be to make this information available on request of the committee. She also thought there would be greater monitoring of the legislation by the agencies leading to greater costs. She also did not think the agencies would have the information available to provide the committee regarding the judicial decisions on a particular regulation, and so would experience an increase in cost. She thought maybe regulation reform would be something to spend more money on, but would want assurances the benefit was going to warrant the additional cost. Number 435 FRANK DILLON, Executive Director of the Alaska Trucking Association, supported HB 267. He said the trucking industry is regulated by a variety of regulations, both state and federal. He claimed over the last decade, regulations had gotten out of sync with reality. He offered an example to illustrate his point. He discussed the requirement of the state that all employers have an employee bulletin board, listing pertinent and necessary information to the employee. This should be pretty straight-forward and easy to comply with. He said the problem was that the information required to be on this board was distributed by approximately nine different agencies and consisted of about 50 items that should be listed on the board. He spoke of a letter from the prior Governors Administration that ended with a statement to not consider the letter as a definitive answer to his questions, as they did not know for sure what was required to be on those bulletin boards. He thought this was pretty symptomatic of the entire regulatory system and was greatful for Chair James introduction of this and other regulatory reform bills. He recognized this could be a terrifying prospect to those in the agencies, but felt that many if not most of the regulations no longer accomplish their stated purpose or legislative intent. He also argued that the main purpose for writing regulations, in his experience with the agencies, was job security. He thought regulations were supposed to be written to protect the public, but when they get so confusing to private industry, many businesses give up trying to comply. He hoped that with the review of regulations proposed by HB 267, it would be possible to weed out bad regulations and write new ones that would be better and easier to comply with. He wanted to reiterate his support for HB 267. Number 479 MR. MCKEE said he supported the concept of the bill, but felt there could be an amendment on page two, line 20 and line 23, which references common law of the state. He thought this should be changed to common law of the individual. He thought this would better address his earlier references to property rights. Number 507 CHAIR JAMES asked if there was anyone else from the public wishing to testify. She said her intention was to send this to a quick subcommittee for some amendments and then recalendar it for the next meeting. She said it would be open to any of the committee members who wished to work with her and the administration on a proposed committee substitute for this bill. REPRESENTATIVE ED WILLIS expressed his interest in participating on the subcommittee. REPRESENTATIVE PORTER also expressed his interest. Representative Robinson arrived at 9:25 a. m. CHAIR JAMES stated the next bill on the agenda SB 92 by House Rules at the request of the Legislative Budget and Audit Committee.