Legislature(2003 - 2004)
02/19/2003 08:58 AM House ARR
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ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON ADMINISTRATIVE REGULATION REVIEW
February 19, 2003
8:58 a.m.
MEMBERS PRESENT
Senator Gene Therriault, Chair
Senator Lyda Green
Senator Hollis French
Representative Bruce Weyhrauch, Vice Chair
Representative Tom Anderson
Representative Les Gara
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
Discussion of Central Panels to Create Independent Hearing
Office Functions
Committee Administrative Function Re: Continuous Service
PREVIOUS ACTION
See ARRC minutes dated 2/5/03.
WITNESS REGISTER
Ms. Pam Varni
Executive Director
Legislative Affairs Agency
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Explained changes to personnel rules.
Mr. Bob Boerner
Program Principal
National Council of State Legislatures
Denver, CO
POSITION STATEMENT: Answered questions about centralized panels
of administrative law judges in other states.
Mr. Ed Hein
National Oceanic and Atmospheric Administration (NOAA)
302 Gold St.
Juneau, AK 99801
POSITION STATEMENT: Answered questions about the NOAA
administrative law judge system.
ACTION NARRATIVE
TAPE 03-2, SIDE A
CHAIR GENE THERRIAULT called the Joint Committee on
Administrative Regulation Review meeting to order at 8:58 a.m.
Senators Green, French, Chair Therriault and Representative Gara
were present. He told members the committee would first take up
an administrative matter.
ADMINISTRATIVE FUNCTION RE: CONTINUOUS SERVICE
MS. PAM VARNI, Executive Director of the Legislative Affairs
Agency (LAA), told members the House and Senate employment
policy passed by the Legislature in 1988 has worked well with
the exception of the longevity step provision. To correct the
longevity step problem, the House and Senate Rules Committees
adopted a new policy in early February. She asked the
Administrative Regulation Review Committee (ARRC) to do the
same. The change to the employment policy will affect the
longevity step provision that covers steps J through M.
MS. VARNI explained that legislative staff frequently change pay
ranges because legislators have different positions available at
different pay ranges at different times of the year. When an
employee takes a job at a lower pay range but was paid at a high
step, the step must be lowered to an "F". This policy penalizes
staff monetarily. She noted that a change in policy will not be
costly and, in fact, may result in a savings in some cases
because, due to budget constraints, an employee might be willing
to take a job at a lower range. She pointed out that one ARRC
staff member will be affected by the policy change.
SENATOR HOLLIS asked for further clarification of the range and
step procedure.
MS. VARNI explained that a legislator may be able to hire two
employees during the legislative session; one at a range 19 and
the other at a range 15. During the interim, that legislator may
only be able to hire one employee at a range 17. If the range 19
employee has a lot of longevity, that employee might be at the
"J" step. However, if that person accepts the interim employment
position at a range 17, he or she can no longer be paid at the
"J" step and must be paid at the "F" step because of the
longevity step provision in the current policy.
CHAIR THERRIAULT added that because that employee may bounce
back and forth between the pay ranges, he or she will never
accumulate seven years of continuous service.
REPRESENTATIVE GARA asked if, under the current policy, the
longevity steps are based on legislative experience only and not
state service in general, and whether this change will affect
that.
MS. VARNI told members that steps A through F apply to
legislative experience, steps J through M apply to employees of
the executive branch. Executive branch employees are not
affected because they are covered by bargaining units and their
salaries can never decrease.
REPRESENTATIVE GARA asked whether staff members with a lot of
state experience but no actual legislative experience would
benefit from the new longevity step policy. He specified that he
was referring to someone who worked for the Office of the
Governor for eight years.
MS. VARNI said the step provision applies strictly to
legislative experience so nothing will change in that regard.
CHAIR THERRIAULT announced that Representative Weyhrauch was
present.
SENATOR FRENCH moved, "that the Administrative Regulation Review
Committee not adopt AS 39.27.022, pay increments for longevity
for state service, but instead adopt their own plan which better
applies to legislative service. This new policy is before the
members and would be effective January 16, 2003."
CHAIR THERRIAULT announced that without objection, the motion
carried. He then told members that the purpose of the press
conference that preceded the meeting was to announce that the
Administration is willing to work with members of the
Legislature to consider and evaluate a central hearing office
panel concept in Alaska. He noted the Alaska liaison from the
National Council on State Legislatures (NCSL) would give a
presentation on the topic to the committee.
CENTRAL PANELS TO CREATE INDEPENDENT HEARING OFFICE FUNCTIONS
MR. BOB BOERNER, Program Principal with the NCSL in Denver, said
he has been the state liaison for Alaska since 1996. He covers
10 topic areas for NCSL, which include attorney regulation,
civil rights, legislative program evaluation, privatization,
state government and telecommunications. He is still in the
discovery process of the central panel issue and is not a
national expert but can act as a resource for the committee. He
provided the following overview of his findings on
administrative law panels.
Agencies hear more arguments than courts do so it is imminently
important that administrative law judge [ALJ] panels be
considered. Administrative hearings cover a variety of subject
areas, including workers compensation, personnel issues, and
social security benefits. Often, the ALJs propose opinions but
agency heads are free to substitute their own judgments.
John Hardwick, a retired Maryland ALJ, is the national expert in
this area. He has reported that 25 states have a central panel
system, as well as Chicago, Washington, D.C., and New York. The
system is intended to provide for fair and impartial hearings by
judges who are independent of the agencies who are parties to
the cases. Illinois, New York, and Pennsylvania are also
considering such panels. Oregon passed its law in 1999.
Colorado's panel was created in 1976. Colorado's panel is unique
in that it also looks at workers' compensation cases; only three
centralized panels in the country review workers' compensation
cases. South Dakota is the only state to have adopted such a
panel, abandoned it, and then readopted it.
CHAIR THERRIAULT asked how long South Dakota's system was in
place before it was abandoned.
MR. BOERNER said he believes South Dakota introduced legislation
to create a central panel in 1991, abandoned the project several
years later, and recently re-enacted it.
REPRESENTATIVE GARA noted that Mr. Boerner mentioned that ALJs
have to be independent. He asked whether any states forbid ALJS
on centralized panels from being members of the regulated
industry they oversee.
MR. BOERNER said he is not aware of any but will look into that
question.
REPRESENTATIVE GARA said that such standards might apply within
the state and asked Mr. Boerner if the current system allows
members of the industry being regulated.
MR. BOERNER again said he was not familiar with that but would
look into it and provide the committee with an answer at a later
date.
MR. BOERNER continued his overview.
The state auditor's office in Colorado was charged in 1992,
1997, and 2000 with looking at Colorado's centralized panel. He
will provide the committee with the state auditor's review. The
states of Maryland and Washington have also performed program
evaluations but they have not yet issued opinions. He has
requested copies of those reports and will forward copies to the
ARRC.
Colorado's central panel is cash-funded; it bills each agency
for services performed. The panel serves approximately 70
agencies, which is not unusual. In Colorado, if a conflict
between agency or panel rules arises, agency rules are followed.
Maryland's system is considered to be the "Cadillac" of
centralized administrative panels. It was established in 1990.
It is housed in a very impressive building and is one of the
largest central panels in the country. In the year 2000, the
panel reviewed agency decisions for 25 state agencies with over
200 programs. Between the years 1991 and 2000, the number of
ALJs decreased from 72 to 60.
SENATOR FRENCH asked if the decrease was due to a decrease in
the number of hearings.
MR. BOERNER said just the reverse happened, the panels actually
had more agency decisions to review with fewer ALJs.
REPRESENTATIVE GARA asked if the function of the centralized
hearing office is to hear individual disputes regarding
decisions made under agency rules, rather than to evaluate the
agency rules.
MR. BOERNER said he believes that varies by state. The primary
function of the centralized panel is to review agency decisions,
not to write its own rules.
REPRESENTATIVE GARA asked for further clarification. He said he
envisions a system where the hearing officer would decide an
appeal of an agency decision by an individual or business. He
said the central panel would not act as an independent group of
people who review agency decisions that don't involve individual
cases. He questioned whether the only authority of the
independent hearing officers would be to decide cases involving
the application of rules and regulations on individuals and
businesses.
MR. BOERNER said he believes the answer is that central panels
review agency decisions that affect both businesses and
individuals.
CHAIR THERRIAULT asked, "But agency decisions made under the
existing regulations? It's not appeals or the public's
interaction in the creation of regulations - it's just the
decisions that are made under the regulations?"
MR. BOERNER believed that to be correct.
REPRESENTATIVE GARA asked, in relation to the efficiency issue,
whether the centralized hearing officers are assigned to
specific areas of law or whether they have to become familiar
with everything.
MR. BOERNER said he believes that is a decision for the
legislature to make and varies in the models he is describing.
In some states, ALJs are assigned to specific types of cases;
others review any type of case.
CHAIR THERRIAULT acknowledged that would be a policy call for
the legislature and said it is his understanding that ALJs who
work on the same issues have a higher burnout rate. He noted
that the attorneys in the Division of Legal and Research
Services are periodically rotated to prevent burnout and for
cross-training purposes.
MR. BOERNER added that having a core group of ALJs on the panel
review specific cases, such as workers' compensation cases,
could alleviate that concern.
REPRESENTATIVE WEYRAUCH asked Mr. Boerner if his review of other
states included an analysis of the federal government's approach
to a centralized officer pool.
MR. BOERNER said it did not.
CHAIR THERRIAULT informed members that Mr. Ed Hein, a hearing
officer with the National Oceanic and Atmospheric Administration
(NOAA), was present. He noted that Mr. Hein formerly worked for
the Legislature as a legal drafter.
REPRESENTATIVE WEYRAUCH said the court system assigns cases in a
random fashion. If that is not done, the ALJs in a pool may want
to carve out a niche for themselves by specializing in a
specific area.
MR. BOERNER said he believes the method used to assign cases
could be established in the organic legislation. He then
continued his overview.
Since 1998, the Maryland centralized panel has engaged in
alternative dispute resolution. It has also used
videoconferencing as a means of conducting and recording
hearings. He repeated that John Hardwick, Maryland's previous
chief administrative law judge, is a national expert in this
area and is someone the committee might want to consult.
MR. BOERNER told members the State of Washington created its
office of administrative hearings in 1982. Its central panel has
70 administrative law judges located in nine field offices
throughout the state. The greatest number of cases heard in
Washington relate to unemployment insurance, public assistance
benefits, and child support. The mission statement on its
website is to conduct fair and independent hearings, followed by
sound and timely decisions. He provided the committee with a
chart of systems used by other states.
He said proponents of the centralized hearing panel argue that
where the hearing officer is an employee of an agency, the
agency is allowed to act as a police officer, prosecutor, and
judge, with the hearing process appearing to be a mere rubber
stamp for agency staff decisions. Proponents also argue that
even if an agency employee has had a fair hearing, the potential
for unfairness remains because the hearing officer is an
employee. A third argument for centralized hearing panels is the
standardization of services and quality control. A fourth
argument is that uniform procedures and standards can be
adopted. The final argument in favor of centralized panels is
one of professionalism. Many states' panels have adopted a code
of ethics; proponents reason this code produces more consistent
and fair adjudication.
MR. BOERNER pointed out one argument against a centralized panel
involves lack of expertise. Opponents of a centralized panel
reason the agencies are highly dependent on the specialized
knowledge of hearing officers in their specific area of law. A
second argument is one of cost. Oregon created an office of
administrative hearings in 1997 but the office was not opened
because the cost was $1.6 million. In the year 2001, the State
of Kansas reviewed its centralized hearing panel. The State of
Kansas's report appendix contained [three] considerations for
its legislature to consider in expanding that panel:
· How to fund a centralized panel. Agencies could pay a fee
for hourly services, agencies could pay a percent of the
panel's budget based on the percent of workload, or the
panel could receive a direct appropriation from the
legislature.
· The role of the agency head. Would the agency head be able
to overturn the decision of the centralized panel?
· Standards for hearing officers. The National Association of
Administrative Law Judges offers a model code of standards.
9:28 a.m.
REPRESENTATIVE GARA expressed concern that hearing officers do
workers' compensation cases today. After awhile, they learn the
workers' compensation statutes and can walk into a hearing
without having to reread the statutes and regulations every
time. If hearing officers are paid by the hour or the amount of
work they produce, over time they will not have to spend as much
time doing their work. He noted that Mr. Boerner said one
state's panel reviews cases for 200 state programs. He
questioned how it will be more cost efficient to have hearing
officers take workers' compensation, oil and gas, social
security and other program cases. He noted that in the court
system, a judge studies the law before the case comes to trial.
He asked if the State of Oregon was considering the resultant
cost of increased preparation time when it decided not to fund
its newly created panel.
MR. BOERNER said he was not certain and would look into how the
State of Oregon established the cost. He said his overall sense
is the question of expertise is something the committee should
consider when drafting legislation.
REPRESENTATIVE GARA asked if any information on cost is
available from other states in which hearing officers hear many
types of cases. He noted, "Logically, I can't see how it would
not cost more but maybe I'm missing something."
MR. BOERNER repeated that he would locate that information and
provide it to the committee.
CHAIR THERRIAULT referred to the Maryland example where more
decisions are now being made with fewer people. He said he would
assume that Maryland has seen a cash savings and that he could
see how a lot would depend on how the panel is structured. If
the current workers' compensation hearing officers are moved to
a centralized agency, they may perform their function in that
area of expertise. However, over time, they would take on other
subjects to broaden their scope of knowledge. He felt in the
case of Oregon, perhaps the proposed cost consisted of creating
a centralized function with randomly assigned cases to all new
employees.
MR. BOERNER said one concept behind the centralized panel is to
cross-train ALJs and offer standardized training in specific
areas of law that they may not be familiar with.
CHAIR THERRIAULT said he is not sure that legislators have any
feel for the existing due process system since it is not
centralized. He questioned whether the hearing officer in DNR
uses the same notice requirements as the hearing officer in
DHSS. He said a centralized panel would assure that the same
due process is available to everyone.
MR. BOERNER said, in closing, he would provide written responses
to the questions posed by committee members, and that he stands
as a resource to the committee.
REPRESENTATIVE WEYRAUCH asked whether it is more expensive to
hire hearing officers as salaried employees of the state or to
hire them as contract employees.
MR. BOERNER said he was not familiar with any such studies but
would find out.
CHAIR THERRIAULT said he would like to gather salary information
on the hearing officers in Alaska and is aware that they are
paid as both employees and contractors.
REPRESENTATIVE GARA said he shares the Chair's concern that
people who have decisions imposed upon them be accorded due
process rights during the administrative process. His instinct
is that all state agencies are required to follow the
Administrative Procedures Act when holding a hearing. He assumes
most states have similar acts. He said he would like to find out
whether that is being done to identify the problem before fixing
it. He asked Mr. Boerner if model administrative procedures acts
around the country address the standards and rules that apply to
a hearing.
MR. BOERNER said he believes the extent of the administrative
procedures acts varies by state. Some states have an exhaustive
act that provides for due process, others do not. He said he was
not familiar with Alaska's act.
9:36 a.m.
CHAIR THERRIAULT thanked Mr. Boerner and asked Mr. Hein to
testify.
MR. ED HEIN, Chief Appeals Officer with NOAA, told members he
worked for eight years in the Legislative Affairs Agency central
drafting office. He pointed out he has not worked as a state
hearing officer, but he is an officer and board member of the
Alaska Association of Administrative Law Judges, an affiliate of
the National Association of Administrative Law Judges. He said
he is speaking today on his own behalf and wanted to inform the
committee about his background experience. He also told members
that Representative Weyhrauch, as a private attorney, has some
cases pending before him at NOAA.
MR. HEIN said he followed the legislation introduced by Senators
Ogan and Taylor about four years ago. That legislation took a
broad approach: it tried to cover all of the agencies in the
state and put them under the Administrative Procedures Act. The
legislation would have required a constitutional amendment,
primarily because of strong opposition by the Administration.
MR. HEIN said his main thought is that it is very important to
get a clear idea of the existing problems before deciding on a
solution because the system is diverse. Different state agencies
have different procedures, rules, levels of expertise and
caseloads. The Alaska Association discussed this issue a few
weeks ago and found many factors should be considered. He
commended members for studying the problem and identifying the
number of hearing officers, the differences in their
relationships with their agencies, and then taking a surgical
approach to problem solving.
CHAIR THERRIAULT asked if his decisions as an ALJ within NOAA
are final or whether "higher-ups" can overturn his decisions.
MR. HEIN said officially, his decision is not final. There is no
right to review by the parties, but a discretionary review by
the federal agency at a regional level is allowed. In the vast
majority of cases, the regional administrator takes no action.
In effect, his decision becomes the final agency action, which
can be appealed to the federal district court.
CHAIR THERRIAULT said it is his understanding that states have
set things up differently. In some states the judge's decision
is final, in others the decision is advisory and the
commissioner makes the final determination or the commissioner
can elect to give the case to an independent adjudicator whose
decision would be final.
MR. HEIN agreed and said that most states do proposed decisions.
However, in some states, California being one, the agency that
sends the case to the central panel can specify whether it wants
the panel's decision to be final. He noted that was a big issue
the last time the Alaska Legislature considered central panel
legislation.
REPRESENTATIVE WEYHRAUCH noted that Mr. Hein was tasked to the
National Transportation Safety Board to investigate airplane
crashes and asked if that was an effort to broaden his
experience as an administrative law judge.
MR. HEIN said he chose to attend an executive training program
at the National Transportation Safety Board to see how it
operates. The training focus was on management techniques; it
was not part of his ALJ training.
REPRESENTATIVE GARA asked if ALJs in other states adhere to
model ethical standards or whether anything governs the ethics
of ALJs on the state level.
MR. HEIN said he is not certain what the law is now but he
believes there are some ethical guidelines, if not statutes. The
legislation introduced several years ago addressed that so he
assumes that no uniform standard is required by law. He noted
many hearing officers are not attorneys; those who are would be
subject to the ethical rules for attorneys.
TAPE 03-2, SIDE B
REPRESENTATIVE GARA said some agencies do not accept an ALJ's
decision as final and, assuming the state was using the system
used by the federal government, if an ALJ's case is appealed to
court, the court will give deference to the ALJ's findings
because the ALJ saw the witnesses' demeanor. However, if the
agency head disagreed with the ALJ's decision and makes a
finding that is then appealed, the court will not give deference
to the agency head because the agency head did not watch the
witnesses. He asked if that is a fair rendition of what happens.
MR. HEIN said the answer is complicated. The decisions made by
the ALJs become the agencies' decisions. The court tends to give
no deference on legal questions, but the court gives a lot of
deference on factual issues. The court gives a varying degree of
deference on issues depending upon the level of expertise
involved. Therefore, the courts tend to give deference to
agencies when they are explaining their own regulations and have
specific expertise. He repeated the decision is always
considered to be the agency's decision. He is not aware that the
courts make a distinction between the hearing officer's decision
and the agency head's decision. In many cases in which the
hearing officer's decision is a proposed decision, the agency
head will either adopt or change it and the proposed decision
goes away. His office publishes its decisions on the Internet so
a public record is kept. Some state laws require hearing
officers' decisions to be part of the record because a problem
arose where agency heads buried those decisions so the parties
had no way of knowing what the hearing officer decided.
REPRESENTATIVE WEYHRAUCH said the committee has a great resource
in Mr. Hein as the procedures used by his office provide an
incredibly valuable lesson for state agencies. His office
sometimes reviews decisions with parties before they are final
and publishes agency decisions so that they are easily
accessible to the parties and the public. Sometimes providing
that information, making people available, and working in a way
that is open, honest and accessible alleviates problems. He said
perhaps the legislative body has to do that to gain public trust
in what the government does.
CHAIR THERRIAULT said he has come to realize if agencies know
that an independent adjudicator will be making decisions based
on the regulations, the regulations improve over time. They
understand the adjudications will not take place in-house where
employees understand what is meant by the regulations. He hopes
a central panel will raise the level of professionalism and the
public's ability to understand.
REPRESENTATIVE WEYHRAUCH agreed that public trust is critical in
impartial tribunals.
MR. HEIN noted the agency he works for did not have a hearing
officer before he was hired. The person whose decisions he ended
up reviewing originally hired him. That became a structural
problem so within a year his office was separated out and now
consists of three people. He believes the new structure helps
the perception, as well as the reality, of independence. His
office has overturned the agency's initial decisions 25 percent
of the time. He feels that is a fair indicator that his office
is independent. In addition, his office is not involved in
drafting regulations so they view the regulations with a fresh
eye.
CHAIR THERRIAULT asked how many decisions were being appealed
before his office was formed and whether decisions are now being
made in a timelier manner.
MR. HEIN said he does not believe there has been a significant
difference in his office since it became separated because his
office has heard nothing but appeals the entire time. The main
difference is that the new structure provides more independence
and his officers can give what they believe is the right answer
without worrying that it will affect their performance reviews.
CHAIR THERRIAULT asked members to contact his staff if they have
further questions and said he would like to work toward drafting
legislation for introduction.
REPRESENTATIVE GARA asked Mr. Hein if all of the work he does is
within NOAA so that he does not work in a centralized office
system.
MR. HEIN said that is correct.
REPRESENTATIVE GARA asked if the advantage of Mr. Hein's set-up,
from his standpoint, is that he is protected from any influence
by his superiors within NOAA.
MR. HEIN said an inherent conflict always exists when a hearing
officer is employed by the agency. He has the same supervisor as
the person issuing the initial determinations. His supervisor
understands that he will disagree with the other person at
times. However, agency administrators are not always that
enlightened. He has heard many stories at national conferences
where hearing officers are pressured into changing their
decisions. Hearing officers have quotas and cannot side against
the agency too often. He said the more the legislature can
create a structure to protect against that, the better off
everyone will be. He thinks central panels do that but central
panels are not a one-size-fits-all system. He said he does not
know which agencies in this state are having more problems than
others and which would be more amenable to a central panel
structure. He believes that determination will take some study.
CHAIR THERRIAULT thanked Mr. Hein and adjourned the meeting at
9:58 a.m.
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