Legislature(1999 - 2000)
04/28/1999 03:26 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 28, 1999 3:26 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative Andrew Halcro, Vice Chairman Representative Lisa Murkowski Representative John Harris Representative Tom Brice Representative Sharon Cissna MEMBERS ABSENT Representative Jerry Sanders COMMITTEE CALENDAR CS FOR SENATE BILL NO. 141(L&C) "An Act relating to construction contracts and subcontractors; relating to design-build construction contracts; and providing for an effective date." - MOVED HCS CSSB(L&C) OUT OF COMMITTEE HOUSE BILL NO. 110 "An Act relating to the sale, offer to sell, and labeling of fluid milk, meat, and meat products." - MOVED CSHB 110(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 208 "An Act relating to professional counselors; and providing for an effective date." - MOVED HB 208 OUT OF COMMITTEE HOUSE BILL NO. 183 "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: SB 141 SHORT TITLE: PROCUREMENT: CONTRACTS/SUBCONTRACTS SPONSOR(S): SENATOR(S) LEMAN BY REQUEST Jrn-Date Jrn-Page Action 4/12/99 879 (S) READ THE FIRST TIME - REFERRAL(S) 4/12/99 879 (S) L&C 4/20/99 (S) L&C AT 1:30 PM BELTZ 211 4/20/99 (S) MOVED CS (L&C) OUT OF COMMITTEE 4/20/99 (S) MINUTE(L&C) 4/21/99 985 (S) L&C RPT CS 4DP SAME TITLE 4/21/99 985 (S) DP: MACKIE, LEMAN, HOFFMAN, TIM KELLY 4/21/99 985 (S) ZERO FISCAL NOTE (DOT) 4/22/99 (S) RLS AT 12:05 PM FAHRENKAMP 203 4/22/99 (S) MINUTE(RLS) 4/23/99 1064 (S) RULES TO CALENDAR AND 1 OR 4/23/99 4/23/99 1064 (S) READ THE SECOND TIME 4/23/99 1064 (S) L&C CS ADOPTED UNAN CONSENT 4/23/99 1064 (S) ADVANCED TO THIRD READING 4/23/99 1064 (S) UNAN CONSENT 4/23/99 1065 (S) READ THE THIRD TIME CSSB 141(L&C) 4/23/99 1065 (S) PASSED Y20 N- 4/23/99 1065 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 4/23/99 1071 (S) TRANSMITTED TO (H) 4/27/99 1020 (H) READ THE FIRST TIME - REFERRAL(S) 4/27/99 1020 (H) L&C 4/28/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 110 SHORT TITLE: SALE/LABELING OF MEAT/MILK PRODUCTS SPONSOR(S): REPRESENTATIVES(S) HARRIS, Dyson Jrn-Date Jrn-Page Action 2/24/99 300 (H) READ THE FIRST TIME - REFERRAL(S) 2/24/99 300 (H) L&C, JUD 3/10/99 418 (H) COSPONSOR(S): DYSON 3/15/99 (H) L&C AT 3:15 PM CAPITOL 17 3/15/99 (H) HEARD AND HELD 3/15/99 (H) MINUTE(L&C) 4/19/99 (H) L&C AT 3:15 PM CAPITOL 17 4/19/99 (H) HEARD AND HELD 4/19/99 (H) MINUTE(L&C) 4/23/99 (H) L&C AT 3:15 PM CAPITOL 17 4/23/99 (H) <BILL POSTPONED TO 4/26> 4/26/99 (H) L&C AT 3:15 PM CAPITOL 17 4/26/99 (H) HEARD AND HELD 4/26/99 (H) MINUTE(L&C) 4/28/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 208 SHORT TITLE: PROFESSIONAL COUNSELORS SPONSOR(S): REPRESENTATIVES(S) MURKOWSKI Jrn-Date Jrn-Page Action 4/21/99 900 (H) READ THE FIRST TIME - REFERRAL(S) 4/21/99 900 (H) HES, L&C 4/27/99 (H) HES AT 3:00 PM CAPITOL 106 4/27/99 (H) WAIVED OUT OF COMMITTEE 4/27/99 1036 (H) HES REFERRAL WAIVED 4/28/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 183 SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION SPONSOR(S): SPECIAL COMMITTEE ON UTIL RESTRUCTURING Jrn-Date Jrn-Page Action 4/09/99 702 (H) URS, L&C 4/14/99 (H) URS AT 8:00 AM BUTROVICH ROOM 205 4/14/99 (H) SCHEDULED BUT NOT HEARD 4/16/99 (H) URS AT 2:00 PM CAPITOL 120 4/16/99 (H) MOVED CSHB 183(URS) OUT OF COMMITTEE 4/16/99 (H) MINUTE(URS) 4/20/99 880 (H) URS RPT CS(URS) NT 6DP 4/20/99 880 (H) DP: PORTER, KOTT, COWDERY, HUDSON, 4/20/99 880 (H) GREEN, ROKEBERG 4/20/99 880 (H) ZERO FISCAL NOTE (DCED) 4/20/99 880 (H) REFERRED TO L&C 4/09/99 702 (H) READ THE FIRST TIME - REFERRAL(S) 4/23/99 (H) L&C AT 3:15 PM CAPITOL 17 4/23/99 (H) HEARD AND HELD 4/23/99 (H) MINUTE(L&C) 4/26/99 (H) L&C AT 3:15 PM CAPITOL 17 4/26/99 (H) HEARD AND HELD 4/26/99 (H) MINUTE(L&C) 4/28/99 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER JEREMY KERR, Student Intern to Senator Loren Leman Alaska State Legislature Capitol Building, Room 115 Juneau, Alaska 99801 Telephone: (907) 465-2095 POSITION STATEMENT: Presented Sections 1 through 6 of SB 141 on behalf of the bill sponsor. DAVID ROGERS, Lobbyist/Attorney for the City of Delta Junction P.O. Box 33932 Juneau, Alaska 99803 Telephone: (907) 586-1107 POSITION STATEMENT: Testified on Section 7 of the Version House committee substitute for CSSB 141(L&C). ROY GILBERTSON, Mayor City of Delta Junction P.O. Box 229 Delta Junction, Alaska 99737 Telephone: (907) 895-4656 POSITION STATEMENT: Testified on SB 141. SUSAN KEMP, City Council Member City of Delta Junction P.O. Box 229 Delta Junction, Alaska 99737 Telephone: (907) 895-4656 POSITION STATEMENT: Read statement in support of Section 7 of the Version H House committee substitute for CSSB 141(L&C). RICK JOHNSON, City Council Member City of Delta Junction P.O. Box 229 Delta Junction, Alaska 99737 Telephone: (907) 895-4656 POSITION STATEMENT: Commented regarding Councilwoman Kemp's statement on SB 141. BRIAN ROGERS, Chief Financial Officer Information Insights, Incorporated 751 Old Richardson Highway, Suite 235 Fairbanks, Alaska 99701 Telephone: (907) 452-2461 POSITION STATEMENT: Answered questions regarding Section 7 of Version H House committee substitute for CSSB 141(L&C). MARK O'BRIEN, Chief Contracts Officer Office of the Commissioner Department of Transportation and Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-6990 POSITION STATEMENT: Available to answer the committee's questions regarding Sections 1 through 6 of the Version H House committee substitute for CSSB 141(L&C). ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman Alaska State Legislature Capitol Building, Room 115 Juneau, Alaska 99801 Telephone: (907) 465-5149 POSITION STATEMENT: Testified on SB 141 on behalf of the bill sponsor. PETE FELLMAN, Researcher for Representative John Harris Alaska State Legislature Capitol Building, Room 110 Juneau, Alaska 99801 Telephone: (907) 465-4859 POSITION STATEMENT: Explained change in Version K committee substitute for HB 110. ART GRISWOLD Sleepy Hollow Farm HC60 Box 4493 Delta Junction, Alaska 99737 Telephone: (907) 895-6248 POSITION STATEMENT: Expressed his disappointment with the Version K committee substitute for HB 110. JANICE ADAIR, Director Division of Environmental Health Department of Environmental Conservation 555 Cordova Street Anchorage, Alaska 99501 Telephone: (907) 269-7644 POSITION STATEMENT: Testified that the department has no objections to the Version K committee substitute for HB 110. ANNE GORE, Researcher for Representative Lisa Murkowski Alaska State Legislature Capitol Building, Room 406 Juneau, Alaska 99801 Telephone: (907) 465-3783 POSITION STATEMENT: Presented HB 208 on behalf of the bill sponsor. ANNE HENRY, Chair Board of Licensed Professional Counselors Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811 Telephone: (907) 465-2538 POSITION STATEMENT: Testified on HB 208. CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2534 POSITION STATEMENT: Testified on HB 208. JANET SEITZ, Legislative Assistant to Representative Norman Rokeberg Alaska State Legislature Capitol Building, Room 24 Juneau, Alaska 99801 Telephone: (907) 465-4968 POSITION STATEMENT: As aide to the House Labor and Commerce Standing Committee, offered information on HB 208; conceptually explained proposed amendments to proposed Version I committee substitute for HB 183. SHARON DANIEL Copper Basin Sanitation Service Company P.O. Box 88 Glennallen, Alaska 99588 Telephone: (907) 822-3600 POSITION STATEMENT: Testified in support of Version I of HB 183 but had not seen proposed amendments, testified against deregulation of garbage service. RON ZOBEL, Assistant Attorney General Fair Business Practices Section Civil Division (Anchorage) Department of Law 1031 West Fourth Avenue, Suite 200 Anchorage, Alaska 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Answered questions about amendments to HB 183. ERIC YOULD, Executive Director Alaska Rural Electric Cooperative Association, Incorporated 211 Fourth Avenue Juneau, Alaska 99801 Telephone: (907) 463-3636 POSITION STATEMENT: Explained proposed and previously adopted amendments to HB 183. ROBERT LOHR, Executive Director Alaska Public Utilities Commission Department of Commerce and Economic Development 1016 West Sixth Avenue Anchorage, Alaska 99501 Telephone: (907) 276-6222 POSITION STATEMENT: Testified on HB 183. ACTION NARRATIVE TAPE 99-48, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:26 p.m. Members present at the call to order were Representatives Rokeberg, Halcro, Harris and Brice. Representative Cissna arrived less than a minute after the call to order. Representative Murkowski arrived at 3:30 p.m. CHAIRMAN ROKEBERG announced the day's calendar is SB 141, HB 110, HB 208 sponsored by Representative Murkowski, and then HB 183. The chairman noted it is not his intention to move HB 183 today; some additional amendments keep filtering in. REPRESENTATIVE BRICE indicated he would be offering a couple amendments to HB 183. CHAIRMAN ROKEBERG noted it was his intention to adjourn the meeting by 5:00 p.m., due to members' attendance at another committee meeting. CSSB 141(L&C) - PROCUREMENT: CONTRACTS/SUBCONTRACTS Number 0124 CHAIRMAN ROKEBERG announced the committee's first order of business is CSSB 141(L&C), "An Act relating to construction contracts and subcontractors; relating to design-build construction contracts; and providing for an effective date." Number 0137 JEREMY KERR, Student Intern to Senator Loren Leman, Alaska State Legislature, came forward to present CSSB 141(L&C) on behalf of the bill sponsor. He indicated he is a student at the University of Alaska Southeast and conveyed Senator Leman's regrets that he was unable to testify in person due to a recent injury. Mr. Kerr stated he is present to speak about Sections 1 through 6 of SB 141. Senate Bill 141 was introduced at the request of the Department of Transportation and Public Facilities (DOT/PF) to give the department greater flexibility in contracts known as design-build. A design-build contract is one where the owner, in this case the state, chooses a contractor that will be building as well as designing a project. A couple of examples of this from the state of Alaska are the M/V Kennicott ferry and the Whittier tunnel. A more typical contract is one where the owner picks a design and the contractors then begin building according to that design. This bill allows decisions that are made to be in the best interest of the state in regard to building projects and will only affect state contracts. MR. KERR explained current law specifies that construction contractors must list the subcontractors they plan on using within five days of contract award. Because of the nature of design-build contracts, it is not always possible for the contractor to have identified the necessary subcontractors. For example, during the middle of a ferry building project the primary contractor learns that the propulsion system needs to be different and it is not something the current subcontractor can perform. Therefore, the primary contractor needs to hire a different subcontractor. The primary contractor cannot do this under current statute; under statute he cannot get rid of the first subcontractor. This legislation gives DOT/PF the flexibility to allow design-build contractors to provide subcontractor information past that five-day notification period. The legislation also contains protections in that requested subcontractor changes must be in writing. Mr. Kerr noted Senator Leman has reviewed the new Section 7 of the proposed committee substitute (CS) and has found no objection. In addition, they have also spoken to the design and construction communities regarding Sections 1 through 6 and have found no objection from them either. Number 0404 CHAIRMAN ROKEBERG commented there is a proposed CS; he would entertain a motion to adopt Version H. REPRESENTATIVE HALCRO made a motion to adopt the proposed Version H House CS for CSSB 141(L&C), labeled 1-LS0827\H, Bannister, 4/27/99. There being no objection, it was so ordered. Number 0465 DAVID ROGERS, Lobbyist/Attorney for the City of Delta Junction, came forward in Juneau. Mr. David Rogers indicated he is joined online in Delta Junction by Mayor Gilbertson of Delta Junction and the Delta Junction City Council, and by Brian Rogers in Fairbanks, a key consultant to the Delta prison project. They are all here today to testify in support of Section 7 [added by Version H, the proposed House CS]. This amendment basically means that the public procurement process undertaken by the City of Delta Junction over the last several months meets the requirements of HB 53 [HB 53, LEASE-PURCHASE CORRECTIONAL FACILITIES, Twentieth Legislature]. This process resulted in an ordinance authorizing a sole source contract for that purpose. House Bill 53, among other things, authorized the state to enter into an agreement with Delta Junction to lease prison facilities as long as the prison is operated by a private third party vendor selected by the city through a process similar to the procedures set out in the state procurement code, AS 36.30. Some people have raised concerns about Delta Junction's process, but the city thinks it has done it correctly and has arrived at a decision that is best for Delta Junction and its citizens. This amendment [Section 7] would resolve any ambiguities about Delta Junction's process and would allow them to begin as soon as possible. Mr. David Rogers indicated he would like to turn the testimony over to Mayor Gilbertson and the Delta Junction City Council for a statement. [Section 7 of the proposed House CS for CSSB 141(L&C) read: * Sec. 7. Section 4, ch. 15, SLA 1998, is amended by adding a new subsection to read: (d) The adoption by a municipality, when exercising its powers under AS 29.35.020(a), of an ordinance for procurement of a facility or operation on a design-build construction contract basis satisfies the procurement requirements under (b) of this section.] Number 0607 ROY GILBERTSON, Mayor, City of Delta Junction, testified next off-network via teleconference from Delta Junction. He noted city council members Susan Kemp, Mary Dowling (ph) and Rick Johnson were present. Mayor Gilbertson thanked the committee for its time and turned the testimony over to Councilwoman Susan Kemp. Number 0643 SUSAN KEMP, City Council Member, City of Delta Junction, testified next off-network via teleconference from Delta Junction. She read the committee a statement on the Delta Junction City Council's position: "This winter, we brought the question of the private prison project to the Delta Junction voters. They said we should proceed, and that's what we are trying to do. "Delta Junction is going to be in a world of hurt when Fort Greely closes unless the base is reused. Our best shot for economic reuse of the base is the prison project. The prison is controversial in our community, and there is a vocal opposition, but they've been in the minority both times we've voted. "Those [the proposed] changes in Section 7 of this bill are designed to help the City with the goals set out in House Bill 53 last year, and I quote: '1. To take advantage of the unique opportunity to use surplus military facilities on the road system that are becoming available through the United States Army's realignment of Fort Greely's mission, 2. To prevent and ameliorate economic hardship in the Delta region occasioned by that realignment, and 3. To relieve overcrowding of existing facilities within the state and the extensive use of out-of-state correctional facilities to house Alaska inmates.' "The legislature's intent was to provide economic redevelopment relief to Delta Junction by seizing the unique opportunity of using the abandoned buildings left after the realignment of Fort Greely. At the same time, it applies to a matter of statewide concern because capitalizing on this unique opportunity will have a positive impact on the State by returning prisoners to custody in Alaska. "The City is under tremendous time pressure to move this project forward for timely completion, to even have a chance of aligning the prison project with the closure of Fort Greely. These pressures include the need to begin the landfill construction and permitting this summer, to handle the demolition that will be needed for a major conversion project. Survey work has to be done to begin the process of land transfers. "Most importantly, we have to demonstrate to the Army that they have a viable plan to proceed. If the Reuse Plan is not in acceptable form by January 2000, then the opportunity to seek an economic development transfer for this project will be gone. If the prison is not ready to operate by July 2001, the jobs in Delta Junction will be gone and families will suffer. To meet this schedule, Delta must select our design-build and initial operations contractor now. "This amendment will keep the project on track. For the state, that means the goals of economic redevelopment and in-state ... prisoner housing can be met. For Delta Junction, that means our community can survive the base closure. Thank you for helping us meet this challenge." Number 0842 CHAIRMAN ROKEBERG requested that Ms. Kemp fax her written statement to the committee. He confirmed no one else wished to testify from Delta Junction. The chairman asked if that concluded Mayor Gilbertson's presentation. MAYOR GILBERTSON commented he didn't really have anything to add. RICK JOHNSON, City Council Member, City of Delta Junction, commented off-network via teleconference from Delta Junction that Councilwoman Kemp had done a good job of representing the majority of the council. CHAIRMAN ROKEBERG asked the committee members if there were any questions for Ms. Kemp or Mayor Gilbertson. REPRESENTATIVE HALCRO noted there was a lawsuit filed over this issue about adhering to state procurement code. He asked Mayor Gilbertson if Section 7 would provide the city some relief. MAYOR GILBERTSON answered he was not too sure on that and deferred the question to Brian Rogers. Number 0921 MR. DAVID ROGERS in Juneau offered a response. He noted the Delta Junction's city attorney is out of town, emphasizing he is not the city attorney. Mr. Rogers said his sense is that it [Section 7] will resolve much of the issues presented in the lawsuit; he doesn't know if it will resolve every one of them, but it will certainly do a big job of clearing the path for the city to proceed. CHAIRMAN ROKEBERG asked who the parties to the lawsuit are. MR. DAVID ROGERS answered that the plaintiffs are: Wayne Mark Carpenter (ph), Dean Willard Cummings (ph), Dean William Cummings (ph), William Johnson (ph), Ray Patterson (ph), Russell Bowdry (ph) and Ray Bowdry (ph) v. the City of Delta Junction, the "Delta Corrections Group, LLC," and "Cornell Corrections of Alaska, Inc." Mr. Rogers noted Cornell will be the city's contractor. CHAIRMAN ROKEBERG questioned that this was filed on the complaints about procurement code violations. MR. DAVID ROGERS answered in the affirmative, indicating that the plaintiffs were objecting to the city's process. CHAIRMAN ROKEBERG asked if that was what generated the need for this remedial statute. MR. DAVID ROGERS answered in the affirmative, indicating it is, however, for the same reason - time delay - that the competitive RFP [request for proposal] process did not work for them. He said this would create another potential substantial delay in launching the project, which could ultimately jeopardize the project and place the community at risk. It is one of the factors that brings the city before the committee today. CHAIRMAN ROKEBERG confirmed Brian Rogers in Fairbanks was available on teleconference and had been following the testimony. The chairman asked if he had anything to add to clarify the situation. Number 1049 BRIAN ROGERS, Chief Financial Officer, Information Insights, Incorporated, testified next off-network via teleconference from Fairbanks. Mr. Rogers noted litigation is not his area. He indicated he thinks the city has pretty well described what the need is for this amendment. He indicated he could answer technical questions, commenting he has been working with the city attempting to bring the project to fruition. CHAIRMAN ROKEBERG requested that Brian Rogers provide the committee with something on the order of a one-page critical time line of the timing, rationale, and very brief outline, which could be added to the bill packet for the House floor. The chairman indicated this might help the members understand the situation a bit better. Number 1093 MR. BRIAN ROGERS answered in the affirmative, noting he could provide a brief verbal walk-through as well. Mr. Rogers commented the city [Delta Junction] needs a prison that is ready to operate by July 13, 2001. This is the date Fort Greely is realigned and all the remaining jobs will be eliminated. Mr. Rogers indicated their continual focus has been to ensure a seamless transition from the use of Fort Greely as a military base to use as a private prison. In order to reach that July 2001 time frame, the city needs to begin construction during the 2000 construction season. This requires demolition to be done over the course of this winter and next spring. Unfortunately, the Delta Junction landfill is close to capacity and a new landfill is needed to allow the demolition. The city needs to do the landfill work by September or October of this year and begin the permitting process well in advance of that. Over the course of the last nine months Mr. Brian Rogers has been working on the project, they have worked through sort of understanding all of the issues and were headed toward issuance of a competitive RFP. In February the city authorized the issuance of an RFP and the services of Mr. Richard Crane (ph) were retained. Mr. Crane (ph) is the national expert in RFPs for private prison services. MR. BRIAN ROGERS continued, "He [Mr. Crane (ph)] has written a number [of RFPS] for a number of states, and he came back with a time line that said, basically, we could ... be ready to make an award under a time line beginning in February, that would be the end of October of this year, and with [the] state's procurement 10-day, et cetera, mid-November before an award can be made." Mr. Rogers said at that point they realized going forward with an RFP process would not allow them to make that July 2001 time table. Because of the time needs, the city attorney examined the issue of justification for a sole source based on the unique circumstances of the military base's availability, the fairly complex process of working with the military, the time table of preparing the landfill for demolition, for construction. The city attorney concluded this does meet the state standards for a sole source procurement. Mr. Rogers noted this assumes the city does not have other extraneous items like litigation which further delay the process. He commented this is a difficult process to get completed, but the city's best shot at ensuring it does not lose the job, and that families are not left without sources of income, is to proceed by this sole source. That was the city's decision. Number 1258 CHAIRMAN ROKEBERG asked if the January 2000 date is the point at which they, in essence, have title from the military to begin construction. MR. BRIAN ROGERS replied the January 2000 date is for an effective reuse plan. The "Delta Coalition" filed a reuse plan with the military. Basically, reuse of Fort Greely requires some form of what, in a shopping mall, would be called an "anchor tenant." In this case the primary tenant would be the prison. If they are not able to show the military that they have an economic reuse of the base with an anchor tenant - someone that is committed and makes the base operate as an economic entity as the prison would - then the whole process of land transfer cannot start. They may not need all the transfers by January because the military can execute leases and furtherance of conveyance, "LIFC (ph)," in the interim period, but the military needs to know by January of 2000 whether this is a go or no go. CHAIRMAN ROKEBERG noted, then, they could begin the demolition under the leases and further conveyance if the military felt progress was being made on the total reuse issue. The chairman asked if that was correct. MR. BRIAN ROGERS agreed. The city will need an inter-governmental agreement with the state and final contract with the sole source contractor, in that order. The next step would be the inter-governmental agreement with the state which sets out all the terms so the military knows that this is the real deal. Number 1359 MR. DAVID ROGERS in Juneau said he would like to add one general comment about the process. This decision did not come easily; there was a substantial public process undertaken that ultimately led to the sole source decision as the best shot for the seamless transition. It was a long, involved process with a lot of discussion between community members and a vote on an ordinance to sanctify the decision. REPRESENTATIVE HARRIS directed a question to either of the Mr. Rogers. He asked, regarding the litigation or injunction filed to stop the progress of this project, if it was their understanding that this legislation, especially Section 7, would be retroactive to before this injunction was filed in order to give the city of "Delta" some relief. MR. DAVID ROGERS answered the intent is to provide that remedy. He noted there is some discussion amongst the lawyers about whether or not a specific retroactive clause is needed in the bill. Mr. Rogers indicated he is comfortable with the current drafting. CHAIRMAN ROKEBERG questioned, on that point, if adopting a retroactive effective date for Section 7 would be appropriate. MR. DAVID ROGERS replied it would not hurt. In response to the chairman's further comment, Mr. Rogers noted the date of the ordinance is March 30. He indicated a March 29 retroactive date would make very clear. CHAIRMAN ROKEBERG suggested possibly March 15. MR. DAVID ROGERS indicated it is the committee's choice. REPRESENTATIVE HALCRO suggested March 17. CHAIRMAN ROKEBERG confirmed there were no further questions for either of the Mr. Rogers and informed the committee there was one more witness. Number 1474 MARK O'BRIEN, Chief Contracts Officer, Office of the Commissioner, Department of Transportation and Public Facilities, came forward. Mr. O'Brien indicated he thought Mr. Kerr had done an excellent job describing the department's situation which brought about the legislation's introduction. He is available to answer any questions the committee might have regarding Sections 1 through 6. CHAIRMAN ROKEBERG noted the unfortunate example of the M/V Kennicott state ferry had been used earlier. The chairman questioned whether this legislation could in any way have helped the specifications and the avoidance of the Y2K [year 2000] problem for that vessel. MR. O'BRIEN answered in the negative, indicating he didn't think the legislation would have done that for the department. Mr. O'Brien provided another example. If the department is erecting a simple shed building by design-build and is ready to award to the firm that has scored the highest number of points, within five days of that [award] period according to the statute, this firm would be required to name its construction contractors. However, that design has not been done, it has not been approved by the state. Perhaps there was the option of piling or concrete perimeter foundation. Mr. O'Brien commented, "There's no way to select a foundations contractor at the point in which you're entering into the design-build portion of the contract." He noted that would be an example. CHAIRMAN ROKEBERG asked, "With the exception, is that the primary thing, the time-frame, or is there other aspects ... you'd like to bring to the committee's attention ...?" The chairman commented the five-day selection is ludicrous, noting he has been in the commercial real estate business for 25 years in Alaska and has been involved in this type of thing. It just doesn't make sense. Number 1564 MR. O'BRIEN indicated he had additional comments. He explained the second provision in the legislation is to allow for the substitution of a contractor when it is in the best interests of the state. For example, the department enters into a building contract not believing there is an asbestos problem, but upon opening up the structure for a remodel, asbestos is found and an asbestos abatement subcontractor needs to be hired. Technically the way the law is currently written, the department could not do that. Mr. O'Brien indicated this legislation would permit, when the contractor requests and when the state concurs, a best interest finding (BIF) to be done that allows the addition of that subcontractor. CHAIRMAN ROKEBERG noted, then, the department would have to do a BIF to get change of contract (indisc.). He asked if that is in the existing code. MR. O'BRIEN answered no, it is not. CHAIRMAN ROKEBERG questioned, then, why the department would have to do a best interest finding. MR. O'BRIEN indicated the department felt that in order to address some of the contractors' concerns, allowing substitutions of subcontractors for any reason might promote the idea of bid-shopping down the road. The idea was, then, that there had to be a compelling reason. Therefore, it ought to be documented to the file as to why the state is allowing the contractor to either add or replace a subcontractor. CHAIRMAN ROKEBERG mentioned the language that the request must be in writing, specifically detailing the basis for the request. He asked who the request is in writing to. MR. O'BRIEN answered it would be to the file by the contracting officer. Number 1635 REPRESENTATIVE MURKOWSKI questioned, then, if there would be an opportunity for appeal of that decision by the contractor who had been initially selected and who it has been determined it is not in the state's best interest to continue with. MR. O'BRIEN answered no, under this provision there would not be. REPRESENTATIVE MURKOWSKI questioned the identity of the entity making the final determination. MR. O'BRIEN answered it would be DOT/PF if it was one of the department's projects. REPRESENTATIVE MURKOWSKI questioned, then, it would be the procurement office. MR. O'BRIEN agreed. REPRESENTATIVE MURKOWSKI confirmed that "best interest of the state" is term of art. She noted it seems somewhat problematic. CHAIRMAN ROKEBERG mentioned BIFs, best interest findings. The chairman indicated the committee members were mainly or completely from the private sector. He questioned whether Representative Murkowski is satisfied with the answers she has received, indicating the point that there is no appeal is valid. REPRESENTATIVE MURKOWSKI asked if the legislation has further committees of referral. CHAIRMAN ROKEBERG indicated the legislation would proceed directly to the House floor. REPRESENTATIVE MURKOWSKI commented she was sure this would come up as a question from the very adequately versed lawyers. CHAIRMAN ROKEBERG asked Mr. O'Brien if there were other provisions in the code to replace the contractor, or if there are other policies or regulations within the department to do so. Number 1710 MR. O'BRIEN answered in the negative. Technically, under the example of the asbestos abatement [sub]contractor, if this was not allowed, the department would probably have to agree to allow the addition of that subcontractor where none existed before and, the way it is currently written, technically decide whether to assess the contractor a penalty. He noted this is ludicrous. CHAIRMAN ROKEBERG agreed, stating, "If you had to add the contractor? So there's no flexibility in it before?" MR. O'BRIEN noted that is correct. CHAIRMAN ROKEBERG commented that is ludicrous on its face, but he asked about replacing one, noting that is a different case. MR. O'BRIEN answered there was only a limited number of reasons why a subcontractor can be replaced: generally for bankruptcy and those kinds of issues, not when circumstances arise due to the contract itself. CHAIRMAN ROKEBERG said that is not in this bill, though. The chairman asked if it is in regulations, questioning what those circumstances are and if they are codified or stipulated anywhere. MR. O'BRIEN answered in the negative. Up to this point there were no provisions that allowed for those kinds of substitutions. He expressed some unsurety. CHAIRMAN ROKEBERG noted, right, the department was providing for substitution but the department just has to make a best interest finding. He commented, "In other words, if you are a good creative writer, you can have a lame excuse - there's no statutory grounds ... or rationale for it here, though. Is that correct?" MR. O'BRIEN answered that is correct. He indicated the department has discussed this with the "Associated General Contractors (AGC)" who had some initial concerns. Mr. O'Brien said this organization is now satisfied with this and a letter of non-objection is part of the bill packet. In response to the chairman's lack of enthusiasm, Mr. O'Brien indicated it was the department's attempt obtain some consensus on the issue with the contractors. CHAIRMAN ROKEBERG questioned if the letter was on that issue. MR. O'BRIEN answered in the affirmative; the AGC reviewed this legislation in its very early stages. CHAIRMAN ROKEBERG questioned if there were comments from the bill sponsor regarding this. Number 1801 ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman, Alaska State Legislature, came forward as the bill sponsor's representative. She stated that they have gone back to AGC several times and AGC has reviewed the legislation. Additionally, Senator Leman has been having conversations over the past couple of days with AGC and the design-build community: they have no objection to the legislation as written. CHAIRMAN ROKEBERG asked if this provision is only in the design-build section, questioning if there is a general applicability to the entire operation of DOT/PF. MR. O'BRIEN responded that the second portion is applicable to all contracts. There are two issues: 1) To relieve the state from the five-day notification for design-build. 2) To allow the replacement or substitution of subcontractors under all DOT/PF contracts, not only design-build. Mr. O'Brien indicated the chairman is correct in that this does have universal application. Referring to the issue raised about whether a subcontractor would have some avenue to object, Mr. O'Brien noted the contract controversy provisions under the existing statute would allow a contractor to bring an action against the department for a contract issue. There is an avenue under the formal dispute resolution process, not as a part of this section of the statute. He agreed with the chairman and Representative Murkowski that the alternative would be a court action. CHAIRMAN ROKEBERG indicated this would be for breach. Number 1872 REPRESENTATIVE MURKOWSKI indicated that is her thought: By including this, are they not just opening up the door for some major lawsuits against the state by contractors? CHAIRMAN ROKEBERG noted that is where the BIF comes in - that is the supporting document, but it is to the file. REPRESENTATIVE MURKOWSKI agreed it is to the file. She questioned where it goes and the process. She expressed some concern, although the fact that the AGC has signed off on it gives her a bit more comfort. However, she guesses a non-opposition is not exactly a wholehearted endorsement. Representative Murkowski reiterated that she has some concerns. She admitted she had not caught this during her earlier review; if she had, she would have given it more thought before this meeting. It seems problematic that there isn't an appeal process in place. Perhaps the contract controversy is the avenue one does pursue, if in fact one has been ousted from the contract; it certainly gives one grounds to contest. However, she is not familiar with what that process is. CHAIRMAN ROKEBERG suggested that Representative Murkowski and staff look into this; if there is a problem, it can be brought to the attention of the House Rules Standing Committee. REPRESENTATIVE MURKOWSKI said she is happy to do that. Number 1959 REPRESENTATIVE HALCRO moved that the committee adopt a conceptual amendment to the effect of making Section 7 retroactive to March 17, 1999. There being no objection, the conceptual amendment was adopted. Number 1989 REPRESENTATIVE HARRIS made a motion to move House CS for CSSB 141(L&C) [Version H], as amended, out of committee with individual recommendations and the attached [zero] fiscal note. There being no objections, HCS CSSB(L&C) moved out of the House Labor and Commerce Standing Committee. Number 2019 CHAIRMAN ROKEBERG called a brief at-ease at 4:01 p.m. The committee came back to order at 4:02 p.m. HB 110 - SALE/LABELING OF MEAT/MILK PRODUCTS Number 2026 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 110, "An Act relating to the sale, offer to sell, and labeling of fluid milk, meat, and meat products." Number 2031 REPRESENTATIVE HARRIS, sponsor of HB 110, noted it is his intention to move the legislation. He drew the committee's attention to the proposed Version K committee substitute (CS). The difference between Version K and most previous CS [Version I] is the addition of the language, "and may also state "No significant difference has been shown between milk derived from rBST treated and non-rBST treated cows."", after "or "farmer certified rBST-free,"", in Section 2 of the legislation on page 2, lines 2 and 3. Number 2095 REPRESENTATIVE HALCRO made a motion to adopt the proposed Version K CS for HB 110, labeled 1-LS0408\K, Bannister, 4/27/99. There being no objection, it was so ordered. Number 2109 PETE FELLMAN, Researcher for Representative John Harris, Alaska State Legislature, came forward as the bill sponsor's representative. In response to the chairman's request for an explanation of the difference, Mr. Fellman agreed it is as was stated by Representative Harris. The disclaimer requested by the Department of Environmental Conservation (DEC) was added to the legislation; this is also the same wording in the "Interim Federal Guidelines [Food and Drug Administration (FDA)]" regarding the labeling of milk for bST and rGBH. In response to the chairman's question regarding the location of the change, Mr. Fellman directed the committee's attention again to page 3, lines 2 and 3. CHAIRMAN ROKEBERG noted the language is "may also state" and therefore is not mandatory. The chairman asked Mr. Fellman if that is correct. MR. FELLMAN indicated he thinks it is. Mr. Fellman indicated he asked the bill drafter to take the language word-for-word out of the FDA guidelines. He noted the use of "may" in a previous sentence and commented it might be a matter of grammar. CHAIRMAN ROKEBERG indicated "may" is not used as a matter of grammar in legislation; it is a dictum or discretion. Number 2180 REPRESENTATIVE MURKOWSKI indicated she feels this satisfies the concern she had raised at the previous hearing [April 26, 1999]. If a dairy farmer wishes to sell his/her milk to the [military] bases or the school lunch program, he/she can use this entire labeling to meet the FDA requirements. However, if a farmer chooses not to sell his/her milk to one of these outlets, he/she would be allowed to omit the language, ""No significant difference has been shown between milk derived from rBSt treated and non-rBST treated cows."". MR. FELLMAN commented that is probably a benefit he did not recognize when the "may" was included. REPRESENTATIVE MURKOWSKI noted she read the added language and thought that solved the problem; she looked at "may" as a good thing. CHAIRMAN ROKEBERG informed the committee there was one witness online who wished to testify. Number 2244 ART GRISWOLD, Sleepy Hollow Farm, testified via teleconference from Delta Junction. He commented he raises some milk animals, mainly goats, and some beef cattle. Mr. Griswold indicated he has been following the legislation's progress; he thought it was a pretty good bill to start with. However, Mr. Griswold expressed that he is very unhappy with the current version because all the power has been removed from the legislation, the requirements for hormone reporting on beef have been reduced completely, and more (indisc.) is just being added to the existing dairy operation in the future for the creamery. He questioned what the legislation is going to accomplish really; they have taken all the meat out of the bill and destroyed it up to now. Mr. Griswold noted he would like to see the legislation to its original form: including the term limit for dating [of milk], including the coverage of beef animals, and including the milk as far as the hormone additive. He stated, "And that's all I've got to say gentlemen, I think your big money got to you someplace." CHAIRMAN ROKEBERG responded he appreciated Mr. Griswold's testimony but not his last comments. The chairman asked if there were any questions for Mr. Griswold. REPRESENTATIVE HARRIS noted, as the bill sponsor, that he would just like to say he doesn't think big money got to them; he thinks a matter of trying to get this through as legislation which accomplishes something causes one to work with other people. Representative Harris hoped the department would come forward as well; he indicated they have been trying to work with the department to allow some form of milk labeling which supports various special interests and other people's concerns regarding knowledge of what is in some of the food they eat. This is why the legislation is in its present form. CHAIRMAN ROKEBERG noted he appreciated Representative Harris' comments and hopes Mr. Griswold takes them to heart. The chairman stated this a land of reality and that is why it is called politics. Given the limited resources of this state and what they can do, they can't ideally accomplish everything they may want to do, and therefore they try to take small steps to reach the desired goal. He invited Ms. Adair forward. Number 2342 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, came forward. Ms. Adair commented the department does not have any objections to the Version K CS; she would like to thank Representative Harris' office for working with the department to address its concerns. CHAIRMAN ROKEBERG closed the public hearing on HB 110 after confirming there were no further witnesses. Number 2374 REPRESENTATIVE HALCRO made a motion to move CSHB 110 [Version K] out of committee with individual recommendations and the attached zero fiscal note. Representative Halcro amended his motion to included the two attached fiscal notes. There being no objection, CSHB 110(L&C) moved out of the House Labor and Commerce Standing Committee. Number 2393 CHAIRMAN ROKEBERG called an at-ease at 4:11 p.m. The committee came back to order at 4:14 p.m. [MANUAL TAPE CHANGE DURING AT-EASE] TAPE 99-48, SIDE B HB 208 - PROFESSIONAL COUNSELORS Number 0001 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 208, "An Act relating to professional counselors; and providing for an effective date." REPRESENTATIVE MURKOWSKI, sponsor of HB 208, thanked the chairman for hearing the legislation on such expedited notice. She commented that HB 208 is a housekeeping measure; it is a title restriction bill, not a practice restriction bill. She requested that her staff, Anne Gore, present HB 208. Number 0038 ANNE GORE, Researcher for Representative Lisa Murkowski, Alaska State Legislature, came forward. Ms. Gore provided the following testimony based on the sponsor statement: "Last year the legislature created statutes ... which established a board and license for professional counselors in Alaska. The intent of the statutes was essentially twofold. The first was to create a board which would oversee activities relating to professional counselors; and second, was to create requirements of appropriate, quality education and experience for professional counselors seeking licensure. However, in those original statutes there is some key language that was left out, primarily that which defined the authority of the board and the language which defined 'appropriate, quality education and experience.' This bill seeks to address those omissions and also allows for three other small housekeeping provisions. "Specifically, it adds to the list of health professionals allowed to supervise professional counselors; it adds professional counselors to the Centralized Licensing Statutes section regarding the use of the letters 'LPC' after a licensed professional's name; and it extends the deadline by six months for current, eligible professional counselors to be 'grandfathered' in without having to undergo supervisory and testing requirements that will be required of new entrants into the profession. "... This bill strengthens those original statutes laid out last year for both the public and the profession." MS. GORE stated she would be happy to answer any questions the committee might have. Number 0091 REPRESENTATIVE MURKOWSKI requested that Ms. Gore explain why the additional six month extension is being addressed. MS. GORE explained that under the current provisions, the time for current counselors working in Alaska to gather their educational materials specifying their educational background and work history would expire December 31, 1999. This information allows current counselors to become licensed professional counselors without having to undergo the 3,000 supervised hours and taking the test which would be required of new entrants to the profession. The board, established under the previous years statutes, had been slow in becoming established and gathering the information required to send out to current, working counselors. Because those materials may not go out until as late as August, the board was concerned that without an extension, working counselors within Alaska who wished to become licensed professional counselors might miss that deadline. Number 0150 CHAIRMAN ROKEBERG indicated the previous legislation establishing the board had come through the committee the previous year. The chairman referred to page 3, lines 7-8 and 11-12. He asked if those were the housekeeping measures to which Ms. Gore had referred. MS. GORE replied yes, exactly. She said that it simply seeks to define both the authority of the board, and the education and experience for new entrants to the profession. CHAIRMAN ROKEBERG referred to Section 4 of HB 208. He commented that HB 208 is a technical bill. Number 0208 ANNE HENRY, Chair, Board of Licensed Professional Counselors, Division of Occupational Licensing, Department of Commerce and Economic Development, came forward. She informed the committee that the board was not appointed until December 1998. The original date to send applications to potential professional counselors was January 1, 1999. Therefore, the board is backed up by many months in terms of getting the applications to people. The six-month extension would assist the board in getting the information out to those in remote areas and in providing those people enough time to gather their documentation to send in for the application process. Ms. Henry indicated she had been very involved in the drafting of the previous year's legislation, and she acknowledged that there had been some omissions in that legislation. She thinks HB 208 cleans up a lot of different things that will assist the board in the writing of regulations and enforcement of the statutes, as intended by both the drafters and, hopefully, the legislature. Ms. Henry noted she is basically here for the committee's questions. CHAIRMAN ROKEBERG pointed out that on page 2 there are provisions for adopting a code of ethics by regulation, but not the balance of the regulations. He asked if that was the omission. MS. HENRY indicated agreement. REPRESENTATIVE MURKOWSKI asked how many professional counselors there are in Alaska. MS. HENRY said that she does not know; they are hoping that approximately 250 people will apply for this license. Ms. Henry agreed with Representative Murkowski that the actual number of professional counselors is unknown because no information has been sent out. Ms. Henry identified that as another reason for extending the deadline. More licensees would decrease the amount of the individual licensing fee. Number 0320 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, came forward. She informed the committee that the division provides the staff support to the Board of Professional Counselors. Ms. Reardon said that HB 208 is a good bill from the department's perspective. When the board began fleshing out regulations, the need for the technical clean-ups were discovered. She commented that HB 208 has a zero fiscal note. REPRESENTATIVE MURKOWSKI understands one of the reasons for requesting these technical changes is to allow this six-month extension. She questioned if the legislature is being unreasonable with these deadlines when it sets them and if should that be reviewed in order to ensure that is not the case again. MS. REARDON pointed out that with a new board, the members must first be appointed before any actions establishing policies and regulations can occur. Those policies and regulations then allow applications to be sent out. Therefore, applications cannot be sent out until the board is appointed and meets. The appointment process takes awhile because the bills pass at the same time the budget and other items come before the Governor. Therefore, appointments of new board members take lower priority. Ms. Reardon indicated this situation should be recognized regarding time deadlines. She also noted that sometimes a bill introduced the first session might not pass until the first session. Although the dates could be much closer then, Ms. Reardon indicated that amending the bill at that point might impede the legislation's progress. Additionally, she thinks both the department, and perhaps the legislature, need consider how long it really takes to write thoughtful regulations and inform the public. Ms. Reardon emphasized that she did not see much harm in having extended grandfather clauses. CHAIRMAN ROKEBERG asked if anything in HB 208 added to the nondiscrimination clause of the insurance statute. MS. REARDON replied no and said that would be a separate issue probably will be brought to the legislature at some time. She mentioned that would be somewhat more controversial. REPRESENTATIVE HALCRO noted that the bill packet only included an unnumbered draft bill. Number 0493 JANET SEITZ, Legislative Assistant to Representative Norman Rokeberg, Alaska State Legislature, as aide to the House Labor and Commerce Standing Committee, clarified for the record that the version before the committee is version 1-LS0828\A, which is the same as the unnumbered draft bill. CHAIRMAN ROKEBERG asked how the licensing fee had been established for the board. MS. REARDON explained that the fiscal note accompanying the previous year's legislation included a proposed amount based on the number of people who might get licenses. That amount was publicly noticed and adopted. She said that three years from now, the fee would be more accurate. CHAIRMAN ROKEBERG asked if another reason for the extension was to attempt to meet the proposed number of applicants in order to have enough money to pay for the program. Number 0537 MS. REARDON stated that there are enough licensees in the division so that would not be a concern of the division. However, more licensees result in lower fees. CHAIRMAN ROKEBERG asked if Ms. Reardon was suggesting that other licensees fund this license. MS. REARDON explained that if the program costs more than the fee brings in revenue, the division would deficit spend on that program which would mean that technically the money spent may be from another program. However, the profession would have to pay back the deficit and the money returns to those from which it came. CHAIRMAN ROKEBERG asked if anyone else wished to testify on HB 208. There being no one, the public hearing on HB 208 was closed. The chairman asked the will of the committee. REPRESENTATIVE CISSNA noted a conflict of interest because she is a potential applicant for a professional counselor license. CHAIRMAN ROKEBERG indicated that Representative Cissna would be required to vote. Number 0623 REPRESENTATIVE HALCRO made a motion to move HB 208 out of committee with individual recommendations and the attached zero fiscal note. There being no objection, HB 208 moved out of the House Labor and Commerce Standing Committee. Number 0633 CHAIRMAN ROKEBERG called an at-ease at 4:30 p.m. The committee came back to order at 4:39 p.m. HB 183 - ALASKA PUBLIC UTILITIES COMMISSION [Contains discussion relevant to SB 133.] Number 0638 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 183, "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." The chairman informed the committee there are some suggested amendments patterned after provisions of SB 133. It is the intention to try to mirror some of the provisions placed in SB 133 that the industry as a whole can agree on that would be a betterment to the commission. The chairman mentioned amendments I.1 and I.2 [there is also I.3]. REPRESENTATIVE MURKOWSKI questioned if the committee needed to adopt the committee substitute (CS) [Version I]. There was some discussion among the committee regarding distribution of the three amendments. Number 0697 CHAIRMAN ROKEBERG called a brief at-ease at 4:40 p.m. The committee came back to order at 4:41 p.m. The chairman announced that before taking up the amendments, the committee would hear public testimony. Number 0719 SHARON DANIEL, Copper Basin Sanitation Service Company, testified via teleconference from Glennallen. Ms. Daniel commented that she does not have any of the amendments, but she does support the original Version I work draft. However, if the three amendments change the legislation much, she may withdraw her support. CHAIRMAN ROKEBERG confirmed Ms. Daniels was concerned about subject of refuse regulation. He stated there is nothing in this legislation and it is not the sponsor's intention to add that to this legislation. MS. DANIELS stated her concern is the deregulation of garbage service. She does not support that; if garbage service is left out of HB 183, the legislation has her support. CHAIRMAN ROKEBERG reiterated that it is not in the legislation nor is it the chairman's intention. REPRESENTATIVE HALCRO informed Ms. Daniels as co-chair of the House Community and Regional Affairs Standing Committee that HB 178, which he believes Ms. Daniels is referencing, would possibly be heard by that committee the following Tuesday [May 4]. CHAIRMAN ROKEBERG added that he believes Senator Pearce's legislation, SB 133, does include the garbage or refuse provisions. He indicated HB 183 and SB 133 are along the same lines, but HB 183 does not have those specific provisions. The chairman indicated he would suggest that Ms. Daniel should track both HB 178 and SB 133. He questioned whether Mr. Zobel in Anchorage wished to testify. Number 0805 RON ZOBEL, Assistant Attorney General, Fair Business Practices Section, Civil Division (Anchorage), Department of Law, spoke via teleconference from Anchorage. Mr. Zobel told members he was available for questions that had arisen at the last hearing [April 26] concerning amendments on arbitration, the 60-day limit on issuing decisions and the consumer complaint amendment [Amendment 2 to Version H]. Mr. Zobel indicated Mr. Baldwin [Jim Baldwin, Assistant Attorney General, Governmental Affairs Section, Civil Division (Juneau), Department of Law] had thought it would be better to have an attorney who worked day-to-day with the Alaska Public Utilities Commission (APUC) present for these questions. Mr. Zobel is one of the two assistant attorney generals assigned to the commission. Number 0838 REPRESENTATIVE HALCRO made a motion to adopt the Version I CS for HB 183, labeled 1-LS0764\I, Cramer, 4/28/99. There was no objection to the motion. CHAIRMAN ROKEBERG questioned if Mr. Zobel and Mr. Lohr [Robert Lohr, Executive Director, Alaska Public Utilities Commission] had Version I. MR. ZOBEL responded that he believed he had that version. CHAIRMAN ROKEBERG requested that Ms. Seitz conceptually explain the amendments to the committee and then Mr. Yould could discuss the amendments' substance. The chairman indicated the amendments would be marked I.1 as Amendment 1, I.2 as Amendment 2, and I.3 as Amendment 3. Number 0895 JANET SEITZ, Legislative Assistant to Representative Norman Rokeberg, Alaska State Legislature, came forward as aide to the House Labor and Commerce Standing Committee. Ms. Seitz explained that Amendment 1 is in the same area as the amendment passed at the last meeting [April 26] "dealing with the chair of the commission shall promptly fix a date." The committee adopted 60 days at the last hearing; this amendment would reinsert the 30-day provision. Ms. Seitz indicated the last portion of the amendment is new language regarding timely closure of dockets. Amendment 1, labeled 1-LS0764\I.1, Cramer, 4/28/99, read: Page 1, line 5, following ";": Insert "relating to timely action by the Alaska Public Utilities Commission;" Page 3, line 26: Delete "a new subsection" Insert "new subsections" Page 3, lines 28 - 30: Delete ", the chair of the commission shall promptly fix a date for hearing when a hearing is appropriate. The hearing shall be without undue delay. The" Insert "for which a hearing is clearly warranted, the chair of the commission shall assign a priority rating to the issue and promptly fix a date for hearing. The hearing shall be expedited in accordance with the priority rating. Regardless of the priority rating, a" Page 4, line 2: Delete "60" Insert "30" Page 4, following line 2: Insert a new subsection to read: "(c) Unless to do so would violate the due process rights of a party, the commission shall ensure that its dockets are closed in a timely fashion and not delayed due to inaction, complexity of issues, or another reason. Failure of a commission member to comply with this subsection constitutes grounds for removal from the commission under AS 42.05.035. The chair of the commission may dismiss a commission employee for failure to comply with this subsection." CHAIRMAN ROKEBERG questioned whether Mr. Zobel had the I.1 amendment. MR. ZOBEL answered they did not have that in Anchorage. MS. SEITZ informed the chairman the amendments had been received just prior to the hearing. The amendments are being faxed to the Anchorage Legislative Information Office (Anchorage LIO). CHAIRMAN ROKEBERG indicated he wished to hear Mr. Zobel's comment on Amendment 1 after his (Mr. Zobel's) review. The chairman invited Mr. Yould and Walt Wilcox [aide to the House Special Committee on Utility Restructuring, sponsor of HB 183] forward. Chairman Rokeberg questioned Mr. Yould regarding the nature of Amendment 1. Number 1013 ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative Association, Incorporated (ARECA), came forward. He noted ARECA is a trade association for the electric utility industry. Mr. Yould commented there had been an amendment before the committee at the previous hearing which attempted to put some "teeth" into the time in which it takes to get dockets through APUC. An amendment was adopted that required, among other things, a certain prioritization on dockets when they come in. There was also a requirement that the commission enter its order within 60 days after conclusion [of a docket]. The timeliness of dockets is the major issue relating to the APUC that ARECA sees coming before its body, from the electric utilities' standpoint. There were many comments the other day that that completed section was still loosely worded and could be tightened up; ARECA agreed with that. Mr. Yould indicated that ARECA also privately felt that perhaps there could be even more teeth put into getting dockets out in a timely fashion. MR. YOULD commented this is what he has attempted to do. Amendment 1 to Version I ["Version T" misstated on tape] is a derivative of what he put together; it was reworded by the legislative drafters. The amendment suggests that the question of how soon decisions shall be made should be revisited. ARECA suggests 30 days is better than the 60 days passed previously. ARECA is also saying that the chairman should examine and prioritize an incoming docket by importance, place it into a management tracking system, and get to it as soon as possible. Mr. Yould noted the last portion of the amendment, subsection (c), tries to ensure that the commission and its staff understand the importance of getting dockets out in a timely fashion. If there is a continual history of slowness or inattention to dockets, this would serve as grounds for dismissal. ARECA is not looking for dismissal, nor does it believe that would happen. However, Mr. Yould indicated ARECA would certainly like to know that dismissal could be had if timeliness of dockets continues to be an issue. Number 1165 REPRESENTATIVE HALCRO referred to the language, "assign a priority rating" in paragraph 3 of Amendment 1, relating to page 3, lines 28 through 30 of Version I. He questioned the intent with the priority rating, wondering if would be as simple as "one through five." MR. YOULD answered it could very well be; that is up to the commission to decide by regulation. He added, "It's just trying to say one docket is more important than another, and just because you have a full slate, it doesn't mean that if you don't get an important one in, it shouldn't get bumped to the top. And, frankly, there's been some dockets that have come in - at least with the electric utility industry, having to do with the takeover of one utility by another - that I wish APUC had taken on and made a decision on, and we wouldn't be still trying to figure out what's going on." Number 1206 REPRESENTATIVE MURKOWSKI indicated, however, that if they are to enact language that says nothing can be done which would cause undue delay, a prioritization schedule, by nature, would delay some items in favor of others. A prioritization schedule with "hot" items relating to electric utility dockets would delay the garbage dockets, for example, making it difficult to keep to the time management schedule. Representative Murkowski expressed that she likes the idea of prioritization and thinks it may need to be examined, but she questioned this delaying effect on the less urgent items. MR. YOULD said he fully agreed with Representative Murkowski's comments; it is necessary to ensure that some of those less important dockets ultimately get heard. He proposed using some new hearing techniques that perhaps the commission has not used enough of in the past, such as having some dockets heard by a hearing officer or arbiter, or using other tools the commission has available to it. He stated, "We want to see a little bit more action over there, frankly. ... Some of the dockets are very important, and they should be put on an expedited basis. I'd have to say that there's been a couple of recent dockets that have cost ... members in utilities a lot of money, because the utilities have come to APUC and said, 'Give us a decision.' Still, today, no decision ... is there and hence people are spending money, throwing grenades back and forth with newspaper ads and that sort of thing, that in some respects, perhaps, could have been settled through a timely adjudication by APUC." Mr. Yould continued, "Now, I'm not even going to pretend to say that there wasn't a due process that didn't slow it down because I agree with that and I've even tried to acknowledge the fact that due process does need to take its place. It absolutely does. But I just think a sense of urgency and prioritization is very necessary over there. And, yes, some dockets would get bumped down, but at the same time I think that good managers will find ways to deal with that." Number 1339 CHAIRMAN ROKEBERG asked Mr. Zobel if he had received a copy of Amendment 1. MR. ZOBEL replied they had not received it yet. CHAIRMAN ROKEBERG noted that Amendment 1 replaces the 60 days in Version I with 30 days, and puts a lot more "fangs" into it. The chairman questioned whether Mr. Zobel wished to comment. MR. ZOBEL asked if Amendment 1 refers to the closing of a docket. CHAIRMAN ROKEBERG indicated the 30 days or 60 days relates to the order afterwards, found on page 4, line 2, of Version I. Number 1383 MR. ZOBEL pointed out that there is an important distinction between the issuance of an order after a hearing and the closing of a docket. The closing of a docket is a fairly routine thing when the entire docket is completed. CHAIRMAN ROKEBERG noted that Version I, page 4, lines 1 and 2, says, "After the conclusion of the hearing, the commission shall enter its order within 60 days." He asked how Mr. Zobel would interpret that, and whether he was distinguishing between a docket hearing and another hearing. Number 1421 MR. ZOBEL explained that there can be a hearing or a series of hearings leading to various orders being issued in a particular docket. The closing of the docket comes later, after virtually everything has been finished, and is a rather routine, bureaucratic chore of simply closing the file. He suggested that the problem they are getting at is that once a matter has been heard in a hearing and submitted to the APUC for decision, that is when the time clock would start to run. He pointed out, however, that what is reasonable varies with the complexity or nature of the docket, and 30 days is a very short time for many items. Mr. Zobel said he doesn't think that there is necessarily a legal problem with directing the commission to do this, but, obviously, they want the right number of days to be in there so that it is a practical provision. He noted that the bill he was looking at didn't specify a remedy for a violation of that directive. CHAIRMAN ROKEBERG suggested the legislature could cut the funding. MR. ZOBEL said that it is always an option. He noted that a directory statement like that is a standard against which the APUC can be measured. He paused to look at Amendment 1, which had just been handed to him. Number 1560 CHAIRMAN ROKEBERG asked whether Mr. Zobel would counsel the committee to leave the time as 60 days. MR. ZOBEL said he believes 60 days is a much more reasonable period of time for many dockets. CHAIRMAN ROKEBERG asked Mr. Yould to respond. Number 1613 MR. YOULD replied, "Everything's subjective. If I have an attorney that works for me, and I say that I want something tomorrow, I'm going to pay for it, and I'm going to get it tomorrow. And it would seem to me that if something is important enough and it needs to be done, it can be done. And I think that APUC has the resources, either through the attorney general's office or, as amended, through outside legal resources, that they should be able to get the job done. I certainly wouldn't want to see them expending undue funds on trying to get dockets out that are of a relatively low priority, but it would seem to me that you should have the resources within this commission to act in a timely fashion." CHAIRMAN ROKEBERG responded that it depends on the scope of the work, which he believes is Mr. Zobel's point. Number 1667 REPRESENTATIVE MURKOWSKI asked whether there has been testimony from the other utilities involved in APUC hearings, in terms of what they might consider reasonable. CHAIRMAN ROKEBERG said no. REPRESENTATIVE MURKOWSKI added that it may be easier for electric utility cases, as opposed to pipeline rate cases, for example, where even 60 days might be unreasonable. MR. YOULD answered that everybody has learned to expect something longer rather than shorter, which he believes is unfortunate. CHAIRMAN ROKEBERG proposed going back to 30 days, with extensions requiring justification, as discussed in the previous meeting. MR. YOULD said he has no problem with that. Number 1729 REPRESENTATIVE HALCRO asked if the expectation of delays isn't simply because there hasn't been any time line in force. MR. YOULD said that is a good point, adding that perhaps some other management techniques put in place would obviate the need for this sort of thing. CHAIRMAN ROKEBERG suggested that could be a compromise. He asked Mr. Zobel and Mr. Lohr if they had heard the discussions, and if they believe it is more reasonable to revert to 30 days, with extensions for good cause. Number 1776 MR. ZOBEL answered that certainly some latitude would be more reasonable. He cautioned against distracting the commission from the issue at hand, however, by the process of getting extensions and findings of good cause. There are going to be a large number of cases where good cause would be necessary to get some extra time, he said. To him, having 30 days and then another extension adds a procedure to jump through, which could be a little cumbersome, although it would keep everybody on track. He proposed that the chairman should always have a system to determine what remains in a particular matter at any given time, because sometimes it isn't readily apparent what is still out there to be decided. Mr. Zobel believes that would be the best thing to help in meeting deadlines. Number 1910 CHAIRMAN ROKEBERG made a motion to adopt Amendment 1, and to amend it by deleting lines 12 through 14 [of the printed amendment, relating to page 4, line 2, of Version I]. This would leave the 60 days in, with no extension. He asked if there was any objection to the amendment to Amendment 1. The language to be deleted from Amendment 1 by the amendment to the amendment read: Page 4, line 2: Delete "60" Insert "30" REPRESENTATIVE HALCRO objected for purposes of discussion. He asked if the reason is fear of the 30 days. CHAIRMAN ROKEBERG referred to testimony and expressed concern that 30 days isn't enough time to write a report. "We can tune this up later," he added. The chairman said he accepts Mr. Zobel's counsel that adding another "cause" issue creates paperwork, which he himself doesn't want. CHAIRMAN ROKEBERG asked if there was any objection to the amendment to Amendment 1. There being none, the amendment to the amendment was adopted. The chairman asked if there was any objection to Amendment 1 [as amended]. Number 2000 REPRESENTATIVE MURKOWSKI referred to the last section of the amendment and the language, "... the commission shall ensure that its dockets are closed in a timely fashion and not delayed due to inaction,". She indicated this language is acceptable to her, but she noted the following language, "complexity of issues". She specifically referred to line 19 of the printed amendment which read, "delayed due to inaction, complexity of issues, or another reason. Failure of a" Representative Murkowski believes "complexity of issues" is a valid reason to take 45 days instead of 30 days, for example. Therefore, she expressed discomfort with inclusion of that language. Although it could be used as an excuse for delay, she believes there is a need to allow the APUC to wade through incredibly complex issues. She suggested urging the commission to deal with it in a timely manner, however. REPRESENTATIVE HALCRO noted that if they are retaining the 60 days because of the worry that 30 days is not enough time to respond because of complex dockets, then on line 19, "delayed due to inaction, complexity of issues, or another reason. ...", they are punishing for something which has already been addressed in lines 12 through 14. Representative Halcro commented they have said there are complex issues out there; 30 days is not enough, 60 will be provided, but then again on line 19, they say that that is not a reason to delay. He said this is his concern. CHAIRMAN ROKEBERG replied that he had not thought of complexity of issues as a reason to extend the 60 days, indicating his thought had been toward bureaucratic inertia and failure to get things done. Number 2154 REPRESENTATIVE CISSNA also referred to line 19 of Amendment 1, "delayed due to inaction, complexity of issues, or another reason. ..." She asked whether "or another reason" doesn't essentially say that there is no reason to do it. REPRESENTATIVE MURKOWSKI agreed. Number 2208 CHAIRMAN ROKEBERG asked if there were any objections to Amendment 1 [as amended]. REPRESENTATIVE MURKOWSKI and REPRESENTATIVE HALCRO objected. REPRESENTATIVE MURKOWSKI suggested it might be all right if that first sentence was deleted. CHAIRMAN ROKEBERG requested that Representative Murkowski fix the amendment and bring it back on Friday [April 30]. The chairman requested that Ms. Seitz to comment on Amendment 3. Number 2259 MS. SEITZ noted that Amendment 3, labeled 1-LS0764\I.3, Cramer, 4/28/99, read: Page 4, line 29, following ".": Insert "A decision of an arbiter is not final until approved by the commission." CHAIRMAN ROKEBERG reminded members that arbitration had been added to the commission's tools, but it is necessary to ensure that the commission approves the arbitration decision. The chairman asked if there was any objection to Amendment 3. There being none, Amendment 3 was adopted. CHAIRMAN ROKEBERG noted Amendment 2 is a bit more complex. Amendment 2, labeled 1-LS0764\I.2, Cramer, 4/28/99, read: Page 1, line 8, following "Commission;": Insert "relating to regulatory cost charges;" Page 5, following line 13: Insert new bill sections to read: "* Sec. 12. AS 42.05.254(a) is amended to read: (a) A regulated public utility operating in the state shall pay to the commission an annual regulatory cost charge in an amount not to exceed the maximum percentage of adjusted gross revenue that applies to the utility sector of which the utility is a part. The total regulatory cost charges that the commission expects to collect from all regulated public utilities and regulated pipeline carriers may not exceed .8 percent of the total adjusted gross revenue of all regulated public utilities and the total gross revenue of all regulated pipeline carriers [DERIVED FROM OPERATIONS IN THE STATE, AS MODIFIED UNDER (c) OF THIS SECTION IF APPROPRIATE]. An exempt utility shall pay the actual cost of services provided to it by the commission. * Sec. 13. AS 42.05.254(b) is amended to read: (b) The commission shall by regulation establish a method to determine annually the amount of the regulatory cost charge for a public utility. If the amount the commission expects to collect under (a) of this section and under AS 42.06.286(a) exceeds the authorized budget of the commission, the commission shall, by order, reduce the percentages determined under (i) [SET OUT IN (a)] of this section so that the total amount of the fees collected approximately equals the authorized budget of the commission for the fiscal year. * Sec. 14. AS 42.05.254(h) is amended by adding a new paragraph to read: (5) "adjusted gross revenue" means the gross revenue of a utility as modified under (c) of this section, if appropriate. * Sec. 15. AS 42.05.254 is amended by adding a new subsection to read: (i) The commission shall by regulation establish a method to determine annually the maximum percentage of adjusted gross revenue that will apply to each regulated public utility sector and the maximum percentage of gross revenue that will apply to each regulated pipeline carrier sector. The method established shall allocate the commission's costs, other than the cost of services provided to exempt utilities, among the regulated public utility sectors and the regulated pipeline carrier sector based on the relative amount of the commission's annual costs that is attributable to regulating each sector. * Sec. 16. AS 42.06.286(a) is amended to read: (a) A pipeline carrier operating in the state shall pay to the commission an annual regulatory cost charge in an amount not to exceed the maximum percentage of gross revenue that applies to regulated pipeline carriers. The total regulatory cost charges that the commission expects to collect from all regulated pipeline carriers and regulated public utilities may not exceed .8 percent of the total gross revenue of all regulated pipeline carriers and the total gross revenue of all regulated public utilities [DERIVED FROM OPERATIONS IN THE STATE]. A regulatory cost charge may not be assessed on pipeline carrier operations unless the operations are within the jurisdiction of the commission. * Sec. 17. AS 42.06.286(b) is amended to read: (b) The commission shall by regulation establish a method to determine annually the amount of the regulatory cost charge. If the amount the commission expects to collect under (a) of this section and under AS 42.05.254(a) exceeds the authorized budget of the commission, the commission shall, by order, reduce the percentage determined under (1) [SET OUT IN (a)] of this section so that the total amount of the fees collected approximately equals the authorized budget of the commission for the fiscal year. * Sec. 18. AS 42.06.286 is amended by adding a new subsection to read: (f) The commission shall by regulation establish a method to determine annually the maximum percentage of gross revenue that will apply to each regulated pipeline carrier sector and the maximum percentage of gross revenue that will apply to the regulated public utility sector in accordance with AS 42.05.254(i)." Renumber the following bill sections accordingly. [Note: amendment copy quality very poor - unable to determine subsection specified in Section 17.] MS. SEITZ noted that Amendment 2 addresses concerns raised about disparity between what telephone companies and electric utilities pay, based on the amount of work done for them. She deferred to Mr. Yould. Number 2331 MR. YOULD explained, "Presently, the commission computes the RCC [regulatory cost charge] by equally apportioning the RCC to be collected, by dividing the total commission budget to be collected from the utilities by the total gross utility receipts. And it basically puts a cap on how much ... of those gross receipts ... could go toward the commission; and I think the percentage is .8 percent of gross receipts. What that means is that [regardless] of the service, and the number of issues that you have before the commission, you're going to be paying a flat amount - no matter what - by your industry sector. And as a 'for instance,' under the present formula, last year the commission needed to recover ... $4,122,000 from the regulated utilities, of which ... a little over a million was to be recovered from the electric utility industries. That's roughly 25 percent." MR. YOULD continued, "However, if you look at the level of effort that is put in by the commission on electric utility dockets, you will probably find that we are not getting 25 percent of their effort. For instance, ... in 1996, there were 110 new dockets filed with the commission; that was a year before deregulation of the telecommunications industry took place. That's probably a period of time when we would say that we probably got equal representation within APUC. In 1997, however..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 99-49, SIDE A Number 0001 MR. YOULD continued, "I can tell you ... that the preponderance of the increase in dockets was not a result of the electric utility industry, but simply because of the increased re-regulation associated with the deregulation of the telecommunications industry. We believe that we are probably getting significantly less than the 25 percent that we are paying into the commission through the RCC. What we are recommending is an amendment, which is some three pages long, which basically changes the formula so that each individual industry will be allocated its charge based on the anticipated level of effort needed for that industry within the commission. And that's what this amendment does." Number 0090 CHAIRMAN ROKEBERG requested that Mr. Lohr comment on this allocation-to-workload concept. Number 0104 ROBERT LOHR, Executive Director, Alaska Public Utilities Commission, testified next via teleconference from Anchorage. He told members that the regulatory cost charge was established in 1992, based on recommendations of the legislative auditor and others who felt that it would be a more equitable way than using unrestricted general funds to finance the APUC's operations. Since that date, the APUC has operated on a RCC and the APUC fund is a separate fund in state accounting. Mr. Lohr stated, "The approach of the commission, following the statutes, has been to try to keep the program simple, to keep the allocation to all utilities - all regulated utilities - the same, to the extent possible. That's been a very successful approach. It's kept the program simple. It has avoided creating a kind of 'Internal Revenue Service of the North,' if you will, to have exclusions, deductions, exemptions and so forth, or special treatment." MR. LOHR continued, "The legislature, in 1995, the last sunset review, did authorize a reduction in the electric regulatory cost charge to exclude the cost of power from the calculation. That had the effect of reducing regulatory costs allocated to the electric industry by 43 percent. ... It's true, as Mr. Yould has indicated, that the number of dockets has increased substantially ... in recent years, and that the primary increase has been in the area of telecommunications. However, the choice of formal dockets as the measure of a commission activity misses some significant activity by the commission. For example, the electric restructuring contract with CH2M Hill and the work that the commission has done with the legislature in that area is not reflected in the expenses of any docket. It's a regulatory docket; so, it would not show as one that is allocated to electricity." MR. LOHR commented, "And yet, I think the primary benefit of that contract is clearly to the electric industry. Other things, such as the number of tariff filings handled, reflect a much more general balance, with electricity having a far higher percentage than the 10 percent indicated in the formal docket. At this point, the RCC has worked extremely well. ... In the last two full fiscal years we have received more formal dockets than in the previous four fiscal years. We'd like to focus on speeding things up, responding to the increased volume of activity, and not having to do more detailed allocations of costs by industry, and having to balance at the sub-level." Number 0329 CHAIRMAN ROKEBERG asked Mr. Yould if he has consulted with the main long-distance carriers in Alaska and the ATA [Alaska Telephone Association] about Amendment 2. MR. YOULD replied that although he would not speak for them, he had talked to ATA and would characterize its feeling as positive. He suggested the need to ask ATA that question directly. CHAIRMAN ROKEBERG agreed that the ATA should be asked before taking up Amendment 2. REPRESENTATIVE HALCRO referred to Mr. Yould's earlier testimony about the percentage of the workload of APUC compared to the percentage that ARECA contributes. He asked Mr. Yould to restate those figures. MR. YOULD replied that he didn't have the numbers before him, and those he had provided were probably more hypothetical than not. He said one reason, as Mr. Lohr had noted, is that the APUC doesn't have a time accounting system, despite the fact that two "sunset commissions" have told them that they should have one. Hence, he doesn't believe the APUC can provide those numbers either. Number 0419 CHAIRMAN ROKEBERG suggested that is another problem they should look at. With that, he announced his intention to hold the legislation over and take it up again on Friday [April 30]. Noting that only Amendment 3 had been adopted that day, Chairman Rokeberg requested that Mr. Lohr bring Version I to Chairman Cotten's [Sam Cotten, APUC Chairman] attention and then provide comments. [HB 183 WAS HELD] ADJOURNMENT Number 0491 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 5:17 p.m.