Legislature(1995 - 1996)
03/16/1995 08:10 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 16, 1995 8:10 a.m. MEMBERS PRESENT Representative Jeannette James Representative Brian Porter Representative Ivan Ivan Representative Caren Robinson Representative Joe Green MEMBERS ABSENT Representative Ed Willis Representative Scott Ogan COMMITTEE CALENDAR HB 130: "An Act relating to agency review of public comment on the adoption, amendment, and repeal of regulations; relating to the examination of proposed regulations, amendments of regulations, and orders repealing regulations by the Administrative Regulation Review Committee and the Department of Law; relating to the submission to, and acceptance by, the lieutenant governor of proposed regulations, amendments of regulations, and orders repealing regulations; and requiring agencies to make certain determinations before adopting regulations, amendments of regulations, or orders repealing regulations." HEARD AND HELD HB 163: "An Act requiring an agency to provide compliance cost estimates for proposed regulations, amendments, and repeals of regulations under certain circumstances." HEARD AND HELD HSTA - 03/16/95 *HB 201: "An Act relating to prisoner litigation, post-conviction relief, sentence appeals, amending Alaska Administrative Rule 10, Alaska Rules of Appellate Procedure 204, 208, 209, 215, 521, 603, and 604, and Alaska Rules of Criminal Procedure 11, 33, 35, and 35.1; and providing for an effective date." SCHEDULED BUT NOT HEARD HSTA - 03/16/95 *HB 234: "An Act relating to administrative adjudication under the Administrative Procedure Act." SCHEDULED BUT NOT HEARD HSTA - 03/16/95 *HB 212: "An Act relating to the management and sale of state timber and relating to the administration of forest land and classification of state land." SCHEDULED BUT NOT HEARD HSTA - 03/16/95 *HB 122: "An Act authorizing payment of a portion of the motor fuel tax on boats and watercraft as refunds to municipalities; and providing for an effective date." SCHEDULED BUT NOT HEARD (* First public hearing) WITNESS REGISTER BRUCE CAMPBELL, Administrative Assistant to Representative Kelly Alaska State Legislature State Capitol, Room 513 Juneau, Alaska 99801-1182 Telephone: 465-2327 POSITION STATEMENT: Provided sponsor statement for HB 130 MICHELLE O'LEARY, Vice President Regional Citizens Advisory Council P.O. Box 1052 Cordova, Alaska 99574 Telephone: 424-7758 POSITION STATEMENT: Opposed HB 130 and HB 163 JOHN LINDBACK, Chief of Staff Office of the Lieutenant Governor P.O. Box 110015 Juneau, Alaska 99811-0015 Telephone: 465-5400 POSITION STATEMENT: Expressed Lt. Governor Ulmer's concerns with HB 130 PAM NEAL, President Alaska State Chamber of Commerce 217 2nd Avenue Juneau, Alaska 99801 Telephone: 586-2323 POSITION STATEMENT: Supported HB 130 and HB 163 REPRESENTATIVE PETE KELLY Alaska State Legislature State Capitol, Room 513 Telephone: 465-2327 POSITION STATEMENT: Sponsor of HB 130 BONNIE WILLIAMS, Consultant Bonnie Williams Consultant P. O. Box 82812 Fairbanks, Alaska 99708 Telephone: 455-6652 POSITION STATEMENT: Opposed HB 130 DEBORAH BEHR, Assistant Attorney General Legislation and Regulations Section Department of Law P.O. Box 11030 Juneau, Alaska 99801-0300 Telephone: 465-3600 POSITION STATEMENT: Opposed HB 130 ROD MOURANT, Administrative Assistant to Representative Kott Alaska State Legislature State Capitol, Room 432 Juneau, Alaska 99801-1182 Telephone: 465-3777 POSITION STATEMENT: Provided sponsor statement for HB 163 JACK KREINHEDER, Senior Policy Analyst Office of Management and Budget Office of Governor 240 Main Street, Suite 800 Court Plaza Building Juneau, Alaska 99801-0020 Telephone: 465-4676 POSITION STATEMENT: Opposed HB 130 and 163 PREVIOUS ACTION BILL: HB 130 SHORT TITLE: REGULATION ADOPTION PROCEDURES & REVIEW SPONSOR(S): REPRESENTATIVE(S) KELLY, James JRN-DATE JRN-PG ACTION 01/27/95 157 (H) READ THE FIRST TIME - REFERRAL(S) 01/27/95 157 (H) STA, JUD, FIN 02/14/95 (H) STA AT 08:00 AM CAPITOL 519 02/14/95 (H) MINUTE(STA) 02/14/95 (H) ARR AT 12:00 PM BUTROVICH ROOM 205 02/15/95 396 (H) COSPONSOR(S): JAMES 02/21/95 (H) STA AT 08:00 AM CAPITOL 102 02/21/95 (H) MINUTE(STA) 02/21/95 (H) ARR AT 12:00 PM BUTROVICH ROOM 205 02/22/95 (H) ARR AT 04:00 PM BELTZ ROOM 211 02/22/95 (H) MINUTE(ARR) 02/22/95 (S) MINUTE(ARR) 02/23/95 (H) STA AT 08:00 AM CAPITOL 102 02/23/95 (H) MINUTE(STA) 03/09/95 (H) STA AT 08:00 AM CAPITOL 102 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 163 SHORT TITLE: COMPLIANCE COST ESTIMATES REQUIRED SPONSOR(S): REPRESENTATIVE(S) KOTT,Toohey,Kelly,MacLean JRN-DATE JRN-PG ACTION 02/08/95 272 (H) READ THE FIRST TIME - REFERRAL(S) 02/08/95 272 (H) STA, FIN 02/22/95 456 (H) COSPONSOR(S): KELLY, MACLEAN 02/28/95 (H) STA AT 08:00 AM CAPITOL 102 02/28/95 (H) MINUTE(STA) 03/09/95 (H) STA AT 08:00 AM CAPITOL 102 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 201 SHORT TITLE: PRISONER LITIGATION AND APPEALS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 02/27/95 488 (H) READ THE FIRST TIME - REFERRAL(S) 02/27/95 488 (H) STATE AFFAIRS, JUDICIARY, FINANCE 02/27/95 488 (H) 3 ZERO FISCAL NOTES (LAW, CORR, DPS) 02/27/95 488 (H) 2 ZERO FISCAL NOTES (ADM) 02/27/95 488 (H) GOVERNOR'S TRANSMITTAL LETTER 03/07/95 (H) STA AT 08:00 AM CAPITOL 102 03/07/95 (H) MINUTE(STA) 03/14/95 (H) STA AT 08:00 AM CAPITOL 102 03/14/95 (H) MINUTE(STA) 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 234 SHORT TITLE: ADMINISTRATIVE ADJUDICATIONS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 03/06/95 590 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 590 (H) STATE AFFAIRS, JUDICIARY 03/06/95 591 (H) 14 ZERO FISCAL NOTES (ADM, DEC, F&G) 03/06/95 591 (H) (DHSS, LABOR, LAW, DPS, DOT) 03/06/95 591 (H) (4-DCED, 2-DOE) 03/06/95 591 (H) GOVERNOR'S TRANSMITTAL LETTER 03/08/95 665 (H) ZERO FISCAL NOTE (DNR) 3/8/95 03/14/95 (H) STA AT 08:00 AM CAPITOL 102 03/14/95 (H) MINUTE(STA) 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 212 SHORT TITLE: TIMBER MANAGEMENT SPONSOR(S): STATE AFFAIRS JRN-DATE JRN-PG ACTION 03/01/95 530 (H) READ THE FIRST TIME - REFERRAL(S) 03/01/95 530 (H) STATE AFFAIRS, RESOURCES, FINANCE 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 122 SHORT TITLE: MARINE MOTOR FUEL TAX SPONSOR(S): REPRESENTATIVE(S) MOSES,Grussendorf,Mackie JRN-DATE JRN-PG ACTION 01/25/95 132 (H) READ THE FIRST TIME - REFERRAL(S) 01/25/95 132 (H) STATE AFFAIRS, FINANCE 03/16/95 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 95-27, SIDE A Number 000 The meeting of the House State Affairs Standing Committee was called to order by Chair Jeannette James at 8:10 a.m. Members present at the call to order were Representatives James, Porter, Green, and Robinson. Representative Ivan arrived at 8:49 a.m. Members absent were Representatives Ogan and Willis. HSTA - 03/16/95 HB 130 - REGULATION ADOPTION PROCEDURES & REVIEW CHAIR JEANNETTE JAMES announced the first item on the agenda was HB 130. She called for Bruce Campbell, Administrative Assistant to Representative Pete Kelly, sponsor of the measure, to come and testify on behalf of Representative Kelly. BRUCE CAMPBELL, Administrative Assistant to Representative Pete Kelly, said he was in attendance to ask the committee to adopt proposed draft for HB 130 and to pass the bill out of committee. He said that HB 130 was a small step towards regulation reform, working within the current framework of the regulatory process. Mr. Campbell stated that the bill does two things: 1) Provides for the review of regulations by an elected official; and 2) Gives guidance to those in the administration who must work with the public comment process. He further added that HB 130 attempts to bring public opinion into the regulatory process. Mr. Campbell said he would be glad to answer any questions from the committee. REPRESENTATIVE BRIAN PORTER asked what changes were made in the proposed committee substitute for HB 130, from the original bill. Number 062 MR. CAMPBELL said the changes were small modifications arising from questions coming from the Lieutenant Governor's Office and from comments regarding the fiscal notes. He stated the most substantive change was in Section 6, AS 44.62.215, which would be a new section added. Part (b), lines 14, 15, 16, and 17 have been shortened from four items to two. These state that before an agency adopts a regulation, they shall make a written estimate of the cost of compliance to private individuals affected by the proposed regulation and show that there is an economically feasible means of complying with the proposed regulatory action. Originally, this section had two additional requirements for showing the economic benefits to and economic impact on the state, which was interpreted by some agencies as meaning they would have to hire additional economists to collect this data. This was not the intent of the bill. These two items are still part of the written record provided to the Lt. Governor, and will help give some sense of the requirements of the regulation to those who must comply. He stated that Section 2, page 3, lines 10, 11, 14, and 15, were changed to note the Lt. Governor may return a proposed regulation to the agencies if and when he/she finds that doing so is in the best interests of the state. He said this helps to define the reasons the Lt. Governor may return a regulation to an agency for redrafting. He stated these were the two major changes in the proposed committee substitute for HB 130, and argued the bill still hopes to add light and review to the regulatory process through the Lt. Governor's Office and the legislature's Administrative Regulation Review Committee prior to regulations being signed into law. He further stated HB 130 gives guidelines as to how public comment must be considered by the agencies during the drafting of proposed regulations. Number 156 REPRESENTATIVE JOE GREEN mentioned that HB 130 had picked up an additional fiscal note, which would cost the state an extra $300,000 a year. He asked Mr. Campbell whether he thought the stated objective of this bill was worth the extra expense. He asked what the state would be getting for the extra cost. BRUCE CAMPBELL said it was not their intent to have such a large fiscal note, and that they thought the proposed committee substitute for HB 130 would lower the cost to the state. REPRESENTATIVE PORTER attempted to summarize his understanding of what HB 130 hoped to accomplish in the regulatory process. He said that, as he understood it, the agencies would be required to come up with a cost of compliance estimate for new proposed regulations. These draft regulations would then go to the legislatures Administrative Regulation Review Committee before going to the Lt. Governor's Office for signing into law, where they would receive additional review. Number 193 MR. CAMPBELL responded this bill would require the agencies to prepare a cost of compliance estimate for new regulations, which would be filed by the Lt. Governor as a part of the official record. He further stated that HB 130 would assign the Lt. Governor to send draft regulations to the Administrative Regulation Review Committee prior to their being filed into law, where they would receive additional review if necessary. REPRESENTATIVE PORTER verified that the Lt. Governor was required, by this bill, to delay the filing of new regulations, until receiving input from the legislature's Administrative Regulation Review Committee. MR. CAMPBELL agreed this was the case for a period of time. REPRESENTATIVE PORTER asked what would keep this proposal from delaying the regulatory process to the point it was not manageable. MR. CAMPBELL said it would require some legwork and cooperation between the Administration and the legislature's Administrative Regulation Review Committee. In the case of an emergency regulation, this bill would not apply. He suggested that we currently have a similar situation in the review of regulations by the Department of Law, which has no set time frame. He said they were trying to give the Administrative Regulation Review Committee a set time period in which to do their review, but if this period were considered too long, it could be negotiated. He stated this period was currently set at 90 days in the proposed committee substitute for HB 130. Number 250 REPRESENTATIVE PORTER asked if he thought the cost of compliance review would add time to the regulatory process. MR. CAMPBELL said no, as he thought the cost of compliance questions would come up largely in the public hearing comments. REPRESENTATIVE GREEN asked if there was a default mechanism in the review process of the Administrative Regulation Review Committee, if they did not respond within the designated amount of time. MR. CAMPBELL said this was the case. Number 275 REPRESENTATIVE CAREN ROBINSON asked for an explanation of how the sponsor had addressed the concerns of the Department of Law regarding this bill. As an example, she said one of their concerns was about the fast pace in which regulations needed to be written, and they were concerned this bill would delay that process. MR. CAMPBELL responded that the current process was not instantaneous and takes a certain amount of time. He stated HB 130 would extend this process by a period of time for review of the regulation by the committee, but that this phase could probably be quickened upon request from the public. Mr. Campbell said they would have to anticipate the amount of time needed for this, just as they need to anticipate the delays in the current process. REPRESENTATIVE ROBINSON verified that the bill clearly identified it was the legislature's regulation review committee, who would be conducting this review. MR. CAMPBELL stated it was, and that this committee was called the Administrative Regulation Review Committee. REPRESENTATIVE ROBINSON was confused if it was the legislature's committee, why was the word "administrative" included in the title. She said this made it unclear as to whose committee it was. Number 295 CHAIR JAMES responded that this was the language of the existing statutes and not the language of this particular bill. She said the reason for this title was that the committee was reviewing administrative regulations. She said this committee is a joint committee of the House and Senate. REPRESENTATIVE ROBINSON stated she was familiar with the committee and knew there were considerations of disbanding it, as it had no function. She said she supposed this bill was trying to give it a function. CHAIR JAMES responded the original purpose of the committee, related to a statute which allowed the legislature to annul a regulation by a resolution. This was then deemed unconstitutional by the courts and so the committee has been left without a function. REPRESENTATIVE ROBINSON asked why this bill would not then be considered unconstitutional. Number 334 MR. CAMPBELL replied that this bill does not deal with the annulment of regulations at all. That was a much larger issue covered by HB 105 and HJR 1. REPRESENTATIVE ROBINSON continued by stating that another concern of the Department of Law, was that this bill gave authority to the Lt. Governor to return regulations to the agencies, who may not know what the problem is. She wanted to know how the sponsor proposed to deal with this problem and how the agencies would know why the regulation was returned. MR. CAMPBELL said that he could not believe that this would be the case, as the agencies would be directly involved with the public hearing process and would be exposed to the concerns and complaints. He stated the problems which arose in the past, were when a Lieutenant Governor acted on their own discretion without the delegated authority, such as former Lt. Governor Steve McAlpine. He said Mr. McAlpine did refuse to sign regulations which he thought had problems. He added that in the past Administration, the ability of the Lt. Governor to stop and review regulations was granted by the Governor, which was later taken away. Therefore, he thought that when the legislature grants this authority, this conflict would be removed and it would become a part of the normal regulatory process to get the regulations signed into law. Number 375 REPRESENTATIVE ROBINSON stated she thought it was strange to allow the Lt. Governor to send the regulation back without an explanation. She thought that maybe this explanation should be in writing and recommended changes. MR. CAMPBELL argued that the phrasing "best interest finding" has a certain legal definition, which requires a certain type of decision making by the Lt. Governor before he/she returns a regulation to the agency. He thought that although this may not be as strong of language as the Department of Law would like, there is a particular reason established by this bill, as to why a regulation may or may not be returned. Number 400 REPRESENTATIVE ROBINSON asked why this bill was trying to preclude the agencies from considering public policy concerns arising from public comment, which was the opinion of the Department of Law. She thought that one of the main concerns of the regulatory process was the perceived lack of listening to public concerns by the agencies. MR. CAMPBELL disagreed with the Department of Law's interpretation of HB 130 on this point. He said they were not trying to preclude the agencies from taking public comment, but that in the preparation of the draft regulation from public comment, they are asking the agency to create a written record of what comments they evaluate and how the regulation has changed accordingly, but are restricting them to evaluate only factual or substantive comments in the drafting of the regulation and not the preferences of individuals on the issue. He argued that the agencies task in writing regulations were to make specific and add details to the laws passed by the legislature and not to be a legislative body of its own. He said they were not delegated the authority by the legislature to pass judgement on a particular statute, but only the ability to add detail to implement a given statute. The weighing of public will in developing policy was properly the purview of the legislature and not the agencies. Thus, HB 130 was an attempt in assisting the agencies in how to deal with public testimony during the regulatory process. Number 455 REPRESENTATIVE GREEN said he was concerned about what would happen if the regulations were given to the Administrative Regulation Review Committee for review during a time when the legislature was not in session, and may not be able to respond in the allowed 30 day time period. MR. CAMPBELL stated he thought that for the bulk of regulations that were well written, this would not matter. He said this question hinged mainly on whether this committee was to be an interim committee. He suspected that if a particular regulation developed enough public concern, the committee would avail itself of the opportunity to offer its suggestions regarding the regulation. CHAIR JAMES invited Representative Kelly to come sit at the committee table. She added that there was a person wishing to testify via teleconference from Cordova. Number 490 MICHELLE O'LEARY, Vice President of the Prince William Sound Regional Citizens Advisory Committee, said she wanted to commend the legislature's effort to insure that regulations are clearly written and to provide a user friendly mechanism for consistently implementing state law through the regulatory process. She agreed that laws should be written to minimize the burden of regulations, while maximizing the public welfare. She added that both HB 130 and HB 163 contain provisions, which require the private costs imposed by regulations to be analyzed and agencies stipulate in writing that there is an economically feasible means of complying with the regulation. She said she questioned whether agencies would be able to make this determination. She thought that one of the results of recent environmental regulations, was the large and thriving environmental compliance industry. Ms. O'Leary said the technological growth of this industry was astounding, and the result of and not the cause of environmental laws and regulations. She stated that when a new law is written, there is often a significant time lag before regulations are written and compliance is required. During this time, the highly competitive environmental compliance industry researches ways to bring the regulated industry into compliance. She said it was not uncommon to have the compliance dated postponed to meet the requirements of stringent environmental laws. Ms. O'Leary thought that in most cases the agencies would have no means of knowing what compliance technologies would be developed or what technologies would be selected by the regulated industry. She was also disturbed that both HB 130 and HB 163 require a cost of compliance by private parties only, and not a cost-benefit analysis for the general public. Ms. O'Leary thought it was generally agreed that it was the role of government to restrict private actions only if the cost of these private actions are excessive or pose a risk to the general public. She thought that if laws were passed only if their was a public risk, then it made little sense to measure only the private cost of compliance. Ms. O'Leary further argued that a subjective analysis of these costs should be calculated before a law is passed and should not totally be the burden of the regulatory process. Speaking specifically about HB 163, she wanted to note that agencies were required, when providing public notice to provide the reason for the proposed regulation, the initial cost to the state agency for implementation, the annual cost to the state agency for implementation, and the cost of compliance to private parties. She believed that the annual cost to the agency for implementation should be included in the fiscal notes passed with the enabling legislation. She added that HB 163, requires the agencies to calculate the initial cost of compliance to private individuals, if the proposed regulation will increase compliance costs. Ms. O'Leary again argued that it was wrong to calculate only the costs of compliance and not the cost-benefit ratio for the general public. Speaking about HB 130, she was concerned that this bill set up the Lt. Governor's Office as a vehicle for the return of regulations by the legislature. She thought that maybe this would be making the legislature a judiciary body, and whether it should have this right. She was also concerned that nothing in HB 130, required the Lt. Governor to take public testimony after a draft regulation was returned with suggestions from the Administrative Regulation Review Committee. She was concerned this would set up a system whereby the public could testify on a proposed regulation, only to have it modified with no apparent recourse for the public. Again, with HB 130 as with HB 163, she was concerned that the bill required only a private cost of compliance estimate and not a cost-benefit ratio for the general public. Finally, Ms. O'Leary was concerned with the provision of HB 130, which would require that an agency consider only testimony that was substantive and factual, and not an expression of personal preference. She was concerned this would limit the ability of the public to participate in the legislative and regulatory process. CHAIR JAMES asked if anyone in the audience wished to testify on HB 130. Number 600 JOHN LINDBACK, Chief of Staff for Lt. Governor Fran Ulmer, stated that Lt. Governor Ulmer felt pretty ambivalent towards HB 130 and would like all of the regulation reform bills to be a topic of discussion over the interim, as is the case with HB 105. Lt. Governor Ulmer feels that this will help to create a coordinated approach towards regulation reform, and will build a consensus between the Administration and the legislature. In a letter to the bill sponsor, Lt. Governor Ulmer expressed her concerns over the lack of specificity in HB 130, as to why the Lt. Governor should return a regulation to the agencies. She would like to see more specific reasons listed in the bill, and would be more than willing to work with the legislature to develop this language. He said the Lt. Governor is also concerned with the legal issues brought up by the Department of Law, regarding HB 130, and would like to see them thoroughly researched by the various committees hearing this bill. Number 628 CHAIR JAMES asked if anyone else would like to testify on this bill. PAM NEAL, President, Alaska State Chamber of Commerce, stated that the Chamber of Commerce was generally supportive of HB 130. She said they are particularly supportive of the requirement that the agencies speak to public comment and how it was dealt with. She added that one of their concerns, over the current regulatory process, was that the business community was not always aware of whether they were heard by the agencies, and if not, why not. They also agreed that elected officials should be the ones responsible for regulations. Finally, the chamber believes very strongly that regulations should reflect the intent of the legislature. REPRESENTATIVE ROBINSON asked what the chamber's view would be towards putting all of the proposed regulatory bills into a subcommittee for review and public hearings over the interim. MS. NEAL said that the chamber was concerned that if they were to put all of the bills into a subcommittee to address the overall concern, that the problem was so large, there would be no steps towards reform. Thus, they would rather take the approach of taking small steps and whittling away at the problem, while the overall solution was addressed and developed. They did not see where HB 130 would negate any of the other proposals towards regulatory reform, and so were satisfied with pushing it forward while the overall solution were developed. Number 694 REPRESENTATIVE ROBINSON asked if the chamber had looked at the concerns of the Attorney General's Office or those of the Lt. Governor's Office, and whether they thought it was wise to push an incomplete bill through the legislative process, which may end up getting vetoed in the end. PAM NEAL replied that they had not gotten to look at the Attorney General's letter, but added that they were strongly in favor of HJR 1, which would call for a constitutional amendment to annul regulations. Their main focus was to develop a regulatory process, which was user friendly and developed regulations which met legislative intent and only those that were necessary. TAPE 95-27, SIDE B Number 000 REPRESENTATIVE ROBINSON asked Representative Pete Kelly, the bill sponsor, about the concerns that HB 130 would limit public testimony in the regulatory process. REPRESENTATIVE PETE KELLY responded that there were two processes occurring. The agencies would weigh the factual and scientific merits of the enabling legislation in developing new regulations, leaving the weighing of public will to the legislature, through the Administrative Regulation Review Committee. He felt that it was in this committee, that it would be the proper place to review both public will and the scientific merits of the regulation. He felt that this was the proper way to weigh public testimony, as the employees of the agencies are not elected officials. Number 018 REPRESENTATIVE ROBINSON stated that she was still confused about the section that would preclude the agencies from weighing public comment that was not factual. REPRESENTATIVE KELLY argued that she was in charge, as a legislator, of public policy. He said an employee of an agency is not. Their job is to take the public policy of the legislature, with the approval of the governor, and to draft a regulation for implementing this policy based on the facts. Furthermore, he added there was nothing in statute currently that directed the agencies as to how to deal with public testimony and comments. This bill, would give guidelines to the agencies as to how to take public testimony, and to leave a paper trail of how they responded to this testimony. It provided guidelines as to what was the purview of the legislature and that of the agencies. Number 070 CHAIR JAMES said she wanted to clarify why two of the regulatory reform bills were out of the subcommittee and back before the House State Affairs Committee. She said the decision of the subcommittee was to take one of the three bills, HB 105, and hold it over the interim to try and work out a comprehensive reform of the regulatory process with the public and the Administration. They decided to take HB 130 and HB 163 and forward them through the legislative process on their own merits. Chair James said of that day, she would be filing a fourth regulatory reform bill, which would establish the sunset provisions and legislative oversight of regulations as discussed in committee. REPRESENTATIVE PORTER wanted to clarify that part of the review of the Administrative Regulation Review Committee would include making sure that the proposed regulation met the intent of the legislature with the enabling statute. REPRESENTATIVE KELLY responded this was absolutely true. CHAIR JAMES wanted to recognize the arrival of Representative Ivan to the committee and added that Bonnie Williams was on teleconference to testify. Number 125 BONNIE WILLIAMS, political consultant and former Chair of Governor Hickel's Task Force on Regulatory Reform, stated she was not sure how this bill would reform the regulatory process. She thought the bill would extend the current process by adding another layer. She further was concerned that the cost analysis and statement of economic feasibility occurred after the public comment, which made them simply assertions of the agency and not valid estimates. This she felt limited public comment or correction of the calculations. She further pointed out there was no cost-benefit analysis required. She also commented that she saw nothing in HB 130, which met any of the recommendations of the regulation reform task force. She said she was particularly concerned that if this bill passed, the legislature would believe they had accomplished regulation reform, and nothing further will occur. She again stated she could not accept HB 130 as regulatory reform. Number 166 REPRESENTATIVE KELLY said he wanted to clarify the cost analysis was a part of the regulatory process, and the intent was to have them completed before the draft regulation goes to the Lt. Governor, so that they and the Administrative Regulation Review Committee can be better informed regarding the costs of the regulation. He did not feel that the cost of compliance analysis was done necessarily after the public comment period, but he would check this point out and try and address it in the bill. CHAIR JAMES asked if there was any other comments or anyone else wishing to testify. REPRESENTATIVE ROBINSON stated that Deborah Behr was present from the Attorney General's Office and that she would like the opportunity to ask Ms. Behr some questions. CHAIR JAMES called for a brief at ease. Number 183 CHAIR JAMES called the meeting back to order. REPRESENTATIVE ROBINSON commented that she too wanted appropriate regulation reform, and when she looked at the surface of the bill it sounded good. Her concerns were raised when exploring the legal issues raised by the Attorney General's Office, as well as the level of public comment allowed by this bill. Thus, she would like to address some of these concerns with Deborah Behr of the Attorney General's Office. Number 200 DEBORAH BEHR, Assistant Attorney General, Department of Law, and the Executive Branch, said she was pleased to be able to offer comments before the committee on HB 130. She said she was concerned about the constitutional issue of separation of powers. She stated that in the original version of HB 130, it read that the Administrative Regulation Review Committee had 30 days in which to review a draft regulation and could apply to the Lt. Governor for additional time if needed. She was concerned that this could be interpreted legally as a "pocket veto" of the regulatory process. In the proposed committee substitute, she noted there was an attempt to address this concern on page 3, lines 7, 8, and 9, by saying after the 30 days were over, if the committee needed more than 90 days to provide its comment on a proposed regulation, it must provide the Lt. Governor with a date of when this comment would be ready. She said this was an improvement, but she was not sure this would withstand a constitutional challenge under ALIVE Voluntary. She was also concerned about the bill's delegation of legislative powers to a subcommittee of the legislature in the form of the Administrative Regulation Review Committee. Ms. Behr said a few members of the committee cannot possibly represent the views of all 60 members of the legislature. She said this again would not withstand constitutional challenge in the courts, because it was an impermissible delegation of legislative power to a committee of the legislature. Number 280 REPRESENTATIVE PORTER asked to verify what she meant by setting out parameters for what. MS. BEHR said she meant that an agency can go no farther in drafting a regulation than the parameters set out by the legislature in a statute. She offered an example of a law regarding the maximum speed limit allowed in the state. If the legislature wanted the maximum speed limit to be 65 miles per hour, they would put this in a statute and the agencies would be limited by it. However, the statute said the Executive Branch may set a maximum speed limit of 65 miles per hour, they could exceed this limit if they chose to do so. Thus, tighter statutes limit the ability of the Executive Branch to go beyond the wishes of the legislature. REPRESENTATIVE ROBINSON pointed out that under HB 130, even the sponsor of the bill may not have the opportunity to express their intent, which may be different than that of the Administrative Regulation Review Committee. MS. BEHR agreed, saying that even the sponsor's intent may change as the bill goes through the legislative process, and so the courts say they look at the record as a whole to interpret legislative intent. She said that she would like to echo that this bill should be a project of the interim and she would be willing to work with anyone over the summer on the regulation reform issue. She said she was also concerned about the ability this bill gives to the Lt. Governor to return a regulation that the Governor and their staff may want, as the Governor is constitutionally the chief executive of the state. She thought that this could arguably be considered unconstitutional. She thought that maybe a way around this was to give this authority to the governor who could then delegate it to the Lt. Governor and revoke it if a problem arose. She added she was also concerned about the bill's changing the position of boards and commissions, as she thought most people valued the time and input of these citizen groups. Currently, the regulations promulgated by many of these groups are final, and cannot be sent back by the Governor or the Lt. Governor. Thus, any limiting of the abilities of the citizen groups to promulgate regulations ought to be something that the legislature did intentionally and not as an accidental oversight, as she suspected was happening with HB 130. Finally, she wanted to express her concern about limiting the ability of the agencies to consider public policy while drafting new regulations. Also, Ms. Behr indicated was concerned about additional steps in the regulatory process that may open the state up for litigation. As an example, she suggested that a problem with HB 130 was the cost of compliance requirement, which did not define cost. The question she had was how far down the line the agency should go in determining costs. Do you look to the cost to the private business or do you go to the cost to the consumer who buys that product? She said she would be willing to answer any questions. Number 367 REPRESENTATIVE GREEN shared his concern over whether there was a default mechanism that would limit how long the Administrative Regulation Review Committee may review a proposed regulation. He stated that he had thought from the testimony of the bill sponsor's aid, that this time was limited, but that Ms. Behr had concluded that this time could be extended indefinitely. Thus, he had some reservations about that part of this bill. MS. BEHR commented she wanted to make sure there was no confusion, that the proposed committee substitute for HB 130 did set a firm date of when this review would be completed, but that it could go on for an extended period of time such as two to three years. Thus, she thought this section was still problematic and would not withstand a court test. CHAIR JAMES asked if there were anyone else who wished to testify on this bill. Hearing none, she asked what the committees intention was regarding the passage of this bill to the next committee of referral. Number 387 REPRESENTATIVE PORTER moved to adopt the proposed committee substitute for HB 130, version M, as the working document for consideration by the committee. CHAIR JAMES asked if there were any objections. Hearing none, the committee substitute was adopted for consideration. She added although she would like for only good, cleaned up bills to leave this committee, that some of the legal problems of HB 130 might better be considered in the Judiciary Committee, which was the next committee of referral. She stated she did not want to impose any of her views on the committee, and so would like the committee as a whole to make that decision. Number 407 REPRESENTATIVE IVAN IVAN apologized for missing the testimony of Deborah Behr from the Attorney General's Office, as he had some questions for her. He said he could give her a call later. CHAIR JAMES mentioned that this bill had two more committees of referral, and so maybe some of their questions could be answered in those committees. She stated she felt a little uneasy in sending a problematic bill forward to the next committee, but had done so in the past and so had unfortunately set the precedent already. REPRESENTATIVE ROBINSON wanted to say she felt very strongly that we should keep all bills dealing with regulation reform in this committee as an interim project to try and come up with an overall solution towards regulation reform. She felt that Chair James had made the right decision in holding her own regulation reform bill, HB 105, as an interim project and urged the committee to do so with this bill as well. REPRESENTATIVE IVAN commented that he was perfectly willing to have his question answered at the next committee of referral. Number 442 REPRESENTATIVE PORTER stated he did not have any problem with addressing the legal issues raised by HB 130 in the judiciary committee, but that he felt there were some issues, such as further refinement of the definition "best interest of the state" and the issue of defining cost of compliance, that he thought would be better answered in this committee. REPRESENTATIVE ROBINSON agreed, further arguing that an additional concern of this committee was the proper role of the Lt. Governor. CHAIR JAMES asked what the committee would like to do regarding passage of this bill to the next committee. Number 471 REPRESENTATIVE IVAN moved to pass this CSHB 130(STA), with attached fiscal notes, to the next committee of referral. CHAIR JAMES asked if there were any objections. Representative Robinson objected, and so Chair James asked for a roll call vote. During the vote, Representative Green had some further questions he would like to have answered before voting. The vote was interrupted to answer these questions. His concern was whether the Judiciary Committee would consider all of the concerns raised in this committee or just those of a legal nature. CHAIR JAMES asked for Representative Porter to answer this question as the chair of the Judiciary Committee. REPRESENTATIVE PORTER responded that knowing the scheduling of the Finance Committee, he would hope that all of the concerns raised here would be settled either in Judiciary or this committee. REPRESENTATIVE KELLY replied that he would gladly offer a committee substitute for responding to most of the concerns raised, as he thought they were legitimate concerns that needed to be dealt with. REPRESENTATIVE IVAN offered to withdraw his motion to pass this bill out of committee, if there were concerns over issues that should be dealt with in this committee. He said he did not mean to put forward a divisive motion to the committee. Number 538 CHAIR JAMES tried to summarize the concerns raised in this committee, as a combination of judicial and policy issues. She wanted to verify that it was not just the judicial issues that were of concern to the committee, but policy issues as well. REPRESENTATIVE IVAN also asked for this verification of the concerns. CHAIR JAMES called for verification of these concerns of the committee. REPRESENTATIVE IVAN thought that he was hearing that the concerns were over policy issues as well as judicial concerns, and stated he would like policy concerns settled in the State Affairs Committee. Thus, he wanted to withdraw his motion to pass the bill on to the next committee of referral. REPRESENTATIVE PORTER thought that keeping the bill in this the State Affairs Committee would not amount to a substantial delay in moving this bill through the legislative process, as those concerns would have to be dealt with in any committee. He felt that policy issues would be better dealt with in this committee, as it seemed to be the focal point of the regulation reform issue. He thought that many of the concerns could be fixed rather easily. CHAIR JAMES asked bill sponsor, Representative Kelly, how much time he felt it would take him to try and fix some of the concerns of the committee, so that it could be rescheduled for consideration. She wondered whether it could be scheduled for the next committee meeting on Saturday. REPRESENTATIVES PORTER and KELLY stated that they would both be tied up in the Finance Committee on Saturday. REPRESENTATIVE ROBINSON thought that maybe it could be held until the Tuesday meeting, and that the bill sponsor could try and address as many of the concerns as possible before that meeting. She thought that getting the bill as refined as possible before passage from the State Affairs Committee, would help it to move through future committees faster as well. REPRESENTATIVE PORTER wanted to clarify that he was not concerned about dealing with the legal issues in the Judiciary Committee, but thought that the policy issues were best handled in this committee. Number 593 REPRESENTATIVE IVAN stated he wished to withdraw his former motion to pass this bill to the next committee. CHAIR JAMES asked if there was any objections. Hearing none, the motion was withdrawn. She asked Representative Kelly how soon he thought he could come back to the committee with corrections to his bill. REPRESENTATIVE KELLY expressed his concern that the Department of Law had waited until now to share their concerns with HB 130, as they have had copies of the bill and have been corresponding with his office for a couple of months. He thought that maybe it was not in their best interest to support a bill, which might limit their power in the regulatory process. He stated he would gladly draft amendments to try and address the concerns of the Department of Law, but wondered how long it would take them to respond. He argued the legislature could be forced to study regulation reform indefinitely, if it continued to try and get approval from the administration and the agencies. He thought that maybe these concerns should be pushed through the committee process and force the administration and the agencies to respond on the legislatures time frame. Thus, he urged the committee to make a decision on the bill, whether it meant voting in favor or opposition. Otherwise, he feared the Administration could drag its feet indefinitely. He stated he could offer a committee substitute very quickly, but did not know whether it would be to the administrations liking. Number 629 REPRESENTATIVE ROBINSON disagreed, saying she had not had bad luck in dealing with the Department of Law. She did not feel that there was such strong opposition from the Department of Law in dealing with these concerns. She said that did not mean they would agree with the committee's decision, but that they would work with the bill sponsor and the committee. REPRESENTATIVE KELLY said he would try and address the concerns by Saturday's meeting. CHAIR JAMES thought this was a good idea to hold the bill until Saturday, so that these concerns could be addressed. She felt that should the vote be called now, the bill would probably die, if these concerns were not addressed. Thus, she was glad to hold the bill over until the Saturday meeting. She asked if there was any objections from the committee. Hearing none, the bill was held over. HSTA - 03/16/95 HB 163 - COMPLIANCE COST ESTIMATES REQUIRED CHAIR JAMES announced the next bill on the agenda was HB 163. Number 650 ROD MOURANT, Administrative Assistant to Representative Pete Kott, expressed that apologies of Representative Kott for being unable to attend the meeting himself. He said that HB 163 takes the recommendations of the Alaska Mineral Commission, the National Federation of Independent Business, and excerpts from the Department of Law's drafting manual of 1993, and puts into statute the requirement that an agency prepare a cost of compliance estimate, when publishing notice to adopt or repeal a regulation. He added that the fiscal notes for the bill range from zero to $178,000, which seemed to be differing understandings from the agencies of what the bill required. He pointed out that the Department of Health and Social Services, who adopts an enormous amount of regulations and works closely with their constituencies, gave a fiscal note of zero, while the Department of Environmental Conservation estimated a fiscal impact of $178,700 with the hiring of three more full time employees. He stated the Department of Revenue cited reasons that precluded them from calculating a cost of compliance estimate, and felt that the legislature should pay this cost anyhow. He offered to answer any questions. Number 673 REPRESENTATIVE ROBINSON asked if he had seen the letter from Michelle O'Leary and whether he had any comments on it. MR. MOURANT informed her that he had seen the letter just recently and had heard her testimony on teleconference. He argued that most of her concerns about HB 163 were already present in existing law. He stated the only thing that this bill will do, is take the suggestion of the 1993 Department of Law drafting manual for regulations and put it into statute as a requirement. He commented that with regard to her second concern, regarding the additional cost to the agency for doing this calculation, is essentially a mute point. This is because the agencies should have no additional cost for complying with this bill, if they are following the suggestion in the drafting manual from the Department of Law. TAPE 95-28, SIDE A Number 000 CHAIR JAMES inquired whether Bonnie Williams wanted to testify on HB 163 via teleconference from Fairbanks. BONNIE WILLIAMS stated she had one comment regarding HB 163. Unlike HB 130, this bill clearly specifies that the cost of compliance happen before the public hearing. She thought the cost of compliance definition in this bill could also be interpreted to be a cost-benefit analysis as well, and said she had no problem with this bill. CHAIR JAMES asked if anyone else wished to testify on this bill. JACK KREINHEDER, Senior Policy Analyst, Office of Management and Budget, thought this bill raised some of the same concerns as HB 130. He said that simple changes that had a lot of common sense appeal, deserved to be well thought out. He reiterated the concerns of the Department of Law, that regulations lacking cost estimates or with insufficient cost estimates will be a substantial source of future litigation. He thought that even if a department makes a good faith effort to comply with calculating a cost of compliance analysis, they could still be challenged in court. He remarked the Administration had no problem with the concept of considering the impact of regulations on the public. He thought this was the intent of the language in the drafting manual, that wherever possible, the agencies should try to minimize those costs of compliance. He thought the problem with HB 163, as it is currently written, is that it creates an extra expense for the agencies in doing this calculation and can be exploited by anyone opposed to regulations. Number 110 CHAIR JAMES stated she was trying to visualize what happens now when a regulation is drafted and is interested in the recommendation for doing a cost of compliance analysis in the Department of Law's drafting manual. She thought the advantage of HB 163, in making that recommendation a requirement, is that this information would then be a matter of public record. This would then give the public the opportunity to dispute the calculations of the agency during the public hearing. She said she could understand the concern that this could lead to future litigation, as every time you add a layer to the process and further definition to the regulation, you give greater latitude and cause for a lawsuit. She thought that by leaving the regulation more open, you give less cause for lawsuit. She thought the fact still remained though, that under the current system, we are not providing any standard of how it should be done, just recommending that a calculation of cost compliance be done. Number 152 REPRESENTATIVE PORTER commented that he thought this bill just needed a provision that said if an agency makes a good faith effort at establishing the cost of compliance, they will not be held liable short of gross negligence for the results of that effort. This would take care of any concern of future litigation caused by this bill. MR. KREINHEDER stated he thought this was a good suggestion, but he would like to consult with the Department of Law. He thought there could be a problem with a statute that puts something off limits to legal challenge. REPRESENTATIVE PORTER pointed out that this would not put it off limits to legal challenge, but just set up parameters that would have to be met in any legal challenge. To challenge in court, an individual would simply have to establish gross negligence in their case. MR. KREINHEDER thought this might solve the legal issues, but would not solve the issue of additional cost to the agency. He found it impractical to assume the agencies could do a proper cost analysis for everyone who could possibly be affected by a regulation. He cited an example given by the Department of Fish and Game, where they could propose a regulation setting the size of fishing gill nets, and for them to follow the letter of the law, they would have to survey the fishermen to determine who owned that size net and who would have to purchase one, the total number of fishing vessels, etc. Thus, he was concerned that even with the allowance of a good faith effort by the agency, that the legislature not pass a law that would simply be a charade, or which agencies would have no choice but to give lip service to. He thought there were numerous examples to document that agencies could not possibly no all of the people, who would be affected by a given regulation. Additionally, many regulations do not prescribe what steps an individual must follow to be in compliance with the regulation. Number 229 CHAIR JAMES commented she had a different interpretation about what this cost of compliance analysis really meant. She felt that, to use his example of the fisherman's gill net, the agency would calculate the cost of a new gill net for the fisherman who needed to purchase one, and then any savings the fisherman would experience. In summary, she felt a cost of compliance calculation was the cost to an individual involved in a particular industry, not the cost to the industry as a whole. Thinking in terms of a cost benefit analysis, the cost of compliance to the individual would be weighed against the benefit to the state as a whole, which would give direction to the state as to how to act in a given situation. She said it was the measurement of the cost of compliance verses the benefit to the state, and whether we were willing to accept that cost for that benefit. REPRESENTATIVE PORTER said he was of the opinion that the Administrative Procedures Act had acted properly and withstood challenge with regards to notice and putting those that will be affected on notice about a proposed regulation. Thus, he did not feel there would be the type of problem where the agency would have to ask every fisherman whether they had a particular size of gill net. He argued the agency would have to make the same type of notification that was required now, and with a good faith effort to listen to the testimony and then use logic to determine the cost of implementation or compliance. He did not think it was that hard. He thought that an agency listening to public testimony was good for everyone. If everyone tried to make it work, there is a way to do it. Number 295 REPRESENTATIVE IVAN questioned whether these regulations could be made flexible to allow the small businesses adjust to the costs of the first year of implementation. MR. KREINHEDER explained that he was reading the language of the bill differently, as implying that the agency would have to calculate the cost of compliance for the whole industry, not just for an individual involved in that industry. CHAIR JAMES agreed, saying she thought this was the cost of compliance for the individual, and she felt the language was prohibitive for anyone to interpret it differently, except as an individual person who will be regulated by the proposed regulation. That is the relative cost to determining whether a regulation will put a person out of business or not. She asked if anyone else would like to testify. Number 336 PAM NEAL, President of the Alaska State Chamber of Commerce, stated the chamber was very much in support of the legislation. It was a prime concern of the chamber and they felt quite basic. No business decision is made without a cost-benefit analysis. She added that no one questioned the benefit of proposed legislation being accompanied by a fiscal note, before being voted upon. It seemed very basic that an agency proposing a new regulation should do an analysis of the cost of compliance. Thus, they were very much in support of HB 163. REPRESENTATIVE ROBINSON asked how this bill would help her as a business person in Alaska. She argued that even if she knew the cost of a particular regulation, she would still have to comply. Therefore, she failed to see the benefit of this bill. Number 370 REPRESENTATIVE PORTER thought the benefit of this bill would be in the agency having to justify the cost of their regulation showing there would not be a more efficient way to comply. CHAIR JAMES agreed, saying that by making this calculation a requirement, it would allow the public the opportunity to comment if the they feel the cost benefit ratio is out of sync. She felt the agencies should give the public all of the information available to be able to make a decision of whether they supported the regulation or not. MS. NEAL concurred, saying if the cost were not known to the business community, they could not adequately make a decision about a particular regulation. She felt this bill was extremely basic, and failed to see why it had not been done before. Number 414 REPRESENTATIVE PORTER agreed with the intent of this bill, but felt the reason this has not been done before is the concern over litigation. He thought this could be fixed easily, and requests the sponsor to amend HB 163 with the previously suggested wording regarding gross negligence. CHAIR JAMES asked the bill sponsor if they would be willing to draft an amendment to HB 163, as suggested, and bring the amended draft to the committee for consideration in a future meeting. Number 429 MR. MOURANT said the sponsor would have no problem with drafting an amendment, but would prefer the committee not hold the bill from passing to the next committee. REPRESENTATIVE PORTER thought that in fairness, because the committee had held HB 130, they should also hold HB 163 as they dealt with similar issues. MR. MOURANT thought he should reiterate the complaint of the previous bill sponsor, that there had been former committee meetings and a work session, where these bills were discussed and no one from the Department of Law had expressed their concerns. Thus, he to felt this could be intended to stall the passage of these bills, and so was not sure how much cooperation he would receive in getting this information from the Department of Law. Additionally, he argued that no one from the Department of Law and the Office of Management and Budget had contacted Representative Kott or his office to express their concerns in advance. Thus, he stated that bureaucrats have a way of holding up and killing any bill that they desire. REPRESENTATIVE ROBINSON thought they had testified earlier at a former committee meeting about their concerns. CHAIR JAMES said she did not recall if they had or not. She would have to review the record. REPRESENTATIVE ROBINSON stated she would like to see not just a calculation of the costs of compliance, but some type of relief for extraordinarily large costs. She could understand if this bill were not the proper vehicle for achieving this, but she would like to see it accomplished. MR. MOURANT agreed this bill does not provide relief by itself, but said it does provide the opportunity for the private sector to express their concerns while the regulation is still being drafted. Number 482 REPRESENTATIVE PORTER thought that maybe the committee could work to adopt wording in this bill, that would insure that it was understood the agencies were not required contact everyone who could be possibly regulated, but just a sample cross section of those effected. CHAIR JAMES asked how the committee wished to handle this bill. REPRESENTATIVE PORTER suggested the committee hold this bill until corrected, as they had previously done with HB 130. CHAIR JAMES agreed, and asked Representative Porter if he would be willing to assist in drafting the suggested language. REPRESENTATIVE PORTER said he would help to draft the needed language. Number 498 CHAIR JAMES asked if there were any other comments from the committee. She mentioned she was concerned about the large fiscal notes on this bill. She did not think the fiscal notes were a proper reflection of the costs of this bill. REPRESENTATIVE PORTER thought the fiscal notes could be a result of the agencies misunderstanding what the bill required of them. Maybe by clarifying the language of bill, they could get fiscal notes that more properly reflected the costs of the bill. ADJOURNMENT CHAIR JAMES adjourned the meeting at 10:23 a.m.