Legislature(1995 - 1996)
04/06/1995 08:12 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE April 6, 1995 8:12 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Scott Ogan, Vice Chair Representative Ivan Ivan Representative Brian Porter Representative Joe Green Representative Caren Robinson Representative Ed Willis MEMBERS ABSENT None COMMITTEE CALENDAR HB 267: "An Act relating to review and expiration of regulations; and providing for an effective date. PASSED OUT OF COMMITTEE SB 92: "An Act requiring that, in addition to its operating budget, all activities of the Alaska Housing Finance Corporation are subject to the Executive Budget Act. HEARD AND HELD HB 232: "An Act establishing an economic development tax credit; and providing for an effective date. SCHEDULED BUT NOT HEARD * HB 241: "An Act relating to the use of a candidates campaign account. SCHEDULED BUT NOT HEARD HB 218: "An Act relating to the payment of certain trucking operators. SCHEDULED BUT NOT HEARD (* First public hearing) WITNESS REGISTER MIC MANNS, Representative Paradise Valley Mining and Development Corporation Bettles, Alaska 99726 Telephone: 479-5704 POSITION STATEMENT: Supports HB 267 SHEILA PETERSON, Special Assistant Office of the Commissioner Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: 465-2803 POSITION STATEMENT: Testified on HB 267 DALE ANDERSON, Representative Commercial Fisheries Entry Commission 880 Glacier Highway Juneau, Alaska 99801 Telephone: 789-6160 POSITION STATEMENT: Opposed HB 267 DEBORAH BEHR, Assistant Attorney General Legislation and Regulations Sections Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Opposed HB 267 BOB BARTHOLEMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: 276-5364 POSITION STATEMENT: Opposed to HB 267 ELMER LINDSTROM, Special Assistant Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 Telephone: 465-3030 POSITION STATEMENT: Opposed to HB 267 SHARON BARTON, Director Division of Administrative Services Department of Administration P.O. Box 110208 Juneau, Alaska 99811-0208 Telephone: 465-2277 POSITION STATEMENT: Opposed to HB 267 TAMARA COOK, Director Legislative Legal Services Legislative Affairs Agency 130 Seward Street, Suite 409 Juneau, Alaska 99801-2105 Telephone: 465-2450 POSITION STATEMENT: Provided information on HB 267 REPRESENTATIVE TERRY MARTIN Alaska State Legislature State Capitol, Room 502 Juneau, Alaska 99801 Telephone: 465-3783 POSITION STATEMENT: Provided sponsor statement MIKE DAVIS, Representative Bristol Bay Housing Authority P.O. Box 50 Dillingham, Alaska 99576 Telephone: 842-5956 POSITION STATEMENT: Opposed to SB 92 JAN SIEBERTS, Senior Vice President National Bank of Alaska P.O. Box 100600 Anchorage, Alaska 99502 Telephone: 564-9326 POSITION STATEMENT: Opposed to SB 92 HEATHER ARNETT, Executive Coordinator Association of Alaska Housing Authorities 520 East 34th Street Anchorage, Alaska 99503 Telephone: 562-7119 POSITION STATEMENT: Opposed to SB 92 WILLIAM HOWE, Deputy Commissioner Treasury Division Department of Revenue P.O. Box 110405 Juneau, Alaska 99811-0405 Telephone: 465-4880 POSITION STATEMENT: Opposed to SB 92 TOM WILLIAMS, Legislative Assistant Senator Steve Frank Alaska State Legislature State Capitol, Room 518 Juneau, Alaska 99801 Telephone: 465-3709 POSITION STATEMENT: Provided sponsor support for SB 92 PREVIOUS ACTION BILL: HB 267 SHORT TITLE: REGULATION REVIEW AND EXPIRATION SPONSOR(S): REPRESENTATIVE(S) JAMES,Kelly JRN-DATE JRN-PG ACTION 03/17/95 779 (H) READ THE FIRST TIME - REFERRAL(S) 03/17/95 779 (H) STATE AFFAIRS, FINANCE 03/20/95 825 (H) COSPONSOR(S): KELLY 03/23/95 (H) STA AT 08:00 AM CAPITOL 102 03/23/95 (H) MINUTE(STA) 03/28/95 (H) STA AT 08:00 AM CAPITOL 102 03/28/95 (H) MINUTE(STA) 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 03/30/95 (H) MINUTE(STA) 04/04/95 (H) STA AT 08:00 AM CAPITOL 102 04/04/95 (H) MINUTE(STA) 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 92 SHORT TITLE: AHFC SUBJECT TO EXEC. BUDGET ACT SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT JRN-DATE JRN-PG ACTION 02/21/95 349 (S) READ THE FIRST TIME - REFERRAL(S) 02/21/95 349 (S) STA, FIN 02/28/95 (S) STA AT 03:30 PM BELTZ ROOM 211 02/28/95 (S) MINUTE(STA) 03/01/95 436 (S) STA RPT 4DP 03/01/95 436 (S) ZERO FISCAL NOTE (REV #1) 03/15/95 617 (S) FIN RPT 6DP 1NR 03/15/95 617 (S) PREVIOUS ZERO FN (REV #1) 03/15/95 (S) FIN AT 09:00 AM SENATE FINANCE 532 03/15/95 (S) MINUTE(FIN) 03/16/95 (S) RLS AT 12:00 PM FAHRENKAMP RM 203 03/16/95 (S) MINUTE(RLS) 03/17/95 664 (S) RULES TO CALENDAR 3/17/95 03/17/95 666 (S) READ THE SECOND TIME 03/17/95 666 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/17/95 666 (S) READ THE THIRD TIME SB 92 03/17/95 666 (S) PASSED Y18 N- E2 03/17/95 679 (S) TRANSMITTED TO (H) 03/20/95 802 (H) READ THE FIRST TIME - REFERRAL(S) 03/20/95 802 (H) STATE AFFAIRS, FINANCE 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 03/30/95 (H) MINUTE(STA) 04/04/95 (H) STA AT 08:00 AM CAPITOL 102 04/04/95 (H) MINUTE(STA) 04/04/95 (H) MINUTE(STA) 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 232 SHORT TITLE: ECONOMIC DEVELOPMENT TAX CREDIT SPONSOR(S): REPRESENTATIVE(S) KOTT JRN-DATE JRN-PG ACTION 03/06/95 590 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 590 (H) ECD, STA, L&C, FINANCE 03/21/95 (H) ECD AT 09:00 AM CAPITOL 17 03/21/95 (H) MINUTE(ECD) 03/22/95 850 (H) ECD RPT CS(ECD) 6DP 03/22/95 850 (H) DP: KELLY,MOSES,MACLEAN,KOHRING 03/22/95 850 (H) DP: SANDERS, ROKEBERG 03/22/95 850 (H) INDETERMINATE FISCAL NOTE (REV) 03/22/95 850 (H) FISCAL NOTE (DCED) 03/22/95 850 (H) REFERRED TO STATE AFFAIRS 04/04/95 (H) STA AT 08:00 AM CAPITOL 102 04/04/95 (H) MINUTE(STA) 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 241 SHORT TITLE: NO PERSONAL USE OF CAMPAIGN ACCOUNT SPONSOR(S): REPRESENTATIVE(S) BUNDE,Rokeberg JRN-DATE JRN-PG ACTION 03/08/95 642 (H) READ THE FIRST TIME - REFERRAL(S) 03/08/95 642 (H) STATE AFFAIRS, FINANCE 03/10/95 713 (H) COSPONSOR(S): ROKEBERG 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 218 SHORT TITLE: PROMPT PAYMENT OF TRUCKING SUBCONTRACTORS SPONSOR(S): REPRESENTATIVE(S) JAMES BY REQUEST JRN-DATE JRN-PG ACTION 03/01/95 531 (H) READ THE FIRST TIME - REFERRAL(S) 03/01/95 531 (H) STATE AFFAIRS, TRANSPORTATION, JUDICIARY 03/07/95 (H) STA AT 08:00 AM CAPITOL 102 03/07/95 (H) MINUTE(STA) 03/23/95 (H) STA AT 08:00 AM CAPITOL 102 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 95-44, SIDE A Number 000 The meeting of the House State Affairs Standing Committee was called to order at 8:12 a.m. Members present at the call to order were Representatives James, Ogan, Ivan, and Porter. Representative Green arrived at 8:15 a. m. Representatives Robinson and Willis arrived at 8:37 a.m. HB 267 - REGULATION REVIEW AND EXPIRATION CHAIR JEANNETTE JAMES announced the first bill on the agenda was HB 267, dealing with regulation review and expiration. She explained there was a committee substitute in their packets, incorporating changes suggested by the subcommittee that met with the Administration and committee members. She mentioned there was also a sectional brief explaining changes from the original bill. These changes were the result of consultation with the Administration and the public to try and make the bill more functional. She stated Section 5, subsection A is amended to expire regulations on December 1, as opposed to the original date of June 30. This would allow a sufficient amount of time for the agencies to react to an expiration of their regulation by the legislature. Subsection B is altered to prohibit a regulation from being readopted with the same substantive effect, versus the original wording of same form. This clarified the intent of the bill. Subsection C was amended to clarify the wording of the bill extending the sunset of regulations. The new wording incorporated into the bill would be Expiration of all regulations of each agency under AS 24.20.402 is postponed for one year except the following..... The bill would then list those regulations scheduled to expire the following December 1. She explained this wording of the bill was necessary to prevent any regulations from being overlooked and accidentally expiring. Subsection D states that before January 1 of each year, the Administrative Regulatory Review Committee shall submit a letter to the Governor identifying each regulation the committee intends to list for expiration on the bill to be submitted that session, together with the reasons for failing to postpone the expiration date of those regulations. She thought this would give the Administration an opportunity to prepare its rebuttal to try and convince the legislature not to expire those regulations, or to amend the listed regulations to comply with the legislatures wishes. Subsection E exempts the Board of Fish and the Board of Game from the annual expiration of their regulations. Section 8 of HB 267 is amended to only require the agencies to submit to the Administrative Regulation Review Committee within 14 days after adoption, repeal, or amendment of a regulation a copy of the regulation change and any fiscal information prepared under AS 44.62.195. This information is required for submittal under current law and should not add any extra expense to the agencies. Any other information will be provided only at the request of the committee. She explained this complies with Representative Gary Davis HB 173, which aims to reduce the amount of extraneous paperwork being submitted by the agencies to the legislature. She said that because the Administrative Regulation Review Committee will be only reviewing those regulations brought to its attention by public complaint, this requirement of only submitting the information at the request of the committee seemed to be reasonable and more cost-effective. She mentioned the committee also was provided a map from the National Conference of State Legislatures, that detailed the type of legislative review over regulations which were required in each of the 50 states. She explained the Administrative Regulation Review Committee in Alaska has not been very active since the ALIVE case of 1980, which took away their authority to demand changes if they perceived a problem in a regulation. Thus, their incentive to conduct any review of regulations has been minimal and the current chair of the committee, Senator Randy Phillips, has suggested disbanding the committee. She further stated she had an additional chart, that documented which of those states with legislative oversight of regulations have advisory powers only and which have the authority to make changes. She said about half of the 50 states have some type of authority to implement changes in regulations. Four states, Colorado, Utah, Tennessee, and Idaho have implemented statutes similar to HB 267. She stated Colorado has had their law in effect for 15 years. She mentioned there were people on teleconference to testify, but wanted to answer any questions from the committee first. REPRESENTATIVE IVAN IVAN stated he had a proposed amendment to HB 267 to introduce when the time was appropriate. CHAIR JAMES said a copy of this amendment was on the table for committee members to review and explained this amendment would exclude the Alaska Commercial Fisheries Entry Commission from the expiration of their regulations. She thought they should take testimony from the public before deciding on whether to adopt this amendment. Number 213 MIC MANNS, Representative of Paradise Valley Mining and Development, offered support for HB 267. He said the Constitution is very clear in giving the legislature the responsibility of making laws for the state and not an appointed official of the Governor. He stated he had personally felt the effect of bad regulatory decisions from the Department of Natural Resources and the Department of Fish and Game, which had cost his company millions of dollars. As an example, one employee in the Department of Fish and Game forced them to build a 7000 foot dike and canal in a creek that did not have any fish in it. He said the court documentation of this incident was absolutely proof positive that there was a need for legislative oversight of regulations, in order to correct these deficiencies. Their company cannot afford to fight an agency with 209 attorneys on staff, he said. This incident took over eight years in court and he felt if there had been legislative oversight, it would never have occurred in the first place. He also cited an incident of land they had staked in the 1960s and 1970s, which the Department of Natural Resources had not yet relinquished title to and have claimed they could not do so, when the state law says they must. He thought these types of affairs must be put to an end if the state was to ever accomplish economic development and if its citizens were to guarantee a future for their children. He said it was necessary for the Administration to comply with laws that were drafted by the people, who had elected the legislature to represent them. He argued it was not the right of an appointed official in an agency to override the intelligent minds of the elected legislators, who were chosen by the people of Alaska to represent them and make these decisions. He mentioned he had provided written documentation of the incidents to Representative James and would encourage the legislature to realize they are the ones the people were counting on for their future. He reiterated his support for HB 267. CHAIR JAMES thanked Mr. Mann for his testimony and documents. She wanted to point out that HB 267 was only a small part of her regulation reform efforts and that she would be working over the interim, with a commitment of support from the Administration, on a bill that would improve the process of how regulations are written in response to legislative intent and make them easier to be implemented by those being regulated. MR. MANN mentioned when Larry Galloway was the Deputy Commissioner in an Anchorage office, he had on file over 640 cases in his office that would have never occurred had the legislature had the ability of oversight. He hoped the legislature would get the message and not allow this to be pushed aside like when Governor Sheffield vetoed it. Number 297 SHEILA PETERSON, Special Assistant, Office of the Commissioner, Department of Education, said she could understand the legislatures frustration over how regulations are promulgated in this state. However, she wanted to bring to the attention of the committee the uniqueness of the Department of Education, with regard to the adoption of regulations. She mentioned the State Board of Education is the head of the department. This board is the policy maker. This seven member committee is appointed by the Governor and confirmed by the legislature. These members represent all judicial districts of the state and no more than four may be of the same political party as the Governor. She felt this board represented a cross-section of the people of Alaska. She pointed out that the board appoints the commissioner with the approval of the Governor. She argued that as new regulations are promulgated, all decisions are made in a public forum with public testimony and notice. As this is a public board, she requested the committee exempt the Board of Education from this legislation. She stated she was aware that if the committee exempted many different agencies from this bill, it could become ineffective. But she felt the Board and Department of Education was unique in its system of promulgating regulations. She argued the current process of how they promulgated regulations was ideal. She again requested the committee exempt the Board of Education from HB 267. CHAIR JAMES asked if the committee had any questions for Ms. Peterson. Hearing none, she called on Dale Anderson to testify. Number 348 DALE ANDERSON, Representative for the Commercial Fisheries Entry Commission, requested an exemption for their group from the expiration of their regulations. He was concerned HB 267 would affect the economics of their organization adversely, saying he had mentioned this at an earlier meeting. He was also concerned about the effects this would have on the commissions adjudicatory powers. He stated one of the main functions of the commission was to settle disputes with denied applicants. He thought HB 267 could threaten the integrity of the body of law they had developed over the past 20 years. He argued the commission was originally developed as a result of a vote of the people and public input was foremost in their minds as a body. He pointed out the commission does not even limit a fishery without the request of the public. He further mentioned that all of the steps of their process for gathering public input are established by regulation and so would be subject to expiration under HB 267. He also feared that any length of time without regulations in effect could allow people to enter a fishery who were not worthy. He reiterated his request for an exemption from the expiration of their regulations. Number 457 DEBORAH BEHR, Regulations Attorney for the Department of Law, said she wanted to address the proposed committee substitute for HB 267. She wanted to clarify that single people were not writing regulations. She also thought the Administrative Regulation Review Committee could take a more active role in the regulatory process by performing regulatory audits. She argued there were still legal problems regarding the Constitutions separation of powers clause in that she felt this bill would not allow the Governor the opportunity to veto. She argued this was a violation of the ALIVE case of 1980. She pointed out that Idaho, who has this law in effect, can annul regulations by resolution, without a constitutional problem. Their courts have ruled this is constitutional. Thus, she was concerned there were only three states remaining with this law in effect, which had unresolved constitutional issues such as ours. She stated she was also concerned the bill had no protection for the system, should the legislature fail to pass a bill. She was also concerned about a violation of the Constitutions single-subject rule, in that she compared the bill to be drafted under HB 267 as being similar to the revisors bill. She said the revisors bill was an exception to the single-subject rule and she did not think it was intended to have other similar bills allowed. She said Alaskas courts have not liked bills that deal with more than one subject. Thus, she felt with these unresolved legal issues, there would be a cloud over the validity of all regulations. On page 4, lines 19-23, she expressed concern over the section that allowed the Administrative Regulation Review Committee to file an objection with the Lieutenant Governors Office on a regulation, which then shifts the burden of proof to the agency to prove that a regulation is valid and meets legislative intent. She stated her problem was that prior court decisions had not allowed the legislature to delegate its rule-making authority to a subcommittee of itself. She stated the Department of Law would be recommending a veto of this bill to the Governors Office. She stated should the committee decide to pass the bill, she had some technical concerns to mention. On page 3, line 8, she had some concern about the wording same substantive effect. She thought this would be a possible source of litigation, as there was no definition of same substantive effect. On page 3, line 2, she suggested the legislature should consider looking only at incremental changes on an annual basis, and not at every regulation. She mentioned two of the states do this. She also suggested tying the sunset of regulations for boards and commissions with the sunset of the boards themselves. On page 3, line 21, she suggested a slight modification to read regulations required for compliance with federal law. On page 4, line 27, she thought it might be a better suggestion to have this section read 14 days after filing of a regulation, rather than the original reading of 14 days after adoption. She stated she looked at HB 267 to try and see if there were any added costs to state government, because of this bill. Thus, she warned about the committees zeroing out of fiscal notes. She thought there would also be costs for the extra meeting of boards in order to comply with requirements of this bill. She offered to answer questions from the committee. Number 645 REPRESENTATIVE SCOTT OGAN asked Ms. Behr if she thought there would be problems for the Big Game Commercial Services Board under this bill. MS. BEHR thought there would be. She suggested a better way of handling this situation would be to change the statute and not expire the regulations. She claimed the Governor vetoes very few regulations. Thus, she thought the existing system was working just fine. REPRESENTATIVE OGAN asked if she thought this board should be exempted from the expiration provisions of this bill. MS. BEHR thought it should be and compared it to the Board of Fish and the Board of Game. CHAIR JAMES commented she was hearing a tendency in the testimony that the legislature was stupid and not capable of handling these tough decisions. She thought the legislature had a good historical record of making sound decisions and wanted it on the record to reflect that. She said it sounded as if the legislature was being impugned by the testimony. MS. BEHR apologized, saying she did not intend it to sound that way. She simply wanted to mention there could be an emergency situation if the legislature failed to pass the bill by its constitutionally mandated adjournment date. Number 678 BOB BARTHOLEMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, stated the majority of their statutes contained the statement those statutes would be implemented by regulations promulgated by the Department of Revenue. In discussion with the commissioner, he said he was asked to point out the large amount of resources and time going into the development of regulations. Their concern was that if these regulations were to expire, this effort would have to be redone at great expense. He said he wanted to point out that the collection of revenue by the state would not work without the regulations. He urged the committee to focus on the problem regulations and not to establish such a broad sweeping review of regulations. TAPE 95-44, SIDE B Number 000 CHAIR JAMES mentioned that HB 267 contained a provision requiring the Administrative Regulation Review Committee to submit to the Governor a list of all of those regulations they intend to sunset by January 1. She pointed out that the agencies then had until December 1 to amend the regulations to comply with the wishes of the legislature. She stated she understood the time and effort that have gone into the writing of regulations, having followed the process, but she felt that the legislature was a competent enough body to do a good review and that their fears were unjustified. She did not foresee the legislature allowing the types of disasters to occur that they were predicting. She thought the time frame and provisions of the bill were enough to make it work fine. MR. BARTHOLEMEW agreed the legislature was competent, but thought there was a legitimate concern of the legislature failing to extend regulations by the passage of a bill. REPRESENTATIVE OGAN commented the legislature made reasonably good decisions on occasion, but thought they were sometimes motivated by political considerations and not the merit of the legislation. He thought the regulation boards were set up to be more focused on a particular subject, rather than being a quasi-expert on many issues. He thought the volume of issues they have to deal with sometimes preclude legislators from focusing on a particular issue as much as they may need to. Number 138 REPRESENTATIVE BRIAN PORTER expressed appreciation for the concerns of Mr. Ogan. He said that was why the regulatory boards and process were set up. He argued though, that if the process were working, the legislature would not be addressing this issue. He recognized this bill allowed all regulations to be potentially up for review, but pointed out the legislature would only be reviewing those brought to its attention by public complaint. He said the legislature would thus limit its attention to those which were difficult to comply with and had strayed from legislative intent. He stated whether the legislature made a good or a bad decision was a matter of perspective, but it was still the will of the legislature and should not be thwarted by an individual in an agency, who found themselves with the power to write regulations as they individually felt like it. He said that had happened in the past and that was what this bill was aiming to prevent. Number 175 ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services, reiterated the comments of Ms. Behr, that an amendment was needed to exempt regulations needed to comply with federal mandates and not just required by federal mandates. He thought that when you take many issues, that are controversial individually, and place them in the same bill, there is a very strong likelihood that you will not get a consensus of the legislature and the bill extending the expiration of regulations may not pass. This is a real fear to the agencies. Number 215 CHAIR JAMES thought it was a matter of accountability, and if the legislature made that mistake, they would be held responsible. She said under the current system, there is no one to hold accountable. She said that was why the members of the public she had talked to were so supportive of this bill. Currently, if the public complained to the legislature about a regulation, they were told the Administration writes regulations. If they took their complaints to the Administration about regulations, they were informed the agencies only write regulations to comply with legislative statutes. Thus, the public felt like there was no one to hold accountable and blame for bad regulations. She said HB 267 would put the blame on the legislature and give the public some recourse if they did not like the regulatory process. She stated the legislature was constitutionally mandated to provide the laws for this state and should be held responsible. Number 229 SHARON BARTON, Director of Administrative Services, Department of Administration, commented she had recently come across a memo from 1979 dealing with regulation reform. She mentioned the issues they were dealing with then, were essentially the same as the ones being discussed now. Thus, she said, although the Administration had legal problems and concerns about implementation of this bill, they agreed it was time to try to find a solution. She thought there were essentially three areas needing to be addressed: 1) Bad regulations; 2) bad regulatory process; and 3) bad implementation of regulations. She thought this was a large area to deal with. She expressed her appreciation of the willingness of Chair James to listen to the concerns of the Administration in dealing with this issue. CHAIR JAMES stated there was actually a fourth problem and that was bad statutes. She thought if this bill went into effect, it would help the legislature to find bad statutes and fix them. She reiterated the issue was one of accountability and that the legislature gave the Administration the authority to write regulations, without saving some oversight ability for itself. She felt this was a bad decision. She said although she also shared concerns about making sure everything was constitutional and legal, she thought sometimes legislators needed to take responsibility and see if there was a legal challenge. She vowed to work extensively with the Administration over the interim to try and develop a regulatory process that was more efficient and user-friendly. She asked Tamara Cook, legal drafter for HB 267, to come forward to answer questions from the committee and thanked her for participating. Number 286 TAMARA COOK, Director, Legislative Legal Services, said she was willing to answer questions from the committee. REPRESENTATIVE PORTER asked if she thought it was necessary to change the language of HB 267 to exempt regulations necessary to comply with federal regulations. MS. COOK stated she was not convinced it would make any difference. She thought it was a question of whether the legislature wanted to exempt just regulations that were required in a particular form by federal law, while reserving the right of the legislature to review regulations that were mandated for compliance with federal law, but with which the state had several options to achieve compliance. She said most of the time, the state would be given considerable flexibility. Thus, she thought it was a policy call of the legislature and felt the existing language allowed for additional flexibility. She also wasnt sure the language suggested by Ms. Behr would preclude the legislature from reviewing a particular set of regulations, although she thought it would probably place a larger number of regulations outside of its jurisdiction for review. She said she had no problem making the change if it was the will of the committee. Number 329 REPRESENTATIVE PORTER stated this was exactly his concern, that the legislature would be placing regulations outside of its jurisdiction for review by adopting the language suggested by Ms. Behr, that it really wanted within its ability to review. He agreed the legislature would not want to review regulations meeting the minimum standard of federal law, but would want to review regulations that exceeded that standard. MS. COOK thought there could be great argument as to what defined the mandatory minimum requirement for compliance with federal law, depending on ones perspective. She stated her hunch was that the existing language was probably just as good as that suggested by Ms. Behr. Number 347 REPRESENTATIVE JOE GREEN asked if Ms. Cook thought this bill would violate the single-subject rule of Alaskas Constitution. MS. COOK thought HB 267 complied with the single-subject rule, according to case law to date. She said that to overturn this bill as violating the single-subject rule, the courts would have to be stricter in their interpretation than they had been to date. She stated there was an expression of annoyance by the court of the broad flexibility given to the legislature regarding the single-subject rule, but to date they have not taken a strict enough interpretation to cause this bill to be out of compliance. CHAIR JAMES mentioned there was a memo in the committee packets from Ms. Cook regarding this issue, if any of the members wished to read it. REPRESENTATIVE GREEN stated he wanted it in the record for that reason, as earlier testimony from Ms. Behr seemed to contradict these statements. CHAIR JAMES asked if there were any other questions from the committee for Ms. Cook. Hearing none, she thanked Ms. Cook for her testimony. REPRESENTATIVE CAREN ROBINSON asked if it was Chair James intention to pass HB 267 out of committee that day. CHAIR JAMES replied it was and that she also intended to hear the committees wishes regarding the proposed amendment of Representative Ivan. Number 395 REPRESENTATIVE PORTER moved for the committee to adopt CSHB 267 version F as the working draft for discussion. CHAIR JAMES asked if there was any objection. Hearing none, the committee substitute was adopted. REPRESENTATIVE IVAN IVAN moved for the committee to adopt his amendment, exempting the Alaska Commercial Fisheries Entry Commission, for CSHB 267. CHAIR JAMES asked if there was any objection to passing this amendment. Hearing none, the amendment for CSHB 267 was adopted. REPRESENTATIVE OGAN requested the Big Game Commercial Services Board also be exempted from the expiration of their regulations. CHAIR JAMES stated her preference that the committee not exempt any more entities from HB 267, but said she would leave that to the wishes of the committee. She pointed out that she would be doing an extensive study of the regulatory process with the Administration over the interim, and that it could be reviewed then which agencies should be exempted from this bill. She wanted to reiterate she thought there was sufficient time included in this bill to allow the agencies to properly react should their regulations be allowed to expire by the legislature. She said Representative Ogan was free to seek the approval of the committee for exempting the Big Game Commercial Services board, but her desire was that they not exempt any more groups. REPRESENTATIVE ED WILLIS clarified whether she meant she was planning to work on HB 267 over the interim or a different bill. CHAIR JAMES stated she was referring to HB 105, which dealt with a comprehensive overhaul of the regulatory process. She planned to work with the Administration and the public to decide on how best to accomplish a complete overhaul of the regulatory process to make it more efficient and user friendly. She explained this bill was meant to be an alternative to HJR 1, which recently passed the House of Representatives 34 to 4 and would allow the legislature to annul a regulation by resolution. HJR 1 would require a constitutional amendment to effect that change of law. Number 447 REPRESENTATIVE OGAN moved to exempt the Big Game Commercial Services board from the expiration of their regulations under HB 267. CHAIR JAMES asked if there were any objections. REPRESENTATIVE PORTER objected. REPRESENTATIVE OGAN explained he wanted to exempt this board, because the current process was established after considerable public input following a lawsuit over the former system. He said the system was under intense scrutiny by the Attorney Generals office and was thus in a delicate balance between the courts and the public. He was fearful if this board fell under the jurisdiction of HB 267, it could end up in the courts again. Number 473 REPRESENTATIVE PORTER stated with due respect to the Attorney Generals office, this was the same office that had said the bill passed by the legislature last year, appropriating funds from the Constitutional Budget Reserve, was constitutional and a court decided otherwise. Thus, he said there were no guarantees based upon the information coming from the Department of Law. He said he could make a similar argument regarding boards he had served on, but thought that they had to make that leap of faith to decide the legislature was responsible enough to take care of business and only identify those regulations for sunset that had serious problems that havent been able to be worked out with the Administration. He said he was ready to make that leap of faith and wanted the legislature to have some clout when making these recommendations to the Administration. REPRESENTATIVE OGAN withdrew his motion. Number 486 REPRESENTATIVE ROBINSON moved to exempt the Department of Education from the expiration of their regulations under HB 267. She thought they had a good public process and pointed out school starts before the legislature convenes. She thought they were another group that the legislature should not be tying its hands. CHAIR JAMES responded that it was a matter of who was in charge. She thought the legislature was the one charged to make laws in this state and personally thought the fears being raised were unwarranted. REPRESENTATIVE ROBINSON replied it was also the responsibility of the legislature to know what regulations they were putting into effect when they pass legislation. She argued the legislature had given the authority to the Board of Education to write regulations and should trust them to make those decisions. She did not want the school district to have to wait until the legislative session to allow schools to implement their policies. She understood that by passing this bill, the legislature would be doing this. Number 518 CHAIR JAMES said this was not true and pointed out that any regulations promulgated after January 1, 1995, would not expire until December 1, 1996. She stated there would be a legislative session in between to have the legislature decide whether to extend the expiration. She thought there was plenty of time between January 1 and December 1 of the following year to allow the agencies to amend their regulations as necessary to meet the legislatures recommendations. She reiterated the motion was to exempt the Board of Education from HB 267 and asked if there was any objection. REPRESENTATIVE PORTER objected. CHAIR JAMES called for a roll call vote. Representatives Willis and Robinson voted in favor. Representatives Porter, Ivan, Green, Ogan, and James voted in opposition. Number 531 REPRESENTATIVE PORTER moved to pass CSHB 267 version F out of committee as amended with individual recommendations and attached fiscal notes. CHAIR JAMES asked if there were any objections. REPRESENTATIVE ROBINSON objected. She stated she could appreciate the fact there was a need for regulatory reform, but felt this legislature was continuing to pass a series of regulation reform bills, but that they had not clearly defined what the problem was. Thus, she felt they may just be putting a band-aid over the problem, rather than really solving the problem. She stated she was hoping to put all of the regulation reform bills into the interim for study, rather than just passing bills through the legislature that may not address the problem. Number 560 CHAIR JAMES responded that she agreed with Representative Robinson, but pointed out that each of the bills that are in the legislature address a different aspect of a large problem, which together will help to accomplish an overall solution. She also pointed out that HB 267 does start the process of repealing regulations, if that is the decision of the legislature. She stated it gives the authority to the legislature to actually start repealing unnecessary or unfair regulations. She thought this bill would start a process that would allow the legislature to locate bad statutes and repeal them side by side with bad regulations. She did not think the fears of a total disruption of the state were real, pointing out this was not the case in those states with this law in effect. She said it did clarify though, that it was the responsibility of the legislature to make laws for the state and be accountable for the consequences. REPRESENTATIVE ROBINSON was also concerned about passing a bill that was likely to be vetoed by the Governor. CHAIR JAMES stated she shared Representative Robinsons concerns, but felt this issue was so important that the legislature needed to proceed and take that risk. REPRESENTATIVE ROBINSON suggested that the legislature could slow down the process, by passing less legislation into law. She thought maybe bills should be sent to the budget regulation review police before being heard on the House floor. She thought the legislature should try to get ahead of the game, instead of always trying to react after the fact. CHAIR JAMES answered that when the train is going down the hill, it is really hard to stop it. She thought HB 267 was starting to apply the brakes. She asked if there were any other comments from the committee, or if they were ready to vote. Number 598 REPRESENTATIVE PORTER mentioned there had been testimony from the Administration, that in reviewing historical documentation of regulation reform, they had discovered the same problems were cited in 1979, as are currently being discussed. He pointed out that the reason the legislature was still discussing these issues, was that the legislature just studied the issue and did not pass their regulation reform bill then. Thus, he thought it was necessary the legislature try to deal with the problem, rather than just discussing it. He said he recognized HB 267 did not address all of the problems individually that had been mentioned, but he did not think one bill could accomplish that task. He cited several examples of runaway regulations, that indicated the need for some type of review of the regulatory process. He argued this oversight could not be accomplished with any degree of success, without the potential to do something about it. He thought this bill would provide the leverage needed to do that. He argued that possibly the Administration would have a better idea of what legislative intent was if they did not keep vetoing legislative intent letters. REPRESENTATIVE GREEN expressed his favor for the concept, but also had some concerns about this bill. On page 4, he was concerned that if a regulation came up for expiration and the legislature failed to pass a bill to postpone that expiration, the state might be caught in a compromising position where regulations have been allowed to expire without a solution necessarily being found. He was concerned about passing this bill out of committee, as the next committee may not be as thorough about reviewing the true intent of this bill. Thus, he suggested possibly holding this bill in this committee to try and develop a better bill. CHAIR JAMES pointed out that if the legislature failed to pass a bill extending the sunset of regulations, every single regulation would expire. She asked if he thought the legislature would allow that situation to occur. REPRESENTATIVE GREEN argued it was improper to give that authority to the Administrative Regulation Review Committee, to say that a regulation is to sunset, when it might just need a small tweak to fix it. He was concerned that such a regulation could be allowed to sunset and then not be allowed to be adopted in substantially the same form. He was concerned that members of this committee might just develop an attitude problem and be able to abuse their power. CHAIR JAMES explained this bill was being passed by a statute, which had three readings and committee referrals. She argued the Administrative Regulation Review Committee was just introducing the bill and would not be in the position to abuse their power as he feared. She asked if he believed that all 60 members of the legislature would not allow a bill to be passed, when the result would be that all regulations would expire on December 1. REPRESENTATIVE GREEN thought that by blackmailing a bill to avoid having all regulations expire was improper. He was concerned about rushing a bill through the process that may not be exactly what they wanted to do. Number 660 REPRESENTATIVE WILLIS thought the concept was good, but said he shared some of the same concerns as Representative Green. He thought Chair James had stated earlier that she wanted to send the best possible bill they could out of this committee. He also expressed his hopes that they might hold this bill as a project for the interim. He emphasized he did not oppose this approach, but thought maybe this committee could develop a better bill if they held it. REPRESENTATIVE ROBINSON asked if anyone had raised the question of how this bill would affect the business climate of this state. She said she had been told other states had this law and wondered how it was working for their business community. CHAIR JAMES said she had talked to Colorado and Utah, who had this law in effect and that Denver and Salt Lake City were some of the fastest growing business centers on the West Coast. She said many of the businesses were unaware that it was happening, as the amount of regulations that expired were so few and insignificant. She commented they had had this law in effect for 15 years and stated most of the language for HB 267 came from the Colorado law as a model. Number 697 REPRESENTATIVE PORTER mentioned that at the Alaska State Chamber of Commerce breakfast earlier that morning, he described HB 267 and they were elated. They strongly favored this legislation. REPRESENTATIVE ROBINSON argued the State Chamber had been in favor of all of the regulation reform bills proceeding through the legislature. REPRESENTATIVE PORTER stated she had asked how the business community felt about this bill and the Alaska State Chamber of Commerce represented the business community of this state. REPRESENTATIVE ROBINSON said she was not sure that the State Chamber had thoroughly thought out all aspects of the various regulation reform bills, before expressing their support for them. She stated she did not doubt their sincerity in wanting regulatory change, but did not know if they had thoroughly thought out the issues involved. REPRESENTATIVE PORTER mentioned there had been a fear expressed by some of the agencies that this would create an instability in the regulatory climate. He argued the cloud was already there, as the agencies could modify regulations with much more ease than the legislature. He also pointed out the legislature can amend the statutes whenever it decides, thus altering the accompanying regulations. Thus, he did not feel this bill would change the business climate from its current situation. He also stated the legislature could pass a statute with a two-thirds margin of support, to have it completely subverted by a few people sitting in an agency who disagreed. This he thought was wrong and he thought this bill would help to correct it. TAPE 95-45, SIDE A Number 000 CHAIR JAMES thought the decision the committee had to make, was whether they thought the legislature should have oversight over the regulatory process. She mentioned there were only two ways to accomplish this, and that was a constitutional amendment, allowing the legislature to annul a regulation by resolution as suggested by HJR 1, and the other was this bill. She did not believe the argument was whether this would create chaos in the business climate of the state, or if this would create incompetence in the regulatory system, but whether the legislature should have some type of oversight. She thought they needed to have oversight and there were only these two methods to accomplish it. She thought there was a need for legislative oversight and that was why she supported this bill. Number 038 REPRESENTATIVE GREEN disagreed that it was just a question of legislative oversight. He stated he would like legislative oversight, but not just under this bill the way it was written. Thats why he wanted to have a more extensive review of this bill in this committee. He said he was not suggesting to defeat the bill in this committee, just to review some of the issues that had been raised more thoroughly. REPRESENTATIVE OGAN expressed his discontent with the bill. He agreed that there was a need for legislative oversight, but was not sure of the wording of this bill. CHAIR JAMES said she wanted to vote on this bill, either up or down. She called for a roll-call vote. Representatives James, Porter, Ivan, and Ogan voted in favor in favor of passing CSHB 267(STA) out of committee. Representatives Green, Robinson, and Willis voted in opposition. Chair James announced the bill passed on to the next committee of referral. SB 92 - AHFC SUBJECT TO EXEC. BUDGET ACT Number 116 CHAIR JAMES stated the next bill on the agenda was SB 92. She called for Representative Terry Martin, Chair of the sponsoring Legislative Budget and Audit committee, to testify on behalf of the bill. REPRESENTATIVE TERRY MARTIN, Chair, Legislative Budget and Audit Committee, stated his major problem with the Alaska Housing and Finance Committee began about a year ago. He thought it became apparent at that time, that the legislature may have created a monster that needed some oversight, especially considering they had been given so much authority over state funds. He pointed out that many things in this year's capital budget, that were formerly under the Department of Community and Regional Affairs, were now under the Alaska Housing and Finance Corporation. He stated there was a real constitutional concern as to what degree the legislature could delegate its authority to appropriate funds to a corporation and mentioned the legislature had given a tremendous amount of authority to the AHFC. He stated an example of this authority without oversight, is the recent report coming from the Institute of Social and Economic Research. This report indicated that the state was receiving a return of less than $0.14 out of every dollar spent on the weatherization program of the AHFC. He stated the program takes as much as 81 years to receive its investment from the savings in energy loss. He asked the committee what they thought the legislature would do if this knowledge became public information. He said it was going to become public at that point, because its just one example of why they need oversight. He stated the problem was that the legislature was blamed from the mistaken policies of the AHFC, when they had no means of oversight of the activities of the corporations spending. He argued there was no accountability for the policies of the AHFC under the current system. He also pointed out that the concern over tampering with the AHFCs bonding authority was not real, as the legislature oversees the activities of other public corporations with bonding authority as well. He cited the Alaska Industrial Development and Export Authority, the Permanent Fund corporation, and the Alaska Railroad as examples. He argued this oversight would not hurt the bonding authority of the AHFC, but rather may help to keep credibility for their bonding authority great, by them knowing that the legislature will protect and insure that the bonding authority is not misused. He thought this oversight was necessary to help insure that the funds and assets of the corporation were not misused. He reiterated that if the legislature was to be held accountable for the mistaken policies of the AHFC, then it was necessary that it have some means of oversight over the corporation. He stated that his aide, John Bitney, and Tom Williams, legislative aide to Senator Steve Frank, could answer questions from the committee, regarding the bills effect on the bonding authority of the AHFC. CHAIR JAMES stated she would like to take testimony from those on teleconference before hearing from Mr. Bitney or Mr. Williams. Number 241 MIKE DAVIS, Representative, Bristol Bay Housing Authority, stated their housing authority works in approximately 20 communities with about 400 homes in the Bristol Bay community. He said they worked extensively with the AHFC to provide homes in communities throughout bush Alaska. They receive about $1.6 million from the federal government and matching funds from the AHFC, which allows them to make improvements to approximately 76 homes in the region. He argued to put the projects together, in their short construction season, requires readily available financing. He stated they share the concerns already expressed, that by allowing the AHFC to fall under the Executive Budget Act will cause additional delays to projects. The result will be that less homes will be built. He thought that by allowing SB 92 to pass, the legislature will be in the business of micro-managing the corporation, causing additional bureaucracy and regulations, which he did not think was their intent. He shared the concerns that this bill will stifle the corporation from being able to respond to market conditions and create a situation that will delay projects across the state. He suggested the legislature craft the language of the bill to allow them oversight, while still maintaining the ability of the AHFC to respond to the market conditions of the state. Number 290 JAN SIEBERTS, Senior Vice President, National Bank of Alaska, stated there was a group of people who wished to testify, but had to leave for work. He stated they thought the AHFC was an important financial asset to this state, and felt they were overall doing a good job. He argued the housing industry was important to this state for the creation of jobs and said they estimated $150 million in new home construction last year. He stated that developing new housing for lower income families was getting more difficult, because of the increase in cost. He thought that if they had to go to the legislature for approval with each of their transactions with the AHFC, the situation would get too complex. He said they could not accomplish many of their projects without the assistance of the AHFC and would hate to see the AHFC micro-managed to the point that these projects would be delayed for two to three years. CHAIR JAMES asked if Mike Davis was still on teleconference from Dillingham and stated Representative Ivan had some questions for him. Number 346 REPRESENTATIVE IVAN stated he could understand Mr. Davis comments about the existing relationship he had with the AHFC. He asked if Mr. Davis had any recommendations if this bill was too restrictive. He asked if it would help if there were some type of ceiling on dollar amounts allowed before requiring legislative oversight. MR. DAVIS replied the dollar amounts they would need would not be the same as those of the larger communities. He thought what was needed was the ability for the corporation to have the flexibility to respond to market conditions. REPRESENTATIVE IVAN stated he was looking for some type of dollar amount ceiling that would exempt them from the effects of legislative oversight. MR. DAVIS said he could not give an answer to that question. Number 388 HEATHER ARNETT, Executive Coordinator, Association of Alaska Housing Authorities, commented this bill was unclear whether there would be a requirement of legislative approval on a project by project basis. If this was the case, she thought there could be some problems arise. She thought private investors might be more hesitant to invest in urban and rural Alaska if this legislative approval were required. WILLIAM HOWE, Deputy Commissioner, Division of Treasury, Department of Revenue, stated the department has spent the last week to see what amendments could be made to SB 92 to make it more functional. Their suggestions were: 1) To clarify that the AHFC has the ability to issue bonds and make mortgage loans; 2) the AHFC can continue to operate its loan programs where no state subsidy exists; and 3) multi-family loans and projects not to exceed $10 million individually, which may require grants, tax credits, or utilization of arbitrage earnings will be permitted. He stated the Department of Revenue felt with these amendments SB 92 is workable and will maintain the intent of the sponsors. Number 491 REPRESENTATIVE GREEN asked what percentage of the AHFCs loan portfolio does the suggested $10 million cap represent annually. MR. HOWE thought this cap would represent a small percentage of the overall portfolio which was in excess of $3 billion. He stated that last year, the corporation proceeded with about $40 million worth of multi-family housing projects. He emphasized that this was a small, but important percentage of the overall portfolio. CHAIR JAMES called for Tom Williams, Legislative Assistant, Senator Steve Frank, to give a quick wrap-up on behalf of the bill sponsor. She asked him to explain to the committee how they were planning to deal with the concerns raised in the front section of the budget. Number 507 TOM WILLIAMS, Legislative Assistant, Senator Steve Frank, reiterated that the bill sponsor had no desire to impede any of the AHFCs traditional programs, that they have operated well for many years. He stated their concern was to insure there was a mechanism to allow the legislature to exercise oversight, should they tend to divert from their traditional programs. He said it was the intent to address the corporations flexibility issue in the front section of the budget to grant the AHFC that general authority. He argued that by passing the bill without any exemptions, it would bring the entire operation of the AHFC under the Executive Budget Act, while providing for a provision in the budget allowing the AHFC to go forward with its traditional programs, as long as they do not deviate from their basic plan as presented. Should they divert from the stated plan, this bill provides for a mechanism for the legislature to review questionable programs. He stated with regard to Mr. Howes proposed amendments, he thought that if they could develop language to exclude certain programs, that certainly language could be crafted broad enough to allow the AHFC their needed flexibility. With regard to a specific dollar amount cap, he thought this cap may need to change annually, as the corporations needs and programs change. He thought this flexibility could be achieved better in the budget, as compared to being written in statute. CHAIR JAMES asked if the process for working with arbitrage funds would be interfered with under this bill. MR. WILLIAMS thought the intent was that they would present a general plan for how to spend its arbitrage earnings over the next year, and as long as they do not deviate, there should not be a problem. Should they deviate from their generally stated plan, they would then have to come back to the legislature to explain the need for their change of course. He reiterated that the Legislative Budget and Audit committee would allow for prompt legislative response, thus alleviating the concern of missed opportunities. Number 552 REPRESENTATIVE GREEN asked if the sponsor would have any problem with developing language to incorporate Mr. Howes proposed amendments to SB 92. MR. WILLIAMS stated the preferred approach would be to not exclude certain functions of the AHFC. He said they had asked the Executive Director of the AHFC to help craft the language he would need to have flexibility to respond to market conditions, so that it could be put into the budget. He stated he thought there was a fear the legislature would be trying to micro-manage the AHFC, which he argued did not make sense. REPRESENTATIVE GREEN said the goal of the House majority was to try and limit government interference in business and thought this bill was providing for government interference in the AHFC. He stated that without the proposed exclusions, he had some strong reservations about how this bill was written. CHAIR JAMES pointed out that the AHFC was a government corporation. REPRESENTATIVE GREEN agreed they were government, but thought that overall, they had done a decent job of running their own affairs. He thought any aggressive loan institution could document through their history examples of poor decisions. REPRESENTATIVE PORTER said he shared the concerns expressed by Representative Green. He stated he was as concerned as everyone else about the effect of the 5 percent housing loan and the proposed new office building for the AHFC, but argued this bill was potential overkill. He was concerned about the potential of members of the LB&A, during the interim, to allow personal considerations to interfere with the process. He suggested following a pattern similar to the oversight over the AIDEA board. ADJOURNMENT CHAIR JAMES stated they were out of time and were needed in session. She adjourned the meeting at 10:23 a.m.