Legislature(1999 - 2000)

03/09/1999 09:02 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE                                                                                                        
March 9, 1999                                                                                                                   
9:02 AM                                                                                                                         
SFC-99 # 49, Side A & Side B                                                                                                    
         50, Side A                                                                                                             
CALL TO ORDER                                                                                                                   
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 9:02 AM 902                                                                                                       
Senator John Torgerson, Senator Sean Parnell, Senator Dave                                                                      
Donley, Senator Loren Leman, Senator Gary Wilken, Senator                                                                       
Al Adams and Senator Pete Kelly. Senator Lyda Green arrived                                                                     
shortly thereafter.                                                                                                             
Also Attending:                                                                                                                 
JACK KREINHEDER, Senior Policy Analyst, Office of                                                                               
Management and Budget, Office of the Governor; DEIGHT                                                                           
PERKINS, Deputy Commissioner, Department of Labor; AL                                                                           
DWYER, Director, Division of Labor Standards and Safety,                                                                        
Department of Labor; DEBORAH BEHR, Assistant Attorney                                                                           
General, Legislation and Regulation Section, Civil                                                                              
Division, Department of Law; PAM LABOLLE, President, Alaska                                                                     
State Chamber of Commerce;                                                                                                      
Attending via Teleconference: From Anchorage: MARJORIE                                                                          
VANDOR, Assistant Attorney General, Governmental Affairs                                                                        
Section, Civil Division, Department of Law; TERESA                                                                              
WILLIAMS, Assistant Attorney General, Fair Business                                                                             
Practices Section, Civil Division, Department of Law.                                                                           
SUMMARY INFORMATION                                                                                                             
SB  33-TASK FORCE ON PRIVATIZATION                                                                                              
The committee considered three amendments and adopted one.                                                                      
The bill was held in committee.                                                                                                 
SB  50-BOILER AND PRESSURE VESSEL INSPECTIONS                                                                                   
Representatives of the Department of Labor testified and                                                                        
this bill was reported out of committee.                                                                                        
SB  24-REGULATIONS: ADOPTION & JUDICIAL REVIEW                                                                                  
Senator Dave Donley detailed the provisions of this bill.                                                                       
The committee adopted a CS and Amendment #1 to that CS.  A                                                                      
representative from Department of Law testified.  The bill                                                                      
was held in committee.                                                                                                          
SENATE BILL NO. 33                                                                                                              
"An Act relating to the Task Force on Privatization;                                                                            
and providing for an effective date."                                                                                           
This bill was heard in committee once before.                                                                                   
Senator Al Adams returned to the separation of powers                                                                           
debate from the previous meeting.  He thanked the sponsor,                                                                      
Senator Jerry Ward, for sharing the legal opinion written                                                                       
by the Legal Services Division.  He said the Legislature's                                                                      
opinion differed from the Department of Law. The two                                                                            
amendments he was offering would address those issues.  One                                                                     
amendment addressed the selection of members and would                                                                          
assign selection to the Legislature rather than the                                                                             
Governor as stated in the bill.  The second amendment would                                                                     
remove the Governor from the selection process and grant                                                                        
per diem to the public members of the commission.                                                                               
Senator Al Adams moved for adoption of Amendment #1, which                                                                      
would remove members appointed by the Governor and the                                                                          
local boundary commission position. Senator Sean Parnell                                                                        
Senator Gary Wilken requested the question be divided to                                                                        
separate the boundary commission appointment and the                                                                            
appointments by Governor's office. Co-Chair John Torgerson                                                                      
granted the request. Amendment #1A would change page 2 line                                                                     
16 deleting "11" and inserting "8" and delete lines 17 and                                                                      
18 delete two members selected by the governor. Amendment                                                                       
position of the local boundary commission member. Amendment                                                                     
public members of the commission.                                                                                               
Co-Chair John Torgerson repeated the Department of Law's                                                                        
concerns with the separation of powers issue. The                                                                               
Legislative Legal Services Division gave the opinion that                                                                       
because the commission was advisory it was not subject to                                                                       
separation of powers rules. Co-Chair John Torgerson said he                                                                     
had no opinion on the amendment but had felt it was                                                                             
important that the Administration be involved in the                                                                            
selection of the commission members. Amendment #1A was                                                                          
adopted without objection.                                                                                                      
Senator Gary Wilken commented on Amendment #1B, saying he                                                                       
felt that representation from the local boundary commission                                                                     
was important.  Senator Al Adams pointed out that the                                                                           
Governor would also appoint the local boundary commission                                                                       
position and because the other Governor appointed positions                                                                     
had been removed, this should be removed also. He suggested                                                                     
the local boundary commission could be consulted in an                                                                          
advisory capacity. Amendment #1B failed by a vote of 2-4-3.                                                                     
Senator Loren Leman and Senator Al Adams cast yea votes.                                                                        
Senator Pete Kelly, Senator Lyda Green and Senator Randy                                                                        
Phillips were absent.                                                                                                           
Co-Chair John Torgerson asked Senator Al Adams if Amendment                                                                     
Senator Al Adams affirmed and suggested technical                                                                               
corrections could be made if necessary. Amendment #1C was                                                                       
adopted without objection.                                                                                                      
Co-Chair John Torgerson noted the conceptual change to page                                                                     
2 line 16 reflecting that the commission would consist of                                                                       
nine members.                                                                                                                   
Senator Al Adams spoke to Amendment #2 and moved for                                                                            
adoption. He explained that with the removal of the                                                                             
Governor's appointments to the commission, this amendment                                                                       
would provide for the appointment of two members of the                                                                         
public selected from a list of nominees submitted by labor                                                                      
organizations that represent state employees. Senator Dave                                                                      
Donley objected. Senator Al Adams believed it was important                                                                     
for union members were associated with this effort. The                                                                         
motion failed by a vote of 2-4-3. Senator Gary Wilken and                                                                       
Senator Al Adams cast yea votes.  Senator Pete Kelly,                                                                           
Senator Lyda Green and Senator Randy Phillips were absent.                                                                      
Senator Dave Donley moved to rescind action taken on                                                                            
Amendment #1A. Senator Al Adams objected. Senator Dave                                                                          
Donley spoke to motion saying he felt the Governor and                                                                          
subsequently, labor unions, should be involved in this                                                                          
process and were essential for the effort to be successful.                                                                     
He didn't think there was a constitutional problem with                                                                         
separation of powers. Senator Al Adams restated the legal                                                                       
debate regarding separation of powers. He felt this would                                                                       
set bad precedent. Agency personnel would participate in                                                                        
the process and offer their resources, he argued. The                                                                           
motion to rescind action on Amendment #1A passed by a vote                                                                      
of 5-2-2. Senator Al Adams and Senator Gary Wilken cast the                                                                     
nay votes. Senator Pete Kelly and Senator Randy Phillips                                                                        
were absent.                                                                                                                    
Senator Dave Donley commented that this was a good way to                                                                       
get statewide representation of both labor organization and                                                                     
the Governor on the commission.  They were necessary for                                                                        
the success of the commission. He noted that because this                                                                       
would be an advisory commission, it was exempt from the                                                                         
separation of powers restrictions. He asked the sponsor if                                                                      
this would be similar to the membership system in the bill                                                                      
from the prior year. Mark Hodgins affirmed. Senator Dave                                                                        
Donley noted that version passed both the Senate and the                                                                        
House of Representatives and was then vetoed. Mark Hodgins                                                                      
made the correction that SB 68 was from several years ago                                                                       
and vetoed by governor. The privatization bill brought                                                                          
forward last year did not pass from the House of                                                                                
Representatives.  Senator Dave Donley asked if the prior                                                                        
bills had a similar membership system. Mark Hodgins said                                                                        
they did. One of the three reasons given by the Governor                                                                        
for vetoing SB 68 was the separation of powers issue.                                                                           
Under this context, separation of powers was not a problem                                                                      
according to Legal Services' Tam Cook's legal opinion.                                                                          
Senator Al Adams requested a representative of the                                                                              
Department of Law to speak on the separation of powers                                                                          
matter. MARJORIE VANDOR, Assistant Attorney General,                                                                            
Governmental Affairs Section, Civil Division, Department of                                                                     
Law, said the department had looked at Tam Cook's analysis                                                                      
and didn't debate her method of analyzing the Uniform                                                                           
Rules.  However, the different branches of government had                                                                       
different views on the separation of powers when it came to                                                                     
advisory committees.  Whether a committee was advisory                                                                          
would not change the underlying analysis according to the                                                                       
Department of Law. The Administration did not oppose this                                                                       
task force or its goals Marjorie Vandor stressed.  The                                                                          
problem was that it was a bill and had the force of law and                                                                     
mandated the Governor to appoint, and who to appoint, which                                                                     
raised separation of powers concerns. The Governor might                                                                        
chose to comply and appoint members to the commission, she                                                                      
said.  However, historically this would be considered a                                                                         
separation of powers problem and would be an infringement                                                                       
on his normal, and strong, appointment powers. It was                                                                           
important for the historical record for future Governors                                                                        
that it not be consider a waiver of appointment on future                                                                       
task forces, she stated.                                                                                                        
Senator Sean Parnell wanted to know if, when the bill that                                                                      
established the long range financial planning commission                                                                        
passed, was there a requirement of who the governor would                                                                       
appoint.  Marjorie Vandor was not familiar with that bill,                                                                      
but offered to check.                                                                                                           
Co-Chair John Torgerson clarified that the Department of                                                                        
Law's main difference of opinion with the Legal Services                                                                        
Division was that if the commission was under Uniform Rules                                                                     
there would not be the separation of powers issue. But                                                                          
because it would be in statute the issue was a problem.                                                                         
Marjorie Vandor responded that it was a constitutional                                                                          
issue. She felt that Tam Cook's opinion seemed to be more                                                                       
geared toward the Uniform Rules but did not address the                                                                         
constitutional issue, which the department believed was the                                                                     
major underlying problem.  "Any time you mix committees,                                                                        
its going to be raised", she surmised.                                                                                          
Co-Chair John Torgerson didn't understand the                                                                                   
Administration's objection.  Was it because the Legislature                                                                     
would direct the Governor to appoint a union representative                                                                     
or was it because the Legislature was directing him to                                                                          
appoint anybody, he asked. Marjorie Vandor said it was a                                                                        
combination of both. She suggested that the reason the                                                                          
commission was being created in the form of a bill was that                                                                     
the Legislature was afraid the Governor would not appoint a                                                                     
member. "We're not saying that the Governor may not want to                                                                     
do it, that he doesn't believe this committee has a good                                                                        
purpose," she said.  She was concerned with the historical                                                                      
Co-Chair John Torgerson surmised that the Governor would                                                                        
look awful silly vetoing this under those grounds.                                                                              
Senator Gary Wilken said his support of Amendment #1A was                                                                       
more practical than legal.  He wanted to see this effort to                                                                     
go through and to have a commission on privatization.  Past                                                                     
problems had been with the Governor's Office so it seemed                                                                       
to him that removing the Governor from the equation would                                                                       
remove the roadblock. This was focusing efforts on the                                                                          
wrong thing, he stressed. If the Governor appointments were                                                                     
removed, the Legislature could be relatively sure the bill                                                                      
would become law and the process could begin.                                                                                   
Senator Dave Donley commented that one thing he liked about                                                                     
the language was that the Governor, sitting statewide,                                                                          
picked someone from organized labor to sit on the task                                                                          
force.  He thought that was an important element in the                                                                         
process.  If the Governor was removed, he suggested                                                                             
allowing the labor organization to appoint their own                                                                            
representative the same as with the Alaska State Chamber of                                                                     
Commerce member. That would solve part of his concern.  He                                                                      
felt there needed to be some participation from the                                                                             
Executive Branch.                                                                                                               
Senator Gary Wilken agreed with Senator Dave Donley and                                                                         
thought there should be a representative from organized                                                                         
labor on the task force.  However that was a different                                                                          
issue than involvement from the governor's office.  Senator                                                                     
Dave Donley said the reason he brought it up was because                                                                        
the amendment would remove the provision to provide for the                                                                     
labor representation.  Senator Gary Wilken pointed out                                                                          
another amendment before the committee that would add two                                                                       
members of organized labor and said that could be taken up                                                                      
with the Governor's Office.                                                                                                     
Co-Chair John Torgerson liked the original language of the                                                                      
bill but agreed with Senator Dave Donley's concerns.  His                                                                       
intent was that the Governor be a part of the task force.                                                                       
He didn't think the governor would veto this bill simply on                                                                     
the premise that he was to appoint a labor union                                                                                
Co-Chair John Torgerson noted he just received a copy of                                                                        
the creation long range planning commission in which the                                                                        
Governor did not veto and stipulated "two members of the                                                                        
Executive Branch appointed by the Governor." Co-Chair John                                                                      
Torgerson pointed out the inconsistency.  He hoped the                                                                          
Administration would work with the Legislature in forming                                                                       
this task force.                                                                                                                
Senator Loren Leman believed the long range planning                                                                            
commission was formed under a different Governor and                                                                            
suggested that the committee might not want to rely on that                                                                     
Senator Lyda Green asked if the bill passed without                                                                             
Amendment #1A and if the Governor refused to appoint                                                                            
members, if the Legislature could appoint members.  Co-                                                                         
Chair John Torgerson answered that failure to appoint                                                                           
wouldn't defunct the committee.                                                                                                 
Amendment #1A failed by a vote of 3-5-1. Senator Al Adams,                                                                      
Senator Gary Wilken and Senator Loren Leman cast yea votes.                                                                     
Senator Randy Phillips was absent.                                                                                              
Senator Loren Leman moved for adoption of Amendment #3.                                                                         
Senator Al Adams objected for question. Senator Loren Leman                                                                     
explained the amendment, which was in two parts.  The first                                                                     
change would insert language to empower the commission to                                                                       
make government work smarter.  The second change would                                                                          
empower the commission to appoint an advisory council to                                                                        
give a broader base of opinions and information.                                                                                
Senator Loren Leman moved to amend Amendment #3 to delete                                                                       
the language, "composed of representatives from the private                                                                     
sector of the state economy" (page 1 lines 17 and 18 of the                                                                     
amendment.) He fully expected all members of this advisory                                                                      
committee would be representatives of the private sector                                                                        
but didn't want to limit the commission's ability to                                                                            
appoint others. His intention was that members of the                                                                           
advisory council would donate their time and cover expenses                                                                     
incurred in their duties on this council and provide                                                                            
specialized expertise. The motion to amend Amendment #3                                                                         
passed without objection.                                                                                                       
Senator Loren Leman explained that this would be an                                                                             
advisory council to the commission and would serve at the                                                                       
commission's request in functions such as subcommittee                                                                          
membership.  Senator Gary Wilken asked why the commission                                                                       
itself wouldn't do those things.  Senator Loren Leman                                                                           
answered saying nine members would not be enough in his                                                                         
opinion.  He wanted the commission to have a broader reach                                                                      
and to hear further from the communities and pull together                                                                      
those with expertise.  Those people would not be                                                                                
compensated.  Senator Gary Wilken asked if the commission                                                                       
itself, if they saw a need, could form its own council.                                                                         
Senator Loren Leman said that was what this amendment would                                                                     
accomplish. Senator Gary Wilken hated to see the bill fail                                                                      
from its own weight so he would vote against the amendment.                                                                     
Co-Chair John Torgerson asked Senator Gary Wilken if he had                                                                     
a problem with the provisions in the rest of the amendment.                                                                     
Senator Gary Wilken did not.                                                                                                    
Senator Pete Kelly noted Senator Loren Leman's suggestion                                                                       
that the commission could appoint an advisory council.                                                                          
However, the language stated "shall".  Therefore, it would                                                                      
be a necessary part of the commission. Senator Loren Leman                                                                      
responded that was correct, but it did not dictate how the                                                                      
council would operate and left those decisions up to the                                                                        
commission.  He fully expected the commission would want to                                                                     
seek others to help with their work.                                                                                            
Amendment #3 as amended, failed by a vote of 4-4-1. Senator                                                                     
Dave Donley, Senator Loren Leman, Senator Sean Parnell and                                                                      
Senator John Torgerson cast yea votes.  Senator Randy                                                                           
Phillips was absent.                                                                                                            
Co-Chair John Torgerson said he was having another                                                                              
amendment drafted that would return the word                                                                                    
"privatization" at the request of the sponsor.  Senator                                                                         
Gary Wilken asked that another amendment be drafted to                                                                          
include the consolidation and efficiency language from                                                                          
Amendment #3.                                                                                                                   
Senator Al Adams requested another day to look at both                                                                          
amendments in writing.                                                                                                          
Co-Chair John Torgerson ordered the bill held in committee.                                                                     
SENATE BILL NO. 50                                                                                                              
"An Act relating to certain boiler and pressure vessel                                                                          
inspections and inspectors; and providing for an                                                                                
effective date."                                                                                                                
DWIGHT PERKINS, Deputy Commissioner, Department of Labor                                                                        
testified in support of the bill, which the department                                                                          
requested.  He told the committee that the department was                                                                       
backlogged in its inspection of boilers and pressure                                                                            
vessels. Of the 6000 vessels that were overdue, over one-                                                                       
half were cast iron boilers and domestic hot water heaters.                                                                     
This legislation would allow the commissioner to identify                                                                       
certain state employees as approved inspectors for the                                                                          
purpose of performing routine annual inspections on this                                                                        
type of vessel. He pointed out that the state plumbing                                                                          
inspectors were journeyman plumbers trained to install and                                                                      
service this type of equipment and could, with minimum                                                                          
amount of training from a board certified boiler inspector,                                                                     
be able to perform annual inspections of this type. It                                                                          
would better help the department utilize existing employees                                                                     
within the department and help bring down the backlog of                                                                        
inspections.  He noted a positive fiscal note accompanied                                                                       
the bill.                                                                                                                       
Senator Lyda Green asked what was the current status of the                                                                     
inspectors and if they were on contract or employees of the                                                                     
state.  She wanted to know if they were certified                                                                               
inspectors.  Dwight Perkins said they currently had                                                                             
certified boiler inspectors that did a wide range of                                                                            
inspections. This bill would allow plumbing inspectors,                                                                         
with minimal amount of training to do the inspections for                                                                       
low-pressure boilers.  The department did not plan on                                                                           
hiring additional staff to perform these inspections.                                                                           
Senator Lyda Green asked if there was any reason to go                                                                          
outside of the department to contract others to do the                                                                          
inspections.  She referred to rural areas.  Dwight Perkins                                                                      
responded that the intent was not to hire new employees but                                                                     
to better use the staff already.                                                                                                
Senator Lyda Green asked if there was reason to contract                                                                        
the inspections outside the Department of Labor. She                                                                            
suggested staff from Department of Transportation and                                                                           
Public Utilities or an individual in a remote area that                                                                         
could do the inspections could be hired on a contract                                                                           
basis. Dwight Perkins replied that the intent was not to                                                                        
hire new people. The department had staff available for                                                                         
this. Senator Lyda Green asked what was the examination                                                                         
taken to qualify for certification. Dwight Perkins answered                                                                     
that examination was for the full-fledged boiler inspection                                                                     
certification and was intense and encompassing.                                                                                 
Senator Gary Wilken asked if this would expand the duties                                                                       
of the inspectors.  He wondered what were the current                                                                           
duties and if they inspected home hot water heaters. Dwight                                                                     
Perkins responded that hot water heaters were inspected.                                                                        
Senator Gary Wilken asked if this legislation would expand                                                                      
the duties the department currently performed. Dwight                                                                           
Perkins said this would help reduce the backlog of existing                                                                     
services provided.                                                                                                              
Tape: SFC - 99 #49, Side B 9:49 AM                                                                                              
AL DWYER, Director, Division of Labor Standards and Safety,                                                                     
Department of Labor, explained that inspections were done                                                                       
for new construction and larger, commercial facilities,                                                                         
such as for an apartment building.  This would not expand                                                                       
the duties, but would allow the department to utilize their                                                                     
plumbers for the inspections.  Inspections of domestic hot                                                                      
water heaters were currently in the department's code, he                                                                       
Senator Sean Parnell understood Senator Lyda Green's                                                                            
concerns and read language from page one of the bill                                                                            
regarding the special inspector: "The Commissioner of the                                                                       
Department of Labor may appoint an employee of the                                                                              
Department of Labor as an approved inspector." He then                                                                          
referred to language from page two that dictated                                                                                
certification as a special inspector, a person must have                                                                        
passed an examination, or hold a certificate. He wanted to                                                                      
know if the special inspector was different than the                                                                            
approved inspector of the first section. Al Dwyer responded                                                                     
that there was a difference.  He explained that half of the                                                                     
boilers and pressure vessels were inspected by insurance                                                                        
company inspectors and were commissioned by the                                                                                 
Commissioner.  It only used large companies, such as oil                                                                        
companies that had experts who had passed the national                                                                          
board test. To do the remaining half of the inspections,                                                                        
the department had a difficult time retaining qualified                                                                         
boiler inspectors who would go into the private sector                                                                          
positions. The department hoped that by using the plumbing                                                                      
inspectors, the backlog could be reduced. Senator Sean                                                                          
Parnell wanted to know if these inspectors were trained                                                                         
workers that could only be found in the department.  Al                                                                         
Dwyer explained the inspectors were highly trained and must                                                                     
work with the commissioner, who was ultimately responsible                                                                      
for the inspections.  Conflict of interest concerns were                                                                        
also a consideration with plumbers inspecting the same                                                                          
system they installed.                                                                                                          
There was discussion on the requirements of inspectors of                                                                       
the smaller cast iron boilers and the training and testing                                                                      
Senator Gary Wilken made a motion to move SB 50 from                                                                            
committee with individual recommendations and the negative                                                                      
fiscal note.  Without objection, Co-Chair John Torgerson so                                                                     
CS FOR SENATE BILL NO. 24(JUD)                                                                                                  
"An Act relating to regulations; relating to                                                                                    
administrative adjudications; amending Rule 65, Alaska                                                                          
Rules of Civil Procedure; and providing for an                                                                                  
effective date."                                                                                                                
Senator Dave Donley, sponsor of the bill, testified on its                                                                      
behalf.  This was part of a decades long effort that                                                                            
stemmed from the general frustration heard in the                                                                               
Legislature from the public as to how regulations were                                                                          
adopted and what was contained in regulations.  Most people                                                                     
didn't understand that the Administration wrote the                                                                             
regulations as delegated by the Legislature, he stated.                                                                         
Once a regulation went through the procedure laid out in                                                                        
the Administrative Procedures Act and was adopted the                                                                           
Legislature could not repeal it but only pass a statute                                                                         
that made the regulation inconsistent. He detailed the                                                                          
regulation process, pointing out the differences with the                                                                       
legislative process.                                                                                                            
SB 24 would provide that when the Executive Branch proposed                                                                     
a regulation change, they would be required to notify the                                                                       
public of the substance of the change, rather than simply                                                                       
the intent to make a change, and allow for public comment.                                                                      
He noted that this would be a change from the normal                                                                            
operations of the Administration. However, he didn't feel                                                                       
this would cause as large a conflict as feared.                                                                                 
He testified that SB 24 was an effort to try to increase                                                                        
public input into the regulatory process.                                                                                       
Senator Dave Donley noted the bill had grown as it traveled                                                                     
the legislative process. He spoke to some of the changes.                                                                       
Page 1 dealt with the core of the relationship between the                                                                      
Legislature, the Executive Branch and the regulatory                                                                            
Section 2 was the existing law that guided how regulations                                                                      
were adopted in the State Of Alaska. It dictated there was                                                                      
to be a consistency between regulation and statute.                                                                             
However, it was written in an open manner in saying a                                                                           
regulation was not valid if it wasn't reasonably necessary                                                                      
to carry out the purpose of the statute.  He felt it gave                                                                       
the Executive Branch very broad ranging powers to adopt                                                                         
Senator Al Adams asked if the sponsor was reading from the                                                                      
Judiciary version of the bill or the proposed finance                                                                           
committee substitute. Senator Dave Donley clarified Version                                                                     
M, CS SB 24 (JUD) was the version he was speaking to.                                                                           
The proposal from the Senate Judiciary Committee would make                                                                     
a significant change in this area by replacing the word,                                                                        
"reasonably" with "clearly".  He anticipated arguments from                                                                     
the Attorney General claiming that the Administration knew                                                                      
what "reasonable" meant and had 20 years of case law to                                                                         
guide them but had no understanding of "clearly". Another                                                                       
argument would be that there would be litigation and                                                                            
regulators would be unable to perform their duties as in                                                                        
the past because of this language.                                                                                              
Section 3 set out new, specific language providing that a                                                                       
new regulation should follow the intent of the statute it                                                                       
was implementing.  Because of concerns raised by the                                                                            
Attorney General's office regarding litigation, the burden                                                                      
of proof on a regulation challenged under this section,                                                                         
would be on the challenger rather that the state to show                                                                        
that it was the intent.  This section was a concession to                                                                       
the Executive Branch to make regulations easier to defend,                                                                      
Senator Dave Donley told the committee.                                                                                         
A clause was inserted preventing anyone from obtaining a                                                                        
temporary restraining order, preliminary or permanent                                                                           
injunction on the regulation based on failure to comply                                                                         
with the intent of the Legislature.  He said that was                                                                           
because many interest groups had used the regulatory                                                                            
process to block economic development and other aspects of                                                                      
changes to the society that the majority of the people                                                                          
would support.  The Senate Judiciary Committee wanted the                                                                       
Executive Branch to follow the intent of the Legislature                                                                        
and the intent of the statute, not provide an inappropriate                                                                     
tool to people who just wanted to be obstructionists toward                                                                     
progress.  Therefore, this would place the burden on the                                                                        
challenger if they wanted to contest a regulation.  At the                                                                      
same time, it provided additional guidance to the Executive                                                                     
Branch, in his opinion.                                                                                                         
Section 4 dealt with the idea that the federal government                                                                       
had already incorporated into its regulatory process.  That                                                                     
was to have a cost benefit requirement for regulations.                                                                         
Senator Pete Kelly interrupted asking about the cost                                                                            
benefits section, which he said he liked. He spoke to a                                                                         
bill last year that allowed adoption of "regulations by                                                                         
reference" for non-substance changes.  He gave an example                                                                       
of Department of Health and Social Services and their                                                                           
dealings with pages of Medicaid code changes. Before the                                                                        
passage of the law, those changes had to go through the                                                                         
entire regulatory process for adoption. He wanted to know                                                                       
if this bill made allowances for those kinds of regulation                                                                      
Senator Dave Donley responded that this legislation had                                                                         
specific exceptions for regulations that were necessary to                                                                      
meet federal requirements.  He suggested it might be                                                                            
appropriate to add this situation to the section. Because                                                                       
of concerns raised by the Executive Branch on the cost                                                                          
benefits requirements, a provision was added that would                                                                         
allow department heads to make a finding that a particular                                                                      
item was not appropriate for a cost benefit analysis. A                                                                         
cost benefit requirement was currently in Policy, but the                                                                       
Administration was concerned that by having a cost benefit                                                                      
requirement in statute, it would be an item that could be                                                                       
litigated.  Therefore, this legislation allowed for                                                                             
flexibility to give exceptions. Specific exemptions listed                                                                      
were the Board of Fisheries, the Board of Game and the                                                                          
Commercial Fisheries Entry Commission, since it would be                                                                        
particularly difficult to do cost benefit analysis for                                                                          
their functions.  He suggested other departments could be                                                                       
added as exemptions to avoid challenges.                                                                                        
Senator Al Adams referred to page 2 lines 17-20 in Section                                                                      
4 regarding the cost benefit analysis. He read, ".most                                                                          
state agencies may not adopt a regulation covered by this                                                                       
section unless the benefit to the public outweighed the                                                                         
cost to the public." His concern was what would happen to                                                                       
public safety or the health of the constituents if the cost                                                                     
outweighed that in regulations. Senator Dave Donley                                                                             
responded that specific provisions were made to allow cost                                                                      
benefit analysis to consider non-tangible elements as well                                                                      
as specific tangible elements.  In the public safety area,                                                                      
the purpose of public safety was to protect the public                                                                          
safety of the communities across the state and if a cost                                                                        
benefit analysis determined there was a more efficient way                                                                      
to deliver a service, that system of delivery should be                                                                         
considered. A more non-specific method of measurement could                                                                     
be used in public safety areas, he suggested.  Line 15                                                                          
allowed for that in stating that issues were non-                                                                               
Senator Dave Donley continued with Section 5 saying it                                                                          
continued with the changes from Section 4 requiring the                                                                         
notices posted on the Internet if the department had the                                                                        
Section 6 would add to the proposed public notices                                                                              
regarding regulation changes, a statement saying that a                                                                         
cost-benefit analysis was available if one were prepared.                                                                       
Section 7 was a technical provision necessary to implement                                                                      
Section 8.                                                                                                                      
Section 8 addressed the supplemental public notices when                                                                        
substantial changes were made to the content of a proposed                                                                      
regulation.  It would set out a system by which, if an                                                                          
agency provided the initial notice and after public                                                                             
comment, decided to significantly change the proposed                                                                           
regulation, the agency would issue another public notice                                                                        
detailing the changes. This was with the exception of                                                                           
federal requirements, emergency regulations and the Board                                                                       
of Game, Board of Fisheries and the Commercial Fisheries                                                                        
Entry Commission.                                                                                                               
Section 9 was another technical provision to implement some                                                                     
of the other sections.                                                                                                          
Section 10 expanded on the emergency regulations making                                                                         
exceptions for them.                                                                                                            
Section 11 was not mentioned.                                                                                                   
Section 12 was added because of public testimony heard in                                                                       
the Senate Judiciary Committee complaining about delays in                                                                      
the time it took to adopt some regulations to carry out new                                                                     
statutes.  He gave an example of the ignition interlock                                                                         
legislation that took a lawsuit to compel the state to                                                                          
finally adopt regulations. He surmised that this method was                                                                     
a way for the Executive Branch to essentially veto                                                                              
statutory provisions by simply not adopting necessary                                                                           
regulations. Therefore, the Senate Judiciary committee                                                                          
inserted a two-year maximum deadline for a department to                                                                        
adopt regulations pertaining to a particular statute.                                                                           
Senator Dave Donley said agencies voiced concerns about                                                                         
what would happen if after the two-year time period, no                                                                         
regulations were adopted.  Would that then prevent them                                                                         
from ever writing regulations? Senator Dave Donley said                                                                         
that was not the intent.  The intent was to encourage                                                                           
agencies to get them done. To do so without stopping the                                                                        
regulatory process, the provision stipulated that if an                                                                         
agency failed to adopt regulations within two years, they                                                                       
would need to file a written report containing the reasons                                                                      
for the failure and submit it to the Legislature.                                                                               
Senator Al Adams asked if there was a provision to allow                                                                        
for the public and their initiatives.  Was there a time                                                                         
period for them to challenge a statute? He suggested that                                                                       
the deadline should allow an agency to delay implementing                                                                       
regulations until the initiative process was completed.                                                                         
Senator Dave Donley felt the best place for that would be                                                                       
with the court. He repeated the option agencies would have                                                                      
in filing a report listing the legitimate reasons for                                                                           
Section 13 dealt with the issues involving what grounds of                                                                      
invalidity could be used for overturning a regulation.  He                                                                      
wanted to adopt the concept that regulations accomplish                                                                         
their goals in the least intrusive way to individual and                                                                        
property rights. He noted that this was part of the                                                                             
Governor's regulation policy. Although sometimes the common                                                                     
good had to override the individual rights and property                                                                         
rights, but they should be considered wherever feasible,                                                                        
Senator Dave Donley stressed. Another intent of this                                                                            
section was to prevent people from taking advantage of the                                                                      
situation and cause unnecessary delay of regulation                                                                             
implementation.  Under the provision, if a court reviewed                                                                       
the validity of a regulation it must consider the least                                                                         
intrusive method for people affected by the regulation.  If                                                                     
another method other than the least obtrusive was chosen,                                                                       
it could be shown that a substantial state interest was                                                                         
required.  This would serve as a safety valve.  There were                                                                      
also special provisions that placed prohibitions on the                                                                         
court from stopping necessary regulations based on lawsuits                                                                     
on this issue of least intrusive method. The intent was                                                                         
that the regulations would proceed and this argument could                                                                      
not be used as a tool to stop regulations.  He suggested                                                                        
this would be important for natural resource development                                                                        
Senator Al Adams pointed out certain exemptions listed in                                                                       
the bill.  Senator Dave Donley said they were put in                                                                            
specifically to avoid the holdup with court proceedings.                                                                        
The new language could otherwise be used as a tool to block                                                                     
necessary regulations for the Department of Corrections and                                                                     
Department of Natural Resources.  Therefore, they were                                                                          
specifically excluded.  Another exception was added base on                                                                     
comments received from the Attorney General's Office.                                                                           
Because the board or commission regulation process involved                                                                     
greater public participation, they were also exempted.                                                                          
Senator Dave Donley wanted to note a reoccurring theme, if                                                                      
members felt there was a particular area that this would                                                                        
cause a problem, that area could be exempted.  He said this                                                                     
process was a tremendous and complicated step and if there                                                                      
were areas of concern, they could be exempted. He felt it                                                                       
might be appropriate to exempt the Department of Natural                                                                        
Resources.  He also suggested this could be turned into an                                                                      
experimental bill and only target some problematic                                                                              
Section 14 imposed time limits on departments to handle the                                                                     
challenge to regulations.  Part of the regulatory process                                                                       
was not just producing new regulations, but to make                                                                             
decisions based on those regulations, he argued. Before                                                                         
going to court, a challenger to a regulation had to get a                                                                       
final administrative adjudication.  If that was delayed,                                                                        
justice was delayed. In response to public testimony, the                                                                       
Senate Judiciary Committee added a method to ensure that                                                                        
the departments made the decisions in a reasonable and                                                                          
timely manner.  A deadline required hearing officers to                                                                         
close the record with a final administrative order within a                                                                     
timely manner or two years after the statement of issue.                                                                        
Other complaints were with once a hearing officer issued a                                                                      
final order, there was no standard for the exception to                                                                         
allow the Commissioners to overrule the decision and                                                                            
request additional facts on the issue, which put the                                                                            
process back at the beginning.  Therefore standards were                                                                        
added to provide when an agency could order a record                                                                            
reopened for additional factual findings.  The Commissioner                                                                     
would have to get permission from the Lieutenant Governor                                                                       
as an outside party. The intent was to give some avenue for                                                                     
finality if the department was unresponsive.                                                                                    
Section 15 addressed applicability issues and gave an                                                                           
effective date of July 30, 2000.                                                                                                
Senator Dave Donley suggested that the different sections                                                                       
of the bill were each strong enough to stand as a separate                                                                      
bill. The bill had grown much larger than he anticipated                                                                        
and he offered to break it down into areas the committee                                                                        
wished to address.  He supported a flexible approach.                                                                           
Senator Al Adams suggested looking at the functions of the                                                                      
Regulation Review Committee and their workload.  He pointed                                                                     
out the high cost of implementing this statute.  He also                                                                        
suggested a pilot program for some agencies that could be                                                                       
worked within their budgets.  He offered working on a                                                                           
TERESA WILLIAMS, Assistant Attorney General, Fair Business                                                                      
Practices Section, Civil Division, Department of Law,                                                                           
testified via teleconference from Anchorage. She addressed                                                                      
Section 14, the time limits provision on Version M of the                                                                       
bill.  It provided for a final decision within 60 days of                                                                       
the closing of the hearing record.                                                                                              
Tape: SFC - 99 #50, Side A                                                                                                      
During that timeframe, if parties wished to submit briefs,                                                                      
that would come out of the time frame.  The hearing officer                                                                     
would have to prepare a proposed decision.  The final                                                                           
decision maker must review the decision and if there were a                                                                     
determination to review the record, the record would need                                                                       
to be prepared and reviewed within that time period.  There                                                                     
were complex and controversial cases that came before                                                                           
hearing officers and agencies for determination and this                                                                        
deadline could not be met in those kinds of cases, she                                                                          
stressed.  She gave an example of a recent Medicaid rape                                                                        
case where an attorney for the private party indicated that                                                                     
the transcript was 1500 pages long and had taken about four                                                                     
and a half weeks to prepare.  That person wanted to have                                                                        
more than a month to prepare the brief that would be filed                                                                      
after the record had been closed so the hearing officer                                                                         
would be able to benefit from the analysis by the party.                                                                        
Clearly, that process could not be allowed within a sixty-                                                                      
day window between the close of the record and a proposed                                                                       
decision. That was a concern for the interest of the                                                                            
parties as well as whether the administrative hearing                                                                           
process could even work.                                                                                                        
Teresa Williams continued with the other deadline requiring                                                                     
the hearing to be concluded within two years.  Again, there                                                                     
were complex proceedings in which both parties agreed that                                                                      
there was a need to develop testimony, talk to experts,                                                                         
find out what the facts were before the actual hearing, and                                                                     
do briefing. Sometimes there was a parallel criminal                                                                            
proceeding, which much conclude before the administrative                                                                       
proceeding could start.  Other times there was a parallel                                                                       
civil proceeding that also must conclude first. To require                                                                      
both proceedings to go on simultaneously would double the                                                                       
cost for the party, she advised. If a stay were requested                                                                       
there was no provision under the bill to provide that any                                                                       
request for an extension would stop the clock.  The                                                                             
administrative hearing would be cancelled.                                                                                      
Another concern was that the preparation of the transcript                                                                      
took time.  The final decision-maker could not change the                                                                       
proposed decision made by the attorney how acted as the                                                                         
hearing officer without reviewing the record.  Some                                                                             
agencies did that by listening to the tape. For instance                                                                        
the Human Rights Commission listened to the tapes and it                                                                        
sometimes took weeks.                                                                                                           
In Teresa William's opinion, the bill needed to be drafted                                                                      
I such a way to recognize that respondents sometimes                                                                            
legitimately request delays and other times cause the delay                                                                     
by not being cooperative, not meeting deadlines, etc.  They                                                                     
could manipulate the process and move it to the Superior                                                                        
Court.  Any of that time should be excluded from the clock.                                                                     
The remedy provided in the bill was extreme.  Currently,                                                                        
parties had the power to petition the Superior Court to                                                                         
request the agency to act if it was felt the agency was                                                                         
acting unreasonably.  Under the provision in the bill, the                                                                      
process would have to start over in the Superior Court.  As                                                                     
a result, the agency's cost and the respondent's costs                                                                          
incurred in the proceedings would be lost when the process                                                                      
started over in state court, which was more expensive.                                                                          
Another concern Teresa Williams voiced was with the role of                                                                     
the Lieutenant Governor that had been injected in a couple                                                                      
stages in the proceedings.  That would open administrative                                                                      
adjudication to the political process with political                                                                            
pressure. That may not be the public interest and would be                                                                      
an unknown quantity since there was no provision stating                                                                        
the standards the elected official must exercise. There                                                                         
also was no preclusion of ex partay contact.                                                                                    
Co-Chair John Torgerson requested her comments in writing.                                                                      
Senator Dave Donley said his proposed committee substitute                                                                      
addressed some of the testifier's concerns.  He asked that                                                                      
the committee adopt the CS so future public comments could                                                                      
be addressed to that version.                                                                                                   
Senator Al Adams said he had no objection and asked about                                                                       
the sectional analysis between the two versions.                                                                                
Senator Dave Donley spoke to the changes made in the CS.                                                                        
Section 2 tried to reach a middle ground by replacing the                                                                       
word "clearly" with "reasonable".  The new language would                                                                       
say that the reasonable approach was clearly within the                                                                         
intent of the statute.  The bill drafters suggested the new                                                                     
Section 12 was the adoption time limit section. The CS made                                                                     
a specific exception indicating that when a regulation did                                                                      
not get adopted within the two-year deadline, the court                                                                         
would not hold the regulation invalid.  This was to                                                                             
encourage agencies to adopt regulation, not to give a                                                                           
reason to hold a regulation invalid.                                                                                            
Section 13 was rewritten to reverse the presumption from                                                                        
the Judiciary CS that the regulation was automatically                                                                          
invalid if it did not meet the specified criteria. The new                                                                      
language stated that the regulation was valid and the                                                                           
challenger had the burden of proof to show the specific                                                                         
criteria were not met.                                                                                                          
Section 14 replaced the term "final administrative order"                                                                       
with the term "proposed administrative order".  It also                                                                         
added an additional 30 days to the 60-day period by which                                                                       
time a final administrative order would be provided.  He                                                                        
felt this should alleviate some of the witness's concerns.                                                                      
He referred to a proposed Amendment #1 and said his motion                                                                      
to adopt the CS would include the changes listed in                                                                             
Amendment #1.                                                                                                                   
The amendment added a specific exemption for situations                                                                         
with a simultaneous criminal case to wait until the                                                                             
criminal case was resolved.  The amendment also added a                                                                         
provision to allow a period of time until the next                                                                              
regularly scheduled board meeting, plus an additional 30                                                                        
days after the board meeting, for regulations written by a                                                                      
board or commission.                                                                                                            
He felt these changes tried to address specific issues                                                                          
worked on since the adoption of the Judiciary CS.  There                                                                        
was nothing radical, but changes that tempered the effect                                                                       
of the legislation.                                                                                                             
Senator Dave Donley moved to adopt the Version "N"                                                                              
committee substitute incorporating Amendment #1.  Senator                                                                       
Al Adams objected for question. He wanted to know if, with                                                                      
the two differences to Sections 12,13 and 14, did any of                                                                        
those changes alter the numerous fiscal notes accompanying                                                                      
the bill. Senator Dave Donley said all the departments had                                                                      
their own positions on the fiscal notes and he couldn't                                                                         
speak for the departments.  He noted that the changes would                                                                     
give them more time and mitigate the impacts of the bill,                                                                       
so they would not increase the fiscal notes.  Senator Al                                                                        
Adams removed his objection.                                                                                                    
The committee adopted CS SB 24 Version "N" incorporating                                                                        
Amendment #1, without objection.                                                                                                
Co-Chair John Torgerson ordered the bill held in committee.                                                                     
He reminded the committee that amendments to the FY99                                                                           
Supplemental Budget bills were due by 11:00 AM.                                                                                 
Senator Torgerson adjourned the meeting at 10:52 AM                                                                             
SFC-99 (20) 3/9/99                                                                                                              

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