Legislature(1999 - 2000)
01/29/1999 01:30 PM Senate JUD
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* first hearing in first committee of referral
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SENATE JUDICIARY COMMITTEE
January 29, 1999
1:30 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Dave Donley
Senator John Torgerson
MEMBERS ABSENT
Senator Rick Halford, Vice-Chairman
Senator Johnny Ellis
COMMITTEE CALENDAR
SENATE BILL NO. 24
"An Act relating to the adoption, amendment, repeal, legislative
review, and judicial review of regulations; and amending Rule 202,
Alaska Rules of Appellate Procedure."
-HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SB 24 - No previous action to report.
WITNESS REGISTER
Mr. Jack Kreinheder
Senior Policy Analyst
Office of Management and Budget
Office of the Governor
PO Box 110020
Juneau, AK 99801-0020
POSITION STATEMENT: Opposed SB 24
Ms. Deborah Behr
Assistant Attorney General
Legislation and Regulations Division
Department of Law
PO Box 110300
Juneau, AK 99801-0300
POSITION STATEMENT: Commented on SB 24
Ms. Pam LaBolle
President, Alaska State Chamber of Commerce
217 2nd Street
Juneau, AK 99801
POSITION STATEMENT: Supported SB 24
Mr. Doug Wooliver
Administrative Attorney
Alaska Court System
820 West 4th Avenue
Anchorage, AK 99501-2005
POSITION STATEMENT: Commented on SB 24
ACTION NARRATIVE
TAPE 99-05, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:35 p.m. and announced SB 24 would be the first and only
order of business.
SB 24-REGULATIONS: ADOPTION & JUDICIAL REVIEW
SENATOR DAVE DONLEY, prime sponsor of SB 24, presented SB 24.
SENATOR DONLEY said the bill is similar to legislation he has had
before the Legislature for six or eight years and revises the
current system of adoption and implementation of regulations under
the Administrative Procedures Act. SENATOR DONLEY stated there is
a huge volume of regulations that now exist and all of them carry
the power of law. SENATOR DONLEY explained the Legislature does not
have the power to change regulations by any means other than
passing new legislation inconsistent with them.
SENATOR DONLEY asserted that the process by which a regulation is
adopted is not as stringent as the legislative process and the
regulations that may be adopted can be quite different from the
proposed regulations noticed for public comment. SENATOR DONLEY
stated that the legislative process is much more open to the
public; he proposed SB 24 would open up the regulation process.
SENATOR DONLEY explained he has heard complaints from constituents
about excessive and burdensome regulations and SB 24 is an attempt
to change the process of adopting regulations in several ways.
First, most proposed regulations would be noticed again if there
was a substantial change from the initial proposal. This would
allow the public to comment on final versions of regulations to be
adopted. Second, SB 24 requires the department to do a cost/benefit
analysis on every proposed regulation to determine if the proposed
regulations are "more trouble than they are worth." SENATOR DONLEY
said this is a very positive and minimal thing to ask of a
bureaucracy imposing "new laws," and added SB 24 does exempt
emergency regulations. SENATOR DONLEY observed there is a sectional
analysis of the bill available for further explanation.
SENATOR DONLEY explained the proposed committee substitute, saying
it alleviates the concerns of the Alaska Court System and does not
allow challenges to regulations to be heard in District Court. The
Board of Fish, Board of Game, the Limited Entry Commission and the
Department of Corrections are all exempt from the requirements of
SB 24 and SENATOR DONLEY stated he is open to arguments about
further valid exemptions.
Number 180
SENATOR TORGERSON asked why some departments should be exempted
from the cost/benefit analysis requirement. SENATOR DONLEY replied
a cost/benefit analysis may be difficult to do for resource
questions, and these departments are faced with the necessity of
making quick management decisions in response to a quickly changing
environment. SENATOR DONLEY said he did not want to bog them down.
SENATOR TORGERSON argued these departments would be exempt from
analyzing emergency regulations anyway and perhaps they should be
required to do the analysis if and when they permanently adopt
regulations.
Number 216
SENATOR DONLEY moved the adoption of the committee substitute dated
1-26-99. Without objection, the committee substitute was adopted.
MR. JACK KREINHEDER, representing the Office of Management and
Budget, testified that the Administration supports and shares the
objective of making the regulatory process more responsive to and
accommodating of the public. MR. KREINHEDER mentioned several steps
that have been taken in this direction. For example, Executive
Order 157, issued in 1995, directed all state agencies to use plain
English, minimize the cost of compliance with regulations and work
closely with the public to accomplish the objectives set out in the
statutes underlying regulations. MR. KREINHEDER remarked that
agencies have done a good job on this and also on conducting a
review of existing regulations.
MR. KREINHEDER explained regulations are like statutes and are a
necessary response to new issues raised in our complex society.
In addition to Executive Order 157, HB 130 (also passed in 1995)
required state agencies to solicit and consider the cost to the
public of compliance with proposed regulations. Agencies have been
doing a good job of trying to minimize costs to the public,
according to MR. KREINHEDER.
MR. KREINHEDER concluded by saying the committee substitute makes
some improvements to SB 24 but the Administration still has
concerns, particularly with the cost/benefit analysis requirement.
MR. KREINHEDER repeated that the Administration supports the
concept behind the bill but thinks implementation may be costly and
impractical.
MR. KREINHEDER further stated that in many cases the costs and
benefits behind proposed regulations are difficult to calculate,
and added that the calculations behind these cost/benefit analyses
must be thorough enough to stand up in court. He said this analysis
may delay new regulations, and he estimated the cost of
implementation of SB 24 in excess of 1.5 million dollars.
MR. KREINHEDER congratulated CHAIRMAN TAYLOR on his appointment to
the Regulation Review Committee.
Number 321
CHAIRMAN TAYLOR recalled a bill requiring a cost/benefit analysis
of federal mandates that the Governor vetoed in 1995. CHAIRMAN
TAYLOR said the Governor told him the Administration wanted to do
what was required in the bill, but did not want to be forced to do
it. CHAIRMAN TAYLOR commented that the question seems to be if the
public should know how much the cost imposed by a new regulation
will be.
CHAIRMAN TAYLOR noted SB 24 has twenty-five fiscal notes from
departments that say it will be near impossible to do, basically,
the very thing that is already being done under Executive Order
157. CHAIRMAN TAYLOR stated you can not minimize the cost of
compliance with a regulation without first knowing what the cost
is. MR. KREINHEDER responded by saying there is a difference
between minimizing the cost of compliance and doing a full
cost/benefit analysis that also attempts to quantify a proposed
regulation's benefit to the public. MR. KREINHEDER explained there
are many areas like public safety in which the benefit is difficult
to quantify. He told the committee a good job requires research and
information.
SENATOR DONLEY called attention to the fact that Executive Order
157 required the submission of a report on existing regulations
that examined the cost to the public. SENATOR DONLEY said this
constitutes a cost/benefit analysis and the Administration's
opposition to doing the same thing for future regulations seems
inconsistent. MR. KREINHEDER replied that agencies looked at costs
but not specifically in regard to all regulations. He reiterated
this bill will require a hard dollars and cents analysis.
SENATOR TORGERSON asked MR. KREINHEDER for specific examples in
which proposed regulations were changed to minimize the cost to the
public. MR. KREINHEDER cited the establishment of mixing zones as
a remedy to the high cost of meeting federal water quality
standards. MR. KREINHEDER said he would be happy to compile more
examples and present them to the committee. SENATOR TORGERSON
replied he would appreciate that.
Number 423
SENATOR DONLEY recognized there may be non-economic issues that are
not easily quantified. He asked MR. KREINHEDER if the bill would be
better if it included recognition of non-economic issues. MR.
KREINHEDER said that, and the recognition that the dollars on the
benefit side don't always have to exceed the dollars on the cost
side, would help. SENATOR DONLEY said he was willing to work on
this.
Number 440
CHAIRMAN TAYLOR showed the committee a pile of documents composed
of regulation changes submitted to the Lt. Governor. CHAIRMAN
TAYLOR noted the significant changes made in longhand to these
documents and wondered who made them. CHAIRMAN TAYLOR found out
these changes were made by the Department of Law after the whole
process had been completed. CHAIRMAN TAYLOR said the public has no
opportunity to see or comment on any of these changes even though
the change in one word may have a huge impact on an effect of a
regulation.
MS. DEBORAH BEHR, Assistant Attorney General and Regulations
Attorney for Alaska, testified that the committee substitute for SB
24 is an improvement but the department still has concerns with the
bill.
MS. BEHR stated the concepts in the bill have been presented in the
past and rejected because of the significant fiscal impact and the
opportunity for challenge of regulations particularly in an attempt
to obstruct development.
MS. BEHR said the mandatory requirements within the bill can oblige
the court to void regulations under review if processes are not
precisely followed.
Regarding the cost benefit analysis, MS. BEHR expressed concern
with non-economic costs and the inability to quantify some
benefits. MS. BEHR used the difficulty of opening the Hall road as
an example. MS. BEHR stated that if this bill had been in place,
she does not believe the road could have been opened. She concluded
by saying this is just one example among many.
Number 503
MS. BEHR explained the definitions of many terms in the bill such
as "cost" and "benefit" as well as "public" are not clear and this
could be very problematic. MS. BEHR brought to the committee's
attention a cost/benefit analysis of one regulation promulgated by
the Department of Fish and Game. She pointed out the sheer volume
of the analysis and said, even after this lengthy analysis, there
is no certainty that the benefit can precisely be shown to exceed
the cost. If it were challenged, it might not stand up in court.
MS. BEHR indicated that several things have been done to reduce
costs and provide better public notice of proposed regulations and
changes. MS. BEHR has modified the public notice forms for
regulations to include a section soliciting ideas on the cost of
compliance. MS. BEHR worked on the passage of HB 130 which mandated
that the cost of compliance to the public be considered in the
adoption of all new regulations. She assured the committee that if
there is not a statement that cost has been taken into account on
a regulation adoption order, she will not accept the adoption
order. MS. BEHR remarked that regulations are adopted in a public
forum, like the legislature.
MS. BEHR concluded that, on the surface, the bill looks good, but
budget cuts and other circumstances often require statutory
amendments be done by regulation, and that would not stand up under
this bill. MS. BEHR also commented that a view of the budget is a
different perspective than a view of an individual regulation and
she is concerned how the cost/benefit analysis provision in SB 24
would work in a climate where we don't have the money to do
analyses that will stand up in court.
MS. BEHR also expressed concern with the availability of business
proprietary information that would be necessary to do a
cost/benefit analysis on regulations affecting business. Given the
constitutional right to privacy, MS. BEHR doubted she could get
this information even if she had a subpoena.
Number 548
MS. BEHR addressed SENATOR DONLEY'S concern about regulations which
are on the books but are not working. MS. BEHR remarked this is a
valid concern but observed that under SB 24, a cost/benefit
analysis would have to be done in order to take these old
regulations off the books. Furthermore, if the analysis was
challenged, the Commissioner would have to show with the precision
of a cost/benefit analysis that those regulations should be
removed.
MS. BEHR offered some suggestions to reduce the fiscal impact of SB
24. First, she suggested Commissioners be given discretion to
determine when costs and benefits are not reasonably identified, or
when it would be cost prohibitive to do so. Second, MS. BEHR
suggested the requirement of a cost/benefit analysis could be
restricted to only major projects. The danger with this is these
very cost/benefit analyses may provide grounds for a legal
challenge of regulations in order to halt large development
projects. Third, MS. BEHR suggested that a regulation should not be
allowed to be overturned simply on the grounds of the cost/benefit
analysis. MS. BEHR stated that even with the above changes, SB 24
will have a fiscal impact.
Number 572
MS. BEHR addressed the issue of supplemental public notices and
said SB 24 would require new rounds of public comment at a cost of
possibly $1,500 - $3,700 per round. The bill does say only
significant changes require additional public comment, but MS. BEHR
agreed with CHAIRMAN TAYLOR that sometimes even a minor change may
be determined significant by the court.
TAPE 99-05, SIDE B
Number 584
MS. BEHR worried that agencies do not have the money in their
budgets to implement SB 24. She also worried that delays to a
project may mean its death, and another round of public comment on
a last minute legal change to a regulation may mean missing a
construction season.
MS. BEHR noted that certain programs require quick changes that
need to be done by regulation, and SB 24 would make that difficult
to do. She maintained that there are checks within the
Administrative Procedures Act on the amount of change an agency can
make to regulations. First, a change must fit within the scope of
the public notice; MS. BEHR regularly tells agencies they cannot
make a change because it does not fit the scope of what has been
noticed. Second, an agency must have the legal authority to make a
proposed change; if they do not, there is no change made.
Additionally, if a change is way out of line, it may be challenged
in court.
MS. BEHR stated that some Commissioners are now posting regulations
on the Internet and she encourages them to do so. Regulations are
a matter of public record and the public always has access to them.
MS. BEHR offered other cost-saving proposals that might improve
things: continued posting of regulations on the Internet, exemption
of Boards and Commissions (which adopt regulations in public
meetings), exemption of rules made as a result of negotiated rule-
making and the consideration that regulations not be voided if
somehow "someone gets it wrong."
Number 545
SENATOR DONLEY asked MS. BEHR if she could explain administrative
rule making. She replied negotiated rule-making allows the
establishment of a working group comprised of public and private
interests to negotiate regulations. If the group can not agree on
regulations, they submit a report identifying any consensus they
have reached. This is the point at which proposals go out for
public comment. MS. BEHR said negotiated rule-making has worked
very well and the public responds well to it but, due to a lack of
funding, it is not used as often as it might be.
MS. BEHR reported the third major factor to consider is that SB 24
sets up a presumption of invalidity. This means a regulation can
not be upheld by a court unless it is shown to be the least
intrusive on those affected, or unless the state can show a
compelling interest in maintaining it. MS. BEHR said a compelling
interest will have to be quite significant. Currently, the law
presumes validity until a challenge is decided on in court. This
establishes some stability for business that could not be
guaranteed under SB 24.
Number 516
CHAIRMAN TAYLOR inquired if this least intrusion standard is the
same standard used with condemnation proceedings and the right of
eminent domain. MS. BEHR was not certain. CHAIRMAN TAYLOR commented
that courts have had to make this type of decision for many years.
DEBORAH BEHR stated there is a broad range of different types of
regulations, some of which do not lend themselves to an easy
determination of the least intrusive standard. She suspected it
would be hard to tailor a bill to fit across such a broad spectrum
of programs. MS. BEHR used public safety concerns as examples of
issues that would be easily challenged in court and she said,
basically, "The State loses unless we show."
MS. BEHR said departments will have a hard time enacting
regulations to implement the will of the Legislature unless they
can provide a positive cost/benefit analysis. She proposed SB 24
will cause many unintended consequences.
MS. BEHR stated that the current standard is adequate and suggested
that the Legislature may enact statutes to prohibit the adoption of
regulations in certain areas. In relation to the committee
substitute, MS. BEHR agreed with the removal of review at the
District Court level. Regarding review of regulations, MS. BEHR
said the Regulation Review Committee now has the power to review
regulations. She commented the bill overlooks two agencies that
promulgate regulations, the Office of the Governor and the
University of Alaska. She suggested another approach to regulation
review might be to audit problem areas within the administrative
code rather than review the entire code. She ended her testimony by
saying she would be willing to work with the committee on this
issue.
Number 461
CHAIRMAN TAYLOR asked about the problem of issues being endlessly
tied up in "the political merry-go-round" of administrative law.
He expressed concern about the due process aspects of regulations
and the means by which the public can get a final decision on a
regulation question. MS. BEHR replied she would refer this question
to one of the hearing officers who deal with this type of issue
every day.
SENATOR TORGERSON asked MS. BEHR for examples of regulations which
have been adopted that substantially changed or subverted the
intent of the Legislature. MS. BEHR replied that Alaska is unique
in the fact it does not have committee reports or consensus reports
that reflect the will and intent of the Legislature. She suggested
that in order to avoid confusion, the Legislature should provide as
much information as possible through purpose and intent statements
as well as through the legislation itself. MS. BEHR said the
biggest problem in deciding regulation questions is divining what
the intent of the Legislature was many years after the fact.
Number 401
SENATOR TORGERSON recalled hearing "war stories" of regulations
that surpassed not only the intent, but even the letter of the law.
He mentioned that including a new section in every bill with
language to prohibit certain regulations might be a good idea. MS.
BEHR clarified that type of language would be adopted as a part of
each individual bill, not in a bill like SB 24 which deals with the
structure of the Administrative Procedures Act.
CHAIRMAN TAYLOR observed there exists a type of "pocket veto" when
no regulations are created to implement a bill that the Governor
has opposed. He said this has happened to bills he has introduced.
On the other hand, sometimes the Administration brings forward
legislation which fails to pass and the affected department(s)
subsequently enact regulations which carry out essentially the same
objectives, according to CHAIRMAN TAYLOR.
Number 354
MS. BEHR observed that the Regulation Review Committee can ask for
a progress report from a department at any time.
SENATOR DONLEY thanked MS. BEHR for her constructive, new
suggestions. He asked what might be a better standard for the court
in place of "compelling". He commented he likes the idea of giving
the Commissioners discretion in cost/benefit analyses and he agrees
with CHAIRMAN TAYLOR'S idea to include some sort of statute of
limitations on how long things can be tied up in the regulatory
process. SENATOR DONLEY said after a certain amount of time, an
issue should go directly to court.
CHAIRMAN TAYLOR brought up an example of inconsistency of
regulations within different departments. He would like to see more
openness and less politics in the regulation process.
Number 301
SENATOR TORGERSON asked MS. BEHR if she could provide the committee
with information about the number of regulations she reviews per
month and the average time line of processing a regulation.
MS. BEHR observed that due to staff levels, the Department of Law
does not submit perfect regulations. Instead, regulations are
drafted by a trial attorney, then go through the process and end up
on the desk of MS. BEHR, who is a regulation specialist. MS. BEHR
returns any substantive changes to the department for readoption,
or she may disapprove proposed regulations if they do not follow
the law.
Number 236
MS. PAM LABOLLE, President of the Alaska State Chamber of Commerce,
reported that regulatory reform has been a priority for the Chamber
for years. She pointed out that the business community is active in
the legislative process, but it is more difficult to participate in
the administrative process with as much success.
MS. LABOLLE declared the Chamber supports the bill and has promoted
other legislation encouraging cost/benefit analyses. She said it
appears that Executive Order 157 and HB 130 have been deemed too
costly and ignored. MS. LABOLLE said businesses worldwide make
cost/benefit decisions every day and even the Legislature uses
fiscal notes to assess the cost of proposed legislation. She said
it seems agencies are not concerned with increasing costs unless
their accountability also increases.
MS. LABOLLE expressed support for a fixed time line for the
adoption of regulations and a repeal of regulations by the
Legislature of regulations that do not follow their intent. She
said these regulatory issues have been building up as business
struggles to function in the face of excessive regulation. MS.
LABOLLE remarked she would be willing to work on this issue.
MS. LABOLLE said, unfortunately, companies are reluctant to
disclose problematic regulations, unless they are egregious, out of
fear of damaging their relationship "with this agency that has
control over their lives."
Number 139
MR. DOUG WOOLIVER, Administrative Attorney for the Alaska Court
System, clarified that the reason for the amendment removing the
provisions relating to District Courts had nothing to do with the
competence of the Courts. Rather, District Courts do a different
type of work and are designed to handle a large body of cases that
can be fairly quickly resolved. MR. WOOLIVER stated that District
Court judges are as competent as Superior Court judges, but the
type of case they deal with is different; that was the only concern
of the Court System. SENATOR DONLEY replied it might be good to try
the cases in District Court in order to increase public access and
speed up the process.
Number 60
SENATOR DONLEY reported that he would work on developing a
committee substitute incorporating the work done today and he would
bring it before the committee. CHAIRMAN TAYLOR said he would
schedule the bill at SENATOR DONLEY'S convienence.
With nothing further to come before the committee, CHAIRMAN TAYLOR
adjourned at 3:06 p.m.
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