SB 287-REGULATION REVIEW    CHAIR GARY STEVENS announced SB 287 to be up for consideration. He stated the committee was hearing the bill at the sponsor's request, but he didn't intend to take action that day. He asked Senator Therriault to step forward. SENATOR GENE THERRIAULT, sponsor of SB 287, explained he introduced this bill as a result of his work on a different piece of legislation relating to regulations formation and the public's perception of the regulatory process. That bit of legislation deals with the standards citizens are held to when they appeal a decision made under regulation. It's the end of the process when the regulation is being implemented and is having consequences for constituents, he said. Because of that work, he began to look at how the Legislature interacts with regulations as they are formed. He referred members to the flow chart, "Steps in the Regulation Adoption Process," and pointed out that sometimes there is a misinterpretation of the legislative intent when an agency works with legislators then proposes a regulation. It's upsetting for constituents to work on legislation only to find that the regulation has taken an unexpected turn. At that point, the Legislature has the choice of working to change the direction the regulation is headed through the public comment period or pass another piece of legislation. He and his staff began to explore formalizing the role of the Legislature for input or notification. This is not to control the process, he quickly insisted, because regulations are an administrative function and with the separation of powers, the Legislature has no constitutional power to control the regulatory process. However, he would like to explore the early input option so that if the body that passed the underlying statute believed there was some misinterpretation, they could take corrective steps early in the process. SB 287 would insert legislative legal attorneys into the process between step 4 and 5 in the flow chart. In step 4 the Department of Law opens the file and in step 5 the agency publishes and distributes public notice, additional notice information, and regulations. He admitted that Lt. Governor Leman and his staff have some concerns with the separation of powers issue, but he reemphasized it isn't his intent to insert the Legislature in any controlling manner. It's an opportunity to work cooperatively with the administration to avoid difficulties. Legitimate concerns relate to the Board of Game and the Board of Fish. If citizen groups are suggesting changes to regulations the boards oversee, the board reviews and selects the proposals they want to move forward. He clarified, "It certainly would not be in my intent that our legislative legal attorneys review all of those proposed regulations that are brought to the boards." Specifically, he said, he was interested in addressing new legislation that is implemented through the passage of regulations. This is when the legislative attorneys would be involved. With regard to the fiscal impact of the bill as currently structured, he said he expected to receive the same advice from the Finance Committee co-chair that he used to dispense. That is, "Great idea, cost's too much. Come back when you get the cost down." SENATOR THERRIAULT admitted that controlling costs might involve a blend of the current system with the Administrative Regulation Review Panel and early notification or solicitation of input into the process. SENATOR JOHN COWDERY questioned whether legislative legal has sufficient staff to handle the additional workload or is extra staff included in the fiscal note. SENATOR THERRIAULT replied the expense of additional positions is something that needs evaluation. He noted that the legislative legal staff has slack time during the interim and perhaps this function could be performed then. SENATOR COWDERY asked how long it would take to review the regulations and give the public time to comment. SENATOR THERRIAULT opined the legal review could be completed in a week or two. He pointed to the practice of one department holding another hostage and stated with certainty that the Legislature doesn't have the constitutional power to hold up the process in that fashion. Ideally, the same attorney that worked with legislators in drafting the bill would look at the regulations and give an opinion as to whether they were backing up the stated legislative intent in the new law that was passed. Although it's not necessary, it's not uncommon for legislators to solicit opinions from the Attorney General's Office (AG). There's no requirement for legislators to follow that advice, but they certainly do take it into consideration because it doesn't make sense to take steps that would lead to certain legal challenge. If the regulation writers got a memo from our legislative legal shop saying, "You're missing the boat here." They would listen in the hope that it would save headaches down the line. It could avoid backlash from the public that thought they knew what to expect when they supported a piece of legislation, but the regulation went in a different direction. SENATOR COWDERY asked how many regulations are established in a year. SENATOR THERRIAULT replied Mr. Stancliff could probably answer that question. DAVE STANCLIFF, staff to the Regulation Review Committee, reported that Senator Therriault tasked him with finding a way to bring about positive changes in the process through the regulatory reform process. A good process works well for any political persuasion and deals with the balance of power between the Executive Branch of government and the Legislative Branch of government. MR. STANCLIFF reported that the regulatory process that Colorado employs is one of cooperation. Their legal services aren't adversarial with the Attorney General's Office and that's the model in SB 287. He suggested that the system in Alaska doesn't have the same level of balance that other states have with regulatory review. First, it's not uncommon to hear that an agency regulator told a disgruntled citizen that if they didn't like a regulation they should speak to their legislator because that's who passed the bill that made the department establish the regulation. He admitted that is sometimes valid, but many times it's not because the regulation that's causing the heartburn has little to do with the statute that was passed. The other imbalance is that the Attorney General's Office isn't involved until after the public comment period. Currently the public is given an opportunity to comment on an agency's proposed regulation after which it is sent to the Attorney General's Office for review. If that office finds fault with the regulation, it is remanded back to the agency for repair. After the repair, the commissioner decides whether or not to send the proposed regulation back through the public comment period. Often the decision is to skip additional public comment so the regulation continues through the process and becomes law. The result is that the public sees a regulation that is different than the one they commented on. In response to Senator Cowdery's questions, he said the fiscal note calls for three full time attorneys, which would be very costly if you weren't sure of a good return. He estimated that the number of regulations per year is well over 1,000. In Colorado, regulation writers realized their work was going to be screened by the Legislative Branch. Regulations were written more carefully, there weren't as many. The process saved money from the start to the end because they didn't send as many back, they weren't adjudicated the same way because they were better quality regulations. The investment climate in Colorado changed significantly. Using the fishing industry as an example he noted how much impact one regulation can have in a sensitive and multimillion dollar industry. Clearly, it's important to get it right the first time. With regard to costs he thought that they would come down significantly if fish and game were left out. "I think you might eliminate one of those positions," he said DEBORAH BEHR, regulations attorney with the Department of Law, said she and Annette Kreitzer were there to talk about regulatory reform and better interactions with the Executive Branch. She stated agreement with Senator Therriault's premise that it's necessary to cooperate for regulations to be better developed and more responsive to the public. She expressed the opinion that everything that's in the bill could be done without a statute and she firmly believes that if a new statute isn't need, you shouldn't put a new one on the books. She said she would be working with Senator Therriault's staff to determine whether they were looking for a policy review or a lawyer's review. She has reviewed legislation and found it to be perfectly legal, but then had to ask the commissioner which policy direction he or she wanted to take. At that point, the commissioner talks to policy experts who are usually not lawyers and selects the policy direction. MS. BEHR suggested that the committee decide whether they want to invest expensive lawyer dollars in looking at all the regulations in the state. Certainly, she asserted, there are regulations such as local hire and complex tax regulations that would require a lawyer, but some sort of prescreening by legislative staff or other non-lawyers would make better use of your legal services dollars. She said she would talk to staff about the standards legislative legal is supposed to be using as compared to the standards that the Department of Law is supposed to use because they don't mesh. For example, legislative legal doesn't look at compliance with drafting legal styles. Another concern is what happens when legislative legal is busy and the provision is for a mandatory review and they don't have the staff to conduct the review in a timely fashion. An unintended consequence might be that a third party would charge that the regulations are somehow flawed because the statute says legislative legal shall review the regulations. MS. BEHR noted that several agencies have expressed concern about regulation delays so discussions should take place to decide what to include. Certainly there's a difference in new legislation and legislation that is for cost containment and right now most of the bills she is reviewing deal with trying to get the state statutes to match a pared down budget. She said, I don't want to have the department waiting to hear from legislative legal and then missing time - a month or two - in implementing a policy call the Legislature made to pare down a budget. This is of particular concern in the understaffed areas of health and social services. If you miss a month in Medicaid, you're talking about millions of dollars. She advised that the Department of Law has a budget request in for a lawyer. It's much easier for the Executive Branch to garner federal dollars for legal resources than it is for the Legislative Branch. "So if you believe there is a need for more legal resources, that certainly is a possibility and at any time you found a regulation you were troubled with and wanted a legal opinion, certainly the Department of Law is the resource for you." She then brought up a technical concern related to public records. Because the attorneys at legislative legal aren't part of the Executive Branch, there isn't a clear attorney-client privilege. It isn't entirely clear that an opinion written by legislative legal wouldn't be a discoverable document, which could be very problematic on a complex oil regulation. Next she brought up the applicability of regulations in process pointing out that several industries are waiting for regulations and there isn't a section in the bill to address that. She concluded her remarks saying that it is important that the Legislature wants to better interface with the Executive Branch and she reemphasized that comments legislators make on regulations are considered strongly and evaluated seriously. ANNETTE KREITZER, chief of staff to Lt. Governor Leman, stated that the Lt. Governor appreciates Senator Therriault's interest in reviewing how regulations are promulgated and when and how legislators have an impact on the process. That being said, she admitted that she's a bit baffled when her office doesn't hear from legislators during the public comment period because the public includes legislators. The departments would absolutely take those comments very seriously, she said. She showed members a regulation packet and said it lists all the legislators that got the notice about the regulations being proposed in response to HB 271, which was passed last session. There was ample opportunity to comment yet there is nothing in the packet reflecting that a single legislator had a comment. The Lt. Governor has assured Senator Therriault that if there is something about the process that doesn't work, such as more training for staff or new legislators, they're very willing to work with him to accomplish his desire to ensure that legislators are involved early on. TAPE 04-4, SIDE A  5:00 pm    CHAIR GARY STEVENS asked Ms. Behr about her concern about delays and whether she had considered what options might be available to address the delay. MS. BEHR clearly stated that this bill doesn't stop anyone from going forward with a project while legislative legal is reviewing. However, she said if she were commissioner of Revenue and she knew that legislative legal was looking at regulations, she'd probably wait for that legal review before proceeding. She repeated that a screening process would help address the issue of how quickly a review could be completed. Legislative legal attorneys should neither spend time looking at minor regulations that don't require an attorney's expertise nor spend time doing legal research that the Department of Law isn't going to use. CHAIR GARY STEVENS thanked everyone for their comments and announced SB 287 would be heard again in the future. With nothing further to come before the committee, he adjourned the meeting at 5:15 pm.