MINUTES SENATE FINANCE COMMITTEE March 24, 1999 6:07 PM TAPES SFC-99 # 63, Side A and B 64, Side A and B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 6:07 PM PRESENT Senator John Torgerson, Senator Sean Parnell, Senator Randy Phillips, Senator Dave Donley, Senator Gary Wilken, Senator Al Adams, Senator Pete Kelly, Senator Lyda Green and Senator Loren Leman Also Attending: DEBORAH BEHR, Assistant Attorney General, Legislation and Regulations Section, Civil Division, Department of Law; JON SHIVELY, Commissioner, Department of Natural Resources; CAROL CARROLL, Director, Division of Support Services, Department of Military and Veterans and Department of Natural Resources; NICO BUS, Administrative Services Manager, Division of Support Services, Department of Military and Veterans Affairs and Department of Natural Resources; Attending via Teleconference: From Anchorage: JIM BUTCHART, Division of Emergency Services, Department of Military and Veterans Affairs; MARY GILSON, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law; BOB LOEFFLER, Director, Division of Mining, Department of Natural Resources. SUMMARY INFORMATION SB 101-DEFINITION OF DISASTER SB 24-REGULATIONS: ADOPTION & JUDICIAL REVIEW SB 33-TASK FORCE ON PRIVATIZATION Back to order from morning recess. SENATE BILL NO. 101 "An Act amending the definition of 'disaster.'" This was the fourth hearing for this bill. Co-Chair John Torgerson noted that during the last hearing, the committee adopted CS Version "I" as a Workdraft. Senator Sean Parnell moved for adoption of Amendment #5. Co-Chair John Torgerson explained that it added an intent section to the bill to alleviate fear that the committee would change the way the Governor could receive federal funds. He stated that the bill did not do that, but the intent language was proposed to clarify the matter. Without objection, Amendment #5 was adopted. Senator Al Adams moved for adoption of Amendment #6. Co- Chair John Torgerson objected. Senator Al Adams explained the amendment would add the words, "an event including" to page 4 line 8. The reason for this addition was to ensure that FEMA funds would not be lost. Co-Chair John Torgerson spoke to objection, saying that there could be other interpretations to the language to suggest the disasters would not be limited to the list, but that others could be included. Amendment #6 failed to be adopted by a vote of 2-7. Senator Al Adams and Senator Pete Kelly cast the yea votes. There was discussion by the committee to clarify the status of the CS, past actions taken and the amendments proposed. Break 6:15 PM / 6:22 PM Senator Dave Donley moved for adoption of Amendment #7. Senator Al Adams objected. Senator Dave Donley explained that the amendment was mostly conforming language to make Section 2 work. It would give the Legislature an option not to convene a special session if the expenditure was over $5 million. It set up a method for the presiding officers to poll the members of the Legislature and receive written consent by the majority of the members of each body. It would make the provision of polling of Legislatures acceptable using telephonic facsimile, electronic mail or other means of written communication. Co-Chair John Torgerson referred to page 1 section 1 and noted the language stating that the proclamation of disaster could not last longer than 30 days unless extended by the Legislature by law. He wondered if there shouldn't be a conforming amendment to that provision also to possible allow for the extension to be made other than with a law or concurrent resolution. Senator Dave Donley countered that the existing law said a disaster could not last longer than 30 days without concurrent resolution. Therefore, the same problem existed under current law. Co-Chair John Torgerson responded that the current law intended that the Legislature would convene a special session and pass a law for the extension. Senator Dave Donley said the distinction between law and a concurrent resolution wouldn't be impacted by this because, unless it was determined that the current system was flawed and the special session law had been ignored, the CS would become consistent even thought it was inconsistent in current law. With the adoption of Amendment #7 there was a possibility it could become inconsistent again. Co-Chair John Torgerson said the bill drafters would be directed to ensure conformity. Senator Al Adams referred to page 2 line 1 of the Amendment explained that if that was done, funding could be approved for a disaster of over $1 million or, $5 million if the federal government declared it. It would also give the option to handle the funding through the legislative process. He asked the sponsor to comment. Senator Dave Donley said that would change the framework of the CS. Senator Al Adams said it would make it simpler to get access to the federal funds and to also implement Senator Dave Donley's polling method. Senator Dave Donley said the CS was intended to bring more accountability into the system. By inserting the "or" the Governor would be free to spend money without consulting the Legislature as long as the federal government declared the disaster. Senator Al Adams countered that the legislation shouldn't be made so tight that when there was a disaster, the state would be unable to respond. Senator Al Adams conceded that if the sponsor did not agree with the proposed amendment to Amendment #7, he would not offer it. Senator Dave Donley thanked him and declined the amendment. Without objection, Amendment #7 was adopted. Amendment #8 was brought before the committee. Co-Chair John Torgerson noted that page 2 lines 6-15 of the CS was deleted by Amendment #7 thus affecting the proposed changes in Amendment #8 to page 2 line 9 of the CS. ANNETTE KREITZER, staff to Senator Loren Leman, spoke to Amendment #8. She testified that no changes from Amendment Amendment #8. She told the committee that proposed deletions of, "26.23.300(c) and (d)" and insert of, "26.23.300(b) and (c)" in Amendment #9 was simply a function of what would happen on page 2 lines 22-26 of the CS. She quantified that this amendment was drafted as a result of committee discussions about how to go through the process. This would remove the $500,000 limit and provide specific expenditures of up to $1 million from the disaster relief fund. The qualifications would be, "to save lives, protect property and public health and safety or lessen or avert the threat of a disaster that posed a direct and imminent threat of sufficient severity and magnitude to justify state action." This language was taken from FEMA's definition of emergency. The next significant change was to page 3 line 7 of the CS, the limiting section of specific types of disasters allowable. It added "mitigate environmental damage" to the release of oil or hazardous substances. The next proposed change was to reduce the spending cap from $5 million to $3 million on page 3 line 8. She indicated that was a policy call for the committee to decide what figure it chose to use. Co-Chair John Torgerson interrupted asking that the amendment be divided. There was discussion as to where the division would occur. Co-Chair John Torgerson asked for clarification that the first portion of the amendment would delete the half million-dollar provision for smaller disasters and increase it to $1 million. Annette Kreitzer affirmed explaining that the reason for that change related to the definition of disaster and the committee's action to separate out certain disasters on page 3 lines 4-9 for specific treatment by the Legislature. Co-Chair John Torgerson noted that the $500,000 trigger was liberal and the definition was very broad so that it could encompass the smaller disasters. It had seemed an appropriate amount of money to fund the smaller events and this change would raise that amount and tighten the definition. Annette Kreitzer said that was correct and that it was a policy call for the committee. She noted the various discussions relating to the bill. Co-Chair John Torgerson asked if the $500,000 was in existing language. Annette Kreitzer answered that the $1 million limit was the existing language. Co-Chair John Torgerson thought the $500,000 limit was also in current statute. Co-Chair John Torgerson entertained a motion to divide the question. Senator Loren Leman moved for adoption of Amendment #8A. This consisted of all of page 1 and page 2 lines 1-10 excluding lines 3-5 of Amendment #8. Annette Kreitzer recommended including page 3 lines 21 and 22 of Amendment #8 noting that it was parallel language. Senator Loren Leman amended his motion to include that in Amendment #8A. Senator Al Adams said it was difficult to understand the amendment because it set different flooring levels relating to the $500,000 and $1 million limits. It also was difficult to understand what authority the governor would have at different flooring levels. He suggested a change of the word "possesses" to "poses". He then spoke to the concerns of only allowing relief for one flood per community. What would happen if there was a second flood and the state wanted to save lives and protect property and health? He then noted that the cost of most disasters was above $3 million for Alaska and he felt the $5 million limit should not be lowered. He complained about the definitions of the disasters asking why the list did not include disasters more likely to occur in Alaska. He would vote no on the amendment. Senator Lyda Green discussed the definition of disaster. She referred to current statute and its reference it made to US code. The definition included in the current amendment was nearly identical to the current statute. Therefore, this amendment would not depart from the definition, it just hadn't been followed in the past. Senator Al Adams rebutted that if that were the case, he would ask where was the definition of severe winter storms in the amended definition. Senator Sean Parnell read the amendment differently. As he understood, it would allow the Governor, without additional Legislative authorization, to expend funds for the purposes of saving lives, protecting property, etc. All this amendment would do was bring to light the immediacy of the impact to the people affected and give the Governor the ability to fund those disasters. It did not set dollar limits. Senator Loren Leman said Senator Sean Parnell was correct. Senator Loren Leman made technical amendment to the amended Amendment #8A to change "possesses" to "poses" on page 1 line 12 and page 2 line 8. Senator Al Adams still questioned what would happen in the case of a second flood. Was it the intent of the sponsor to prevent the state and federal government from assisting in the protection of lives and property. Co-Chair John Torgerson informed him there was another amendment that addressed the flood provision. It was not his intent to not allow assistance. He noted the two triggers of $5 million for the first flood and $1 million for the next flood. He detailed the provision. Co-Chair John Torgerson asked Annette to read the language with the amended Amendment #8A incorporated. She read into the record portions of the CS Version "I" as it would be amended. Senator Sean Parnell asked why, as a policy matter, did the committee want to get rid of the $500,000 provision. Annette subsection b the 500,000 . Annette Kreitzer responded that this amendment was drafted in the initial stages of the bill to reflect the feelings of the committee at that time. She realized that the feelings might have changed. Senator Sean Parnell liked the language but questioned the deletion of the $500,000. Co-Chair John Torgerson agreed saying it essentially raised the amount that the governor could expend and that it had worked fine in the past. Senator Sean Parnell asked if an amendment to delete page 1 lines 4 and 5 of Amendment #8 would affect the provisions on page 2 starting with line 22 of the CS Version "I". Annette Kreitzer suggested a conceptional amendment to direct the Division of Legal Services to conform the language to include the saving lives and property provision and retain the $500,000 provision. She gave detail. Senator Sean Parnell moved to conceptually amend the amended Amendment #8A. This would delete page 1 lines 4 and 5 of Amendment #8, and essentially retain the language on page 2 lines 22-26 of the CS Version "I" and leave the $500,000 trigger in the bill. Senator Al Adams asked if that would affect the change to renumber AS 26.23.300 as proposed on page 1 lines 1-3 of Amendment #8 and also addressed in Amendment #7. Annette commented that she saw it as a technical amendment to conform to the bill. Senator Sean Parnell stated his intent to have the bill drafters incorporate the necessary technical changes. The intent of his motion was to retain the language regarding the $500,000 provision. Without objection, the amended Amendment #8A was again amended. Senator Lyda Green moved to conceptually amend Amendment delete all of lines 24-26 of the CS Version "I" and be replaced with the language from page 1 lines 11-13 of Amendment #8. She read the proposed language into the record. Senator Sean Parnell questioned why the committee would do that with the $500,000 trigger when it was included with the $1 million trigger. He noted Senator Al Adams's point that there were other smaller events that the state may want to respond to. Senator Lyda Green responded that when declaring disasters, the standard must be consistent or there would be a risk of starting to assist in a disaster and the cost running above the $500,000. Senator Dave Donley understood this, if there was a small disaster and the cost rose above the $500,000 it would be pushed into the higher category and the additional restrains would be imposed. Senator Lyda Green commented. Tape: SFC - 99 #63, Side B 7:03 PM Co-Chair John Torgerson asked if the language should be inserted were intended by Amendment #8 rather than as proposed in the amendment to the amended Amendment #8A. Senator Dave Donley said that while there was a good argument for accountability, there was an outweighed argument for flexibility when the cost was below $500,000. By allowing that flexibility, the Legislature did not give up the greater accountability for the larger disasters. Senator Lyda Green asked for clarification of the restrictions between the $500,000 and $1 million dollar expenditures. There was discussion on the subsections affected. Co-Chair John Torgerson restated the amendment into the record. Senator Randy Phillips objected to the motion. Senator Loren Leman felt the committee should roll back and start over. He thought the committee had gotten off track with this amendment. Senator Lyda Green withdrew her motion to amend the amended Amendment #8A. Co-Chair John Torgerson noted that brought the committee back to Amendment #8A as amended. Senator Al Adams maintained his objection. He restated his earlier comments that the amendment was difficult to understand and the delegation of powers was also difficult to ascertain. He noted that this bill could not be amended to adequately satisfy all the member of the committee. Amendment #8A as amended was adopted by a vote of 8-1. Senator Al Adams cast the nay vote. Senator Loren Leman stated that he would not offer Amendment #8B. This consisted of page 2 lines 3-5 and lines 11-25 of Amendment #8. Senator Loren Leman moved for adoption of Amendment #8C. This consisted of page 3 lines 1-20 and the deletion of page 2 lines 3-5 and lines 11-25 of Amendment #8. Senator Lyda Green objected. Annette Kreitzer explained that the portion remaining (page 3 lines 1-20) spoke to the definition of disaster. This amendment would change the definition to make it similar to the FEMA definition of major disaster. She read the definition into the record. She added that she had checked with the National Weather Service to see how they defined prolonged cold temperatures. She learned that they defined a short period of cold a "cold snap" and a longer period of cold a "cold spell". The term, "prolonged extreme cold" came from the FEMA's reference to prolonged extreme heat. Co-Chair John Torgerson asked for clarification of the intent of the amendment. Annette Kreitzer responded that it was difficult for her to understand and that she was only able to determine the new language rather than what was deleted. She continued to detail the amendment. Co- Chair John Torgerson noted that it would actually delete the language down through line 8 of page 3 of the CS and replace the entire definition. Senator Gary Wilken asked for the rationale behind the elimination of "or clothing". Annette said clothing was considered property and was not listed separately under FEMA language. Co-Chair John Torgerson pointed out that the new definition would also eliminate avalanche. Annette responded that it was the intent of the amendment to stay within the FEMA language. However, she said the severe extreme cold provision was added and the committee could chose to add a provision for avalanche also. Senator Loren Leman moved to amend Amendment #8C to insert "avalanche" to page 3 line 12 after "mudslide" in Amendment Senator Lyda Green asked if other parts of the statute referred to the US code that defined natural disaster. She read the definition into the record. She felt the statute had to either conform to the federal code or eliminate any reference to it. Co-Chair John Torgerson said he would entertain an amendment to do so. Senator Al Adams asked if the statute reflected the US code, would that make it easier to get federal funding. Senator Dave Donley didn't think so. Senator Al Adams wanted to know what events might happen in Alaska that was not included in the definition. He had concerns about the elimination of potential events that might happen in the future. Co-Chair John Torgerson explained that the Governor could still spend up to $500,000 on them. If the Governor chose to declare the event a disaster, he could spend up to $1 million. Any amount more than that would then trigger the legislative special session component. Senator Lyda Green felt it should be called a "major" disaster. Break 7:24 PM / 7:40 PM Senator Lyda Green moved to amend Amendment #8C as amended. This would delete language on page 3 of the CS beginning with "resulting" on line 4 and ending with "damage," on line 7 and replace with different language, which she read into the record. Co-Chair John Torgerson offered a friendly amendment to the amendment to replace the language to be inserted with, "as defined in AS 26.23.900(2)". Senator Lyda Green accepted the friendly amendment. Co-Chair John Torgerson noted that this amendment would remove from the list of allowable disasters, epidemic, explosion and riot. If this was the will of the committee, he felt it should be noted in the record. Senator Lyda Green stated that was her intent. Without objection, the amendment to amend Amendment #8C as amended was adopted. Without objection, Amendment #8C as amended was adopted. Senator Randy Phillips moved for adoption of Amendment #9. Senator Al Adams asked how it compared to the changes made with Amendment #8. Co-Chair John Torgerson explained that this amendment would change the provisions regarding floods to pay $5 million once. If costs exceeded $5 million, the Legislature must approve expenditures using the polling method. If a second flood occurred in the same geographical area, the maximum amount allowed would be $1 million without Legislative approval. Senator Al Adams removed his objection. Without objection, Amendment #9 was adopted. JOHN SHIVELY, Commissioner, Department of Natural Resources testified. He said his office delivered a letter to the Senate Finance Committee that outlined the department's concerns about the affect of the bill, which he didn't think the committee intended. However, because of the funding procedure, he thought there would be consequences to the wildlife fire fighting services. In the past, the program was funded from the disaster funds with the department coming to the Legislature the next session with a supplemental request to replenish the fund. Under this bill, it would be necessary to declare a disaster and to request additional funds from the Legislature before they could be expended. Fire fighting costs over the last several years averaged over $11 million. Because the new bill set a $5 million limit, a special session would need to be called each fire season. He suggested a couple solutions. One was to pre-fund the fire fighting program. He felt that could be problematic for a number of reasons. Another solution would be for the Legislature to exempt some wild land fire fighting. That would allow the status quo by having the Legislative leadership approve the funds as needed. Another solution was to incorporate the polling of the Legislature to convene a special session. Co-Chair John Torgerson asked what was the current limit for spending on wildfires. Jon Shively responded that the initial limit was whatever the Legislature appropriated. Last year that amount was $3.5 million. When more was expended, the department requested money from the disaster relief fund. That fund usually was not sufficient, and a request was made to the Governor. The Governor then notified the Legislative leadership for approval for more funds to continue to fight the fires. He stressed that the costs constantly went over the initial appropriation. There was no limit for fire fighting as such other than the Legislative leadership deciding to refuse the request. Co-Chair John Torgerson corrected him saying that the Legislative leadership didn't approve additional funds, only declining to convene a special session, thus allowing the Governor to expend funds. Under the proposed bill, the limit would be raised to $5 million. Jon Shively countered that he did not interpret it that way. The spending limit was not the problem; it was the fact that there was no money in the fund. There was further discussion between Co- Chair John Torgerson and Jon Shively on the matter. Senator Al Adams asked if the Legislature would appropriate more money to the disaster relief fund. Co-Chair John Torgerson answered that chances were there would not be additional funds. Senator Al Adams stated that he felt more money should be appropriated. Co-Chair John Torgerson understood but noted that this bill would allow the Governor to use other funds for disasters without legislative authority. He stressed that prior to this bill, the Governor only had authority to expend up to $1 million. This bill would allow him to spend up to $5 million. Co-Chair John Torgerson noted that his office hadn't received the aforementioned letter from the Department of Natural Resources. It was determined there was no one present wishing to testify on the bill. Co-Chair John Torgerson announced he did not intend to move the bill from committee at this meeting. He would have a new CS drafted for the committee to review. He ordered the bill held in committee. 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." This was the third hearing for this bill. Co-Chair John Torgerson noted the new CS Version "W" before the committee did not incorporate the removal of Section 8 from CS Version "V", as amended by the committee in it's previous hearing. Senator Dave Donley, as sponsor of that amendment, understood the difficulty in removing the section and had no objection to it remaining in the bill. He moved for adoption of CS SB 24 Version "W" as a Workdraft. Without objection, it was adopted. It was noted that earlier Amendments 2, 3 and 4 were redrafted and renumbered Amendments 5, 6 and 7 to conform to CS Version "W". Senator Sean Parnell moved for adoption of Amendment #5. Co-Chair John Torgerson explained the amendment a technical recommendation from the Department of Law. It would delete "the division of habitat and restoration of" and insert "for habitat and restoration programs". The division was not created by statute but by regulation. Therefore there was no official division and this amendment would conform the bill to law. The amendment would also delete, "designated state entity" and insert, "designated state agency". Senator Randy Phillips asked for clarification that the habitat and restoration division in the Department of Fish and Game was not created by statute. Co-Chair John Torgerson said it was created by Executive Order and then regulations were adopted to operate the programs. Amendment #5 was adopted without objection. Senator Al Adams moved for adoption of Amendment #6. Senator Dave Donley objected. Senator Al Adams explained that this would limit the use of supplemental notices for Department of Environmental Conservation regulations relating to domestic wastewater disposal, food service programs and the solid waste management program. He said these regulations were most likely to affect citizens who were unfamiliar with the regulation process and would not benefit from the additional notices. This would be cheaper to operate and make regulation adoption easier. DEBORAH BEHR, Assistant Attorney General, Legislation and Regulations Section, Civil Division, Department of Law, came to the table at the request of Senator Al Adams. The amendment would create a pilot project out of the programs of the Department of Environmental Conservation. These programs were selected because it was felt they affected citizens who did not regularly deal with regulations and therefore would have smaller fiscal notes. Senator Dave Donley commented that the bill as it was included the programs mentioned plus others from Department of Environmental Conservation. He said that the bill was narrowed to only include the Department of Environmental Conservation, Department of Natural Resources, and the Department of Fish and Game, habitat and restoration programs. Therefore, it was already focused to the most problematic programs. Senator Gary Wilken asked if this amendment would narrow the bill down further. Senator Dave Donley answered it would. Co-Chair John Torgerson added that it would exclude all the other programs listed in the current CS. Amendment #6 failed to be adopted by a vote of 1-8. Senator Al Adams cast the yea vote. Senator Al Adams moved for adoption of Amendment #7. Senator Dave Donley objected. Senator Al Adams spoke to the motion. Tape: SFC - 99 #63, Side A 8:07 PM Senator Al Adams continued to speak saying the amendment would reduce the number of public notices needing to be sent. It would also make an efficient use of the Internet and allow for a shorter turn around time for comments on proposed regulations. It would make the process more predictable for business and eliminate reoccurring cycles of revisions and comment periods. Deborah Behr commented that this amendment addressed the most problematic sections of the bill. She explained the process for adopting regulations required under the current bill regarding timber sales. There was no end to the number of times required for a proposed regulation to be sent out for public comment. She spoke of concerns about missed construction seasons and missed timber sales. This amendment would reduce costs by limiting to provisions to pilot programs. Senator Randy Phillips asked when was the last time the state had a timber sale. Deborah Behr did not know and said she would have to ask Department of Natural Resources. However, this provision would also apply to air quality issues. Senator Dave Donley asked what was different between this amendment from what the departments currently did. Deborah Behr detailed the steps of the current process. So long as the proposed regulation fit the scope of the public notice, the commissioner had the discretion to adopt the change without further public comments. This amendment would remove that discretion, but only for one round of public comments. Senator Dave Donley responded that while this was a step toward the original intent of the bill, it did not go far enough. It should not be limited to one round. If a person agreed with the first regulation proposal and chose not to comment, he or she would then not be notified of the next proposed change, which may be significantly different. Senator Pete Kelly asked Deborah Behr to comment on Senator Dave Donley's statement. She said Senator Dave Donley raised a point. How do people who didn't comment the first round have an opportunity to be noticed of subsequent changes? She suggested that those interested would follow the process on the Internet. Amendment #7 failed to be adopted by a vote of 1-8. Senator Al Adams cast the yea vote. Senator Al Adams moved for adoption of Amendment #8. Co- Chair John Torgerson objected. Senator Al Adams explained the amendment would remove Section 4, requirement for a cost benefit analysis for new regulations, which would be costly. Deborah Behr further explained the problems the Administration had with Section 4 of the bill because of its vagueness. It did not define the costs to benefit the public requirement. She spoke of the difficulty to decipher when there were competing interests to the public about a proposed regulation such as with timber sales, saying it would be difficult to figure what was appropriate. Determining the cultural impact to the community into the cost of development. There would be many court challenges based on this point. She also referred to small business waivers and the need to determine if there was a public cost benefit under the requirement of the bill. She continued saying this amendment was an expansion of Senator Pete Kelly's suggestions for serious consideration of costs. The Department of Law felt this solution would be workable and would have no fiscal impact to the state. Co-Chair John Torgerson noted he added the cost benefit analysis to the section of the CS after a sidebar with Senator Dave Donley. Senator Dave Donley commented that the added language was only to a portion of the section. This amendment would remove the entire section. He spoke to the rest of the section. First, the Senate Judiciary Committee had adopted many provisions to soften the effects of the cost benefit. He detailed those provisions noting the added flexibility and safeguards. Co-Chair John Torgerson commented that the greatest flexibility his CS added to the bill was to page 2 lines 24-28, which dictated that a cost benefit was not necessary if the cost to implement the regulation was identified in the fiscal note. He said the intention was to stop the Administration from adopting regulations that went beyond the scope of the enabling or authorizing legislation. If it would, the agency would have to return to the Legislature with a request to change the statute to conform to their proposal. The intent was to lessen the impact on the fiscal notes of this bill. Senator Dave Donley pointed out a further ultimate safeguard. Although the Legislature hoped that the Administration would follow the intent of the limited application of the legislation, if something did go wrong, there would be this savings clause dictating that the regulation may not be adopted because the agency failed to comply with the section. This would prevent lawsuits, according to Senator Dave Donley. Co-Chair John Torgerson added that there was also conforming section on page 5 lines 11-16. It clearly stated that if a copy of the fiscal note identified in the front section were available from the designated state agency then the cost benefit analysis would not be required. He felt that showed the clear intent of the Legislature. Amendment #8 failed to be adopted by a vote of 1-8. Senator Al Adams cast the yea vote. Senator Dave Donley spoke to Amendment #9. He noted the Senate Judiciary Committee version of the bill, which had applied to most of state government rather than the 3 departments currently, there was a general provision that addressed problematic question of agency heads not accepting the findings of hearing officers. Under their existing powers of the Administrative Procedures Act, the commissioners would remand the decisions back to the hearing officers because they didn't agree with the findings. There was no standard in existing law dictating when a commissioner could remand a decision back for more facts. He felt there needed to be some sort of standard inserted. This amendment contained the language drafted in the Senate Judiciary Committee hearings. He said there had been discussion about another vehicle to do this. One was the proposed constitutional amendment recently introduced by the Senate Judiciary Committee providing that a separate department conduct regulation hearings. He felt that the odds of the constitutional amendment being adopted were slim and suggested this amendment would help the situation. He also felt a change to the Administrative Procedures Act would also be helpful. He wished for these provisions to apply to all departments, not just the three left in the bill. He wanted a general across the board provision. He welcomed any suggestions to accomplish the goal of preventing the commissioners from remanding hearing officer decisions without valid grounds. Senator Dave Donley moved for adoption of Amendment #9. Senator Al Adams objected. Deborah Behr was invited to comment on the amendment. She pointed out that hearing officers were not confirmed cabinet officers and never came before the Legislature for confirmation. Therefore, this amendment would allow an unconfirmed cabinet officer, generally a private attorney, to trump the decision of a confirmed cabinet officer. Most regulations were adopted by boards or commissions made up of lay people appointed by the Governor and confirmed by the Legislature. There could be a hearing officer who was not a licensed doctor issuing a decision that went against medical practice, because the attorney had no knowledge. If the agency could not find a substantial factual question would be in court over what that the substantial question was. Even with that, the Lieutenant Governor would have to grant approval. She felt this would change the balance of power. Senator Dave Donley asked if Deborah Behr had any suggestions for additional language to the Administrative Procedures Act. Deborah Behr offered to work with sponsor to find one. Senator Dave Donley offered to withdraw his motion. Co-Chair John Torgerson said they could go back to the original language from an earlier workdraft. Senator Dave Donley said multiple hearings were held in the Senate Judiciary Committee and this was an ongoing discussion. He welcomed assistance in setting standards but thought there ought to be standards. Deborah Behr restated her offer of assistance in detail. Co-Chair John Torgerson told Deborah Behr this language was included in another version. Senator Dave Donley was willing to give them one more chance to come up with something smoother. He said he could address the matter on the Senate floor. Senator Dave Donley withdrew his motion to adopt Amendment Co-Chair John Torgerson turned the discussion to the fiscal notes. He noted that some of the department's fiscal notes went up. He commented the committee could take several approaches to reduce the amounts. The departments could testify to the reason the funding was needed. Deborah Behr mentioned that the fiscal notes were drafted against the "V" version. The fiscal notes to the "W" version would go down. Co-Chair John Torgerson noted that the CS Version "V" was substantially less restrictive than the versions before. BOB LOEFFLER, Director, Division of Mining, Department of Natural Resources testified via teleconference from Anchorage. He addressed the division's concerns with the cost benefit analysis requirement and its potential affects to the mining industry. He felt the cost benefit analysis might have the unintended consequence providing a significant legal handle that could unavoidably delay a number of important mining projects. Senator Dave Donley interrupted asking if the director was familiar with page 3 lines 12-14 of the bill. Bob Loeffler believed it said a regulation may not be voided but it didn't address temporary restraining orders or other court actions to remand for further analysis that would delay a project. Senator Dave Donley noted there was another section on page 2 lines 10-12 that could address the concerns regarding restraining orders. He offered the committee could incorporate that provision. Bob Loeffler replied that would alleviate his concerns. Bob continued his testimony saying that because a number of mining projects required a specific regulation to Department of Environmental Conservation's water quality standards, a cost benefit analysis would have to be done before a mine could be approved. He gave examples of the Kensington Mine that required site-specific criteria and a stream reclassification for the Red Dog Mine. He speculated that a company that designed their project to maintain clean water would have to jump another hurdle before getting approval. That would be to prove their total benefits were greater than the total costs. He didn't know if that was the intention of the legislation, but it was how he interpreted it. He asked how good did an economic analysis have to be in order to pass that hurdle. His answer was that it would have to be better than that of any well-funded opposition. For a large industrial mine, that could be substantial. Co-Chair John Torgerson asked if the division intended to adopt new regulations every time a mine opened. Bob Loeffler did not, but noted that no but certain mines needed regulations for water quality reasons. Senator Dave Donley said the Senate Judiciary Committee had been given a memo issued by Governor Knowles directing state agencies to do a cost benefit analysis before adopting regulations. He asked how the division implemented that order. Bob Loeffler responded that the regulations were typically done by Department of Environmental Conservation. He had not done a cost benefit analysis of the scope called for in the proposed bill. Senator Dave Donley queried, "So you didn't comply with the Governor's directive to all the members of the bureaucracy?" Bob Loeffler said that before his division wrote new regulations, it analyzed the cost and benefits, but in a general manner rather than in the detail called for if a major industrial facility effect a significant portion of the population. Senator Dave Donley moved for adoption of Amendment #10. This would copy the language from page 2 lines 9-12, "A person may not obtain a temporary restraining order.based on a failure to comply with this subsection" and insert on page 3 after line 14. Without objection it was adopted. The discussion returned to the fiscal notes. Senator Dave Donley suggested the committee direct departments do new fiscal notes based on Version "W" and justify any increases Senator Al Adams commented that with the addition of Section 4 the cost benefit analysis added costs to the departments. Co-Chair John Torgerson retorted that the cost benefit analysis was only required if the regulations went outside the scope of the enabling statute's fiscal note. Therein lay the policy call. Senator Dave Donley stated that it was surprising to him that the Administration was opposed to the cost benefit analysis. He detailed the arguments in favor of the analysis. Senator Al Adams asked if the sponsor wanted to start the regulation process with the cost benefit analysis after a new law was passed or from ground zero. Senator Dave Donley clarified to limit the applicability to regulations adopted for new statutes. He said that would be another possibility but it didn't seem that radical. He noted that the federal government already did it and it would be reasonable to require state government as well. Senator Randy Phillips requested the departments be given a time limit for submitting the new fiscal notes. Co-Chair John Torgerson said his office would request them in a timely manner. Co-Chair John Torgerson ordered the bill held in committee. SENATE BILL NO. 33 "An Act relating to the Task Force on Privatization; and providing for an effective date." This was the forth hearing for this bill. Senator Randy Phillips moved for adoption of CS SB 33 Version "N" as a Workdraft. Senator Al Adams objected. Co- Chair John Torgerson explained a new subsection was added to page 2 under the title, "Items not subject to bargaining" to add an ability for the state to hire out services previously performed by state employees. Section 3 was added and provided that if the state intended to enter into contract with a private entity to perform services the labor organization representing the affected employees may submit a response to demonstrate that the state would not reduce costs. The state would consider the statement but would not provide a preference when making the final decision. Senator Al Adams removed his objection and Version "N" was adopted without objection. Senator Loren Leman moved for adoption of Amendment #4. Senator Al Adams objected for explanation. Senator Loren Leman explained the change would be to page 2 line 3 adding a provision noting there may be state functions that should be consolidated or otherwise performed more efficiently. He did not want to limit the task force to only consider the privatization or consolidation of services if there were other options. Senator Al Adams removed his objection and Amendment #4 was adopted without objection. Senator Loren Leman moved for adoption of Amendment #5. Co- Chair John Torgerson objected. Senator Loren Leman explained that this amendment would allow the commissioner to appoint an advisory council to assist with specific topics. The members would be volunteers and incur no additional expenses. They would not have a vote in the final proceedings. He shared that in his experiences serving on commissions, this had been helpful. Senator Lyda Green asked if Senator Loren Leman had talked about this with the sponsor. Senator Loren Leman had not. Co-Chair John Torgerson removed his objection. Senator Lyda Green objected. Amendment #5 was adopted by a vote of 8-1. Senator Lyda Green cast the nay vote. Co-Chair John Torgerson ordered the bill held in committee. Tape: SFC - 99 #63, Side B 8:53 PM Senator Dave Donley spoke to judgement and claims forms for the Department of Law. He asked that the committee adopt the forms. Senator Sean Parnell said he had reviewed the forms and felt Senator Dave Donley was onto something. He questioned whether the Department of Law should be responsible for answering the questions about prevention against future incidents taken by the affected departments. Senator Dave Donley responded that he thought the Department of Law did take some corrective actions. He then noted a separate form required of the affected agency asking their response to the same question. Senator Sean Parnell asked if the Department of Law had commented on the forms. Senator Dave Donley said he spoke with them before and they said they would work on incorporating most into their own forms. The exception was with question five asking who was responsible for the incident, which resulted in the state's financial costs. Senator Al Adams asked about question seven wanting to know if that information would be used only after all settlements had been made. Senator Dave Donley answered yes. Senator Al Adams was concerned that litigants could not use that information for their benefit. Senator Dave Donley clarified that the Department of Law wouldn't bring anything to the Legislature until it was final. Offers for settlement would not be brought before the committee before they were final. Co-Chair John Torgerson agreed. Co-Chair John Torgerson this matter should be handled as part of the operating budget. Senator Sean Parnell said it should be sent to Department of Law for comment before the committee took final action. Senator Dave Donley there could be settlements submitted before the next budget cycle. Co-Chair John Torgerson ordered the judgements and claims forms matter held in committee while Co-Chair Sean Parnell sent a letter to the Department of Law asking for their comments and suggestions. Co-Chair John Torgerson announced the schedule for balanced budget presentations 9:00 AM Friday. Monday's schedule would be announced the next day. Bills would be next taken up the following week. ADJOURNED Senator Torgerson adjourned the meeting at 9:02 PM. SFC-99 (23) 3/24/99