Legislature(2015 - 2016)HOUSE FINANCE 519
03/22/2016 09:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB53 | |
| HB268 | |
| HB351 | |
| SB53 | |
| HB351 | |
| HB268 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 268 | TELECONFERENCED | |
| += | HB 143 | TELECONFERENCED | |
| += | SB 53 | TELECONFERENCED | |
| + | HB 351 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 351
"An Act relating to adoption of regulations; and
providing for an effective date."
REPRESENTATIVE LANCE PRUITT, SPONSOR, explained that the
bill's inception came from the idea that regulations were
costly to the state and private entities. He shared that he
was inspired by Alaskan Senator Dan Sullivan's "red tape"
legislation that he introduced in Congress. The concept
capped regulations by eliminating an existing regulation
for every new regulation adopted. He attempted to craft a
similar bill on a state level.
JENNA CROUSE, STAFF, REPRESENTATIVE PRUITT, read from the
sectional analysis:
Section 1. (b) Amends AS 44.62.020, the authority to
adopt, administer, or enforce regulations.
A new section is added that states a state agency and
the lieutenant governor may not adopt new regulations
unless:
· they are part of the initial regulations
· they repeal one or more existing regulations that
are equal to or lesser than the proposed new
regulation
· they are adopted as an emergency regulation
· they are implemented following a state or federal
law being enacted
· the cost is less than or equal to zero
· The lieutenant governor determines the regulation is
narrowly tailored, reasonable, and necessary
(c) Extends this rule to amending existing regulations
with the following exceptions:
If the estimated initial or annual cost of the set of
regulations is less than or equal to zero
If the regulation is amending certain fees for
licensed occupations under AS 08
(d) Alaska Oil and Gas Conservation Commission and the
Regulatory Commission of Alaska are exempt from the
requirements of (c) of this section
Section 2. Adds a new subsection to AS 44.62.040 that
reads the Lt. Governor may not accept regulations if
an existing regulation is not repealed. The Lt.
Governor can extend the time for adopting a regulation
for new and amended laws.
Section 3. It applies to regulations adopted after the
effective date of this bill.
Section 4. The effective date clause.
9:56:38 AM
Representative Pruitt explained that the initial thought
process had been one regulation in and one out. He learned
from the Department of Law (DOL) that previously, there had
never been a definition of what a new or amended regulation
was. The legislation expanded on the initial idea so the
bill contained a provision applying to amended regulations.
In addition, the bill aimed to address some concerns
brought forth by the Department of Law, which allowed fees
for businesses and licensing to be amended accordingly to
cover the costs. He delineated that the bill took advantage
of HB 140 (Regulations: Notice, Review, Comment) [Chapter
87 SLA 14 - 07/16/2014] that was adopted several years ago.
The legislation mandated that the cost of a new or amended
regulation to the private sector or municipalities must be
"understood" by the corresponding department. The cost of
the new or amended regulation had to be equal to or less
than the existing regulation.
Co-Chair Thompson OPENED public testimony.
AL TAMAGNI, MEMBER, NATIONAL FEDERATION OF INDEPENDENT
BUSINESSES (via teleconference), testified in support of
the legislation. He believed that the bill would force
departments to review regulations that were 20 or so years
old and were no longer relative today.
Co-Chair Neuman observed that the bill granted the
lieutenant governor a lot of authority and placed him in
the position of "gate keeper of regulations." He wondered
why it gave the position so much authority. Representative
Pruitt answered that the way the bill was proposed to be
enforced on a national level was to confiscate Cost of
Living Allowances (COLA). The question of how to enforce
the bill was also relevant on a state level. He elaborated
that since the Lt. Governor was the "holder of regulations"
and to separate enforcement from the regulating department,
he decided to grant enforcement authority to the office. If
adopted, The Lt. Governor would create the initial set of
the legislation's regulations.
10:01:49 AM
Co-Chair Neuman believed that the Lt Governor's duties were
related to elections and ballot initiatives. He did not
understand the relationship between regulations and the Lt.
Governor. Representative Pruitt replied that any regulation
had to be filed by the Lt. Governor.
Co-Chair Neuman cited page 1, line 8, subparagraph (2) of
the bill and read:
(2) the agency repeals one or more existing
regulations and the cost of the new regulation is less
than or equal to the cost of the repealed regulation…
Co-Chair Neuman wondered how the cost of a regulation was
measured. Representative Pruitt responded that if the
regulation added cost to an agency or the public as
determined through statute created by HB 140. He felt that
if a department was going to put forth a regulation it
should understand and quantify any additional costs similar
to the process of drafting a fiscal note. He noted that
both the United Kingdom (UK) and Canada had enacted similar
laws and that he considered them "socialist type
countries." He voiced that "even countries that liked
government" believed regulations were "burdensome." He
surmised that the implementation of the laws in the UK and
Canada were proof that costs of regulations were
quantifiable.
10:05:13 AM
Co-Chair Neuman wondered whether there was a formula or
methodology of how to measure a regulation. He asked for an
example. He was trying to understand how to measure the
cost.
Representative Saddler referred to AS 44.62.190 d2 and d3
and read the following:
(2) the initial cost to the state agency of
implementation;
(3) the estimated annual costs, based on a good
faith effort to estimate the costs in the aggregate
for each of the following categories using the
information available to the state agency, to
(A) private persons to comply with the proposed
action;
(B) the state agency for implementation and to
other state agencies to comply with the proposed
action; and …
Co-Chair Neuman maintained his request for some concrete
examples.
Representative Pruitt thanked Vice-Chair Saddler for citing
the statute. He did not have current examples but could
provide them.
Representative Wilson asked whether the Board of Game would
be covered under the legislation. Representative Pruitt
answered in the negative. He explained that he spoke with
representatives from the Board of Game and the Board of
Fish that supported the concept. Representative Wilson
asked about the cost. She noted that there was a difference
between the cost to the state versus the cost to local
governments or businesses. She wondered whether the
legislation weighted and prioritized the impacts of the
costs for the affected entities. For example, she asked
whether the impacts of costs to constituents would be
prioritized over costs to the department. Representative
Pruitt answered in the negative. He explained that the goal
of the bill was that the regulation would not add cost for
both. Some regulations would impact one or both, but no
priority was given. Representative Wilson asked whether a
new regulation added in one department could be removed
from another department in order to satisfy the "one in and
one out" requirement. Representative Pruitt responded in
the negative and added that the provision applied per
agency. Representative Wilson supported the legislation.
10:11:05 AM
Vice-Chair Saddler supported the goal of reducing the
regulatory burden on government and individuals. He had
questions about the "presumed relative value of
regulations." He asked about how the costs of a regulation
was determined and interpreted that the legislation relied
on a "good faith effort" by the agency to determine the
costs of compliance for private individuals and
municipalities. He asked how the value of a regulation that
was "not financial" was calculated. Representative Pruitt
answered that the cost had to be less than or equal to
zero. He remarked that the focus of the bill was on costs.
He stated that most regulations were costly. The intent of
the legislation was to put a "cap on government." He wanted
to ensure that regulations were limited in scope so they
did not reach beyond the "initial letter of the law" and
felt they were broadly applied. He summarized that if a
regulation did not have a cost there was not a limitation,
but if a regulation carried a cost the "zero sum game"
applied.
10:14:17 AM
Vice-Chair Saddler stated that the value of a regulation
was not only in the cost. He remarked that there may be
other costs to the state such as a lack of ability to
implement statue. He was concerned about the intrinsic
value of a regulation. He wondered whether a connection
existed between dropping one regulation to make room for
another one. Representative Pruitt responded that it was
left to the department's discretion. He believed that it
was "difficult" for policy makers to think about the
concept and that the issue was philosophical. He felt that
if a person liked large government they would probably not
like the bill. He argued that the regulatory issue was as
"important" as any budget discussion due to the cost of
regulation that was not factored in. Vice-Chair Saddler did
not believe the bill could be characterized as a large
versus small government bill. He voiced that the
legislature passed laws that were implemented by regulation
and were worthwhile. He surmised that the goal was that if
a new regulation was created it would repeal another more
expensive regulation. He was not sure he understood the
concept of the bill. He believed a regulation could hold
value to the public outside its cost.
10:17:55 AM
Representative Gattis pointed to the first line in the
sponsor statement and read: "Alaska has one of the
strictest and most costly regulatory environments in the
country." She believed the statement was scary and favored
a "two for one policy." She thought that an administrative
regulation review committee reviewed regulations. She spoke
about unfunded mandates and state's school districts that
were "mired" in regulation that did not cost the state but
cost the districts money. She wondered how the bill would
handle the situation. She referenced the regulation review
committee and asked whether that committee should deal with
regulatory issues. She wondered whether there was currently
a committee that handled regulatory issue. Representative
Pruitt replied that the issue would be the goal of the
administrative regulation and review committee. He
described that the review committee did not have the
authority to veto regulations. The committee could only
recommend legislation to remove a regulation. He thought
that the committee's role was "vague" and had not seen any
bills to remove costly regulations. He spoke to another
bill by Representative Mike Chenault to abolish the review
committee. He noted that the committee had been around for
a long time, but regulations continued to grow. He
suggested that the legislature should consider how to put
the mechanisms in place to limit regulatory growth and what
the limit should be. He reported that the statute read
earlier by Vice-Chair Saddler was the statute related to HB
140 and would apply to the regulatory costs to school
districts. He agreed that the state was continually adding
burdens on school districts because the department had
established unfunded mandates.
10:22:32 AM
Representative Gattis supported the bill and concurred with
the bill's sponsor that government continued to grow and
that the legislation addressed a philosophical issue about
growing bureaucracy.
Representative Edgmon supported the underlying concept of
the legislation, and felt that the bill was "thought
provoking." He spoke to the 14 state agencies and the Court
System and University. He wondered about the number of
regulations in each department. He stated that regulations
provided interpretation to statues and pondered the effect
of the legislation on the Department of Law and regulations
for statutes that upheld the state's constitution. He
discussed the government structure in Scandinavian
countries and thought they were more "streamlined." He
mentioned the Medicaid reform bill that he imagined would
remove regulations and also add regulations to make
Medicaid more efficient and less costly. He thought there
were an "endless number of permutations" the bill could
take to accomplish its purpose.
10:26:30 AM
Representative Pruitt replied that it was necessary to
think about running government differently and diversifying
the state's economy. He highlighted that he could not say
that every new law passed would get rid of another law. He
believed that the legislature should remain "cognizant"
that every new law created a burden in some capacity. He
suggested considering the repeal of outdated regulations as
well.
Representative Kawasaki appreciated the recognition that
every time a new law was passed significant regulation was
created. He referenced the myriad of regulations created by
one word in the oil tax bill. He expressed confusion
regarding calculating the cost of regulations. He cited
page 2, subsection (c)(1) as follows:
(c) A state agency may not submit, and the lieutenant
governor may not accept
6 for filing, a set of regulations that amend an
existing regulation unless
7 (1) at the time the regulation is submitted to the
lieutenant governor,
8 the estimated net cost of the set of regulations
adopted by the state agency for each of
9 the costs under AS 44.62.190(d)(2) and (3) is less
than or equal to zero; or
Representative Pruitt answered that the provision defined
the statute AS 44.62.190(d)(2) and (3), found in HB 140,
Representative Reinbold's bill from a previous year. He
relayed that due to passage of HB 140 a cost must be
determined for any amended or new state regulation and
based on that figure a comparison can be made whether any
new costs were generated. He noted that the bill did not
mandate calculating the cost for existing regulations; only
new or amended regulations applied to the legislation.
10:31:12 AM
Representative Kawasaki wondered who the estimated net
costs would be calculated for and who they impacted; the
state or private sector.
Representative Pruitt answered that it was both the state
and private sector. He revealed that HB 140 authorized
calculating a regulations initial and annual costs based on
a good faith effort and estimated the costs for the private
sector, state agencies, and municipalities. Representative
Kawasaki maintained his confusion and provided an example.
He reported that SB 21 (Oil And Gas Production Tax)[
Chapter 10 SLA 13 - 05/21/2013] had created "participating
areas" in order to define what "new oil" was. Subsequent to
adoption, the Department of Natural Resources (DNR) wrote
regulations stating that the department would determine
what a participating area was based on calculations. He
deduced that the regulation would not have a net zero
effect and would actually cost the state money to define a
participating area and whether it was subject to the new
tax provisions. If the analysis pointed to a new oil
determination the tax revenue to the state would be
diminished and the oil company would benefit and the effect
would not be net zero. Representative Pruitt replied that
his example would be a new law. The provision in the bill
was related to every new law. He read under subsection (b)
(4):
(4) the regulation implements a state or federal law
enacted, amended, or repealed within 120 days of the
adoption of the regulation,…
Representative Pruitt explained that under his bill a new
law would not be required to have an offset. The time frame
was added to allow consideration of the new regulation and
to enact it.
10:35:06 AM
AT EASE
10:38:09 AM
RECONVENED
Representative Kawasaki asked whether the governor could
essentially veto any legislation passed by the legislature
by declaring that an offset could not be found for the
regulations. Representative Pruitt responded in the
negative. He stated that because it was a new law the
administration would be required to come up with
regulations within 120 days. He clarified that the
exemption existed in the bill that new regulations could be
written without requiring the offset, if the legislature
determined that a bill was important enough to adopt. The
governor would be required to enforce the new law.
Representative Guttenberg understood that the bill did not
apply to new legislation. He referred to page 2, line 1 and
cited the statue AS 44.62.190(d) (2) and (3) regarding cost
estimation. He reported that the bill exempted the federal
government and the Board of Fish and Game. He read (3):
"the estimated annual cost based on a good faith
effort."
…estimate the cost in the aggregate for each of the
following using the information available…
Representative Guttenberg summarized that the statute
applied to a private person, a state agency, or a
municipality. He discerned that no attempt was made to
balance importance or costs, and the determination was left
for the agency to decide. He felt that the process was
"subjective." He asked what the sponsor's idea was for the
cost calculation and how he planned to balance the process.
Representative Pruitt needed clarification on the question.
He surmised that his concern was ensuring that the agency
was not just protecting its own interests. Representative
Guttenberg wondered how the cost calculation would be
balanced between the department, private person, and
municipality. Representative Pruitt perceived that if the
cost to a state agency was $100 the offset would be $100
and if the regulation cost a private entity $100 the agency
would find another way to offset the $100 to the private
sector in another place. He understood Representative
Guttenberg's concern but felt that some discretion was left
to the agency to avoid "tying the hands" of the
departments. He stated that granting the department the
authority to determine the entire costs of the regulation
would ultimately be a policy call.
10:43:27 AM
Representative Guttenberg stated that his concern was that
it could be easy to "not intentionally" circumvent the
intent of the statute and subscribe all of the costs onto
the private entity. He contended that the bill was not
"simple."
Representative Gara noted that there were regulations that
he did not like, but shared his concern that the bill gave
the administration the power to decide what a good
regulation was and to remove good regulations for bad ones.
He asked if the sponsor shared his concern. Representative
Pruitt answered in the negative. He thought that if the
legislature mistrusted the agencies writing regulations
legislation would continually be introduced that reversed
regulations. Currently, the sole authority for writing
regulations resided with the administration and no
limitation existed. He furthered that technically, the
regulation had to remain within the framework of the law,
and some agencies had not remained within the scope of the
law. He felt that his bill placed limits on government
expansion and that currently broad regulatory authority
existed within the administration. He did not know a way to
statutorily say that good regulations could not be taken
off the books and thought any attempts would be
"subjective."
10:47:21 AM
Representative Gara was still concerned that the governor
may cancel good regulations to replace them with bad ones
in order to comply with the bill. He stated that the power
to rescind bad regulations existed in the legislature and
he wondered how his legislation was any different than the
current process. Representative Pruitt discovered that DOL
did not have a definition for what a new regulation was. He
believed that there has been no control over the regulatory
process and that currently the administration can write a
bad regulation. He stated that the legislature had enabled
unelected individuals to expand greatly upon statute. The
legislative possibility for reversing statute existed but
there was nothing limiting the growth of regulations.
Representative Gara voiced that the administration did not
have the power to just adopt a regulation; it had to be
consistent with statute or was deemed unconstitutional. He
added that regulations were frequently declared
unconstitutional. He believed that, without sideboards, the
bill just let the administration decide and handed the
administration more power than it currently had.
Representative Pruitt felt the concept of the bill was
"great" and wanted it to move forward.
HB 351 was HEARD and HELD in committee for further
consideration.