Legislature(2003 - 2004)
02/26/2004 09:03 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 203(JUD)
"An Act relating to administrative hearings, to hearing
officers, and to administrative law judges; establishing the
office of administrative hearings and relating to that office;
and providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken communicated that this legislation would create an
independent office of hearing officers under the administration of
a chief administrative law judge (ALJ), within the Department of
Administration. The bill's sponsor would be providing further
information in regards to the office's structure. An explanation
pertaining to the fiscal note would be forthcoming.
Co-Chair Wilken asked whether there was any objection to the
adoption of the Version 23-LS0903\Z committee substitute as the
working document.
There being no objection, Version "Z" was ADOPTED.
[NOTE: A formal request to adopt the Version "Z" committee
substitute was offered later in the hearing.]
DAVE STANCLIFF, Staff, Administrative Regulation Review Committee,
Office of Senate President Gene Therriault, the bill's sponsor,
explained the this committee substitute has been developed to
address technical issues and to "clean up" various components of
the bill as identified by the Legislative Legal Division and the
Administration. He referenced a handout provided by the Regulation
Review committee titled, "Changes Included in SB 203(FIN)" [copy on
file] that specifies the eight changes made in the committee
substitute. The first substantive change is located in Section 66,
line 30, page 31 of the bill and reads as follows.
Sec. 66. AS 39.52.170 is amended by adding a new subsection to
read:
(d) A public employee who is in a permanent full-time
position as a hearing officer or administrative law judge may
not accept employment as a hearing officer or enter into a
contract to act as a hearing officer, administrative law
judge, or judicial officer for the federal government, another
state, a municipality, or a Native tribe.
Mr. Stancliff stated that the municipal jurisdiction specification
was added to the list to avoid possible conflicts of interest.
Senator Olson understood the rationale for this section, as it
would apply to such large communities as Anchorage or Fairbanks;
however, he asked how Rural locations with limited numbers of
hearing officers would be affected.
ANDY HEMENWAY, Hearing Officer, Department of Administration,
responded that currently the State has 25 hearing officers, all of
whom are located in Anchorage, Fairbanks, or Juneau. These
individuals travel to other locations or participate via
teleconference as required. Therefore, this requirement would not
affect smaller communities.
Senator Olson continued to voice discomfort with the inclusion of
municipality employees in the list.
Mr. Hemenway stated that the purpose of this language is to avoid
any conflict of interest that might arise regarding decision-making
on behalf of one sovereign entity verses another's policies or
interests.
Senator Olson questioned how a hearing officer, whose role is one
of neutrality, could have a conflict of interest.
Mr. Hemenway expressed that the intent would be to avoid any
"inherent" conflict of interest. There might be a perception that a
hearing officer who works on behalf of the State might tend to rule
in its favor in a situation involving the State and a municipality,
for example.
Senator Olson observed "that it sounds like we are trying to
protect ourselves from ourselves."
Mr. Stancliff commented that the second change is located in
Section 65 on page 31 of the bill. While the bill provides
protection to the ALJ from inappropriately contact or influence
from agencies or Legislative agencies, it did not provide that
protection to hearing officers. This is addressed in Section 65.
Mr. Stancliff stated that recently enacted legislation incorporated
new processes at the request of Associated General Contractors
(AGC) in regard to dispute resolution. In order to allow that
process to develop, those processes has been eliminated from the
jurisdiction of the legislation.
Mr. Stancliff continued that the Administration has requested that
hearing officers be provided the same type of code as judicial
officers have in that a person could request a different hearing
officer preside over the hearing. This language is included in
Section 3, Subsection 44.21.570(c) on page ten, beginning on line
eleven.
Mr. Stancliff stated that the definition of an administrative
hearing is expanded in language in Section 3, Subsection 44.21.599
(1) on page 11. This section reads as follows.
(1) "administrative hearing" means a quasi-judicial hearing
before an agency, but does not include an informal conference
or review held by an agency before a final decision is issued.
Mr. Stancliff, addressing Senator Olson's concern about the
prohibition of hearing officers working for the State and another
jurisdiction specifically in regards to how this might affect a
small Rural area, stated that this language would serve to address
the concern. Highly contested cases would be heard at the higher
administrative level.
Mr. Stancliff stated that Number Six on the Regulation Review
Committee list would address some conflicts the legislation
incurred with agency's "cease and desist" authority. This language
is located in Section 8, on page 13, beginning on line 16.
Mr. Hemenway explained that this language would primarily address
the bill's conflict with the Department of Community and Economic
Development's crease and desist orders for regulated professions.
Mr. Stancliff stated that a technical change incorporated in this
committee substitute is that the clarification of the duties and
responsibilities of ALJs and hearing officers is clearly defined in
the bill.
Senator Bunde mentioned that separate legislation relating to
worker's compensation would incorporate a panel of ALJs. Therefore
he asked how these two pieces of legislation would interact.
Mr. Stancliff replied that this is an unknown, as the integration
stage of the procedure has not been conducted. However, this should
be addressed as the processes advance.
Senator Bunde stated that the bill in question is SB 311-INSURANCE
& WORKERS' COMPENSATION SYSTEM.
Mr. Stancliff acknowledged.
SFC 04 # 22, Side A 10:40 AM
Senator Hoffman asked whether the possible conflict of interest
issue that might arise by a hearing officer being employed in a
second job is addressed in this committee substitute.
Mr. Stancliff responded that substantial discussion has occurred in
this regard, specifically whether hearing officers should be
allowed to practice law outside of their public employee position.
This bill is restrictive in regards to possible conflicts.
Mr. Hemenway noted that language in Section 3, Subsection
44.21.540(c) on page six, lines 24 through 27 addresses the concern
regarding a second job. However, while this bill contains language
in this regard, it does not expressly prohibit work in a second job
outside of their employment with the State.
(c) An administrative law judge employed by the office must
devote full time to the duties of the office unless appointed
to a position that is less than full-time. An administrative
law judge employed by the office may not perform duties
inconsistent with the duties and responsibilities of an
administrative law judge.
Mr. Hemenway understood the intent of this language to be that a
person employed as an ALJ should "not also hold a second job within
the Administration," such as being a Deputy Commissioner, for
example.
Senator Hoffman stated that rather than being concerned about an
individual's ability to hold a second job, his primary concern was
their ability to privately practice law.
Mr. Stancliff responded that while this concern was addressed, the
decision was made not to include it. However, the Chief
Administrative Law Judge would be developing a judicial canon
similar to that currently in place for the State Judicial Branch.
New regulations governing ALJS would also be developed that might
address this issue. It is not, however, required, in Statute.
Senator Hoffman asked whether the independent practice of law would
present a conflict of interest for hearing officers.
Mr. Hemenway shared that this issue is a primary concern. The
Judicial Canon does prohibit judges from practicing law. The
essential question is whether this should also apply to
administrative hearing officers. This is worth considering.
Responding to Senator Hoffman's question, Mr. Hemenway declared
that there is certainly the potential for conflicts of interest in
this area. The question is whether it should be addressed through
regulation or Statute.
Senator Hoffman declared that if there is the potential for
conflict of interest, it should be included.
Mr. Stancliff stated that the State currently contracts with a
number of hearing officers and this process would be continuing.
Therefore, consideration must be given to this situation.
Mr. Stancliff stated that the final change in the bill pertains to
Section 46(b) on page 26 of the bill and regards the amount of time
that hearing officers might spent in regard to insurance rate
setting. Currently, the Director of the Division of Insurance
currently spends more that 1,000 hours in this regard. Were the
rate setting responsibility to shift over to the ALJs, it would
significantly increase the fiscal note. There are some Division of
Insurance duties however, that could be transferred to the Central
Panel without much impact.
Mr. Hemenway voiced that rate setting responsibilities should not
be conducted by the Central Panel.
Mr. Stancliff concurred and stated that were those responsibilities
to become the responsibility of the Central Hearing Panel, the
fiscal note would be cost prohibitive and the bill would falter.
Co-Chair Wilken asked regarding the validity of the University of
Alaska's two-page brief [copy on file] requesting an exclusion from
the jurisdiction of the bill.
Mr. Stancliff commented that the brief might have some validity.
The determination regarding the University is under review.
However, he voiced, "that no State hearing officer should be exempt
from the protections and higher standards" being developed in the
bill. The University has a high quality process and meets those
standards.
Co-Chair Wilken asked how the University's request would be
addressed.
Mr. Stancliff replied that an amendment would be developed to
address their exemption.
Co-Chair Green moved to adopt the Version 23-LS0903\Z committee
substitute as the working document.
There being no objection, the Version "Z" committee substitute was
formally ADOPTED as the working document.
Co-Chair Wilken stated that the fiscal note discussion would occur
during the next hearing on the bill.
Senator Hoffman asked whether there is a shortage of hearing
officer applicants in the State.
Mr. Hemenway responded that in his perception, as positions open,
there are a number of good applicants.
Co-Chair Wilken noted that the bill would be HELD in Committee.
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