Legislature(2005 - 2006)CAPITOL 120
04/06/2005 01:00 PM JUDICIARY
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HB 33 - EFFECT OF REGULATIONS ON SMALL BUSINESSES 2:21:35 PM CHAIR McGUIRE announced that the next order of business would be HOUSE BILL NO. 33 "An Act relating to the effect of regulations on small businesses; and providing for an effective date." [Before the committee was CSHB 33(L&C).] MICHAEL PAWLOWSKI, Staff to Representative Kevin Meyer, House Finance Committee, Alaska State Legislature, sponsor, relayed on behalf of Representative Meyer that the federal Regulatory Flexibility Act was passed in 1980 and requires agencies to consider the impacts and costs to small businesses when drafting regulations. He said [the Act] does not predetermine an outcome, but brings an awareness of the interests of small businesses into the process, and allows interested parties to sue if agencies don't follow the Act. The federal administration has estimated that the Act has saved small businesses over $17 billion, he said, because "just filling out a few less forms, following a few less of the restrictions that are put on business has saved business money." This cost savings allows businesses to invest in jobs, people, and growth. MR. PAWLOWSKI said that 37 states have adopted a similar law. The model legislation may not fit Alaska, however, since it shouldn't get in the way of resource development by slowing down the permitting processes, he explained, and mentioned that the House Labor and Commerce Standing Committee addressed the issue of judicial review. He characterized HB 33 as a better step in the process of forming an Alaskan regulatory flexibility Act. 2:25:01 PM REPRESENTATIVE GARA asked about the cost of the studies required under the bill. MR. PAWLOWSKI acknowledged that there is a fiscal note, but offered his belief that it applies more to the original bill than to the version before the committee, because CSHB 33(L&C) now relaxes those requirements to a "general description." He posited that Alaskans are used to environmental impact statements, and that economic effect statements ought to be reviews of similar depth. He mentioned that CSHB 33(L&C) addresses this issue by softening the language and taking out judicial reviews, he said. REPRESENTATIVE GARA said his concern is that the studies will be costly and will delay the promulgation of regulations, because they must include a general description and estimate of the numbers of the affected businesses, and such will be hard to determine unless "you shoot from the hip." MR. PAWLOWSKI said the costs have not been high for other states with similar laws, and noted that the definition of a small business will be based solely on the number of employees, and the Department of Labor & Workforce Development keeps accurate statistics of such that are available on line. With regard to the analysis of probable economic effect, he agreed that there is a chance that the process will be slowed down. The question then becomes whether the investment of time is warranted compared to the cost of going back and redoing regulations. The approach of regulators is limited by their mission statement, and so adding a little information ahead of time helps them do it right the first time, he opined. REPRESENTATIVE GARA said one of his concerns is that the government must be "flexible enough to come up with regulations that achieve the purposes of the statute that they are implementing in the most cost effective, fairest way." He said he is worried the bill will encourage agencies to shortcut the purposes of a statute, for example, like one that protects people from pesticides. He suggested adding language to ensure that the objectives of statutes are not compromised. MR. PAWLOWSKI said it seems clear enough that the bill is not intended to compromise statutes and that agencies have to meet the objectives of the statutes. The language requires regulators to be consistent with the health, safety, and welfare of the state, he concluded. REPRESENTATIVE GARA argued that clarifying the bill further would ensure that an agency also has the duty to implement the statute as the statute reads. CHAIR McGUIRE suggested that Mr. Pawlowski take that comment back to the sponsor. She opined that more often than not, the regulations undermine the objectives of the statutes. 2:35:51 PM CHRISTOPHER KENNEDY, Senior Assistant Attorney General, Environmental Section, Civil Division (Anchorage), Department of Law (DOL), said Governor Murkowski strongly supports small businesses and feels it is important to safeguard against regulatory requirements that put unjustified or onerous burdens on small business. He added that the administration is very close to an agreement with the sponsor in developing legislation that the governor can support. He said the main areas under discussion are those of determining which kinds of regulations should be subject to this procedure, and of creating a shorter list of agencies that would fall under the legislation. Most labor, commerce, health and social services, and environmental health regulations would be covered, but the governor wants to exclude resource development regulations. REPRESENTATIVE GRUENBERG asked why the bill doesn't also apply to proposed legislation. MR. PAWLOWSKI said that the legislative process allows for deliberation. The concern isn't with regard to elected officials but instead with regard to appointed officials or bureaucrats who have to make decisions without the benefit of being elected and being in touch with their constituencies. Similarly, regulations promulgated by boards and commissions have also been removed from this bill, he said. CHAIR McGUIRE concurred that the regulatory process doesn't have the same opportunities for the public to weigh in at as does the legislative process. She surmised that the goal [of the bill] is to interject more analysis at the regulatory phase. One other major distinction is that legislators can be voted out of office, but it is difficult to track down a regulation writer, she added. REPRESENTATIVE GRUENBERG said exempting natural resource laws may permit large companies to have regulations promulgated to drive out smaller companies. The state's gas pipeline project may have various-sized players, he noted, for example, and said he has been thinking about the legislature's negative impacts on municipalities. He suggested that HB 33 include consideration of the impacts on small municipalities and people in general. 2:44:38 PM REPRESENTATIVE GARA asked Mr. Kennedy whether adding the phrase, "and not compromising" would be workable. MR. KENNEDY indicated that he's not yet had time to consider that but his initial instinct is that the bill already fits that goal. The intent was never to compromise current or future statutes, he said. REPRESENTATIVE GARA said he still has that concern. The language should be put in the statute so people don't have to fight over what the legislative history meant, he opined, adding that another concern of his is that by ensuring that the legislation doesn't apply to the Department of Natural Resources (DNR) because of a desire to not slow that agency down, it suggests that requiring studies does slow down the regulatory process, and will do so for every other agency. MR. PAWLOWSKI said: I think actually the concern on the resource development side is more that objections to resource development in Alaska tend to find whatever crack, crevice, or hole they can slip into to stop, stall, or get in the way of any project. [By] adding even a tiny crevice, even with explicit judicial review taken out of the bill, the concern is always that that can be manipulated at a higher level to file a challenge to halt the permit. REPRESENTATIVE GRUENBERG suggested that the language in the bill should be drafted more carefully. CHAIR McGUIRE indicated that CSHB 33(L&C) would be held over.