Legislature(2005 - 2006)CAPITOL 17

03/04/2005 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 31 WORKERS' COMP: ILLNESS PRESUMPTION TELECONFERENCED
Moved Out of Committee
+= HB 33 EFFECT OF REGULATIONS ON SMALL BUSINESSES TELECONFERENCED
Heard & Held
+= HB 7 UNEMPLOYMENT COMPENSATION BENEFITS TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
HB  33-EFFECT OF REGULATIONS ON SMALL BUSINESSES                                                                              
                                                                                                                                
4:07:34 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  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."                                                                                                                          
                                                                                                                                
MIKE  PAWLOWSKI,  Staff  to Representative  Kevin  Meyer,  Alaska                                                               
State Legislature,  presented HB  33 on behalf  of Representative                                                               
Meyer,  bill  sponsor.   He  noted  that  [there was  a  proposed                                                               
committee  substitute]  in  response to  the  committee  members'                                                               
questions from the previous committee meeting.  He said:                                                                        
                                                                                                                                
     The key  changes made to HB  33 in CS Version  I really                                                                    
     involve the  trigger mechanisms  and the  definition of                                                                    
     small  business.    Several members  of  the  committee                                                                    
     raised the  concern that  asking agencies  to determine                                                                    
     the  adverse effect  prior to  conducting any  economic                                                                    
     effects  statement ...  really didn't  make any  sense.                                                                    
     ... We've changed  the standard in the bill  on page 1,                                                                    
     lines 5-12 to  the standard of ...  govern the conduct.                                                                    
     And while broader, we feel  it's a lot clearer standard                                                                    
     for  the regulatory  agencies to  consider.   An agency                                                                    
     will only go  through the process set in HB  33 for new                                                                    
     regulations  or when  a person  files a  petition under                                                                    
     the  existing  provision in  state  law  that allows  a                                                                    
     person to file  a provision.  This gets to  the root of                                                                    
     the question  that was asked,  "Why would  you consider                                                                    
     regulations that no one had a  problem with?"  We had a                                                                    
     periodic  review in  the bill  that would  look at  the                                                                    
     regulations  every  five  years.  ... It  should  be  a                                                                    
     process that's  initiated for  new regulations  or when                                                                    
     someone raises a concern on a previous regulation.                                                                         
                                                                                                                                
MR. PAWLOWSKI continued:                                                                                                        
                                                                                                                                
     Additionally we  have changed  the definition  of small                                                                    
     business.   I  believe Representative  Crawford in  the                                                                    
     previous hearing had  talked to us a bit  about how the                                                                    
     standard of  under 100 employees and  sales revenues of                                                                    
     $6 million  was a bit  of an arbitrary definition.   We                                                                    
     agreed with that and looked  back to state law and went                                                                    
     with the  standard of ...  less than 50 employees.   We                                                                    
     removed any reference to  revenue largely because small                                                                    
     business  and   business  in  general   doesn't  report                                                                    
     revenue  figures to  the state  government; there's  no                                                                    
     reason  that  government  needs  to  know  about  that,                                                                    
     whereas the  [Alaska Department of Labor  and Workforce                                                                    
     Development] keeps very  good statistics on employment.                                                                    
     So  the information  would be  readily available  to an                                                                    
     agency conducting the review under  this.  We have also                                                                    
     included a  more extensive group of  exemptions on page                                                                    
     3,  starting  on  line  5.   And  this  was  really  in                                                                    
     response  to the  concern that  Representative Rokeberg                                                                    
     raised, that in increasing  costs, businesses are often                                                                    
     the ones the  bear the cost of  the regulatory process,                                                                    
     and we were  creating a loop that  really wouldn't have                                                                    
     any added  benefit to  small businesses,  the beginning                                                                    
     of   which  we've   exempted  from   the  process   any                                                                    
     regulation  adopted  by  a board  or  commission  whose                                                                    
     members   are   subject    to   confirmation   of   the                                                                    
     legislature.                                                                                                               
                                                                                                                                
4:11:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT  moved  to   adopt  the  proposed  committee                                                               
substitute for HB 33, labeled  24-LS0239\I, Bannister, 3/2/05, as                                                               
the working  document.  There  being no objection, Version  I was                                                               
before the committee.                                                                                                           
                                                                                                                                
MR. PAWLOWSKI returned to the issue of changes made for CSHB 33:                                                                
                                                                                                                                
     Page  3,  starting  on  line  5:  removing  regulations                                                                    
     adopted by boards  or commissions.  The  idea there was                                                                    
     that there're  several boards  and commissions  in this                                                                    
     state, and  they are confirmed by  the legislature with                                                                    
     members from industry  on the board.  So  to ask people                                                                    
     who represent the  industry to go through  this type of                                                                    
     exercise  seemed to  be redundant,  and  so we  removed                                                                    
     that.   And then looking at  several different agencies                                                                    
     and departments  in the state whose  regulations really                                                                    
     didn't  need to  be subject  to the  type of  review we                                                                    
     were talking about  in this bill.  Those  are the broad                                                                    
     sweeping   changes  we   made   in   response  to   the                                                                    
     committee's questions.   We really feel  that it's made                                                                    
     the  bill quite  a  bit better.   Representative  Meyer                                                                    
     asked me to express that  his main concern is to create                                                                    
     an  added benefit  for small  businesses. ...  The bill                                                                    
     has been passed in 37 other states.                                                                                        
                                                                                                                                
4:13:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked Mr. Pawlowski to explain what HB
33 does.                                                                                                                        
                                                                                                                                
MR. PAWLOWSKI replied:                                                                                                          
                                                                                                                                
     What this bill does is  set a process in the regulatory                                                                    
     process  where, when  looking at  a  new regulation  or                                                                    
     upon petition,  a regulatory body asks  itself the four                                                                    
     questions on page 2, starting on  line 3.  They look at                                                                    
     and identify the number of  small businesses that would                                                                    
     be subject  to the proposed  regulation.  They  look at                                                                    
     the  projected record  keeping, recording,  [and] other                                                                    
     administrative  costs that  a small  business would  be                                                                    
     required  to   incur  in  order  to   comply  with  the                                                                    
     regulation.    They  do a  statement  of  the  probable                                                                    
     effect  and they  describe any  alternative methods  of                                                                    
     achieving the  same purposes.  Then  in [subsection (c)                                                                    
     on  page  2, lines  15-21]  they  perform a  regulatory                                                                    
     flexibility analysis,  and what this is  is essentially                                                                    
     the  regulatory  agency  looking  at  ways  they  could                                                                    
     achieve  the same  regulatory  goal  with less  onerous                                                                    
     requirements on  small businesses.   The cost  to small                                                                    
     business  often is  in complying  with regulation,  and                                                                    
     this is where  an agency can ask  itself, "Is reporting                                                                    
     monthly  or  quarterly  appropriate for  this  type  of                                                                    
     regulation  and  this type  of  business  class."   The                                                                    
     staff time  that it takes  in the business to  meet the                                                                    
     requirements  of  the  regulation takes  resources  and                                                                    
     money away  from hiring new employees,  spending it all                                                                    
     on growing  the business.   And now under  this process                                                                    
     the agency  spends time thinking  about better  ways to                                                                    
     do business,  so perhaps you  could report once  a year                                                                    
     rather then monthly or quarterly.   And it invites that                                                                    
     type of dialogue.   That's what this bill  does; ... it                                                                    
     puts  an emphasis  on small  businesses  who might  not                                                                    
     have  the  time,  inclination,  and/or  ability  to  be                                                                    
     involved in the regulatory process in the first place.                                                                     
                                                                                                                                
4:14:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  commented,  "When  [regulations]  are                                                               
being  written, there's  an opportunity  for public  input.   And                                                               
business has  that opportunity  as does  the public  in general."                                                               
He  asked  how many  times  regulations  have been  rewritten  or                                                               
deleted in regulation review.   In addition, he said: "I'm trying                                                               
to  find out  where  this works  into the  process  where ...  it                                                               
really is something  that works better for business.   Because in                                                               
many instances, you'll be pitting business against business."                                                                   
                                                                                                                                
4:17:21 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI responded:                                                                                                        
                                                                                                                                
     We  have continually  worked  with the  administration.                                                                    
     The letter  in your  packet from  the state  Chamber of                                                                    
     Commerce, I think, is fairly  clear in that the concept                                                                    
     ... is  a broad one that  they support. ... We  do know                                                                    
     that  this   started  in   1980  when   the  Regulatory                                                                    
     Flexibility Act  was passed at  the federal  level, and                                                                    
     federal agencies  have been following  this for  ... 24                                                                    
     years now.  ... In 2004 reduced  compliance costs saved                                                                    
     small  businesses in  this  country  over $19  billion.                                                                    
     And  so  there's a  long  track  record of  this  being                                                                    
     something  that works.  ... Every  state is  different;                                                                    
     that's  why we  continue to  tweak and  work with  this                                                                    
     piece of legislation.                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG commented that  he had concerns regarding                                                               
the changed  definition of a small  business.  He stated  that he                                                               
thought 50 employees was much too small.                                                                                        
                                                                                                                                
MR. PAWLOWSKI responded  that in the committee packet  there is a                                                               
breakdown by  business class  by the  Alaska Department  of Labor                                                               
and Workforce  Development.   He noted that  50 was  an arbitrary                                                               
number.                                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked how current statutes  define small                                                               
businesses.                                                                                                                     
                                                                                                                                
MR. PAWLOWSKI replied  that it varies; the  federal definition is                                                               
500  employees or  less, but,  he  commented, "At  that level,  I                                                               
think you  include almost every  single employer in the  State of                                                               
Alaska."                                                                                                                        
                                                                                                                                
REPRESENTATIVE LEDOUX  commented that  if the people  running the                                                               
agencies aren't doing "commonsensible"  things right now, there's                                                               
almost  no regulation  or statute  that  [the legislature]  could                                                               
pass that  would change  attitudes.  She  stated, "I  would think                                                               
that  ... they'd  be making  sure  that ...  the regulations  are                                                               
consistent with health, safety, economic welfare, and so forth."                                                                
                                                                                                                                
4:20:46 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI  agreed  and  said   that  this  is  part  of  the                                                               
difficulties:  "You  can  never  legislate  common  sense."    He                                                               
continued:                                                                                                                      
                                                                                                                                
     You pass  a statute that  is explicit in what  it says,                                                                    
     and the  agency does  its best to  implement regulation                                                                    
     that meets the goals of that  statute.  The end of that                                                                    
     process  and the  beginning of  that process  is always                                                                    
     focused on the statute.  What  this does is build in an                                                                    
     aside  that  says,  "As  you're  working  through  that                                                                    
     process,  consider   these  other  things,"   and  adds                                                                    
     another level of dialogue to the process."                                                                                 
                                                                                                                                
CHAIR ANDERSON provided  an example to demonstrate  what would be                                                               
included in an  economic effect statement, as defined  on page 2,                                                               
lines  3-14 of  CSHB 33.    He also  applied the  example to  the                                                               
regulatory flexibility  analysis as  written on  page 2,  line 22                                                               
through page 3, line 2.                                                                                                         
                                                                                                                                
MR. PAWLOWSKI commented that the  statute would only identify the                                                               
issue  while   the  department  would  promulgate   the  specific                                                               
regulation to deal with the issue.  He stated:                                                                                  
                                                                                                                                
     Through  these economic  effect statements  and through                                                                    
     these  regulatory  flexibility   analyses,  when  these                                                                    
     regulations  do  come   before  the  regulatory  review                                                                    
     committee at the legislative level,  there is a thought                                                                    
     process  that  the  legislature can  look  back  to  in                                                                    
     considering  why the  end  product  and the  regulation                                                                    
     came out.   And so if anything, it's  also a supportive                                                                    
     record for  the legislature  to use in  their oversight                                                                    
     of regulation.                                                                                                             
                                                                                                                                
REPRESENTATIVE  LEDOUX opined  that it  might be  better to  only                                                               
require certain  "troubled" agencies to follow  these guidelines,                                                               
but  if an  agency seemed  to be  running well  it could  be left                                                               
alone.                                                                                                                          
                                                                                                                                
MR.  PAWLOWSKI noted  that  he thought  this  was an  appropriate                                                               
statement.   He explained that this  was part of the  reason that                                                               
the bill  would only apply  to new regulations or  to regulations                                                               
that someone has complained about.                                                                                              
                                                                                                                                
4:27:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  stated that  he had  been told  that for                                                               
insurance purposes in Alaska statutes,  a small business has 2-50                                                               
employees.   He commented  that maybe  these numbers  were solely                                                               
for insurance purposes.                                                                                                         
                                                                                                                                
REPRESENTATIVE KOTT  commented that  his impression was  that the                                                               
bill would establish a small  business bureaucracy.  He said, "It                                                               
suggests  what  various departments  should  look  at and  should                                                               
consider,  but  at  the  end  of the  day  there's  nothing  that                                                               
mandates or instructs  them to do anything. ... I  just don't see                                                               
any teeth in it."                                                                                                               
                                                                                                                                
MR.  PAWLOWSKI  responded that  the  first  version of  the  bill                                                               
contained judicial  review over  the economic  effects statements                                                               
and regulatory flexibility analyses.  He said:                                                                                  
                                                                                                                                
     When  the  Regulatory  Flexibility Act  was  passed  in                                                                    
     1980, it too  had no teeth.  It was  amended in 1996 to                                                                    
     include the  provision of judicial  review and  I think                                                                    
     part  of  the  logic  behind that  is  [that]  judicial                                                                    
     review is  something that you  bring along  after there                                                                    
     has been a  chance to implement this.  But  if you open                                                                    
     the  door  for  lawsuits  and challenges  at  the  very                                                                    
     beginning,  then you  don't give  agencies a  chance to                                                                    
     get  up to  speed.    And I  think  that's the  primary                                                                    
     concern in adding  that level of teeth that  was in the                                                                    
     original bill.                                                                                                             
                                                                                                                                
4:30:42 PM                                                                                                                    
                                                                                                                                
CHRISTOPHER   KENNEDY,   Senior   Assistant   Attorney   General,                                                               
Environmental Section, Civil Division,  Alaska Department of Law,                                                               
stated  that  the  Department  of   Law  had  been  working  with                                                               
Representative Meyer  to refine  HB 33, a  process which  was not                                                               
yet complete  because more input  was needed from a  wide variety                                                               
of  agencies.   He presented  the  committee with  an example  of                                                               
matters that are under discussion with the sponsor:                                                                             
                                                                                                                                
     First there's the issue of  emergency regulations.  The                                                                    
     process in this  bill could add some time  to the steps                                                                    
     that are  needed to approve  changes in  regulations or                                                                    
     to approve new regulations.   The extra time could come                                                                    
     in  two  places:  first  in  waiting  for  the  [Alaska                                                                    
     Department   of   Commerce,   Community,   &   Economic                                                                    
     Development]  to   respond  with  comments   that  it's                                                                    
     required to  provide on  regulatory proposals,  and the                                                                    
     second increment of extra time  could come in preparing                                                                    
     the required  analyses ...  on page  2 of  the CS.   We                                                                    
     feel the delay would  likely be of limited significance                                                                    
     in  a  lot  of   instances  with  ordinary  regulations                                                                    
     projects.   But it  is ...  not likely  compatible with                                                                    
     the   quick  responses   that   are   needed  in   true                                                                    
     emergencies.   And  so we  are going  to be  discussing                                                                    
     with   Representative   Meyer   and   his   staff   the                                                                    
     possibility  of  exempting  the  emergency  regulations                                                                    
     process from this bill.                                                                                                    
                                                                                                                                
MR. KENNEDY continued:                                                                                                          
                                                                                                                                
     Also under  discussion is the  list of  ... categorical                                                                    
     exemptions that you  see in its current form  on page 3                                                                    
     of the  CS.  We keep  thinking of more and  that's just                                                                    
     because  state government  is large  and no  one has  a                                                                    
     complete grasp  on the full  range of  regulations that                                                                    
     exist.  Some of the examples  that are on the table ...                                                                    
     for  including in  this  list in  the  future are,  for                                                                    
     example,  the  regulations   directly  issued  by  [the                                                                    
     Alaska  Department  of  Fish   &  Game],  such  as  the                                                                    
     anadromous stream catalog....   We just don't know what                                                                    
     the role of  the small business analysis would  be in a                                                                    
     regulation  of  that type.    In  a slightly  different                                                                    
     vein,  there are  the regulations  that  are issued  by                                                                    
     [the Alaska Department of  Natural Resources] under the                                                                    
     Forest  Resources  and  Practices  Act,  and  there  we                                                                    
     foresee  some tension  if  there's  some discussion  of                                                                    
     discriminating between mill owners  based on the number                                                                    
     of  employees they  happen to  have.   Another possible                                                                    
     exemption is  fire marshal regulations....   Many other                                                                    
     states with  acts like  this have a  very long  list of                                                                    
     exceptions.   Instead  of exceptions  we  could have  a                                                                    
     shorter  list of  key agencies  to  which this  process                                                                    
     would  apply....    And  the  administration  would  be                                                                    
     minimal  to discussing  approaching it  from the  other                                                                    
     direction, from  the direction of either  pilot project                                                                    
     or more limited piece of  legislation aimed ... only at                                                                    
     agencies who  issue regulations that are  of particular                                                                    
     concern in their impact on small businesses.                                                                               
                                                                                                                                
4:35:29 PM                                                                                                                    
                                                                                                                                
MR. KENNEDY continued:                                                                                                          
                                                                                                                                
     Another  area  under   discussion  with  Representative                                                                    
     Meyer's office  is the concept of  limiting coverage of                                                                    
     this  bill to  significant regulatory  changes.   Often                                                                    
     after a  large regulations project there's  a follow-on                                                                    
     set  of  amendments  to  correct   errors  or  to  make                                                                    
     technical adjustments.   And  we see little  benefit in                                                                    
     putting  that type  of amendment  through  a ...  small                                                                    
     business  impact  review,  and   we  hope  to  continue                                                                    
     working  with Representative  Meyer on  ways to  refine                                                                    
     the  bill to  exclude technical  amendments. ...  [But]                                                                    
     it's  difficult to  define what  a technical  amendment                                                                    
     is, so it's going to take some work.                                                                                       
                                                                                                                                
CHAIR ANDERSON stated that the idea of the bill is good, and                                                                    
asked Mr. Kennedy if the committee should hold the bill.                                                                        
                                                                                                                                
MR. KENNEDY said that he had no objection to the committee                                                                      
passing the bill on, and he would continue his dialogue with                                                                    
Representative Meyer through the next committee.                                                                                
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked Mr.  Kennedy how far  he thought                                                               
the bill was from being finished.                                                                                               
                                                                                                                                
MR. KENNEDY  replied that  the process  of preparing  for today's                                                               
meeting brought in comments from  agencies, and he could see from                                                               
the  comments that  some of  the  agencies are  only now  hearing                                                               
about the  bill.  He said  that it may  be a matter of  weeks for                                                               
the additional  comments to  be assembled.   He noted,  "The time                                                               
needed to  work on the  bill would be  shortened if the  scope of                                                               
the bill was  narrowed [such as] if  we were to decide  on two or                                                               
three agencies to which this bill  would apply rather than to all                                                               
agencies in state government."                                                                                                  
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  if  Mr. Kennedy  had any  input                                                               
into the fiscal note.                                                                                                           
                                                                                                                                
MR. KENNEDY answered that he did not.                                                                                           
                                                                                                                                
REPRESENTATIVE GUTTENBERG  pointed out that the  fiscal note that                                                               
he was looking at for $417,000 didn't describe its purpose.                                                                     
                                                                                                                                
MR. KENNEDY stated:                                                                                                             
                                                                                                                                
     I really  can't answer  any questions about  the fiscal                                                                    
     note other  than to observe  in general  that obviously                                                                    
     some  staff  support  in   the  [Alaska  Department  of                                                                    
     Commerce, Community,  & Economic Development]  would be                                                                    
     necessary  and then  much smaller  increments of  staff                                                                    
     effort from the participating departments.                                                                                 
                                                                                                                                
REPRESENTATIVE GUTTENBERG pointed out  that the fiscal note says,                                                               
"See  individual department  fiscal  notes for  fund sources  and                                                               
detailed  explanations".   He asked  if  those individual  fiscal                                                               
notes were available.                                                                                                           
                                                                                                                                
MR. PAWLOWSKI responded the fiscal  notes were not available.  He                                                               
commented  that  the  bill  had  evolved  rapidly  and  therefore                                                               
sometimes the agencies were working  off of older versions of the                                                               
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked Mr.  Kennedy if  he had  ever been                                                               
involved in the  process of regulation writing, and if  so, if he                                                               
thought that  the enactment  of this  legislation would  have any                                                               
impact on that process.                                                                                                         
                                                                                                                                
MR. KENNEDY replied  that he had been involved  in the regulatory                                                               
process by assisting both the  Alaska Department of Environmental                                                               
Conservation (ADEC)  with the initial development  of regulations                                                               
and the Alaska  Department of Law with the  review of regulations                                                               
after they  had completed the  public comment process.   He noted                                                               
that he  does not foresee the  bill making a major  change in the                                                               
way that  ADEC currently  approaches regulations.   He  said that                                                               
ADEC  has a  practice of  [giving substantial  public notice]  of                                                               
regulatory  proposals,   and  then  preparing   a  responsiveness                                                               
summary to the comments that it  receives on the proposals.  This                                                               
way a detailed  document is already being written  in response to                                                               
all of the suggestions.  He said  that in the case of ADEC, HB 33                                                               
would slightly change  the form of the work product  that ADEC is                                                               
already creating; the  department would need to  separate out the                                                               
comments made regarding small business impact.  He continued:                                                                   
                                                                                                                                
     It  would not  make a  major change  in the  way [ADEC]                                                                    
     approaches its  regulations.  I  really can't  speak to                                                                    
     whether that  would be true  in the case of  some other                                                                    
     agencies that  do not prepare  responsiveness summaries                                                                    
     for their  regulations.  Those  agencies might  need to                                                                    
     do quite  a bit  more work than  they currently  do and                                                                    
     whether that  would change their whole  thought process                                                                    
     is  something somebody  closer to  their process  would                                                                    
     have to answer.                                                                                                            
                                                                                                                                
4:44:12 PM                                                                                                                    
                                                                                                                                
CONNIE  MARSHALL,   Regional  Advocate,  Region  10,   Office  of                                                               
Advocacy,  U.S.  Small  Business Administration  (SBA)  explained                                                               
that  her job  is to  be a  direct link  between state  and local                                                               
governments, small  business groups,  small business  owners, and                                                               
the SBA office in Washington D.C.  She stated:                                                                                  
                                                                                                                                
     My  chief  concern  is   to  help  identify  regulatory                                                                    
     concerns that  small businesses have by  monitoring the                                                                    
     impact of federal and state  policies at the grassroots                                                                    
     level.  It's my goal  to see that programs and policies                                                                    
     encourage   fair   regulatory    treatment   of   small                                                                    
     businesses, that they are the  ones developed to ensure                                                                    
     future  growth  and  prosperity....     The  Office  of                                                                    
     Advocacy  enforces   the  Regulatory   Flexibility  Act                                                                    
     [RFA],  much like  what you're  talking  about, on  the                                                                    
     federal  level,  in  order  to  lessen  the  regulatory                                                                    
     burden on  small businesses.   More that 93  percent of                                                                    
     businesses in every state are  small businesses.  Small                                                                    
     businesses  with  less  than  20  employees  ...  spend                                                                    
     roughly $7,000  each year per  employee to  comply with                                                                    
     federal  regulations.   That  is  60  percent more  per                                                                    
     employee than large  firms spend.  And  that's just the                                                                    
     cost of federal regulations.  ... Small businesses also                                                                    
     have to pay cost of  state regulations.  Under the RFA,                                                                    
     advocacy   has  shown   time   and   time  again   that                                                                    
     regulations  can be  reduced and  the economy  improved                                                                    
     without   sacrificing    important   goals    such   as                                                                    
     environmental  quality,  travel safety,  and  workplace                                                                    
     safety.  By working  with federal agencies to implement                                                                    
     the  RFA, in  2004  our office  saved small  businesses                                                                    
     nationwide  over  $17  billion in  foregone  regulatory                                                                    
     costs.  Those  savings can be used to  create new jobs,                                                                    
     buy new  equipment, expanse access  to health  care, or                                                                    
     just simply  to maintain  their competitiveness  in the                                                                    
     marketplace.                                                                                                               
                                                                                                                                
MS. MARSHALL continued:                                                                                                         
                                                                                                                                
     While  some states  have  state regulatory  flexibility                                                                    
     legislation that mandates state  agencies to perform an                                                                    
     economic impact analysis before  they regulate, many do                                                                    
     not.   For  that reason  we helped  draft a  regulatory                                                                    
     flexibility model  legislation and introduced  a report                                                                    
     on that  to the states  two years  ago.  We  found that                                                                    
     there are  five critical  elements that  any successful                                                                    
     state   regulatory   flexibility   law   should   have:                                                                    
     [First],  you  decide  on   what  your  small  business                                                                    
     definition  is,   we  don't   tell  you.     Second,  a                                                                    
     requirement  that state  agencies perform  the economic                                                                    
     impact analysis  before they  regulation....   Third, a                                                                    
     requirement   that   state   agencies   consider   less                                                                    
     burdensome  alternatives that  still meet  their goals.                                                                    
     Fourth, the  judicial review  ... so  that the  law has                                                                    
     teeth.  And  last, a provision for  state government to                                                                    
     periodically  review all  of its  regulations.   To  be                                                                    
     effective we would hope that  there would be few if any                                                                    
     exemptions from  the law....  Even  the best regulatory                                                                    
     flexibility initiative  has little value  if everything                                                                    
     is exempted.                                                                                                               
                                                                                                                                
4:49:02 PM                                                                                                                    
                                                                                                                                
MS. MARSHALL continued:                                                                                                         
                                                                                                                                
     So in order for  regulatory flexibility to really work,                                                                    
     you  need to  have the  governor  on board  and ...  to                                                                    
     train  and educate  your state  agencies to  understand                                                                    
     this  responsibility.   It just  becomes part  of their                                                                    
     workplace.   And  then just  continually involve  small                                                                    
     business  community,  as  many   of  you  have  already                                                                    
     suggested.   During  the time  of tight  state budgets,                                                                    
     you   may  be   wondering  how   much  it   costs.  ...                                                                    
     Implementing  a   regulatory  flexibility   system,  we                                                                    
     believe, can be done at little or no additional cost.                                                                      
                                                                                                                                
MS.  MARSHALL  gave two  examples  of  states that  had  recently                                                               
implemented  [legislation  similar to  HB  33],  and yet  had  no                                                               
additional  costs.    She  explained that  last  year  17  states                                                               
introduced  regulatory flexibility  and seven  states signed  the                                                               
legislation  into law,  and  in 2003  12  states introduced  such                                                               
legislation.    She pointed  out  that  governors in  two  states                                                               
signed  legislation  into law,  and  two  other governors  signed                                                               
executive orders to implement RFAs.   So far this year 12 states,                                                               
including Alaska,  have introduced  regulatory flexibility.   She                                                               
commented:                                                                                                                      
                                                                                                                                
     One of  the many reasons  this legislation has  been so                                                                    
     successful  over the  last two  years ...  [is] because                                                                    
     policy  makers across  the country  are realizing  that                                                                    
     regulatory  flexibility  is   an  economic  development                                                                    
     tool.  There are over  23.7 million small businesses in                                                                    
     the  United  States  and they  are  the  job  creators.                                                                    
     Small firms create between 60  and 80 percent of all of                                                                    
     the  new jobs  in  our economy.  ...  According to  the                                                                    
     federal definition  of small business which  ... is 500                                                                    
     employees  or  less,  almost  97  percent  of  Alaska's                                                                    
     employers are  considered small,  and employ  almost 60                                                                    
     percent of all of your non-farm sector employees.                                                                          
                                                                                                                                
4:52:53 PM                                                                                                                    
                                                                                                                                
MS. MARSHALL commented:                                                                                                         
                                                                                                                                
     Sometimes,  because of  their  size, small  businesses'                                                                    
     importance to  the economy can be  overlooked.  Because                                                                    
     of this  it's also very  easy to overlook  the negative                                                                    
     impacts of  regulatory activities.  The  intent of your                                                                    
     legislation is  to compel  regulatory agencies  just to                                                                    
     consider   small   businesses  when   regulations   are                                                                    
     developed,     and     particularly    consider     the                                                                    
     disproportionate impact  those regulations  might have.                                                                    
     I believe this legislation is needed.                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked Ms.  Marshall  what  form of  the                                                               
judicial review other states apply.                                                                                             
                                                                                                                                
MS. MARSHALL stated, though a  judicial review is not included in                                                               
HB 33,  Alaska already has  statutes that entitle  any interested                                                               
person to a judicial review.   She said that of the five critical                                                               
elements she had recommended earlier, Alaska already has two.                                                                   
                                                                                                                                
REPRESENTATIVE  ROKEBERG commented  that he  likes redundancy  in                                                               
statutes.                                                                                                                       
                                                                                                                                
CHAIR ANDERSON closed public testimony.                                                                                         
                                                                                                                                
REPRESENTATIVE GUTTENBERG  stated that he  was not going  to vote                                                               
to move the bill  from the committee at this point.   He said, "I                                                               
think  there's considerable  amount  of  work left  to  do on  it                                                               
before it  leaves here."   He  voiced concern  about the  lack of                                                               
information on the fiscal notes,  and pointed out that the letter                                                               
from the Alaska  State Chamber of Commerce was "very  tepid."  He                                                               
noted, "I think  everybody sees this as a work  in progress and I                                                               
don't think it's ready to be moved out."                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  commented, "I  do take exception  to the                                                               
50 number  in terms  of definition.   What we've  tried to  do in                                                               
this committee over the years is  try to make a consistent ruling                                                               
in our state statutes about what  is defined as a small business.                                                               
I  don't think  it  serves the  public interest  at  all to  have                                                               
different definitions.  ... I believe  that our goal should  be a                                                               
certain consistency, whatever that is."                                                                                         
                                                                                                                                
4:57:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD   reiterated  that  the  number   50  is                                                               
arbitrary.                                                                                                                      
                                                                                                                                
CHAIR   ANDERSON   noted  that   there   was   an  objection   by                                                               
Representative Guttenberg.                                                                                                      
                                                                                                                                
REPRESENTATIVE GUTTENBERG  opined that the bill  was not complete                                                               
and  there was  a lot  of further  work  to be  done on  it.   He                                                               
reiterated that  the committee  did not  know anything  about the                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
MR. PAWLOWSKI pointed out that  he and Representative Meyer would                                                               
both be  happy to continue  to work on the  bill.  He  said, "The                                                               
goal is  to produce  a good  piece of  legislation that  has real                                                               
value for the state."                                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG moved  to adopt  Conceptual Amendment  1                                                               
which  would change  the definition  of  a small  business to  "a                                                               
current  statutory definition  that would  not be  less than  100                                                               
people."   There being no  objection, Conceptual Amendment  1 was                                                               
adopted.                                                                                                                        
                                                                                                                                
CHAIR ANDERSON announced  that CSHB 33, Version I,  would be held                                                               
over.                                                                                                                           

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