Legislature(1997 - 1998)
01/15/1998 08:12 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 264 - NEGOTIATED REGULATION MAKING Number 0079 CHAIR JAMES announced the only item of business was House Bill 264, "An Act providing for a negotiated regulation making process; and providing for an effective date." Number 0100 WALTER WILCOX, Legislative Assistant to Representative Jeannette James, Alaska State Legislature, addressed the committee on behalf of Representative James, sponsor of HB 264. Mr. Wilcox referred to the committee member's packets which included the original bill and the history associated with it, sponsor statements, definitions of negotiated rulemaking, Alaska regulation adopting process, the Montana version of negotiated regulation making, the Nebraska negotiated rulemaking act, the federal government negotiated Rulemaking Act, the administrative code from Nebraska, agency fiscal notes, a sectional analysis, and a proposed committee substitute for HB 264, State Affairs. Number 0166 CHAIR JAMES made a motion to adopt proposed committee substitute 0- LS0910\B, Bannister, 11/17/97. There being no objection, Version B was before the committee. Number 0214 MR. WILCOX said, "HB 264 enables and encourages negotiated regulation making. At the request of the Office of the Attorney General, through Deborah Behr, we believe that rulemaking might be a better name than regulation making. As regulation making, through negotiation process sounds like maybe regulations are for sale or trade, which is not the case. A negotiated rulemaking -- that just sounds better, we believe. It's used by the federal government, the state of Montana, and the state of Nebraska. As you're all aware, the citizens of Alaska feel embroiled in too many regulations and excluded from the regulation making process. This bill's intent is to include the people of the state of Alaska, at all levels, and impact of people(s) into the regulation making process. It's designed to be used in the most complex regulations that cost lots of money. It would not be used in the mundane adoption of regulations that nobody has any beef with." Number 0296 MR. WILCOX explained that it is a voluntary process for drafting regulations. It brings the impassive parties together, including the government and outside agencies that have interest in the specific regulation. The idea is to reach a consensus on some, or all, of the aspects of the rule before it is formally published as a proposal. He said it brings in the public, impacted industries, and special interest groups into the regulation making process before the regulations are cast in concrete and put out for general public input. The agency head can choose a committee Comprising of individuals who have been identified as interested parties. The idea being not to exclude any of the interested parties. A mediator, or facilitator, or convener is used in appropriate aspects as delineated in five pages of the committee substitute. The committee substitute lays out how this committee would be formed and how it would function. Number 0384 MR. WILCOX expressed it would appear to create more technically accurate, clearer and specific, and less likely to be challenged regulations - challenged by litigation of course. For example, Title 17, the Department of Transportation and Public Facilities (DOT/PF) redrafted 204 pages of leasing regulations that was unanimously opposed by hundreds and hundreds of users. He believed it was unanimously opposed, and in fact was a topic of a meeting at the Regulation Review Committee. Subsequent to the examination by the Regulation Review Committee, the regulations were rewritten. Mr. Wilcox believed it was mostly to the satisfaction of impacted parties. DOT had more than $120,000 in the regulation writing up to that point. He said they could have saved a lot of that money had they involved the 'majors' and the interested third parties in the regulation making process prior to casting it in concrete. Number 0477 MR. WILCOX said it was his understanding that the commissioners, Administration, and the Office of the Attorney General have all signed off on HB 264 as a workable bill. However, acknowledge there may be some flaws in it. We are here today to solicit input on what we could do to make this process better, more equitable, more fair and more workable. Number 0508 MR. WILCOX concluded they should have zero fiscal notes from all agencies. This should be a benefit to the agencies rather than a detriment. He explained this type of a process is currently being used, on a limited scale, with success in a couple of the state agencies. He believed Janice Adair, Director, Division of Environmental Health, Department of Environmental Conservation has successfully used working groups to help promulgate regulations. He said, "It seems like a valuable tool and it would only be a supplemental tool. It would not be required. It would be up to the agency head to decide whether this tool would be used. It is intended to be an adjunct to a process in large scale regulation writing." Number 0570 REPRESENTATIVE ETHAN BERKOWITZ noted that he is a cosponsor. He asked, "The other three statutes involved: the Montana, the Nebraska, and the federal statutes all include a notice requirement about the proposed rulemaking - that's not included in the committee substitute we're looking at?" Number 0600 MR. WILCOX responded yes it is. He explained the Administrative Procedure Act (APA) notice requirements will not be changed in the committee substitute. Mr. Wilcox referred him to line 16 on page 4, AS 44.62.310 apply to meetings of a negotiated regulation making committee. So the APA notice requirements would be required to be used. Number 0667 REPRESENTATIVE BERKOWITZ asked if that would cover the expressed notice requirements that the other statutes specifically adopt in the context of their negotiated rulemaking policies? Number 0687 MR. WILCOX replied our Administrative Procedure Act may or may not follow theirs exactly, but ours is the one we operate under and we're not interested in opening up the APA as that is a can of worms. So we will be happy to incorporate the APA requirements into this regulation and not change. Number 0698 REPRESENTATIVE BERKOWITZ believed the Nebraska statutes have provision for a petition to use negotiated rulemaking committee. He asked if there were any similar provision in HB 264. Number 0717 MR. WILCOX confirmed that it was up to the agency head. He stated, "The agency head can be petitioned, of course. How the request gets to the agency head is driven by whoever might be interested in bringing it to his attention. This is intended to be people driven." For example, if Alaska Airlines had a problem with the regulation, and they didn't like it, at this point they can go the commissioner and say, "Commissioner, we'd like to be involved in the regulation writing process." However, in the past they would have been precluded from doing that. Number 0745 REPRESENTAIVE BERKOWITZ wanted to assure that anyone who feels they have a stake in the process, has access to the process. Number 0746 MR. WILCOX mentioned as an example, you have an activist out here who is just generally an activist. They would be, if they requested, allowed to sit at the table. Number 0760 REPRESENTATIVE BERKOWITZ asked, "And they would be aware of the process because notice had been given that rulemaking was in the works?" Number 0778 MR. WILCOX replied the notice under the Administrative Procedure Act will be followed. The commissioners' jobs depend upon it. Number 0780 REPRESENTATIVE KIM ELTON asked if they would be using the term negotiated rulemaking rather than negotiated regulation making. He noticed negotiated regulation making was being used throughout the bill. Number 0789 MR. WILCOX replied that Deborah Behr, Office of the Attorney General, would be addressing that. He said, "What we don't want to do is have people -- be able to come into an agency and have any doubt in their minds about what a regulation is." For example, if a person got a speeding ticket, he couldn't go to the Department of Public Safety and ask to negotiate the regulation. Number 0820 REPRESENTATIVE ELTON asked, "If the determination is going be made by an agency head on whether or not they hire a mediator or convener, or something, do you anticipate that agency head may in some instances say, 'wait a minute, (indisc.) my budget doesn't accommodate going out and contracting with somebody to do this.' Do you anticipate that an agency head in some instances my say 'we're not going to do this because it's going to cost my agency budget some money?" Number 0854 MR. WILCOX replied if an agency head can substantiate, to the public where he is coming from, they can do anything they choose. He believed bringing the public into the process. If they don't like the decision an administrator or head of an agency makes, they can certainly appeal it to the press, to the legislators, or to the constituency of that particular agency head. Number 0878 REPRESENTATIVE ELTON understood that but wondered if in some instances you may be getting a bureaucratic decision not to do this because they don't want to go out and spend the money to hire a mediator or a convener. Number 0890 MR. WILCOX said, "We're hoping to have most of it voluntary - for the mediators and the conveners. We're trying to keep this a low budget option. I believe in high profile cases that cost lots of money. For instance, Title 17 Airport rewrite, air legislation, water legislation, and timber legislation that gets turned into regulations. They spend hundreds of thousands of dollars on regulations. This may actually be much cheaper for them, if it's a controversial enough item." Mr. Wilcox suggested getting the big controversial items resolved at the first step, rather than winding up making regulations that are challenged in court, that cost much more than trying to head off the problems before they get cast into concrete. He said, "To answer your question directly, yes, the commissioner can abuse the process." Number 0946 REPRESENTATIVE ELTON stated he would not call it abusing the process. In some instances you could call it being fiscally conservative. He mentioned he supported the legislation. Representative Elton said, "If you want disinterested conveners, and you were coming to me and asking me to work either in water regulations or timber regulations, I'd run away from you so quickly because that is a tough job. And disinterested party doing it for no pay - good luck." Number 0980 CHAIR JAMES stated for the record that she has been working hard on this issue for six or eight years trying to find some way to make regulations in this state less controversial. She said, "When you talk to the public, and I've talked to a lot of them, one of the things they really dislike is the regulation process. They believe that the legislature passes laws and the regulations don't implement the law. Many times they do, and there is authority there because the legislature has given them authority. One of the things in having this opportunity before the regulations are crafted is, it gets some of those sticky things out of the way, or keeps them from being put in the regulations, so that there challenged afterwards. And we know lots of regulations - in fact, I have been working on some [Department of] Revenue regulations since 1993 and there still not completed - on oil taxes. And so, you know it's a problem to get things that will work and will not be challenged in court. Regulation writing is probably one of the most difficult things there is to do. If you try to sit down in your house and write a policy of how you handled every issue in your house, you would find out how difficult it is to write a road map of implementing the statutes." CHAIR JAMES reiterated that it was her goal to make it more acceptable by the public. She said when the public is dissatisfied it costs much more money for government. When the public is satisfied things are less expensive. The federal government in using the regulation rulemaking process has found that, even though it may be more expensive up-front because you have added costs for getting these people together. That there is less litigation and fewer problems after the regulations have been crafted and that the net result is less money spent. She anticipated this is the way this would work. Number 1201 MR. WILCOX said, "A specific on-point example though would be in Title 17, airport leasing regulations, once again. I maybe not exactly correct on the number, but I believe the words 'in the manager's discretion' was in there over a hundred times. Had that been addressed up-front the majors in the aircraft industry may have accepted the regulations but there was too much arbitrary, capricious, and possibly discriminatory latitude within that type of language.... Alaska Airlines and Japan Airlines said, 'wait a minute you can't say that you're going to set fees based upon the manager's discretion.' It would have become obvious to the people writing the regulations that wasn't going to fly. And in the long term it didn't fly but it took a lot more money, time and energy from the political entity here plus the impassive private sector people." Number 1151 CHAIR JAMES made reference to the mining industry, particularly in 1979 and 1980, when actually things changed for the mining industry because of environmental concerns and so forth. And at that time she told a lot of her clients, "If you want to be sure that what they tell you to do is going to work, you better start telling them now and figure out how to make it work because when the regulations came out they wouldn't work when you get them on the ground because they were drafted by people in office who had not actually been out there physically doing it. This is why we want to be sure that the regulations that are written work and that we don't' run into problems after they become part of law because changing regulations is every bit as difficult once they've been entered into law. Ever bit as difficult as it is making them in the first place. We want to make it a smoother operation, more publicly accepted, more workable, and less expensive." Number 1201 MR. WILCOX felt there was a lot of confusion relating to permits. He stressed this is not a bill to involve the public in the permitting process, such as the major mine permits, prior to determinations being made that are generally not public. This is for regulation promulgation only and not for permit issuing. Number 1226 CHAIR JAMESadded, "For the writing of administrative codes which is administrative law." Number 1230 REPRESENTATIVE MARK HODGINS asked if this is a voluntary type process as far as the agencies are concerned. He also asked who actually makes the decisions as to how the committee is made up. He questioned whether there is not or is not a limit on the size of the committee. Number 1248 MR. WILCOX replied the agency head would make the decisions as to how the committee is made up. He said, "We discussed that with the Office of the Attorney General and there is a practical size to where you can crumble under your own weight. The agency head has quite a bit of power here to make a committee work." Number 1265 REPRESENTATIVE HODGINS felt the work that comes out of this would just be a suggestion, it wouldn't actually be something that they would have to adhere to. Number 1290 MR. WILCOX responded, "That is correct. The ideas brought forth by the committee would hopefully expedite the streamlining and the usefulness of the regulations, but it would not be required. The commissioner could out of a hand reject - say he has a controversial bill and everybody was on one side and he felt that was completely wrong, he could do the opposite. We did leave an area in there for judicial appeal." Number 1297 REPRESENTATIVE HODGINS indicated the agency head could also limit participation by certain folks. Number 1309 MR. WILCOX believed that would be difficult to do. He said, "Once you've opened that process to the public, eliminating a certain sector of the public is not politically acceptable. We have a lot of trust and faith built into this. And we trust the public to know when they are being treated fairly and when they're not being treated fairly. And they expect the public to come forward when they feel they are not being treated fairly." Number 1322 REPRESENTATIVE BERKOWITZ said, "Maybe I misunderstood before, maybe we weren't communicating clearly, but it's somewhat on the lines what Representative Hodgins had a concern about, that is how members are selected for these committees. The section you referred me to on page 4, Item F, is ironically the Open Meetings Act. And notice is provided for the open meeting itself, but that's distinct from notice that the rulemaking is going to take place and that interested parties should submit application in order to be part of this rulemaking committee. Which the other statutes do express they provide for." Number 1359 MR. WILCOX deferred that question to Deborah Behr since she is a lawyer. He stated that Representative Berkowitz is a lawyer and he is not. Number 1375 REPRESENTATIVE FRED DYSON asked why not make this process mandatory. Number 1393 CHAIR JAMES replied, "We don't want a fiscal note." Number 1406 MR. WILCOX indicated that only in very large arenas would this really be necessary, and where there is going to be public controversy. There can be very large regulations that will not generate public controversy, for example, with insurance regulations that are 25 pages thick that nobody really cares about because they are federal pass-throughs, it would not make any sense. He said, "I think we're flagging this up the flagpole to see if it will be used, and how extensively used, and hopefully only on the most major cases of regulation writing. This is an experiment, it's got a five-year drop dead date to see whether it worked or not." Number 1375 REPRESENTATIVE DYSON stated part of the answer to his question is that if you made it mandatory it would be really clumsy to have to do a negotiated process on a whole bunch of very minor housekeeping type things. Number 1438 MR. WILCOX gave Medicaid as an example. He said most of those flow through - a specific - from the federal government. Number 1446 REPRESENTATIVE DYSON informed the committee he had a brief appointment and excused himself at 8:36 a.m. Number 1468 REPRESENTATIVE IVAN IVAN said, "I'm going to go back probably 10 to 15 years and bring out some of the different constituency that we've had in the prior years in dealing with the Alaska Native families and children, especially in the small communities like my home Akiak. And I think we've come a long way - negotiating and talking Division of Family and Youth Services [Department of Health and Social Services] in adoption of children and social services being provided, foster care for some of the children. And a lot of work has been done and in most cases some of the issues - negotiations had to go before the district court judges in some cases. What impact would this have in even furthering the good progress that has been made up to date. What impact does this negotiated rulemaking have, or am I too far deep into the existing regulations." Number 1534 CHAIR JAMES replied it appears that a lot of the work you've done, and it's been successful, could have been less work done early on in the regulation writing process had this bill been there and encouraged. She believed that in the future, if there is a change in the regulations relating to those issues and given the experience that they've had with needing input from the affected parties, that quite likely those changes might be done under a negotiated rulemaking process which means that you would be called into the process before the rules changed so that you could have influence in some of the changes that would be made. Representative James said, "That really is the basic difference here. That's the step in the process. After the regulations are drafted, in a first draft, and the notice is sent to the public for their response that procedure goes on as usual. Hopefully the little quirks in there, that the public would be rejecting to will have been taken care of before that so that those processes will be more smoothly done and taken less time and be less costly." Number 1600 CHAIR JAMES announced that Representative Ivan has been appointed vice chair of the House State Affairs Standing Committee and that he has accepted that position. REPRESENTATIVE HODGINS said jokingly he would like to suggest a section be put in the bill to make this retroactive on some of the regulations [laughter]. Number 1629 CHAIR JAMES responded we have a regulation review committee, you may do that there. Number 1635 MR. WILCOX said, "One section has been added, civil immunity for members of negotiated regulation committee, that's Section 2 on page 7. I'd like you to note that and discuss that with Deborah Behr, Office of the Attorney General, and I know that some of you are interested in that." He also requested that Ms. Behr address the APA question raised by Representative Berkowitz. Number 1660 DEBORAH BEHR, Assistant Attorney General, Legislation and Regulations Section, Office of the Attorney General, Department of Law said, "I have handled regulations matters for a number of years. I'm now focused on legislation for the governor. I wanted to go over the efforts of the Administration this summer on HB 264, and the result of that is the [proposed] committee substitute which you have today. The suggestions that the Administration made to improve the bill are all contained in here, none of them were rejected. The task force - we had a group of agencies look at the bill summer. We had several meetings and we came out with a bill that we believe more workable, less bureaucratic and less costly. That was primarily our goals." Number 1703 MS. BEHR expressed, "Our position is generally one, this is a voluntary tool and it's totally workable in appropriate circumstances. Some of the agencies are using it now with some success. There are some agencies that this may not work for and were quite realistic of it, Military and Veteran Affairs for example. I think some of the things we do would just not work out well with negotiated rulemaking. Since it's a voluntary tool, the agencies can use it in appropriate circumstances and I'm glad we had a discussion on that. Things like fee increases, it would be pretty hard to have a discussion on fee increases, the legislature has said a certain amount of money needs to be made up and the regulations are just promulgated from that. So, it's not appropriate in those circumstances but most of the literature indicates when it is appropriate it's a very helpful and successful tool." Number 1743 MS. BEHR continued, "Some of the things that I wanted to point out to you today is that what we did do in the bill was attempt to reduce costs. By one way was allowing state agencies to use impartial employees in the convening and intervening - and the negotiating process. For example, if the Department of Environmental Conservation (DEC) wanted to use an employee of another department, or another department who - in DEC that has not worked on the issue to do negotiation that would be okay under this bill, under the prior bill it would not." Number 1767 MS. BEHR indicated HB 264 limits payments of cost for travel and per diem to only essentials - when it's necessary to pay it. Before, the bill was much more open-ended. She said, "We wanted to reduce costs and recognize and encourage the use of teleconferencing when appropriate and this bill does do that kind of a change." Number 1785 MS. BEHR said they wanted to make absolutely clear in the bill that this doesn't preclude other things that are working right now in the regulatory process such as public hearings. She indicated some of the departments are using workshops, some of the departments are holding public meetings to explain the regulations and this bill does not change that, it just provides another tool that's appropriate in the development of regulations. Number 1798 MS. BEHR noted that she had received a couple questions about sidestepping. She confirmed the APA does not. Ms. Behr said, "This is in the presteps before the regulation goes out for public comment, so all the steps of the Administrative Procedure Act must be met. And you can see that very clearly on page 1, line 9. It's in lawyer talk but it says 'Negotiated rulemaking is not a substitution form that's just fancy words for them noticing comment of requirements of the Administrative Procedure Act." Number 1828 MS. BEHR indicated the bill does provide a new provision on immunity and referred the members to page 7, line 13 through 17. She said, "The reason why we suggested that was to encourage, especially private businessmen, to be willing to volunteer their time to serve on these committees and not have this kind of a tort damage suit possibly hanging over their decision. Frankly, I feel that we could probably get most of these folks out anyway because their doing policy level decisions. But this may be an extra protection for the suit not being brought initially. And from someone who feels they are disadvantaged by the regulation, when the committee gives a proposal it still goes through the whole APA process. They can go and comment to the commissioner, the commissioner can weigh those comments and make an appropriate decision. So there is a public forum after the negotiations committee gives its report." Number 1856 MS. BEHR pointed out that the negotiation committee must meet in public and indicated there is an open meetings act provision for this. If there is not a consensus, which is 100 percent of the people sitting at that table agreeing, there's a minority and majority report that are offered to the commissioner. The commissioner can take the provisions of what they think are appropriate. Number 1867 MS. BEHR referred to the recommended changes in the bill on page 6, lines 20 through 27. She said, "We did limit the definition of agency. Before it basically was covering all executive branch agencies. We eliminated the Department of Corrections for fairly obvious reasons. The Commissioner of Corrections should not be sitting down negotiating with prisoners over prison conditions, on access to space, and things like that." Number 1891 MS. BEHR continued, "I also had eliminated a number of multi-member boards and commissions. And, it's primarily a practical reality of how do you get one person from the Board of Education to be able to speak for the Board of Education, commit the Board of Education. Everybody on there is on there for their expertise, and so therefore, those agencies are exempted from that." Number 1905 MS. BEHR referred to the Coastal Policy Council. She said their representative, on this group, asked that they be included so they are. Ms. Behr said, "So that's the primary limitation of it. We didn't think it would work well for the first round in multi member bodies. Also, as was mentioned earlier, if you look at the very end of the bill in pages 26 through 28 there is in essence a time limit, a sunset provision. So that we can come back and, the public can come back to you and say, 'This is a great idea, it's working. Or, it's not working and let's fix it.'" Number 1935 MS. BEHR responded to Representative Berkowitz question. She said, "The bills that I looked at in the prior version of the bill did have a very formalized process on how members of this committee are selected. It required us to put something in the Administrative Journal. It required a time period for people to comment on it. We basically decided in a state as small as Alaska - we know who the players are, we know the players reputation, and if people have a problem with whose on their, they know how to get a hold of their legislator or they know how to get a hold of the commissioner and can say, 'Look, we really want a different representation. Since the process is totally voluntary, we didn't think this step was necessary. And their was a cost to it, and there was a delay process because in most of the bills there's a 30-day [period] while people are commenting on it." Number 1976 MS. BEHR announced it does not remove any provisions of the APA. So where people have problems with existing regulations, like Representative Hodgins mentioned, there is a provision in the existing APA to petition for regulation changes in the APA. That does not change. The meetings are open to the public and the public can come and certainly comment to them. She said, "There was some question about making this mandatory. I can tell you page 2, lines 28 through 30, basically the commissioner has to make a decision up-front before he or she is going to spend the money for this committee. But they will in essence, to the maximum extent possible with their other obligations, use the consensus of it. An so, to me, it's an up-front decision - if I were the commissioner of a particular department I would choose whether it was appropriate, whether - and then do my best within my legal obligations and other obligations to use the consensus. But the consensus still must go through the public process. So, for example, the committee doesn't really necessarily aware of all the issues - and the state, people can come in through the regular APA process and comment on them." Number 2015 REPRESENTATIVE HODGINS asked, "Is there any membership standard or requirement?" Number 2020 MS. BEHR replied, "There is not, and the reason why is we figured the commissioner would pick people who have widely diverse interests so that they will have a report that they can use at the end. If you look at the original house bill that was brought in, it had very - all the issues had to be identified and it had much more of a bureaucratic process. I can tell you the committees that I've had to work with over the years, the commissioners go out of their way to make sure everybody is represented." Number 2040 REPRESENTATIVE BERKOWITZ thanked Ms. Behr for all the hard work she has done. He asked, "About the notice, one of the concerns, and one of the reasons of why we're doing this negotiated rulemaking is to preclude litigation down the road. And one of the ways to preclude litigation is to make sure that everyone, who might possibly have a complaint against regulations, is included at the table. And I'm a little concerned that without some sort of formal mechanism, when people are invited to sit at the table, that that might all been possible challenge to the rulemaking later on." Number 2063 MS. BEHR replied, "The answer I can give you is one that I can never promise the regulation won't be tested in court. And so even if you have everybody - you open up to a public meeting, anyone in Alaska can come to that public meeting. Someone who doesn't come to the public meeting can still come and sue and say they have a problem with it. I don't think - the process brining - there's noting legally wrong with having a process to propose nominees. That's there only - a possibility, but there is a cost with it, there is a delay with it. And in Alaska with as open a government as we have in terms of letters coming into legislators, letters coming into the governor, letters coming into the commissioner, if there's any problem with it I'm sure you'll hear about it or the sponsor will hear about it and then you can do some kind of investigation to it. And you can always add committee members later, if you start with a committee and somebody says, 'Oh, I'm sorry you don't have a representative from a particular area of the state you can always add one to the committee.' There's nothing that precludes that later on if it's not workable." Number 2109 REPRESENTATIVE BERKOWITZ said he also asked about the petition for negotiated regulation that was used in another state. It seemed to him this offers an opportunity for citizens, or people who might be interested, to petition the governments so they can have this form of regulation making. He stated that it is not included expressly in HB 264. Number 2128 MS. BEHR responded, "First of all, you're absolutely right, it was in the original house bill, a provision for petitioning for negotiated rulemaking. The committee that I worked with decided that wasn't necessary because there is a provision in the APA right now for anybody to petition for any kind of rule change. And as a process of it, they can say, 'Hey, I think negotiated rulemaking wasn't appropriate in this case.' I don't think we need a legal process statute. There's nothing here that says you can't ask for it. So, we did not think it was necessary. I don't have a legal problem with it being in there." Number 2155 CHAIR JAMES said, "I think that my general attitude as to what works better, it works better if you don't tell people they need to do something, and if they volunteer. It just seems to me like that, and we do have to have a structure of government, without a doubt, but there's less conflict and so forth if we go forward and are treated fairly at all levels. And when you start putting the rules down on paper there's no way to cover everyone's interests and somebody gets left out. And it's in writing you can't alter it. So I think that having it flexible, and of course, after using this for awhile if we find that it doesn't work, we always have that opportunity to come back and fix it. But I'd rather leave it more open in the beginning because I believe that that will cause less conflict then if we try to write it down. As an attorney, Representative Berkowitz, you ought to know that the attorneys have the responsibility of covering almost every issue because if they leave something out then they leave a hole for somebody to jump into. But people who are not attorneys don't operate that way. We like to have as much that is there by a handshake as possible and when that doesn't work then we'll describe on paper - how we should offer it. That's the difference between legal and non-legal mentality." Number 2201 REPRESENTATIVE BERKOWITZ jokingly said, "Well, I've always operated on a handshake, that's why I'm not an attorney anymore." (Laughter). Number 2218 REPRESENTATIVE HODGINS said, "I guess I do have one question and a concern of somewhat, and that's if you can add people without any requirements, you can also take people off without any requirements. And while I appreciate the fact that there would be political and public pressure brought to bear, it concerns me a little bit that somebody might be removed off this committee unless I've read this wrong." Number 2240 MS. BEHR referred to page 3, line 13 and 14, and read, "members serve at the pleasure of an agency head." She said, "So that to me is serving at the pleasure, so if someone is not attending meetings the commissioner can say, 'I'm sorry, I'd like someone here that attends meetings.' I think it's one of these things where if a process is working well, I can't see a reason why a commissioner would want to take someone off." She clarified that the bill right now has it at the pleasure of the agency, so your observation is absolutely legally correct. Number 2258 REPRESENTATIVE ELTON made reference to page 2, line 8. He said, "It does say an agency may determine that the use of a negotiated rulemaking, a process could occur. I'm curious as to whether or not a regulation could be challenged simply because the agency did not use the process. Can someone come in and say, 'You should have used this negotiated rulemaking process, and you didn't, therefore we challenge the regulation.'" Number 2274 MS. BEHR referred to page 5, lines 30 through 31, and on top of page 6, an agency action relating to establishing, negotiated rulemaking is not subject to judicial review. She said she had some questions frankly from Attorney General Bruce Botelho, saying why is that there? Why I don't have a problem with it is that the decision to do negotiated rulemaking is totally discretionary, what would a court look at? The public interest is protected because the regulation itself has to go through the whole public process and if someone still has a problem with the regulation (indisc.) they can challenge it at that point. Number 2306 REPRESENTATIVE BERKOWITZ made reference to the confidentiality requirements on page 6. He said, "Seems to me the presumption is that the owner of the records will permit release of confidential information. It seems to me it would be better if there were a requirement that the owner does not request that the information be released instead of written the way it is." Number 2328 MS. BEHR replied, "We put this in because there was no provision for confidentiality in the original bill. And in the regulatory process, generally when someone comes to petition government, as when they come to you to testify before a committee, it's generally in a public process, it's very hard for you to go into executive session in the legislation process. This is similar in the regulations process. We felt it was somewhat different because when a private business is impacted by a regulation, for example, the one that I could think was the dental board was interested in doing some regulations regarding the use of lasers in their offices. And dentists were objecting because they bought the equipment and had assumed that their paraprofessionals could use it, and the board was thinking no, that was not appropriate, it should be done at the highest professional level. A dentist under current regulations right now, if they wanted to come to the board and say, 'You're hurting my business, and the board wanted to hear whether or not financial records of that board, there's no way in my mind that they can get information (indisc.) process and make it confidential. If an agency was covered by negotiated rulemaking, someone could come in with private records that we're using in developing regulations and ask that they be kept confidential." Number 2382 REPRESENTATIVE BERKOWITZ expressed that was his point, you have to ask for confidentiality. That should be presumed. He believed most people who have small businesses want to be asked if the information is going to be released. He said, "That way, if the information is going to be released it's done with the knowledge that the information is going t be released." Number 2399 MS. BEHR said, "If you look at the language - as reports from - records from private people that are requested or used by negotiated rulemaking committee shall be kept confidential if they contained proprietary information, and the owner or records requested, the documents are kept confidential. The reason why the request provision is in there is there some businesses that file a lot of proprietary information that is public and they don't have a problem with that. My general presumption is the public has a right to know what government does. I can think of some businesses where they file documents in serval places where their information is public. It is proprietary information but they really don't care. And so, that allows them to come in and claim their privilege. The privilege generally is (indisc.) for records should be - the presumption is in favor of public and that the public has a right to know what government is doing and not all proprietary records absolutely are confidential. And so for somebody wanting to claim confidentiality they should assert it." Number 2410 REPRESENTATIVE BERKOWITZ said, "My concern though is, if I have a small business and my proprietary information is going to be released because I perhaps testify, it might chill my - it might discourage me from testifying. And I think that I should have the control over when my information is going out to the public without interfering with my ability to make a presentation to the public. I think this is something that allows the individual to keep the government from having too much access to information." Number 2455 CHAIR JAMES indicated, having been a small business person and having been in public accounting business for so long and dealing with all the different kinds of small businesses, she understood exactly what Representative Berkowitz said. She said, "However, I also agreed that there is a presumption that when you come to testify or do anything in a public forum, and these meetings are open....(indisc.)" TAPE 98-1, SIDE B Number 0001 CHAIR JAMES continued, "Everything the government does is open to the public, we have the freedom of information. So unless you specifically say that what you're providing in this committee is to be kept confidential, or you won't reveal it and you think it's necessary to be able to support your position, then I think there is a presumption in government that everything is open, it ought to be. And I agree with Representation Berkowitz statement that we like to have government out of our faces as much as possible, but we also want government in our faces as much as possible because the government is us. And so we have a common interest of being able to know and we want our right to know. And so I believe - I support the way it is written and I understand your concerns. But I really believe people need to know when they're involved in a government process that there is an opportunity for them to keep their information confidential and that they need to say so, because, otherwise it's presumed that it will be public." Number 0035 REPRESENTATIVE HODGINS said, "Getting back to my earlier question on the - bringing other regulations under this law, you said that regulations could be nominated to do that. What - could you quickly give me that mechanism - how established regulations." Number 0045 MS. BEHR responded it is in the Alaska Procedure Act, it is existing law. She said, "Even if HB 264 doesn't pass, if you have a constituent that has a problem with the regulation, there is a petitioning process under the APA for regulations that are covered by that act. Where a private person, anyone can petition and write a letter to the adopting authority and say that they want to change the regulation. There's a little bit of formality - such they have to say what regulation they want to change and why they want to change it, things like that. But, even if this bill were not to pass, that avenue is still in the statutes right now." Number 0064 CHAIR JAMES concluded, it's true, even if their request is not recognized because the Administration has an opportunity to respond and say that their request was not valid, and that there is no reason to do it. There is an appeal process. They could continue up to take their issue further. Number 0076 MS. BEHR indicated there always is the avenue of the court. Most people who have a change also might have an avenue into court and they can always go to court. Number 0085 REPRESENTATIVE BERKOWITZ referred back to impunity. He asked, "You specified it's on page 7, line 14, tort damages, does this allow for recovery of contract damages?" Number 0090 MS. BEHR responded, "I don't quite understand where there would be contract damages. Just because the person normally - the people on the committee would not have a contract with the person who was supplying information, or whatever. I don't understand - I don't have a problem if you want to delete the word tort, that doesn't bother me at all. I was trying to narrow it to the typical types of damages that you would have when people want to bring a claim about their interesting hurt which is - damage in some other way. I don't have a problem with it, I don't see a need for it." Number 0113 REPRESENTATIVE BERKOWITZ said, "Apparently is written too. It seems to me it would be better to carve out an exception that the immunity only applies to unless there is - I believe in the original version that the chair put forward specified if there is gross negligence, recklessness or intentional misconduct." Number 0121 MS. BEHR explained the original bill had no tort immunity at all. Number 0134 REPRESENTATIVE BERKOWITZ said, "There was amendment though, that you offered at one point. It's on page 17 of the packet." Number 0141 MS. BEHR stated she did not have a problem with that kind of language going back in there. However, she didn't necessarily know why it is necessary. She said, "The kinds of actions that these people would be doing are not - for example driving cars and running over people. They are sitting at a meeting and coming out with a proposed possible policy for a commissioner to notice up for regulation." Ms. Behr said she did not have a legal problem with something like that being put in there. Number 0158 CHAIR JAMES asked if the committee were to put that in, where would they put it. Or would we have to rewrite it. Number 0166 MS. BEHR said I think you may, and I can work with your legal council on it. Number 0175 REPRESENTATIVE BERKOWITZ made a motion to adopt the amendment to incorporate the amendment that Chair James put together. He referred to page 17 of the packet and replace Section 2 on page 7, with the language. Number 0188 MS. BEHR stated the replacement is a very clean amendment, and she did not have a legal problem with it - it is a policy decision. Number 0197 CHAIR JAMES said, "The motion before us is the conceptual amendment including what's on page 17 of the amendment for Section 44.52.785 on immunity. The issue is the switch from - in the language of immunity. Do you want to look at that, it is changing the language. The motion to exchange the immunity clause that's on page 17 in the packet for the one on page 7, line 12. That motion is before us." Chair James asked if there is an objection to the motion. There being no objection, the motion was approved. Number 0263 REPRESENTATIVE HODGINS asked what the next referral was for HB 264. Number 0270 MR. WILCOX replied that the next referral was House Finance if there is no fiscal notes. He said, "I'll get the chair's [Representative James] permission to request a waiver at finance and go right to the floor." Number 0286 TERESA OBERMEYER said, for the record, she is very fearful of the government and has lost total and unequivocal faith in the government. She continued to speak about issues that didn't pertain to the legislation the committee was discussing. Number 0561 CHAIR JAMES called Ms. Obermeyer out of order. Number 0632 JOHN LINDBACK, Chief of Staff, Office of the Lieutenant Governor, came before the committee to speak on behalf of the Lieutenant Governor's Office. He said he is testifying because the Office of the Lieutenant Governor is the lead agency on bills related to regulatory reform. He indicated the Office of the Lieutenant Governor shares the concerns voiced by Chair James about public dissatisfaction with the regulatory process. He said, "The Administration is very interested and excited about the prospect of negotiated regulation making and are quite pleased about the development of this bill." Number 0691 MR. LINDBACK complimented Ms. Behr for educating the agencies and creating interest in this process. Mr. Lindback believed, if the bill does pass, there will indeed be a positive interest by all state agencies in looking at this new process and using it. Number 0698 MR. LINDBACK continued, "We do have a concern about costs, and I appreciate your bluntness madam chair in saying that the reason that there are no mandatory provisions in the bill is because of that issue. We would like to encourage your committee and the legislature to consider, however, an appropriation for this bill as an incentive for agencies to use negotiated regulation making. Exactly how you would do that, I would be glad to discuss, but I think it would be helpful because in my observations of the meetings last summer there is a fear of costs. As I've stated with this process within the agencies, and that it may well act as a disincentive to jump in and try to use it. And that if there was an appropriation somewhere in state government, either with our office or with Office of Management and Budget, specifically for agencies to apply expenses for negotiated rulemaking process, it may well move us down the road faster to agencies trying it and using it and liking it. And I will hold my observations here. We like the bill." Number 0776 CHAIR JAMES said, "What I would like to do, since this is early in the session and the proposed committee substitute has been out in front of everybody just this week - other members of the legislature and so forth - I don't want to be doing what is rushing it through and then leaving somebody in the path that says, 'I didn't have a chance to look at it." Chair James stated she would like to carry it over to the next meeting. Number 0793 PAM LABOLLE, President, Alaska State Chamber of Commerce, commended the committee and the Administration for working well together. She referred to Mr. Lindback's comment regarding a fiscal note that would provide an incentive for agencies. She said, "I think the fact that it is mandatory, and doesn't have a cost is also laudatory. And I think that the incentive for the agency should be the ability and the opportunity to quality rulemaking. And the cost savings that will probably be recognized and achieved by not having to go further into deeper, more complicated processes by solving some problems up-front. So I think it's a fine piece of legislation and we support it." Number 0871 REPRESENTATIVE HODGINS said, "I would want to let folks know that the public pressure, that can be put forward to making this mandatory - to bring this mechanism to be engaged in regulations - I think the same pressure that would be used to object can also be use to (indisc.) steps forward by getting a hold of legislators and pushing this." He said we can request the agency heads to get involved with this action. He believed it would be very beneficial and hopefully, with no appropriation of funds. Number 0907 CHAIR JAMES stated CSHB 264 would appear on the next calendar and that she wouldn't resist taking public testimony because they have not had a lot of notice. Number 0956 CHAIR JAMES stressed that she would like to move the bill the following next week. If there are no fiscal notes, it go directly to the House floor for a vote. She indicated that it would be effective immediately, the minute it is signed by the Governor. She said, "There may be some things that we are doing this year, I think that now that we've decided that this is what we need to do, we need to get it there and start seeing how it's going to work." CHAIR JAMES indicated HB 264 would be held for further consideration.
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