Legislature(1999 - 2000)

03/29/1999 01:38 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
           SJR 19-CONST. AM: ADMINISTRATIVE HEARINGS                                                                            
CHAIRMAN TAYLOR explained SJR 19 proposes a constitutional                                                                      
amendment to establish an autonomous Office of Administrative                                                                   
Hearings (OAH) The office would house autonomous hearing officers,                                                              
independent from the Department and free from bias.                                                                             
MS. MOSSGROVE explained the constitutional amendment, if approved                                                               
by voters, would establish a separate office of administrative                                                                  
hearings. This independent office would achieve cost savings and                                                                
increase efficiency and fairness in the administrative adjudication                                                             
process. MS. MOSSGROVE said the autonomous office would decrease                                                                
litigation, create a more stable business environment and improve                                                               
public perception of the administrative hearing process.                                                                        
MR. CHARLES GRIFFIN, a C.P.A. from Glennallen, testified in support                                                             
of SJR 19. MR. GRIFFIN said removing hearing officers from                                                                      
departments will save money, increase efficiency, and streamline                                                                
the administrative hearing process.                                                                                             
MR. GRIFFIN proposed SJR 19 would force departments to review their                                                             
own regulations, decrease the chances of litigation and increase                                                                
the number of out-of-court settlements. The new office established                                                              
under SJR 19 will be free from the "institutional bias" now present                                                             
in the appeal process.                                                                                                          
Number 388                                                                                                                      
MS. TERESA WILLIAMS, representing the Office of the Attorney                                                                    
General, stated that the Office of Administrative Hearings proposed                                                             
in the bill is established by powerful language which covers all                                                                
dispute hearings. Low level agency hearings, written hearings and                                                               
hearings held by boards and commissions would all be included under                                                             
the current wording. The OAH would duplicate the function of boards                                                             
and commissions and remove from them the power to make final                                                                    
decisions regarding suspension and revocation of licences. The bill                                                             
would entrust the Office of Administrative Hearings with hearings                                                               
on a broad range of state business including student loans, tax                                                                 
issues, employee relations, safety regulations, procurement, and                                                                
more. The bill would also apply to agencies of the Legislature as                                                               
well as the Judicial branch.                                                                                                    
Number 435                                                                                                                      
CHAIRMAN TAYLOR said this was true if the bill was interpreted as                                                               
broadly as possible so that every department of state government                                                                
was affected by it. However, every other state that has adopted                                                                 
this system has limited the scope of agencies that would draw                                                                   
hearing officers from the pool. He asserted that the bill only                                                                  
gives the Legislature the authority to create the OAH, it doesn't                                                               
mandate the creation of an independent hearing officer for each                                                                 
MS. WILLIAMS disagreed, saying the Legislature currently has the                                                                
power to create this office by statute. SJR 19 would place a                                                                    
constitutional mandate, superior to the power of the Legislature,                                                               
behind this office.                                                                                                             
MS. WILLIAMS said the language in SJR 19 "jurisdiction of the                                                                   
office shall be prescribed by law" is not explicit and does not                                                                 
"expressly authorize the Legislature to exempt agencies or . . .                                                                
certain levels of proceedings from the constitutional mandate." MS.                                                             
WILLIAMS said this language is identical to language in other bills                                                             
that have been found unconstitutional. CHAIRMAN TAYLOR disagreed                                                                
with MS. WILLIAMS' interpretation. He said this Administrative                                                                  
Hearing Office will not be a "fourth branch of government", and the                                                             
Legislature has always had the power to create quasi-judicial                                                                   
CHAIRMAN TAYLOR said following MS. WILLIAMS' interpretation, "The                                                               
existing constitution, as you're reading it, would mandate the                                                                  
Legislature has to pass laws creating quasi-judicial offices in                                                                 
every one of these things." MS. WILLIAMS countered that this is a                                                               
re-structuring of state government through a constitutional                                                                     
MS. WILLIAMS said the final agency decision would be moved out of                                                               
the control of the department, the Legislature, or the Judicial                                                                 
Branch. The Governor's power over the decision maker would be the                                                               
same as the power he holds over a judicial branch employee, and so                                                              
it is a re-structuring of state government.                                                                                     
Number 484                                                                                                                      
CHAIRMAN TAYLOR asked if she was implying the decisions issued by                                                               
this office would not be subject to appeal. MS. WILLIAMS replied,                                                               
"On this fourth branch of government, there would be a  check of                                                                
having the judicial branch . . .review to determine if there was a                                                              
violation of due process by this office, but it would not be a                                                                  
decision made by the Executive branch."                                                                                         
CHAIRMAN TAYLOR stated that hearing officers are not supposed to be                                                             
under the direction of the executive branch, that is the "evil                                                                  
we're trying to overcome here." MS. WILLIAMS said the "evil" would                                                              
be hearing officers making decisions based on their own ideas of                                                                
state policy, rather than abiding by the actual policies set out by                                                             
departments responsible for making the ultimate decisions on                                                                    
licensure and other issues. CHAIRMAN TAYLOR agreed that any                                                                     
decision of a  hearing officer not in compliance with the law would                                                             
be overturned.                                                                                                                  
Number 524                                                                                                                      
MS. WILLIAMS said departments would have to come up with various                                                                
detailed predictions of behavior in order to be sure hearing                                                                    
officers followed department policy in different situations.                                                                    
CHAIRMAN TAYLOR asked why MS. WILLIAMS is worried that independent                                                              
hearing officers will be worse for the department. MS. WILLIAMS                                                                 
replied that boards and commissions with expert members are                                                                     
currently set up to make these decisions. She said she would trust                                                              
that an agency would have the public in mind, not be influenced by                                                              
a personal belief system. She said she had no problem with the idea                                                             
of centralizing hearing officers; the problem is with giving them                                                               
final decision making ability. CHAIRMAN TAYLOR responded, "Yeah,                                                                
especially one you don't pay."                                                                                                  
Number 555                                                                                                                      
MS. WILLIAMS repeated she has no objection to centralizing hearing                                                              
officers. She informed the committee that decisions made by boards                                                              
and commissions and commissioners are reviewed by the Superior                                                                  
Court. She argued there is already a remedy for a person unhappy                                                                
with the (in)action of an agency: a person can petition the                                                                     
Superior Court to order an agency to take action.                                                                               
MS. WILLIAMS also noted the naming of a Chief Administrative Law                                                                
Judge would be a different, more formal approach to the hearing                                                                 
process than has historically been taken.                                                                                       
CHAIRMAN TAYLOR observed that 25 other states have already done                                                                 
this. MS. WILLIAMS maintained that no state has done this by                                                                    
constitutional amendment, and no other state allows centralized                                                                 
hearing officers to make the final decisions in cases which are                                                                 
"rather insignificant."  MS. WILLIAMS concluded she would be                                                                    
willing to explore cost savings through consolidation or                                                                        
centralization of hearing officers.                                                                                             
TAPE 99-23, Side B                                                                                                              
Number 591                                                                                                                      
MS. DEBORAH VOGT, Deputy Commissioner of the Department of Revenue,                                                             
agreed that a centralized panel of hearing officers is a good idea.                                                             
She stated a mandatory office to hear all administrative disputes                                                               
in the state would be "a disaster, it would be a train wreak that                                                               
this Legislature would find itself powerless to correct."                                                                       
MS. VOGT proposed that the controversy surrounding SJR 19 is over                                                               
whether this legislation would create a mandatory panel or a                                                                    
discretionary panel. She asserted if the panel is not meant to be                                                               
mandatory, there is no need for a constitutional amendment since                                                                
the Legislature already has the power to create and assign duties                                                               
to any type of panel it chooses. MS. VOGT suggested if the intent                                                               
is truly to create a discretionary panel, that is not clear by the                                                              
wording of the bill.                                                                                                            
Number 555                                                                                                                      
MS. VOGT said the Department of Revenue (DOR) handles a variety of                                                              
administrative disputes, ranging from Permanent Fund dividend                                                                   
appeals to child support enforcement appeals. There is a huge                                                                   
variation in the matters that come before the DOR hearing officers                                                              
and she stated, "one size does not fit all."                                                                                    
MS. VOGT explained that three years ago, tax appeals were removed                                                               
from DOR when the Office of Tax Appeals was created and placed in                                                               
the Department of Administration. That hearing officer is                                                                       
independent from DOR, and makes final administrative decisions.                                                                 
However, the Department can look closely at cases before they go to                                                             
the Administrative Law Judge. This allows the Department to review                                                              
matters and ensure the approaches taken are consistent with                                                                     
statutes and regulations. Under SJR 19, the commissioner and the                                                                
department would not be able to review the final decision before it                                                             
was issued.                                                                                                                     
MS. VOGT noted that very few cases actually come to a formal                                                                    
hearing, as most are settled during informal conferences.                                                                       
Currently, any funds awarded to the State as a result of an                                                                     
administrative hearing are deposited into the Constitutional Budget                                                             
Reserve Fund, according to MS. VOGT.                                                                                            
MS. VOGT said she would be reluctant to lose management of                                                                      
administrative appeal cases, as this may result in a backlog  of                                                                
MS. VOGT concluded that, though the state likes the idea of a                                                                   
centralized panel of hearing officers, it is "downright terrifying"                                                             
to see this idea take the form of a constitutional amendment. She                                                               
suggested if the intent of SJR 19 is not an absolute mandate, the                                                               
legislation should be amended.                                                                                                  
Number 497                                                                                                                      
MS. CATHERINE REARDON, Director of the Division of Occupational                                                                 
Licencing, opposed the legislation. MS. REARDON said she speaks                                                                 
against the legislation for three reasons, none of which involve                                                                
her, as an individual, trying to retain power.                                                                                  
First, MS. REARDON said SJR 19 would decrease public involvement,                                                               
through boards and commissions, in the administrative adjudication                                                              
process. Second, there would be a decrease in the expertise of                                                                  
hearing officers. Third, costs would increase.                                                                                  
MS. REARDON said currently 21 licensure boards staffed by expert                                                                
members make decisions regarding their peers. These boards use                                                                  
their knowledge and experience as well as input from public members                                                             
to make their decisions.                                                                                                        
Number 445                                                                                                                      
CHAIRMAN TAYLOR said it appears MS. REARDON is assuming the                                                                     
Legislature, in enacting the enabling legislation, would "blanket                                                               
every single entity with a hearing officer . . .and preclude  any                                                               
of these people and agencies from exercising the discretion that                                                                
every Legislature so far has wanted them to exercise." MS. REARDON                                                              
said this assumption came from testimony in the other body.                                                                     
CHAIRMAN TAYLOR replied that question will be a debate within the                                                               
Legislature when the bill has passed.                                                                                           
SENATOR DONLEY noted the bill states, "Jurisdiction of the office                                                               
will be prescribed by law." CHAIRMAN TAYLOR added that if the                                                                   
Legislature did not allow any discretion on the part of state                                                                   
departments, "that would be a complete reversal of about 35 years                                                               
of policy. . ." He said the key to the issue is that the hearing                                                                
officers, whether they have final decision making authority or not,                                                             
will be independent from the departments.                                                                                       
Number 417                                                                                                                      
SENATOR DONLEY noted the bill is consistent with the provisions of                                                              
the U.S. Constitution, and is "hardly a radical concept."                                                                       
MS. REARDON proposed that SJR 19 will require many policy decisions                                                             
for its implementation. She expressed a desire to have these                                                                    
decisions made up front, "So we know what we are buying."                                                                       
MS. REARDON expounded on the financial concerns of her "paying                                                                  
agency." She said the new OAH system is likely to be like using the                                                             
services of the Department of Law. Now, she knows the most she will                                                             
pay a hearing officer now is their entire salary. Under the new                                                                 
system, she will be required to pay billable hours, which is likely                                                             
to be more.                                                                                                                     
MS. REARDON concluded she is not sure hearing officers being                                                                    
controlled by departments is a big problem. Hearing officers rule                                                               
against her division often and moderate the agency's decisions, if                                                              
they did not the Division would revoke more licences. She repeated                                                              
that she, as a political appointee, probably won't have to deal                                                                 
with the consequences of this bill, but she fears "a                                                                            
superbureaucrat, reportable to no elected official, making some                                                                 
Number 355                                                                                                                      
MR. PAUL GROSSI, Director of the Division of Workers' Compensation                                                              
(DWC), expressed concern that his department would be negatively                                                                
affected by SJR 19. He is concerned the bill would decrease the                                                                 
expertise of hearing officers available to the division. He is also                                                             
concerned the administrative adjudication process will suffer from                                                              
a less balanced approach, and undermine the compact that exists now                                                             
between labor and industry. MR. GROSSI concluded that the present                                                               
system works and there is no need to fix it.                                                                                    
Number 288                                                                                                                      
MR. EDWARD HIEN, an employee of the Office of Administrative                                                                    
Appeals for the National Marine Fisheries Service, and a member of                                                              
the National Association of Administrative Law Judges, testified in                                                             
support of SJR 18.                                                                                                              
MR. HIEN said this is not a new idea, and half of the states in the                                                             
country already have central panels. He agrees no other state has                                                               
done this by constitutional amendment, but gave three reasons it                                                                
should be done this way. First, centralizing administrative                                                                     
adjudication will change the structure of the Administrative branch                                                             
and thus is an issue of "constitutional dimension." Second, the                                                                 
public would get a direct voice in the issue not subject to a                                                                   
Governor's veto. Third, the approval of a constitutional amendment                                                              
by the voters would provide a clear mandate for the Legislature and                                                             
the Administration to take action.                                                                                              
MR. HIEN suggested there be no argument over the petty details and                                                              
the central question should be addressed.  He said much of the                                                                  
testimony by division directors and department heads is premature                                                               
as the scope of the proposed central power will not be determined                                                               
until the Legislature considers the implementing legislation.                                                                   
MR. HIEN explained what the resolution does. First, it centralizes                                                              
the administrative adjudication functions within one agency.                                                                    
Second, it creates a core of independent, professional hearing                                                                  
officers that will provide the public with the reality and the                                                                  
appearance of fair, impartial administrative hearings. Third, it                                                                
eliminates costly, inefficient duplication of hearing officers and                                                              
support staff within the Executive branch. Last, it provides a                                                                  
uniform adjudication process and uniform rules for everyone who has                                                             
to participate in the adjudication process.                                                                                     
Number 200                                                                                                                      
MR. HIEN then explained what the resolution does not do. First, it                                                              
is not intended to limit legislative power to create new quasi-                                                                 
judicial agencies, nor is it intended to impinge on the power of                                                                
existing quasi-judicial agencies, unless that is decided by the                                                                 
Legislature. Second, the resolution is not intended to create a                                                                 
fourth branch of government. Finally, the head of this proposed                                                                 
agency would be appointed by the Governor, and the resolution does                                                              
not intend for the office to interfere with the ability of the                                                                  
Administration and state agencies to perform their function. In                                                                 
fact it might relieve some of the political pressure currently put                                                              
on state agencies, according to MR. HIEN.                                                                                       
Under SJR 18, the Legislature would determine the jurisdiction of                                                               
the Office of Administrative Hearings (OAH) and would exempt any                                                                
agencies or types of matters it decided. The Legislature would also                                                             
decide what type of jurisdiction the OAH had (mandatory or                                                                      
discretionary) over different departments. MR. HIEN added that all                                                              
decisions, regardless of their origin, would be appealable to the                                                               
Superior Court.                                                                                                                 
MR. HIEN said that the OAH could hire, educate and train expert                                                                 
hearing officers. Also, agency personnel could still provide expert                                                             
testimony if it was required. He concluded the bill does not                                                                    
infringe on the authority of the Supreme Court and is, therefore,                                                               
not unconstitutional.                                                                                                           
Number 180                                                                                                                      
CHAIRMAN TAYLOR noted the National Federation of Independent                                                                    
Business (NFIB) also support the legislation.                                                                                   
Number 155                                                                                                                      
SENATOR TORGERSON moved SJR 19 from committee with individual                                                                   
recommendations. SENATOR ELLIS objected.                                                                                        
SENATOR ELLIS said he thought more work was needed on the bill for                                                              
the committee to understand exactly what its impact would be. He                                                                
also noted that at this time of budget shortfall, he believes the                                                               
public would be surprised that the Legislature would propose to                                                                 
create a new government structure. SENATOR TORGERSON interjected                                                                
that the fiscal note reflects a cost of $1,500.                                                                                 
Number 145                                                                                                                      
SENATOR ELLIS maintained his objection and the roll was called.                                                                 
Voting in favor of moving the bill from committee were Senator                                                                  
Donley, Senator Torgerson and Chairman Taylor. Senator Ellis was                                                                
opposed. So, SJR 19 moved from committee with individual                                                                        

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