Legislature(1999 - 2000)
03/29/1999 01:38 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 agency. 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 tribunals. 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 amendment. 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 cases. 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 decision." 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 recommendations.