HB 424 - REGULATION REVIEW Number 2108 CHAIR McGUIRE announced that the final order of business would be HOUSE BILL NO. 424, "An Act relating to review of regulations under the Administrative Procedure Act by the Legislative Affairs Agency; and providing for an effective date." Number 2068 BARBARA COTTING, Staff to Representative Jim Holm, Alaska State Legislature, informed the committee that Ms. Behr, from the Department of Law, helped craft Version 23-LS0732\S, Cook, 3/2/04, which is in members' packets. Number 2061 DEBORAH BEHR, Assistant Attorney General, Legislation & Regulations Section, Department of Law (DOL), informed the committee that she has been the regulations attorney for 13 years. She explained that she was asked to provide technical assistance in drafting legislation establishing a framework for legislative branch oversight of executive branch regulations. It is intended that this aforementioned oversight is to be done in a constitutional manner that meets separation of powers constraints because the legislature has the ability, under the constitution, to review regulations. Therefore, this legislation establishes the checks and balances of such oversight. She further explained that another goal she was given has been to minimize the fiscal impact of the legislation, and this has led to prioritization of certain types of regulation reviews in order to maximize the dollars and the cost of the attorney time. MS. BEHR provided the following sectional analysis of Version S. She explained that Section 1, subsection (a) recognizes the already-existing statutory authority of the Legislative Affairs Agency to review any regulation. She highlighted that Section 1, subsection (a), also specifies that the review will be done by an attorney in order to provide clarity. Therefore, one would want to ensure that attorneys are reviewing things that make the most cost-effective sense to review, rather than the policy decisions that are appropriate for the legislators to review. With the aforementioned in mind, a priority order of reviews was established in Section 1, subsection (b). She pointed out that Section 1, subsection (b)(1), avoids the review of routine regulations. Section 1, subsection (b)(2), focuses on regulations the legislature has decided implicates major policy development. She explained that an example of the aforementioned would be that a standing committee, the Joint Committee on Administrative Regulation Review, or Legislative Council would indicate to Legislative Legal and Research Services that specific regulations would be appropriate to review with regard to major policy development. Number 1937 MS. BEHR continued with Section 1, subsection (c), explaining that state agencies will send electronic copies of regulations to those entities specified in Section 1, subsection (c)(1)-(4). She explained that if HB 424 passes, she will talk with the director of the Legislative Affairs [Agency] with regard to setting up designated mail boxes for certain regulations, and the state agencies will then be informed of the address for particular regulations. Ms. Behr turned to Section 1, subsection (d), and explained it with the following example. If the legislature prefers to have a special session and have staff working on legislation, the legislature can do so. In such a situation, legal counsel would say that the regulation review is of a lower priority for the time period. The phrase on page 2, line 11, allows the priorities to be set. On page 2, lines 14- 18, is [a provision] that avoids attorneys getting involved in policy reviews. Also, the list doesn't include the revising of regulations. MS. BEHR moved on to Section 1, subsection (e). She explained that the sponsor and his staff indicated the need for a dialogue in doing regulations and only issuing something in writing if there is a disagreement on the legal standards to be used or if the regulation doesn't meet the standards in the legislation. Therefore, if Legislative Legal and Research Services doesn't believe there is a problem with the regulation, then there won't be a written document. Furthermore, if Legislative Legal and Research Services does raise a legal concern and the [Department of Law] agrees that there is a legal concern and changes the regulation in question, then there is no written document. However, if there is a disagreement [between Legislative Legal and Research Services and the Department of Law], there will be a written document that is sent to the Department of Law, the impacted state agency, the Joint Committee on Administrative Regulation Review, the President of the Senate, and the Speaker of the House. Number 1805 MS. BEHR continued with Section 1, subsection (f), which specifies that if the assigned attorney finds that the [proposed regulation] may be inconsistent with legislative intent and thus it would be appropriate to have additional oversight hearings, the attorney will notify the Joint Committee on Administrative Regulation Review, the President of the Senate, and the Speaker of the House. She stated that the legislative oversight could result in oversight hearings and a more detailed review by the staff of the Joint Committee on Administrative Regulation Review. Section 1, subsection (g), places a limit on the Legislative Affairs Agency with regard to the release of any information. The aforementioned addresses the fact that because Legislative Legal and Research Services doesn't have an attorney-client relationship with executive branch staff, there is an argument that anything drafted by Legislative Legal and Research Services would come out into the public forum. However, since the intent is to have an informal dialogue and correct errors before regulations are finalized, the goal of Section 1, subsection (g), is that information wouldn't be released by Legislative [Legal and Research Services]. MS. BEHR turned to Section 1, subsection (h), which was prompted by concerns regarding whether the process has to be stopped or suspended while waiting for the Legislative Legal and Research Services' review. This subsection clarifies that there is no suspension of the regulation process. Ms. Behr highlighted the second sentence in Section 1, subsection (h), which says "Suggestions for changes to a proposed regulation made by the Legislative Affairs Agency are not binding on a state agency." The aforementioned language recognizes that there is a separation of powers issue and if [the legislature] decides to go a different way, the legislature always has the option of passing a statute to say that the regulation is inappropriate. Ultimately, the legislature has power over any state regulation, she said. Section 1, subsection (i), addresses a situation in which the Legislative Legal and Research Services can't conduct a legal review due to staffing issues or because of special session priorities. In such cases, no one can challenge the failure of the agency to conduct a legal review. MS. BEHR pointed out that Section 1, subsection (j), doesn't include the Board of Fisheries and the Board of Game in the expedited priority review because of the unique processes of the two. She highlighted that the public process of the Board of Fisheries and the Board of Game is one in which any person can place a proposal before the board. Section 1, subsection (k), is merely a definitions section. MS. BEHR moved on to Section 2, which addresses the Public Records Act. She explained that Section 2 basically specifies that if there is written notification or e-mail correspondence between the Department of Law and Legislative Legal and Research Services regarding the process, the public can't obtain a copy of that notification through a public records request. She likened this to the protections the legislature has with Legislative Council. She reiterated that if a regulation still has problems, legislation can still be passed to change it. She then turned to Section 3, which pertains to the Administrative Procedure Act (APA). Section 3 requires state agencies to send the electronic documents indicated. She highlighted that the important part of this section is that the review will begin concurrently with the public comment period. The aforementioned was done as a cost-containment measure. Ms. Behr noted that the fiscal note for this legislation has decreased considerably due to the changes encompassed in [Version S]. Number 1563 REPRESENTATIVE HOLM, speaking as the sponsor, explained that his goal is to reestablish oversight of the rulemaking process. He highlighted that [Version S] specifies that it is the last iteration [of a regulation] that will go to the public for comment. He characterized the aforementioned as a good step toward minimizing complaints about regulations. Representative Holm offered his belief that it's important for the legislature to continue to maintain its legislative oversight of laws that are drafted, including those that are promulgated by regulation. REPRESENTATIVE HOLM then asked why the review response isn't going to the sponsor of the legislation. MS. BEHR recalled that one of the work drafts did include notification of the sponsor of the legislation. MS. COTTING informed the committee that Representative Ogg had suggested that consultation with the legislation's sponsor isn't permissible. She noted that Tamara Cook, Director, Legislative Legal and Research Services, agreed and suggested that that reference be removed. REPRESENTATIVE OGG explained that when the courts review regulations or statute, the written record is reviewed. The written record reports when the intent is narrowed. However, if the sponsor is talked to after the fact, the sponsor is looking at it with different eyes, and so the subjectiveness of the review process is lost. [Chair McGuire turned the gavel over to Representative Samuels.] MS. COTTING relayed that Ms. Cook informed her that once legislation is submitted to Legislative Legal and Research Services, it's no longer the property of the sponsor. However, Ms. Cotting pointed out that nothing in this CS prohibits the sponsor from having input in the process along the way. Number 1353 REPRESENTATIVE HOLM moved to adopt the proposed committee substitute (CS) for HB 424, Version 23-LS0732\S, Cook, 3/2/04, as the work draft. There being no objection, Version S was before the committee. REPRESENTATIVE GRUENBERG directed attention to page 2, lines 23- 26, and page 2, lines 28-29. He noted that in the interim, when there is an election year, things are in total disarray and the Speaker of the House and the President of the Senate are likely to change. He mentioned that AS 24.20.065 requires legislative legal counsel to annually examine administrative regulations. Therefore, there is already a process. Representative Gruenberg recalled from his past tenure with the legislature that Legislative Legal and Research Services annually published a book that was provided to the House Judiciary Standing Committee. Every year the House Judiciary Standing Committee would have a hearing and review the cases [dealing with statute and regulations]. Sometimes, he relayed, legislation would result from that review. Representative Gruenberg asked if Ms. Behr would have a problem with that provision into HB 424. MS. BEHR noted that although she hasn't spoken with the sponsor on this matter, it is her impression that AS 24.20.065 comes later in the process, after the courts have reviewed [the statute or regulation]. This [legislation], however, proposes a review much earlier in the process. She noted her hope that the legal opinions from Legislative Legal and Research Services would come out during the public comment period so that the regulations could be improved. REPRESENTATIVE GRUENBERG inquired as to how this process would unfold in the interim of an election year. MS. BEHR said that sending the information to the Department of Law is absolutely necessary because it provides legal advice to the state agency, which needs the information in order to fix the regulation. She pointed out that the Joint Committee on Administrative Regulation Review is a joint committee of both bodies and is staffed during the interim. Additionally, Ms. Behr remarked, the President of the Senate and the Speaker of the House are probably the two most active positions in the legislature during the interim. With regard to including Legislative Council, Ms. Behr said that she didn't have a legal problem with that but would have to discuss it with the sponsor. REPRESENTATIVE GRUENBERG turned attention to page 2, line 18, and pointed out that often a regulation is promulgated pursuant to several statutes. Therefore, he suggested changing the language to refer to "the applicable statutes". MS. BEHR remarked that the committee might want to talk with its legislative legal counsel, which took care in reviewing the current language to ensure that the standards [the Department of Law uses] match the standards specified. Furthermore, there is already statute that specifies that singular equals plural and plural equals singular. Number 1030 REPRESENTATIVE GRUENBERG moved Conceptual Amendment 1, as follows: Page 2, line 18, Delete "statute" Insert "applicable statutes" REPRESENTATIVE GRUENBERG noted that he is offering Conceptual Amendment 1 subject to review of Legislative Legal and Research Services. REPRESENTATIVE OGG objected. REPRESENTATIVE HOLM said that he had no opinion on Conceptual Amendment 1, but mentioned that per Ms. Behr's comments Conceptual Amendment 1 seems redundant. REPRESENTATIVE GRUENBERG indicated that the caveat regarding the Legislative Legal and Research Services review of Conceptual Amendment 1 includes, "if it's in order, they can change it, and if it's redundant, they can drop it out." REPRESENTATIVE OGG withdrew his objection. REPRESENTATIVE SAMUELS asked whether there were any further objections to Conceptual Amendment 1. There being none, Conceptual Amendment 1 was adopted. Number 0984 REPRESENTATIVE GRUENBERG turned to Amendment 2, which read [original punctuation provided]: Page 1, line 3: After "Act;" insert the following: repealing obsolete provisions of law concerning legislative annulment of regulations and review; Page 3, Line 19: Insert new bill section 5 and renumber sections accordingly: *Sec. 5. AS 44.62.320 is repealed. REPRESENTATIVE GRUENBERG informed the committee that AS 44.62.320(a) is unconstitutional per the A.L.I.V.E. Voluntary case. Representative Gruenberg explained that originally he was going to repeal AS 44.62.320(a). However, upon learning from Ms. Cotting that AS 44.62.320(b) isn't observed, he decided to repeal that subsection as well. MS. COTTING said she'd discussed this repeal with Dave Stancliff, Staff to Representative Gene Therriault, Chair, Joint Committee on Administrative Regulation Review, who'd said that repealing all of it would be fine because it's unconstitutional. She confirmed that AS 44.62.320(b) isn't observed. REPRESENTATIVE GRUENBERG interjected that there is a conforming title amendment. MS. BEHR said that she has no legal objection to Amendment 2 as it clarifies the statutes. However, she remarked, whether this matter should be dealt with in this legislation or in the revisor's bill is something upon which she couldn't comment. Number 0850 REPRESENTATIVE SAMUELS, although no formal motion was made, upon determining that there were no objections to Amendment 2, announced that Amendment 2 was adopted. Number 0839 REPRESENTATIVE GRUENBERG moved to report the proposed CS for HB 424, Version 23-LS0732\S, Cook, 3/2/04, as amended, out of committee [with individual recommendations and the accompanying fiscal notes]. REPRESENTATIVE GARA asked about the fiscal notes. REPRESENTATIVE HOLM relayed that one of the fiscal notes is for $98,000. Number 0817 REPRESENTATIVE GARA expressed the need to ensure that the Legislative Affairs Agency has the power to perform this regulatory review. However, he also wanted to ensure that when the workload of Legislative Legal and Research Services is heavy with other priorities, then reviewing regulations wouldn't be [required]. Representative Gara suggested that that fiscal note could be lowered to zero if, on page 2, line 12, the word "shall" is changed to "may". The current language requires that at least one attorney be assigned to review regulations. REPRESENTATIVE SAMUELS pointed out that on page 1, line 6-7, the legislation specifies, "The Legislative Affairs Agency may review ...." Therefore, there is no [mandate] to review the regulations and, thus, if there is no review, there would be no attorney time used. MS. COTTING offered her belief that with Representative Gara's proposed language change, there would be an indeterminate fiscal note. She said that an indeterminate fiscal note is even more difficult for the House Finance Committee to address. Number 0711 KARLA SCHOFIELD, Deputy Director, Legislative Administrative Services, Legislative Affairs Agency, explained that after reviewing the legislation with Legislative Legal and Research Services and the executive director of the Legislative Affairs Agency, it was determined that there isn't enough staff to review more than perhaps one regulation a year. Because the legislature could want a review of more than one regulation a year, the fiscal note reflects the cost of the addition of one attorney who could be assigned regulations review. REPRESENTATIVE GARA maintained his belief that use of "shall" on page 2, line 12, requires a certain amount of regulation review when perhaps the agency should be given discretion [in reflection of its workload]. REPRESENTATIVE SAMUELS expressed concern that if Legislative Council says there is the need to re-prioritize, then it should be allowed. REPRESENTATIVE OGG opined that it is only once the "may" language on page 1, line 7, is triggered that the mandatory language comes into play. Furthermore, on page 2, lines 11-13, the caveat of "Within available staff resources and priorities set by the legislative council" comes previous to the "shall" language. Therefore, Representative Ogg said that he didn't see the need for Representative Gara's suggested change. REPRESENTATIVE HOLM indicated agreement with Representative Ogg. REPRESENTATIVE GARA withdrew his suggested change. Number 0539 REPRESENTATIVE OGG moved to report the proposed CS for HB 424, Version 23-LS0732\S, Cook, 3/2/04, as amended, out of committee with individual recommendations and the accompanying fiscal [notes]. There being no objection, CSHB 424(JUD) was reported from the House Judiciary Standing Committee.