HB 351-ADOPTION OF REGS; LIMITATIONS; VOID REGS  8:53:34 AM CHAIR LYNN announced that the final order of business would be HOUSE BILL NO. 351 "An Act relating to adoption of regulations; and providing for an effective date." 8:53:55 AM REPRESENTATIVE LANCE PRUITT, Alaska State Legislature, as prime sponsor, said he would explain the concept of the bill. 8:54:02 AM JENNA CROUSE, Staff, Representative Lance Pruitt, Alaska State Legislature, was available to testify. 8:546 AM The committee took an at-ease from 8:54 a.m. to 8:59 a.m. 8:59:11 AM REPRESENTATIVE KELLER moved to adopt the proposed committee substitute (CS) for HB 351, Version 29-LS1355\E, Nauman, 3/16/16, as a work draft. REPRESENTATIVE STUTES objected for purpose of discussion. 8:59:37 AM REPRESENTATIVE PRUITT said he would explain the thought process to the proposed CS for HB 351, and discuss concerns from the Department of Law (DOL) in regard to the initial version of HB 351. 9:00:50 AM MS. CROUSE explained the changes in Section 1 as follows: subsection (b) was changed to read "A state agency may not submit, and the lieutenant governor may not accept for filing, a set of regulations that amend an existing regulation unless"; a new paragraph (3) was added to subsection (b), which reads "the regulation is adopted as an emergency regulation"; a new paragraph (4) was added to subsection (b), which reads "the regulation implements a state or federal law enacted, amended, or repealed within 120 days of the adoption of the regulation, unless that time is extended by the lieutenant governor under AS 44.62.040(d)"; and a new paragraph (5) was added to subsection (b), which reads "if applicable, the estimated cost under AS 44.62.190(d)(2) and (3) are less than or equal to zero." She indicated that a new subsection (d) was added to Section 2, which reads "The lieutenant governor may not accept regulations submitted under this section that do not comply with AS 44.62.020(b). The lieutenant governor may, in writing and for a reasonable cause, extend the time for adopting a regulation implementing a new or amended law under AS 44.62.020(b)(4)." Ms. Crouse relayed that Section 3 clarifies that the law would not be retroactive and that Section 4 was unchanged. 9:02:31 AM REPRESENTATIVE PRUITT offered that the idea for HB 351 came from U.S. Senator Dan Sullivan, who put forward a federal bill called the RED Tape Act [of 2015]. He explained that the proposed legislation follows the one-in/one out idea as it relates to regulations - for every new regulation that is created, there must be another one removed. He added that also under HB 351, for every new regulation that is created that has a cost to government or business, a regulation must be removed to bring the total cost to government or business to either zero or less than the previous cost. He stated that Canada and the United Kingdom, recognizing the importance of not expanding the footprint of government either on itself or on the private sector, have implemented similar legislation. 9:04:36 AM CHAIR LYNN asked if the regulation removed would have to be within the same state agency that added a regulation. REPRESENTATIVE PRUITT responded in the affirmative. He offered that since the passage of HB 140 during the Twenty-Eighth Alaska State Legislature, any new regulation must state the fiscal impact, so cost information is now readily available. 9:06:16 AM REPRESENTATIVE PRUITT alluded to the changes in the proposed CS - the exemption of emergency regulations and allowance for future regulations under new laws. He stated his belief that any new programs should be created by elected officials within the legislature and not state departments, in order to limit the growth of government. He reiterated that the proposed legislation would check the growth of regulation, and the proposed CS would limit the costs related to amended regulations. He further stated that boards or commissions with statutory authority to cover their own costs through fees would be exempt from the requirement in HB 351. He also mentioned that the Alaska Oil and Gas Conservation Commission (AOGCC) and the Alaska Regulatory Commission (ARC) would be exempt as well. He added that the Board of Game and the Board of Fisheries would not be exempt, since many of these regulations are offered by the public, and he opined that the public would be willing to assist with the reduction of regulations. 9:12:38 AM CHAIR LYNN stated he supports the concept of HB 351. 9:12:54 AM REPRESENTATIVE SPOHNHOLZ expressed her amazement of the amount of new legislation created by the legislature. She said she recognized that regulations are the response to application and implementation of new laws. She asked if the proposed legislation would require offsets for all the regulations created as a result of the many new laws. 9:13:57 AM REPRESENTATIVE PRUITT maintained that as a legislator he rarely presents new bills. In response to Representative Spohnholz's question, he read Section 1(b), "A state agency may not adopt, and the lieutenant governor may not accept, a new regulation unless", and he continued with Section 1(b)(4), "the regulation implements a state or federal law enacted, amended, or repealed within 120 days of the adoption of the regulation". He added that the lieutenant governor could be petitioned to extend that time period. 9:15:32 AM CHAIR LYNN suggested that the "marijuana law" was an example of a new law needing new regulations. REPRESENTATIVE PRUITT concurred. 9:16:01 AM REPRESENTATIVE KREISS-TOMKINS mentioned that he could think of a few scenarios in which HB 351 could put the Board of Fisheries into a problematic management situation as it reacts to new fisheries or new gear. He asked if the proposed legislation would require repealing existing regulations in order to create new ones required for pioneering a new fishery. 9:17:24 AM REPRESENTATIVE PRUITT brought up the possibility that there are outdated Board of Fisheries regulations that could be eliminated. 9:18:49 AM REPRESENTATIVE KREISS-TOMKINS agreed there may be old regulations that are obsolete and could be eliminated. He mentioned the yearly revisor's bill that serves as an omnibus review of Board of Fisheries regulations, often resulting in technical confirming changes to statutes and a purge of outdated regulations. He opined that he may need more information to consider the full impact of HB 351. 9:20:11 AM [The objection for purpose of discussion, made by Representative Stutes in response to the motion made by Representative Keller to adopt the proposed committee substitute (CS) for HB 351, Version 29-LS1355\E.1, Nauman, 3/16/16, as a work draft was treated as withdrawn. Version E was treated as before the committee.] REPRESENTATIVE KELLER moved to adopt Amendment 1, [labeled 29- LS1355\E.1, Nauman, 3/16/16], which read as follows: Page 1, line 3: Delete "a new subsection" Insert "new subsections" Page 2, following line 2: Insert new subsections to read: "(c) A state agency may not submit, and the lieutenant governor may not accept for filing, a set of regulations that amend an existing regulation unless (1) at the time the regulation is submitted to the lieutenant governor, the estimated net cost of the set of regulations adopted by the state agency for each of the costs under AS 44.62.190(d)(2) and (3) is less than or equal to zero; or (2) the Department of Commerce, Community, and Economic Development, or a board or commission, adopts the regulation for the purpose of amending an application fee, examination fee, license fee, registration fee, permit fee, investigation fee, or other fee for an occupation licensed or regulated under AS 08. (d) The Alaska Oil and Gas Conservation Commission and the Regulatory Commission of Alaska are exempt from the requirements of (c) of this section." Page 2, line 5: Delete "AS 44.62.020(b)" Insert "AS 44.62.020" REPRESENTATIVE STUTES objected for the purpose of discussion. 9:20:45 AM CHAIR LYNN stated his belief that the proposed legislation would save much money. REPRESENTATIVE PRUITT agreed with Chair Lynn and reiterated that HB 351 would help check the growth of government and give the authority to the legislature to decide if and when any future growth should occur. CHAIR LYNN declared that every regulation has a cost. REPRESENTATIVE PRUITT agreed adding that regulations generate a cost either to the government or to the public. REPRESENTATIVE PRUITT explained that the proposed Amendment 1 would address a potential loophole - increased cost as a result of amending regulations. He indicated that under the proposed amendment the increased cost of an amended regulation must also be offset. Representative Pruitt added that professional licensing under the Department of Commerce (DOC) would be exempt in order to amend a regulation to increase fees, and the AOGCC and RCA would be exempt, as well. 9:24:54 AM AL TAMAGNI, Leadership Council Chair, National Federation of Independent Business (NFIB), stated his belief that the proposed legislation has long been needed and would effect not just businesses but the public. 9:26:12 AM SCOTT OGAN relayed that when he was with the Department of Natural Resources (DNR) he successfully litigated regulations of the Bureau of Land Management (BLM) before the Interior Board of Land Repeals, an administrative law panel within the U.S. Department of the Interior. He added that DNR consistently found inconsistencies in the way BLM interpreted regulations, and DNR won seven out of seven cases. Mr. Ogan mentioned that during an effort by DNR to digitize the process of getting permits, it was discovered that the process varied greatly from region to region. He asserted that the reason interpretation varied in three different offices was that the regulations were so vast and ambiguous. MR. OGAN suggested a change to HB 351, which would add a new paragraph to Section 1, subsection (b). He read Section 1(b), "A state agency may not adopt, and the lieutenant governor may not accept, a new regulation unless" and added his proposed paragraph after paragraph (5), which read, "the regulation is narrowly defined as reasonable and necessary to implement the statute." He claimed that the legislature delegates the authority to make law to unelected people when it gives the authority to make a regulation to state agencies. He stated that he wanted to see sidebars put on that latitude. He added his belief that, so worded, HB 351 would give businesses and citizens a little more leverage in court when opposing a regulation. 9:31:57 AM REPRESENTATIVE STUTES removed her objection to the motion to adopt Amendment 1. There being no further objection, Amendment 1 was adopted. REPRESENTATIVE PRUITT offered support for Mr. Ogan's conceptual amendment but reported that he needed to consult with Legislative Legal and Research Services to determine if the term "narrowly" needs definition or if there is more appropriate wording. 9:34:56 AM REPRESENTATIVE KELLER moved to adopt Conceptual Amendment 2, which would add paragraph (6) to page 2, line 3, to read "unless the regulation is narrowly defined as reasonable and necessary." He emphasized that the proposed amendment was conceptual and subject to wordsmithing by Legislative Legal and Research Services. There being no objection, Conceptual Amendment 2 to HB 351 was adopted. 9:35:43 AM REPRESENTATIVE TALERICO [moved to adopt Conceptual Amendment 1 to Conceptual Amendment 2 to HB 351] by suggesting the word "unless" be dropped from the proposed amendment because that word is already included in Section 1(b). There being no objection, Conceptual Amendment 1 to Conceptual Amendment 2 on HB 351 was adopted. [Conceptual Amendment 2, as amended, was treated as adopted.] 9:37:28 AM REPRESENTATIVE KELLER moved to report CSHB 351, Version 29- LS1355\E, Nauman, 3/16/16, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 351(STA) was reported from the House State Affairs Standing Committee.