CS FOR HOUSE BILL NO. 130(FIN) am(reengrossed) An Act relating to the adoption, amendment, and repeal of regulations. Co-chairman Halford directed that CSHB 130 (Fin)am (reengrossed) be brought on for discussion. BRUCE CAMPBELL, aide to Representative Kelly, came before committee. He explained that the proposed bill has a few, simple goals relating to the Regulation Procedures Act. Language in secs. 1, 2, 3, and 4 closes a loop in the process involving the Legislative Regulation Review Committee and establishes the Governor as the key elected official overseeing the regulation process. Secs. 5 and 6 deal with public comment. Sec. 5 strengthens public hearing requirements and directs agencies to pay additional attention to factual, substantive comments as well as public testimony regarding the cost of a proposed regulation. While agency staff has considerable expertise in terms of the benefits of regulations, the private sector has the most expertise in issues relating to costs. Sec. 6 incorporates a new section requiring agencies to report use or rejection of public comments. Secs. 7, 8, and 9 are housekeeping. Sec. 10 deals specifically with the Dept. of Environmental Conservation and asks the department to consider alternate methods of complying with the statute while paying close attention to costs. The effective date ensures that the proposed bill applies to regulations noticed after the enactment date. Discussion followed between Senator Donley and Mr. Campbell regarding application of Secs. 1 through 4. Mr. Campbell noted application to the Legislative Regulation Review Committee under Title 24 and the requirement that committee comments be provided to both the Governor and state agencies. A loop is thus created between the committee and the Governor. Mr. Campbell further noted that under Sec. 3 language, the Governor may return regulations to an agency for two reasons: 1. If they are inconsistent with faithful execution of law. 2. Agencies have need to respond to specific issues raised by the Legislative Regulation Review Committee. The Governor may delegate this authority solely to the Lt. Governor. In response to a further question from Senator Donley, Mr. Campbell explained that the Regulation Review Committee will receive a copy of proposed regulations. At the present time, the Committee merely receives notice that regulations will be forthcoming. The general theme of the proposed bill is that issues brought to legislative attention are those raised by the public. While the Governor now has the authority to deny adoption of proposed regulations, HB 130 would include the Regulation Review Committee in the loop, as far as comments are concerned, up to the end of the public notice period. It allows the committee to address concerns directly to the Governor rather than through a commissioner. Responding to a question from Senator Phillips regarding the impact of passage of HJR 1, Mr. Campbell said that the resolution would make the system work better. It brings the legislature further into the loop. HB 130 contains preparatory language to assist in the process. JOHN LINDBACK, Chief of Staff, Office of the Lt. Governor, next came before committee. He explained that the administration has taken a neutral position on the bill, but he added that, personally, the Lt. Governor is on the "positive side of neutral." Of chief consideration are cost aspects. The administration is very interested in regulatory reform and looks forward to addressing the matter in the interim, in concert with the legislature. As attempts were made to amend the bill in previous committees, it was determined that amendments are sometimes more costly than expected. Mr. Lindback deferred comment on cost aspects to staff from the Dept. of Law. Mr. Lindback agreed that the proposed bill is a reasonable approach to addressing weaknesses in the current process: 1. It is closer to the public perception of how the regulation process works. The Office of the Lt. Governor is occasionally contacted by people who are under the impression that the Lt. Governor can simply not adopt regulations sent to her for filing based on how she feels about them. In fact, filing is a perfunctory ministerial function at this time. 2. It builds in extra steps to ensure that public comment is taken into consideration before regulations are adopted. In his closing comments, Mr. Lindback asked that the administration be allowed the opportunity to review its fiscal notes prior to passage of the bill from committee, if it is amended. DEBORAH BEHR, Regulations Attorney, Dept. of Law, next came before committee. She said she had reviewed the current version of the bill and has no legal problems with it. She attested to having worked closely with the sponsor and expressed thanks for his cooperation in developing language that will work for the administration. Directing attention to page 5, line 16, Ms. Behr voiced need to delete "consideration" and insert "attention." She referenced page 3, line 29, and noted use of "attention" in that instance and need for parallel language on both pages. Parallel construction will clarify that the Dept. of Environmental Conservation will not have to conduct two types of review. Ms. Behr acknowledged that the Governor presently plays an active role in regulations. Some delay in adoption of regulations will result from passage of the proposed bill because of review by the Office of the Governor. Recording of the use of public comments (Sec. 6) is a new function for state government. At the present time, the Alaska Administrative Procedures Act requires that the state agency consider all comments. There is, however, no track record when a commissioner accepts or rejects regulations. Ms. Behr referenced fiscal notes associated with the new function. Speaking to cost compliance, Ms. Behr noted that bill provisions direct state agencies to ask those who fall under the proposed regulations what costs are likely to be and to pay serious attention to those costs. The final section deals with the Dept. of Environmental Conservation and asks that the department give special consideration to comments relating to the cost of compliance and alternative methods. The department does not believe this provision will be problematic. Discussion followed concerning the number of regulations dealt with in a year. Senator Phillips MOVED for adoption of the recommended change at page 5, line 16, substituting "attention" for "consideration." No objection having been raised, the amendment was ADOPTED. Senator Donley directed attention to a subsequent amendment which he explained was earlier added to other legislation relating to regulations. He noted that under the existing regulation system, the administration merely publishes notice of what it intends to adopt. It does not show the actual language. The administration then takes public comment and thereafter adopts "almost anything they want." It does not have to provide notice or conduct public hearings if a subsequent change is made. The proposed amendment requires that if substantial or significant changes are made in the original intent of the regulation identified in the notice, the administration is required to re-notice the regulation and provide copies of what is posed for adoption. Exemptions are similar to those worked out several years ago relating to special boards such as the board of fisheries, board of game, commercial fisheries entry commission, emergency regulations, or regulations adopted to meet federal requirements. In his closing comments, Senator Donley acknowledged that the administration would probably oppose the amendment. Ms. Behr advised that the amendment would be extremely expensive since it would require "new rounds of public comments on virtually all regulations." As an example, she cited fee regulations which would require a new public comment process for each fee change. The administration could find itself in a continuous cycle of redoing regulations and not meeting budget obligations. She suggested that if the amendment is of interest to committee, she be allowed time to obtain fiscal notes from all departments. Ms. Behr noted that the public can bring court challenges against regulations that are not properly noticed. Co-chairman Halford asked if the proposed amendment was considered when the bill was before prior committees. Bruce Campbell explained that amending language is close to that in an earlier "Z" version of the bill. That bill is not now before committee, mostly because of cost considerations. The amendment is similar to ideas proposed by the State Chamber of Commerce for discussion during the summer. It is the kind of concept that might well fit in a broader package. Mr. Campbell stressed that the goal of the proposed bill is not to reek havoc within the system but to try to find small ways to make things work. The proposed amendment is a much more serious fix than the sponsor initially intended. Co-chairman Halford voiced his belief that the regulatory standard should be changed to provide that instead of merely being reasonable to implement a statute, a regulation must be essential to implementation of the express purpose of the statute. Senator Donley said he would not offer the amendment at this time. He further expressed support for Co-chairman Halford's comments regarding need for overall change in the process. Senator Sharp MOVED for passage of SCS CSHB 130 (Fin) with individual recommendations and accompanying fiscal notes. No objection having been raised, SCS CSHB 130 (Fin) was REPORTED OUT of committee with 18 zero fiscal notes and notes from the following departments showing associated costs: Gov/Lt. Gov. $73.7 DEC (Solid Waste) 10.0 DEC (Wastewater) 4.5 DEC (Drinking Water) 6.0 DEC (Seafood Sanitation) 6.5 DEC (Palmer Lab.) 3.2 DPS (Commissioner's Office) 5.0 DOR 20.0 Co-chairmen Halford and Frank and Senators Phillips and Sharp signed the committee report with a "do pass" recommendation. Senators Donley, Rieger, and Zharoff signed "no recommendation."