SB 203-OFFICE OF ADMINISTRATIVE HEARINGS  CHAIR SEEKINS called the meeting back to order and announced SB 203 to be before the committee. SENATOR GENE THERRIAULT, sponsor of SB 203, told members that the committee substitute (CS) [version B] addresses the many concerns of the state agencies. The purpose of SB 203 is to implement a new system for adjudications and hearing officers to make them consistent across statutes as much as possible. He noted this bill is not a perfect fit to all areas of state government. However, knowing that people resist change, the bill has been scaled back so that it now establishes a pilot project. He said the common goal, in working with the Murkowski Administration, is to achieve a seamless transition. TAPE 04-2, SIDE B  SENATOR THERRIAULT said those existing administrative hearing jurisdictions that do not fit well at this time were removed from version B. Those jurisdictions may, over time, be brought into the new system by future legislative action. He explained that the main source of tension involved whether the existing rules and regulations would apply under the central panel reform, or whether new regulations yet to be developed by the chief hearing officer will control the process. He said to address the concerns about agency expertise, version B allows agency representatives to participate at hearings under conditions set by the chief hearing officer. To address the concern about maintaining agency power over policy, version B keeps the central panel decisions as non-binding within certain timelines and conditions. In areas of conflict with federal law, version B authorizes the administration to follow federal guidelines where required. In addition, at the request of the administration, the definition of a hearing officer was removed and replaced with a more broad description of a quasi-judicial hearing function. SENATOR THERRIAULT told members that the length of the bill has decreased from about 50 to 39 pages. He asked that Mr. Stancliff explain the details. SENATOR THERRIAULT moved to adopt, as the working document before the committee, the proposed committee substitute to SB 203, version B, dated 2/4/04. CHAIR SEEKINS announced that without objection, the motion carried. MR. DAVE STANCLIFF, staff to the Administrative Regulation Review Committee (ARRC) and to Senator Therriault, said the good news is that the fundamental applications and structure in version B are unchanged. The major changes made in the CS were requested by the administration and several concerned commissioners who like the existing process or are in the process of making reforms to their hearing processes and want the opportunity to implement them. Therefore, 12 of the jurisdictions listed in the Senate State Affairs CS were removed from version B. In addition, the Department of Environmental Conservation's (DEC) emergency authority and emergency statutes that are time sensitive and deal with environmental hazards were exempted and the general DEC hearing functions will not fall under the central panel for a grace period of two years. After two years, if DEC's in-house reforms are working well, it could make a case to the legislature for a permanent exemption. MR. STANCLIFF said the Department of Natural Resources' (DNR) concerns were addressed by removing DNR from the bill. Version B is a highly polished model; one that will not be too costly to implement. It has a very liberal transition period, requested by the administration. The tension that Senator Therriault referred to, between the Administrative Procedures Act (APA) and the model, is not new. That tension exists simply because not every agency conducts its hearings in the same way and not every agency conducts its hearings under the APA. Those tensions are inherent in any process that is not consistent from top to bottom. He said the premise of this legislation was to build a model that over time would provide top to bottom consistency, but not to force the consistency in a way that would be too costly or would "train wreck" legitimate, ongoing hearing functions. MR. STANCLIFF pointed out that a panel of five experts from different states that assembled on February 3 was impressed with the provision in the bill that will make the hearing officer an administrative employee who will be appointed by the administration. That hearing officer will write regulations and expedite the necessary hearing process transformations. The five experts were a bit reluctant to give high accolades for the fact that final decision-making authority was not given to the central panel. The experts did note that even though the panel will not have final decision-making authority, the legislation requires the commissioner to meet a fairly high bar to reverse a decision. The reversal must be in writing so that if the case advances to court, a written record will be available. He pointed out the experts from the five states were very impressed with the fact that the model in version B is a culmination of all the best features of about 25 models adopted by other states. MR. STANCLIFF introduced Mr. Andy Hemenway, a hearing officer with the Department of Administration (DOA) and said the two would address the specific changes made in the CS. 9:20 a.m. MR. STANCLIFF described the following changes to version B: · page 5, line 31 and page 6, line 1 - language states that this act does not create a right to a hearing that otherwise does not exist in law · page 6, lines 7-9 - language states that full-time hearing officers will be subject to AS 39.25.150 personnel rules - these positions will be partially exempt with the same protections under the personnel rules listed in paragraphs (7), (15) and (16) · page 6, lines 29-30, language says a person who enters into a contract to work as a hearing officer with the central panel will be subject to the same rules of ethics as a state hearing officer SENATOR FRENCH asked how hearing officers are currently classified in state service. MR. STANCLIFF said it varies but for the most part, they are fully protected employees if they are not under contract. He noted there might be some exceptions in which an appointed person, such as a director, would hold hearings. He deferred to Mr. Hemenway for further information. MR. HEMENWAY told members that most hearing officers are partially exempt. He and a few others are classified. SENATOR FRENCH asked if version B will maintain the status quo. MR. HEMENWAY said that is correct. CHAIR SEEKINS asked why a hearing officer would be under contract. MR. HEMENWAY referred to the list of agencies on page 4 and explained that those agencies are statutorily required to hold hearings if a decision is appealed, but they have no hearing officers. When a hearing has to be conducted, a division employee conducts the hearing or the department might contract with an attorney for professional services to act as the hearing officer. CHAIR SEEKINS asked if this bill would reduce the requirement for contract hearing officers. MR. HEMENWAY said that is the intent but the bill creates one additional position, the chief hearing officer. The expectation is that the consolidation should create some efficiency and free up time for the existing hearing officers to do some of the currently contracted functions. SENATOR THERRIAULT said that even with a centralized panel pool, there may be times when outside contractors will have to perform that function. CHAIR SEEKINS agreed that the number of contracts will be reduced, not eliminated. MR. STANCLIFF continued: · Page 7, lines 24-27 - Sec. 44.21.555 contains a reimbursement agreement · Page 7, beginning on line 8 - Sec. 44.21.560 was rewritten to clarify how a resolution would occur when there is a conflict between regulations and existing statute and regulations adopted by the chief hearing officer MR. STANCLIFF pointed out that the administration will appoint a high quality person to work with the agencies and develop and carry out regulations in a compatible manner. However, no matter how well the system works, there will occasionally be a "rub" between the jurisdictions as the transition goes forward. That section is designed to address such a problem. He continued: · Page 8, lines 13-14, address the confidentiality rule when case information and materials are shifted to the central panel · Page 8, lines 16-21, allow, if an agency makes a case for expertise, the chief hearing officer to determine what level of participation is necessary · Page 9, lines 22-23, subsection (f) provides a 30 day time period for the commissioner to overturn a decision, and says if no action is taken, the decision becomes final · Page 10, lines 14-15, addresses any legitimate ongoing action within an agency and prevents the central panel from arbitrarily holding in abeyance what otherwise would be good public policy · Page 10, lines 24-25, say when federal requirements exist, they prevail · Page 10, line 28, contains a shorter definition of administrative hearing officer at the suggestion of the attorney general · Page 29, lines 7-12, reinstates the requirement that the attorney general approve contract services · Page 34 contains the provision that puts DEC back in after its two-year grace period - line 18 contains an exception for the DEC functions that are extremely time sensitive and are rarely used · Page 39, line 29, Section 71, contains the DEC 2-year exemption MR. STANCLIFF told members that the transition period was designed so that the administration can appoint a hearing officer and start "getting the house" in order within a liberal time period. MR. HEMENWAY noted the start-up date is July of 2005, when the chief hearing officer could be hired. MR. STANCLIFF pointed out that version B addresses 85 to 90 percent of the administration's concerns. Addressing any of the remaining concerns would have diluted the reform to the point where it would not work as efficiently as needed. He said he hopes the committee supports this balanced approach. 9:32 a.m. SENATOR THERRIAULT said resistance is a natural reaction to any system change. He noted that DEC resisted fee changes several years ago but favored the changes after they were in effect for a year. He said he will continue to be sensitive to agency concerns but, hopefully, they will find that most of their concerns have been dealt with. He asked members to consider passing the CS from committee today so that the Finance Committee can address the fiscal aspects of the bill. MR. STANCLIFF told members that the five-state expert panel said if the state wants to build a new model that garners respect, and participant qualifications are raised, it is important to change the title of hearing officer to administrative law judge. He suggested that would be an easy conceptual amendment to make. CHAIR SEEKINS asked the sponsor for his opinion of the suggestion. SENATOR THERRIAULT said he believes it has merit because it would highlight that this panel will have uniform standards and a heightened level of professionalism. CHAIR SEEKINS asked Mr. Ingram to testify. 9:37 a.m. MR. DAVID INGRAM told members he recently retired as a hearing officer for 24 years with the State of Alaska. He also taught administrative law and other legal courses at the University of Alaska Southeast for the last 20 years and has been on the executive committee of the administrative law section of the Alaska Bar Association for 19 years. He thanked Senator Therriault, Mr. Stancliff and Mr. Hemenway and all those involved in SB 203; he is fully supportive of its general thrust. He said anything that will help improve the level of professionalism in administrative adjudications in Alaska is a great idea. He has advocated for the creation of a central panel for many years and looks forward to the day when all hearing officers are removed from agency supervision and control. He believes the idea of a pilot project is a good idea. MR. INGRAM supported changing the title of hearing officer to administrative law judge. He attended the meeting of the five experts from other states and said that several of them noted a discernible change in the level of professionalism when the titles were changed in their states. He said that although it may seem like window dressing, it would mean a lot to the hearing officers to be referred to as administrative law judges. In addition, many titles are now used throughout the state agencies. MR. INGRAM offered the following suggestions, which he believes are very important. First, make all full-time hearing officers employed by the state subject to the Alaska Code of Judicial Conduct. The Supreme Court did a lot of work drafting and adopting that code for the "black robed" judges in the state. He said it does not contain anything unique to judges and would apply in equal force to administrative law judges. Adopting that code would eliminate the need to draft a new code, provide a code of conduct at the inception of the panel, and provide an instantaneous body of interpretive decisions to guide the hearing officers in interpreting the code. His second suggestion is to prohibit the practice of law by all full-time hearing officers employed by the state. He believes that as long as hearing officers are allowed to "moonlight," the state will not have a professional corps of administrative adjudicators. That activity has serious potential to conflict with one's performance of duties. He repeated that is already prohibited in the Alaska Code of Judicial Conduct. 9:42 a.m. SENATOR OGAN asked if any conflicts surrounding private practice work are regulated so that an attorney would recuse himself. He said that the Alaska Bar Association holds attorneys to high standards regarding conflicts. MR. INGRAM said that is true but does not mean attorneys always declare conflicts. The other difficulty is that the extra work distracts them from their state duties. CHAIR SEEKINS asked Mr. Ingram if he is suggesting that full- time hearing officers be prohibited from moonlighting as a lawyer but the prohibition would not apply to contract hearing officers. MR. INGRAM said that is correct. SENATOR OGAN expressed concern that only the attorneys who can't make a living on their own would apply. MR. INGRAM said there are many applicants for any vacant hearing officer position. His third suggestion was that all full-time hearing officers be prohibited from acting as an advisor or judge to another sovereign, such as another state, federal government or Native group. He pointed out the Commercial Fisheries Entry Commission (CFEC) allows one of its hearing officers to be both a judge and an advisor to another sovereign. Alaskans should be sure in the knowledge that their hearing officers are not in a position to advise or sit on the court of a sovereign with an interest potentially at odds with the State of Alaska. He said, in his opinion, the CFEC situation is a serious conflict of interest in light of potential disputes over natural resources, fish and game, jurisdictional matters and the Indian Child Welfare Act. He believes it is a terrible idea to let a hearing officer engage in outside interests that may affect the quality or integrity of his or her work for the state. MR. INGRAM informed members that he attached to his written comments 4 pages of an extract from a decision he issued on January 30, 2004 involving an application from a Ketchikan resident. He suggested members read it to get some idea of what is going on in the "real world" regarding professionalism and integrity of the process. SENATOR OGAN thanked Mr. Ingram for bringing his experience to the committee. MR. INGRAM said that he believes that all hearing officers would love to be more independent and be part of a central panel. SENATOR OGAN said when he introduced similar legislation 6 years ago, a number of hearing officers privately gave him the "thumbs up" for a central panel. He then said the term "administrative law judge" is interesting because most people believe the legislature writes law. However, the administration writes regulations, which have the same force of law, and then enforce them and deal with adjudications. Therefore, what is supposed to be balanced by three branches is under one. He expressed concern that hearing officers are pressured to rule with a little bit of a bias toward the commissioner they work for. MR. INGRAM said was never told how to decide a case. He suspects he was given certain cases because he was likely to lean in a particular way. He believes the main danger is that hearing officers become friends with their co-workers and it is difficult to criticize the performance of people one works with and respects. He acknowledged that a good hearing officer can step back. SENATOR THERRIAULT said he clearly understands the reasons for Mr. Ingram's first suggestion, to change the titles of the hearing officers to administrative law judges. He asked if the central panel adopted the Alaska Code of Judicial Conduct, Mr. Ingram's other two suggestions, regarding outside employment, would be addressed. MR. INGRAM said it would take care of his suggestion to prohibit moonlighting. However, he believes the committee should consider amending the bill to specifically state that administrative law judges should not act as an advisor or judge to another sovereign because some people would argue that is not the practice of law. SENATOR THERRIAULT said if the legislature wants the efficiency of a central pool, it would not want administrative law judges with conflicts within the pool, other than life experiences, such as being related to someone involved in a case. CHAIR SEEKINS announced that he was closing public testimony and asked for further comments from members. SENATOR FRENCH thanked Mr. Ingram for his comments and said he supports his first and fourth suggestions. He said his concern about the second suggestion is based on a personal experience. He noted that law clerks must be admitted to the Alaska Bar Association to practice law and pay dues, but they cannot practice law outside of being a law clerk. He said his problem is with the ABA and believes it should establish a separate dues rate for public interest lawyers. TAPE 04-3, SIDE A  SENATOR FRENCH said he is still mulling over how Mr. Ingram's second and third suggestions should be structured, but he believes the bill is in good shape and appreciates the work that has been done on it. SENATOR THERRIAULT moved a conceptual amendment [Amendment 1] to change the term "hearing officer" to "administrative law judge" throughout the bill. CHAIR SEEKINS announced that without objection, the motion carried. SENATOR THERRIAULT said he would prefer to get more information on adopting the Alaska Code of Judicial Conduct before taking action on that suggestion. He noted the next committee of referral is the Finance Committee and, if adopting that code will avoid having to write an entirely new code, he would consider that as a way of handling the fiscal impact. SENATOR THERRIAULT made a second conceptual amendment [Amendment 2] to preclude the administrative law judges from acting as an advisor or a judge to any other sovereign. SENATOR OGAN objected and asked what is meant by an advisor to another sovereign. He questioned whether that would include consulting. SENATOR THERRIAULT said the amendment is conceptual so the drafters will have to define that term. CHAIR SEEKINS said he believes the intent is to address situations in which the work is done for remuneration because the law could not prohibit someone from giving free advice to another. SENATOR FRENCH read an excerpt from Mr. Ingram's letter that cited the Alaska Code of Judicial Conduct, "A judge shall not practice law. Notwithstanding this prohibition, a judge may act pro se and may, without compensation, give legal advice to and draft or review documents for a member of the judge's family." CHAIR SEEKINS said that is how he interprets Amendment 2. MR. STANCLIFF noted that a member of the administration felt the term, "for remuneration or official purposes" should be used. SENATOR FRENCH said that "official purposes" should probably be parsed out a bit more. SENATOR OGAN said he wanted to provide the drafter with some discussion. He removed his objection; therefore Amendment 2 was adopted. SENATOR OGAN moved CSSB 203(JUD), Version B as amended, with its attached fiscal notes from committee and asked for unanimous consent. CHAIR SEEKINS announced that without objection, the motion carried. He then adjourned the meeting at 10:01 a.m.