HB 140-REGULATIONS: NOTICE, REVIEW, COMMENT  10:07:21 AM CHAIR COGHILL reconvened the meeting and announced the consideration of HB 140. "An Act relating to the proposed adoption, amendment, or repeal of a regulation; and relating to contact with agencies about regulations." He noted the new Senate committee substitute (CS) and asked Senator Dyson to rescind the motion to adopt Version K. SENATOR DYSON rescinded the motion to adopt Version K Senate CS for HB 140. 10:07:43 AM SENATOR DYSON moved to adopt the work draft Senate CS for CSHB 140, labeled 28-LS0478\L, as the working document. CHAIR COGHILL objected for discussion purposes. 10:08:49 AM JORDAN SHILLING, Aide, Senate Judiciary Standing Committee, described the three main changes between Version K and Version L of HB 140. First, the exemption for the Alaska Public Offices Commission (APOC) was removed throughout the bill. The affected sections are 2-8. The second large change appears on page 2, line 5. Following the words "30 days" the phrase "after the approval is prepared under AS 44.62.060(b)" was removed. The intent is to keep the review within the tight 30 day window and not include a reference to the statute that outlines how a state agency prepares and files regulations. The third major change removed the exemptions in Section 9. Both the sponsor and the Department of Law agree that they weren't necessary. CHAIR COGHILL noted that he and the sponsor hadn't agreed about the exemptions for the Regulatory Commission of Alaska (RCA), the Board of Fisheries, the Board of Game, and the Alaska Oil and Gas Conservation Commission (AOGCC). He asked the sponsor to comment. 10:10:23 AM REPRESENTATIVE LORA REINBOLD, Alaska State Legislature, Juneau, Alaska, sponsor of HB 140 said she was happy with the changes in Section 2 that removed duplication that could delay regulations, and she wouldn't object to the exemptions mentioned above. However, she wanted it on the record that many constituents want the Board of Game and the Board of Fisheries to be mindful that the 100,000 Alaskans who hunt and fish want their boards to be very pro-Alaskan. Also, the RCA should be on notice that Alaskans and the legislature want a business-friendly climate and affordable energy for all citizens, businesses, schools, and governments. She and the other sponsors would like all agencies, boards, and commissions to comply with the requirements in Section 5. Many boards and commissions already post notice of proposed regulations on their own websites so it wouldn't be difficult to also post the information on the Alaska Online Publication Notice System. Section 6 requires a notice to include a brief, clear description of the impact of the regulation. This is already a requirement in statute. She noted that her staff brought examples of a brief description of a Board of Game regulation. 10:15:13 AM CRYSTAL KOENEMAN, Staff, Representative Lora Reinbold, Alaska State Legislature, Juneau, Alaska, sponsor of HB 140, read examples of acceptable descriptions. · The Alaska Board of Fisheries calls for proposed changes in the subsistence, personal use, sport, guide sport, and commercial fishing regulations for the Prince William Sound and the upper Copper/Susitna finfish, in Southeast and Yakutat finfish areas, in Southeast and Yakutat crab - king, tanner, Dungeness - shrimp, miscellaneous shellfish, and statewide except Southeast and Yakutat areas, Dungeness crab, shrimp, miscellaneous shellfish areas. · The Alaska Board of Game calls for proposed changes in the regulations pertaining to hunting, trapping, and the use of game for the following regions: Southeast region, Southcentral region, Central and Southwest region. REPRESENTATIVE REINBOLD continued to comment on Version L. She said she and the sponsors have no objection to sections 7-11. She concluded that it's good public policy to make the regulatory process more business and people friendly and more transparent. SENATOR MCGUIRE thanked the sponsor for bringing the legislation forward and the chair for being statesman in making compromises. 10:19:41 AM NORMAN ROKEBURG, Commissioner, Regulatory Commission of Alaska (RCA), Anchorage, Alaska, stated that the RCA does not oppose Version L of HB 140. He said that the RCA takes pride in its best practices methods for undertaking rulemaking and its transparent public process. Regulations are adopted at public meetings and the records are available online. He described it as the most transparent method of regulatory development in the state. Addressing an apparent misunderstanding on the distinction between ratemaking and rulemaking, he clarified that HB 140 is talking about rulemaking, which is the process for changing regulations. The dockets regarding ratemaking are handled under different procedural methods and are almost totally judiciary in context. He requested that the sponsor return for another visit so he could walk her through the rulemaking process, which could be a template for other state agencies. He concluded stating that Version L would not prompt a fiscal note from the RCA. 10:23:31 AM SENATOR DYSON asked if he had concerns that adversarial groups could flood an agency with superfluous requests. MR. ROKEBURG agreed that the RCA is vulnerable to that type of attack, but it has a complaint section and hopefully will be able to shield itself. SENATOR MCGUIRE asked if he had objection to the requirement in Section 5 to post a notice on the Alaska Online Public Notice System and if it was a fair characterization to say that it was already a requirement in statute. She also asked if he had any objection to the requirement in Section 6 to provide a brief description of changes to the regulation that a layperson could understand. MR. ROKEBURG said his understanding is that the RCA is required by statute to post an online notice of regulation changes and he believes they already exceed that requirement. The problem with the requirement in Section 6 is that the complexity of the issues makes brief descriptions difficult. Executive summaries are provided. He deferred further response to Stuart Goering. 10:26:45 AM STUART GOERING, Assistant Attorney General, Civil Division, Commercial and Fair Business Section, Department of Law, Anchorage, Alaska, said that with regard to Section 5, the RCA already utilizes the Alaska Online Public Notice System. Current regulations are housed on the RCA website and links to those regulations are typically available. However, it's important that links goes to the entire docket, not just the text. This is because the accompanying written orders are much more detailed, explain the reasoning for the regulations, and often contain suggestions or questions the commission wants the public to comment on. He said the same concern rests with Section 6. While the commission's rulemaking is typically procedural, the complex concepts can't be condensed to a brief description. Doing so would be a disservice to the people and potentially misleading. Currently the orders explain the problem the proposed regulation is intended to solve in layman's terms. MR. GOERING suggested that what the commission does is already very transparent for the public and the requirements in sections 5-6 would be something of a step backwards in terms of keeping the public informed and giving information about the commission's rulemaking process. SENATOR WIELECHOWSKI asked what his concerns were having this bill apply to a quasi-judicial board. MR. GOERING said there's particular concern with Section 2 that allows the governor to return regulations because this could jeopardize the independent function of the RCA. Sometimes there is tension between the state and parties that appear before the RCA and on occasion the state appears before the RCA on pipeline and utility matters, so exposing the RCA to any kind of political influence by inserting the governor into the process would erode that independence and potentially hamper the work of the commission. CHAIR COGHILL asked the agencies that couldn't zero their fiscal notes to get that information to his office before 1:30 this afternoon because his intention was for the bill to have no fiscal impact. SENATOR WIELECHOWSKI asked Mr. Goering what other quasi-judicial boards there are and whether they've had an opportunity to comment on the bill. He also asked if the bill requires the State Assessment Review Board to submit their order to the governor for review and if the governor could potentially disapprove of a SAR decision. CHAIR COGHILL asked Mr. Goering to address the question when the committee returned. 10:33:16 AM CHAIR COGHILL recessed the meeting until 1:30 p.m. 1:34:47 PM CHAIR COGHILL reconvened the meeting. Present were Senators Dyson, McGuire, Olson and Chair Coghill. Senator Wielechowski arrived during introductory comments. CHAIR COGHILL removed his objection and Version L was adopted. He opened the discussion on the fiscal notes. 1:36:39 PM ARNOLD LIEBELT, Policy Analyst, Office of Management and Budget (OMB), Office of the Governor, Juneau, Alaska, explained that changes were anticipated when HB 140 was introduced, and OMB decided to prepare one indeterminate statewide OMB fiscal note that summarized the impact in the analysis section. For Version L the Department of Natural Resources (DNR), the Department of Environmental Conservation (DEC), and the Department of Commerce, Community and Economic Development (DCCED) submitted more detailed fiscal notes that total $700,000. SENATOR WIELECHOWSKI asked if there was any response from the Department of Health and Social Services (DHSS) and the Department of Labor and Workforce Development (DOLWD). MR. LIEBELT said DHSS believes they will be impacted but they couldn't quantify the amount so they would have submitted an indeterminate fiscal note. DOLWD opted to track the expenses and perhaps come back for an increment in the future. Other departments may have to make similar requests. CHAIR COGHILL said his intention was to learn if there were real impacts. MR. LIEBELT responded that all the departments indicated that additional resources would be necessary. 1:40:38 PM DANIEL T. SEAMOUNT, Geologist Commissioner, Alaska Oil and Gas Conservation Commission (AOGCC), stated that AOGCC is satisfied with the current version of HB 140 and has no objection to sections 5-6. 1:41:22 PM LYNN KENT, Deputy Commissioner, Department of Environmental Conservation (DEC), Juneau, Alaska, discussed the DEC fiscal note. With regard to Section 3, she said the term "good faith" is in the eye of the beholder, but there is certainly a cost to the department to provide a credible cost estimate for implementation of proposed regulations. Another phrase in Section 3 talks about basing the estimate on "information available to the department" but that isn't defined and there doesn't appear to be any legislative intent on the record as to what that means. DEC notices about 15 proposed regulation packages each year and the monetary impact varies. Some could result in a cost savings to those that DEC regulates. She explained that DEC's fiscal note includes contractual funds that would be used to help the divisions sort out what actions have to be taken by state agencies, the public, or municipalities in complying with the proposed regulations. The fiscal note does include one economist because the department doesn't have that type of expertise. The work necessary to estimate the costs would vary with the regulation, but it's not possible to do a credible job of giving a cost estimate without additional resources. MS. KENT said the fiscal note doesn't include any cost associated with Section 5 because it will take just a little administrative time to make sure that the proposed regulations are posted on the Alaska Online Public Notice System. CHAIR COGHILL asked if the bill would impose a cost when a regulation has to be written based on a change in federal law. MS. KENT explained that when the federal government proposes a regulation the cost estimate is the aggregate nationwide. It would be difficult for DEC to separate the costs that would apply in Alaska and the cost difference to do something in Alaska versus the Lower 48. CHAIR COGHILL asked if it's fair to say that some cost estimates are based on public comment on proposed regulations. MS. KENT said DEC often receives cost feedback from those who will be regulated, but that comes after the public notice is issued. This bill requires a cost estimate before the regulations are put out for public comment. 1:49:25 PM NORMAN ROKEBURG, Commissioner, Regulatory Commission of Alaska, referenced a comment about the RCA's impact on utility rates and pointed out that the commission operates under statutory guidelines to find just and reasonable rates, but tries to keep affordability in mind. SENATOR DYSON said he, too, wanted to clarify that RCA's work isn't solely limited to keeping rates down. The commission is charged with regulating utilities to ensure the delivery of safe, reliable, and economic energy, which includes dealing with proposed rate increases that are not directly related to the immediate operation of the plants. He discussed his disagreement with the RCA during the Cook Inlet oil and gas production crisis and his opinion that the commission's policy not to let fuel prices drift up to reflect the market was very foolish. He also mentioned his disagreement when he approached the RCA about allowing the upper Cook Inlet electric utilities to work on getting an alternative fuel supply and having the authority to charge that off against the rate base. He concluded his comments stressing that just looking out for utility rates to the consumer has worked against guaranteeing a secure fuel supply and a reliable transmission system. CHAIR COGHILL noted that the analysis section of the DNR fiscal note specifically discussed a "good faith estimate." He asked if this record needed to clarify the intent of that term. 1:55:05 PM WENDY WOOLF, Petroleum Land Manager, Division of Oil and Gas, Department of Natural Resources, Anchorage, Alaska, stated that it would help DNR if the committee would clarify what it expects in terms of a good faith effort. She agreed with the deputy commissioner of DEC who requested clarity on the type of information available to state agencies. CHAIR COGHILL asked Mr. Liebelt if he had additional comments. MR. LIEBELT said he believes that the testimony from DEC is reflective of all the departments. It's Section 3 that triggers the fiscal impacts. CHAIR COGHILL asked the sponsor to comment on Section 3 (d). 1:56:05 PM REPRESENTATIVE REINBOLD said that Section 3 and Section 7 are the meat of the bill and that's why she questioned potentially exempting the AOGCC and RCA. Her decided preference is to have them comply with sections 5-6. After discussing the quasi- judicial question with legislative legal, she feels that may no longer be an issue. When she introduced the bill, the goal and guiding question was what did she want government to look like when she was no longer a public official. The answer is affordable utilities, less government subsidies, affordable energy to Alaskans, and a responsible government that has checks and balances. She said the intent of Section 3 is to ensure that agencies don't promulgate regulations without looking at the impacts on citizens, businesses, municipalities and other government agencies. An agency currently only has to look at their cost, whereas the bill requires an agency to look at the cost in the aggregate for other state agencies, private persons, and municipalities. REPRESENTATIVE REINBOLD discussed Administrative Order 266, which was issued in 8/2013. It establishes regulatory efficiency guidelines for state agencies. She read the following excerpts from Administrative Order 266: · Minimize the cost, time, and burden to the affected public of complying with State regulations and encouraging State agencies to work with all stakeholders, to meet the objectives of Alaska Statutes; · Ensure that State regulations are consistent with Alaska Statutes and limited to carrying out the statutory purpose; · Share ideas with members of the affected public to develop the proposed regulations through publicly noticed workshops or hearings, calls for written suggestions to improve the process, meetings with advisory boards to the State agency, or other similar means consistent with legal requirements; · Verify costs of implementation to the State agency and the affected public to ensure that the least costly alternatives are considered or enabled consistent with legal requirements; In this Order, "affected public" includes 1. Small and other businesses subject to regulation or conducting regulated activity; 2. State government; 3. Local governments; 4. Nonprofit organizations; and 5. Individuals. Consistent with law and available appropriations, each affected State agency shall use existing personnel and monetary resources to comply with this Order. REPRESENTATIVE REINBOLD said that in light of the forgoing, the fiscal notes were a surprise. She directed attention to an article in the Alaska Journal of Commerce by Tim Bradner to explain why she wants assurance that all state agencies will promulgate regulations that will benefit the state in general. A critical part of that is for agencies to identify whether their orders come from statute, the legislature, or the federal government. The hearing on April [15] showed that DNR was responding to the federal government when it requested well log data from private entities. 2:03:08 PM CHAIR COGHILL asked if she wanted to supplement the record with regard to what constitutes a good faith effort to estimate. REPRESENTATIVE REINBOLD said it's self-explanatory; the idea is that they'll try. Several indemnity clauses were included in the bill to protect the state in every way possible. CHAIR COGHILL recapped that agencies are asked to give a reason for the proposed action, the initial cost, and estimated annual costs based on individual, municipal, and state actions. He described that as fair. REPRESENTATIVE REINBOLD said it mirrors Administrative Order 266. 2:04:54 PM SENATOR WIELECHOWSKI expressed bewilderment and suggested that the chair had whacked the hornet's nest, because the bill was non-controversial in the other body. When people he respects in AOGCC and RCA express concern, it causes him concern. He noted the number of commissions that are quasi-judicial and that he didn't know how the bill would impact them. REPRESENTATIVE REINBOLD offered the following closing comments: "The highest level of prosperity occurs when there is a free market economy and limited government regulations. A system of checks and balances should be adopted to prevent the abuse of power by the different branches of government. And the beliefs must be understood and perpetuated by every people who desire peace, prosperity, and freedom." HB 140 helps with transparency and accountability of government to the people. CHAIR COGHILL offered supporting comments and solicited a motion. 2:08:35 PM SENATOR MCGUIRE moved to report CS for HB 140, Version L, from committee with individual recommendations and attached fiscal note(s). CHAIR COGHILL announced that without objection, SCS CSHB 140(JUD) moved from the Senate Judiciary Standing Committee.