JOINT ADMINISTRATIVE REGULATION REVIEW COMMITTEE March 23, 1993 1:30 p.m. MEMBERS PRESENT Representative Gary Davis, Chairman Representative Bill Hudson Representative Tom Brice Senator Georgianna Lincoln MEMBERS ABSENT Senator Loren Leman, Vice Chairman Senator Mike Miller COMMITTEE CALENDAR Presentation of findings and recommendations of the Governor's Task Force on Regulatory Review by Bonnie Williams, Chairperson. WITNESS REGISTER BONNIE WILLIAMS, Chairperson Governor's Task Force on Regulatory Review 1335 Sunny Slope Road Fairbanks, AK 99709 Phone: 474-7469 Position Statement: Gave Presentation ACTION NARRATIVE TAPE 93-3, SIDE A Number 000 The meeting of the Joint Administrative Regulation Review Committee was called to order by Chairman Gary Davis at 1:37 p.m. Chairman Davis stated that he was looking forward to receiving some direction for the committee as a result of the findings of the Governor's Task Force on Regulatory Review. He then asked Ms. Williams to make her presentation. BONNIE WILLIAMS, CHAIR, GOVERNOR'S TASK FORCE ON REGULATORY REVIEW, stated that the governor was pleased with the results of the findings, and was going to appoint several people in his office to help follow up on the task force's recommendations. Probably an attorney, a staff member, and possibly the lieutenant governor, she believed. Number 059 MS. WILLIAMS pointed out that the task force was not asked to review all regulations, only those hindering private enterprise. She recommended that the governor appoint more task forces to review regulations under other categories. Number 091 MS. WILLIAMS recommended task forces be created for education and health care. Regulations relating to unemployment and workers compensation were recommended for review. General changes mentioned in the report, were recommended for the Administrative Procedures Act. Ms. Williams also noted another general finding was that often Alaska's regulations exceed those of the federal government. CHAIRMAN DAVIS asked if the task force's recommendations regarding the Administrative Procedures Act were prioritized. MS. WILLIAMS replied in the negative. The first was general ideas and the sixth is a process, she thought should be in code. MS. WILLIAMS stated that studies conducted by a national institute have indicated that every $1.8 million spent on regulations could cost one life. She recommended a cost benefit analysis be required of all regulations. Number 135 CHAIRMAN DAVIS encouraged committee members to ask questions. REPRESENTATIVE BILL HUDSON inquired whether one life meant one job. MS. WILLIAMS replied that one life referred to one death. REPRESENTATIVE HUDSON asked for further explanation. MS. WILLIAMS stated a connection exists between the loss of a job due to overregulation. The resulting unemployment can result in a loss of nutrition and eventually a life. She added that industry should be given the opportunity to provide an alternative regulation that costs less -- that is the one the administration should use. MS. WILLIAMS touched on various general principles mentioned in the task force's report. General Principle No. 9 referred to the fact that people that create regulations, are also the ones to administer and enforce them. Ms. Williams paralleled this to our judicial system where it would be like having the judge, jury, and police all rolled into one. Number 190 MS. WILLIAMS stated that some people who came to testify were reluctant to speak. They feared that the people who write regulations might retaliate. SENATOR GEORGIANNA LINCOLN thought the statement about fear and retaliation about testifying were fair statements. She further inquired into how those particular situations were handled. Number 210 MS. WILLIAMS said people that testified had to identify themselves. Some people mentioned people they knew were afraid to testify. SENATOR LINCOLN asked if the task force received letters and the writers all identified themselves. MS. WILLIAMS responded that they did receive letters and the writers all identified themselves, though they all did not make sense. CHAIRMAN DAVIS said that he had viewed some of the documents and shared them with SENATOR LINCOLN. MS. WILLIAMS said if people wanted their testimony taken seriously they had to give their name and address as it was public record. REPRESENTATIVE HUDSON asked how they advertised in order to get input. MS. WILLIAMS replied they did several things. They advertised in several papers throughout the state. They did a little media work, and spoke to various groups in the state. The governor's office in Fairbanks sent out notices to various business groups telling about the task force, and giving them dates they could testify. REPRESENTATIVE TOM BRICE remembered seeing some of those ads. Number 308 SENATOR LINCOLN asked what kind of testimony they received from the rural and Bush areas, and what kind of advertising there was. She also asked whether any teleconferencing went on. MS. WILLIAMS said that when they teleconferenced from the Legislative Information Office, occasionally they had remote sites on line. She said that not many people participated from smaller areas. She didn't think much notice was given to people in the Bush. Number 320 SENATOR LINCOLN asked if Ms. Williams felt she got a fair representation of testimony from across Alaska. MS. WILLIAMS believed it was incomplete. She felt there was fairly complete testimony from several areas such as agriculture and mining. They did pretty well on underground storage tanks. Other than that she felt it was kind of hit and miss. Public awareness was unsatisfactory, and there was reluctance on the media's part as well. Number 350 MS. WILLIAMS then touched on some of the specific regulations that did not make sense. A person has to pay a $50 fee to put a beehive on state land. That immediately makes it unprofitable. People are going to sneak their beehives onto state land, she alleged. Many things found under mining in the task force's report will be replicated in the Alaska Mineral Commission's report, she believed. Number 360 MS. WILLIAMS pointed out that many of the same conclusions were arrived at independently by the task force. One conclusion is that Alaska shot itself in the foot on water back in 1972, relating to the mining industry. She believed the proposed changes the Department of Environmental Conservation (DEC) has before them will address a lot of the problems. All the streams are currently classified as drinking water. She stated that a mining operation has to clean their water back up to drinking water standards even if they never were in the first place. Number 380 REPRESENTATIVE BRICE asked about specific recommendations. He noted that he introduced HB 132 and co-sponsored HB 213, which dealt with these problems, and asked if the task force would be available to write a letter of recommendation. MS. WILLIAMS stated that Charlie Boddy was the member of the task force that would be most suited to write that letter. CHAIRMAN DAVIS acknowledged the presence of Senator Leman at 2:05 p.m. MS. WILLIAMS said many types of businesses contacted them about underground storage tanks. There is a problem regarding these tanks. The state has a fund through which they collect money for clean up. There does not seem to be an understanding by the tank owners, big and small, why they pay this fee. Another problem involves the procedure for getting final closure on an underground storage tank. Apparently someone will jump through the hoops and go through the process to get their tank closed. However, instead of closing the tank it will be put on inactive status, which results in a cloud on the property's marketability. REPRESENTATIVE HUDSON asked why that was. MS. WILLIAMS did not know why. She said that agency officials did not testify at the hearings. She also said that it did not make any sense to expend the time and money to solve the problem, if it never gets resolved. CHAIRMAN DAVIS commented that the committee would investigate this problem. SENATOR LINCOLN asked if any agencies testified or were invited to testify. She wanted to know if it was the task force's choice not to have agency people at the hearings. MS. WILLIAMS stated that was not the intent. She said that the time restraints and the governor's approach, allowed the task force to go directly to the affected parties and review their testimony and then draft recommendations. She said that the agencies may not have had invitations to the hearings, but they had the opportunity to show up. MS. WILLIAMS mentioned that there were some recommendations that would catch the eye of environmental groups. And that they showed up at some of the hearings with copies of the drafts of regulations. SENATOR LINCOLN asked if the agencies knew they had the opportunity to testify. MS. WILLIAMS said they may or may not have known. SENATOR LOREN LEMAN said they were not invited or excluded. SENATOR LINCOLN asked it the task force considered above ground storage tanks as well as those underground. MS. WILLIAMS was not sure if some of the regulations applied to above and underground storage tanks. REPRESENTATIVE HUDSON commented that the Federal EPA UST (Environmental Protection Agency, Underground Storage Tank) program applies to underground storage tanks, while Alaska's LUST (Leaking Underground Storage Tank) program applies to underground storage tanks. Our LUST program was put into place to comply with federal law so the state would not lose federal money, he said. SENATOR LINCOLN mentioned that since the task force was focusing on economic opportunity, they should consider above ground storage tanks. Approximately 95% of the storage tanks in rural Alaska are above ground. The Coast Guard has threatened to close all the tanks down this year, she noted. MS. WILLIAMS pointed out Specific Industry Recommendation No. 8, which suggests eliminating the DEC's requirement of an annual fee for an underground storage tank. Owners of large numbers of tanks are being charged thousands of dollars a year in annual fees. This has a serious negative impact and is basically a hidden tax, she stated. REPRESENTATIVE BRICE asked where the fee went. MS. WILLIAMS said the fee is supposed to cover registering the tank. There is some rather extensive paperwork involved to register an underground tank. However, she questioned the necessity to re-register next year. There is a process already mentioned for digging up a tank, but if the same tank is still underground in the same place, she wondered why it should be re-registered. "The agency is looking for additional revenue. Call it a tax. It is an unfair and unnecessary tax," she said. She commented that these underground tanks have already closed down many small businesses. SENATOR LEMAN commented that he wasn't trying to justify the program, but rather providing some names of people with whom to follow up. CHAIRMAN DAVIS mentioned that he planned on adjourning the meeting around 2:30 p.m. MS. WILLIAMS referred committee members to page 14, Specific Industry Recommendation No. 9. The man that brought it to the task force's attention is the man who would be able to produce the oil and create the jobs, she said. One of the products out of a refinery is heavy bunker oil. In 1972, a set of taxes was imposed on refinery products. A tax of $2.10 per barrel was imposed on bunker oil. This priced Alaska's heavy bunker oil right out of the market, she alleged. Bunker oil is a low grade oil that doesn't create much of a price, she explained. No heavy bunker oil has been sold in Alaska since, and no tax has been collected. MS. WILLIAMS claimed Princess Tours has considered purchasing heavy bunker oil from the Kenai refinery, but only if the price is lowered by lowering the tax to become competitive with the price of bunker oil from British Columbia. Ms. Williams also mentioned that taxes are rising in British Columbia and that it may not be very difficult to create a simple little industry in Alaska by reducing or deleting the tax. CHAIRMAN DAVIS mentioned that bunker oil is a byproduct of the North Slope oil that Tesoro refines and it is a residual. There is nothing they can do with it. It gets hauled out of the state, he added. MS. WILLIAMS said it is getting sold out of state so Alaska is not collecting any tax on it either. REPRESENTATIVE BRICE commented that many of the regulations were good legislation ideas. He was concerned that there were no recommendations addressing procurement practices. During the campaign he was told by many people about problems with state procurement procedures, which are generally not favorable to small businesses. They can be difficult to compete with and he cited [the Department of] Corrections as an example. MS. WILLIAMS stated that several people testified on procurement, especially relating to the graphic services of the University of Alaska Fairbanks and other general comments about [the Department of] Corrections. She recalled concluding that the University was at fault in its procurement practices, though it was not included in the task force's recommendations. Apparently the problem is not with the regulations, but how they are being carried out, she declared. REPRESENTATIVE BRICE said procurement laws are written so that there is generally a tendency to help bigger and larger out of state businesses. MS. WILLIAMS said she went to a presentation of the Alaska Manufacturers Association, where one of the individuals was complaining about competition under procurement. He claimed that they weren't getting a preference. She said that, in fact, the state is underwriting a lot of Alaska businesses with its bidder preferences. REPRESENTATIVE HUDSON suggested that in many cases a law is enacted that gets passed from the governor to a commissioner, then a director, and so on. Unfortunately, the legislature does not follow up on the laws to see that the intent is being met. He said, "We need to make sure what we are doing is serving the public's interest." The task force has maybe touched the tip of the iceberg in its initial investigations. He was interested in suggestions of how to get the big picture in sifting through these regulations. Governor Lamm of Colorado put out a very good paper that suggested society is constantly confronted with affordable risks, he said. REPRESENTATIVE HUDSON claimed we take a risk walking across the street. If the government is going to implement laws and regulations, they should be because the public can't afford the risk of not doing so. Unfortunately, they keep costing and costing even though the public can afford the risk. Basically there needs to be a much more thorough analysis of the cost benefit ratio, he concluded. MS. WILLIAMS mentioned HJR 11, allowing the legislature to repeal regulations. She mentioned that it was not in the report because the task force would not support it. However, she supported it personally. She commented that it may be difficult to get that past the voters. It may be worth investigating the Administrative Procedures Act, she concluded. CHAIRMAN DAVIS commended the task force on their report. He mentioned that the committee has a budget and would be interested in investigating regulations further. He also mentioned the committee's support of HJR 11. SENATOR LINCOLN wondered if there are or were other task forces created to look into regulations. MS. WILLIAMS stated that Governor Hickel has no other regulatory review task force. Also, to the best of her knowledge there were no others by previous governors. SENATOR LINCOLN commented that their findings are most helpful and interesting and that there should be more task forces to investigate other areas. She commented further that this task force had a narrow focus, and wondered if it would be possible to create another task force that would be able to investigate a broad focus. MS. WILLIAMS said that the task force would need at least a year, as well as more money. SENATOR LINCOLN said she would like the committee to consider recommending to the governor that another task force be created and given a year or so to go much more in depth. CHAIRMAN DAVIS stated that he would like the committee to spell out exactly what it would be looking for. MS. WILLIAMS mentioned that all the articles referenced in the report were attached to the back of report. ADJOURNMENT CHAIRMAN DAVIS adjourned the meeting at 2:35 p.m.