ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 4, 2005
3:27:45 PM
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Bob Lynn
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 31
"An Act relating to the presumption of coverage for a workers'
compensation claim for disability as a result of certain
diseases for certain occupations."
- MOVED SSHB 31 OUT OF COMMITTEE
HOUSE BILL NO. 33
"An Act relating to the effect of regulations on small
businesses; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 7
"An Act relating to the calculation and payment of unemployment
compensation benefits; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 31
SHORT TITLE: WORKERS' COMP: DISEASE PRESUMPTION
SPONSOR(s): REPRESENTATIVE(s) ANDERSON
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) L&C, HES, FIN
02/09/05 (H) L&C AT 3:15 PM CAPITOL 17
02/09/05 (H) Heard & Held
02/09/05 (H) MINUTE(L&C)
03/04/05 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 33
SHORT TITLE: EFFECT OF REGULATIONS ON SMALL BUSINESSES
SPONSOR(s): REPRESENTATIVE(s) MEYER
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) L&C, JUD
02/16/05 (H) L&C AT 3:15 PM CAPITOL 17
02/16/05 (H) Heard & Held
02/16/05 (H) MINUTE(L&C)
03/04/05 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 7
SHORT TITLE: UNEMPLOYMENT COMPENSATION BENEFITS
SPONSOR(s): REPRESENTATIVE(s) CRAWFORD, GUTTENBERG
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) L&C, FIN
02/18/05 (H) L&C AT 3:15 PM CAPITOL 17
02/18/05 (H) -- Meeting Canceled --
02/23/05 (H) L&C AT 3:15 PM CAPITOL 17
02/23/05 (H) Heard & Held
02/23/05 (H) MINUTE(L&C)
03/04/05 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
JON BITTNER, Staff
to Representative Anderson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 31 as staff to Representative
Anderson, sponsor.
REBECCA BOLLING, R.N., President
Alaska Nurses Association (AaNA)
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 31 and in
opposition to SSHB 31.
DAVID KESTER, Commercial Insurance Broker
Ribelin Lowell Alaska, USA;
Board member
Workers' Compensation Committee of Alaska (WCCA)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 31.
ERIC TUOTT
Alaska Professional Fire Fighters Association (APFFA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 31.
MIKE PAWLOWSKI, Staff
to Representative Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 33 for Representative Meyer,
sponsor.
CHRISTOPHER KENNEDY, Senior Assistant Attorney General
Environmental Section
Civil Division
Alaska Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 33.
CONNIE MARSHALL, Regional Advocate
Region 10
Office of Advocacy
U.S. Small Business Administration
Seattle, Washington
POSITION STATEMENT: Testified in favor of HB 33.
ACTION NARRATIVE
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:27:45 PM. Representatives Kott,
Guttenberg, Crawford, Rokeberg, Lynn, and Anderson were present
at the call to order. Representative LeDoux arrived as the
meeting was in progress.
HB 31-WORKERS' COMP: DISEASE PRESUMPTION
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 31, "An Act relating to the presumption of
coverage for a workers' compensation claim for disability as a
result of certain diseases for certain occupations."
CHAIR ANDERSON pointed out that there was a sponsor substitute
for HB 31.
JON BITTNER, Staff to Representative Anderson, Alaska State
Legislature, noted that two changes had been made to HB 31 [by
the sponsor substitute]. The first change was the addition of
the words "notwithstanding AS 23.30.100(a)" which were added to
page 2, line 13. He explained that this language was included
to address a concern that current statutes might conflict with
the coverage for retired fire fighters. The second change was
on page 2, subsection (c), which was rewritten to narrow the
coverage for presumption regarding blood borne pathogens to
peace officers, emergency medical personnel, and rescue
personnel. He explained, "This change was made to address the
concern that the coverage for blood borne pathogens was too
broad."
REPRESENTATIVE CRAWFORD referred to his testimony on this bill
at the previous committee meeting in which he spoke about his
wife contracting hepatitis while working in an operating room.
He commented to Chair Anderson:
I was very happy to see that [in HB 31], you had the
presumption for nurses because I think that ... the
first responders that you're talking about, they're
going to hand those same people with the same blood-
borne pathogens over to the medical personnel. So I
liked your first bill much better than I like your
substitute.
CHAIR ANDERSON responded that he recognized the need to add
[medical personnel], but the problem was that soon every other
personnel in the hospital would want the same treatment. He
voiced concern that if the bill covered all medical personnel
the bill wouldn't pass.
REPRESENTATIVE CRAWFORD reiterated that he would like all the
emergency room nurses to be covered as well.
3:33:58 PM
REPRESENTATIVE GUTTENBERG asked for clarification of the
difference between a first responder and a nurse.
3:35:08 PM
MR. BITTNER replied that a first responder is defined as a paid
employee of a first responder service, a rescue service, an
ambulance service, or a fire department.
CHAIR ANDERSON explained further that the intent on page 2, line
22-29 is to "encapsulate personnel who are first responders in
an emergency outside of a hospital setting."
3:35:49 PM
REPRESENTATIVE GUTTENBERG wondered whether the bill would
accomplish the intended goals in the "real world."
REPRESENTATIVE LEDOUX asked, regarding page 2, line 23-29, if
volunteer fire fighters are generally included under workers'
compensation.
MR. BITTNER answered that under HB 31, volunteer fire fighters
would be covered in the bill as denoted on page 2, lines 22-23,
"applies to fire fighters covered under AS 23.30.243."
REBECCA BOLLING, R.N., President, Alaska Nurses Association
(AaNA), commented:
The original version of [HB 31] provides an important
protection of health care employees infected with a
blood-borne pathogen during the course of their
employment. What I'm here to talk to you today about
is the sponsor substitute to this bill, which limits
the coverage of workers' [compensation] benefits for
blood-borne pathogens to only fire fighters, peace
officers, and emergency responders. It deletes this
same coverage for all health workers. ... It is as if
the care of the patient stopped at the emergency room
door. I can assure you that the ... care of patients
with blood-borne pathogens continues on through the
emergency room door for many hours, days, and ...
sometimes for many weeks. The reason the presumption
of coverage is needed is that nurses have had the
experience of being stuck with a contaminated needle
for HIV-positive patients, subsequently converting
from being HIV-negative to HIV-positive, and then have
their employers turn around and hire private
investigators to try and prove that it is their
lifestyle that caused the infection, not their work.
And this is not an isolated [incident].
MS. BOLLING continued:
This week, HB 31 was announced at a national nurses
meeting for the American Nurses Association. It drew
the attention of the American Nurses Association
national delegates as well as our president, Barbara
Blakeney, who responded by stating that the sponsor
substitute had the appearance of being discriminatory,
given that health care workers are predominantly
female. If the committee is concerned about potential
impacts to workers' compensation premiums as a result
of this bill, we ask you to research how similar
legislation has impacted other states. For example,
Nevada passed a law in 2001 that provides the
presumption of blood-borne pathogens for all health
care workers. In a preliminary investigation of the
[workers' compensation] rates in Nevada, we found that
the rates had not gone up in the three years since
this law was passed. HB 31, in its original version,
is good legislation and good policy for Alaska. The
... presumptions offered should be afforded to all
health care workers who face accident exposure to
blood-born pathogens and not just those on one side of
the emergency room door or the other.
3:42:32 PM
DAVID KESTER, Commercial Insurance Broker, Ribelin Lowell
Alaska, USA; board member, Workers' Compensation Committee of
Alaska (WCCA) commented:
My opposition to [HB 31] stems around the fact that
there already exists in the Alaska Workers'
Compensation Act adequate presumption of
compensability in workers' compensation once a
preliminary link has been established between work and
the condition. And thus this legislation is redundant
and duplicative. Redundancy only creates confusion
within the [compensation] system, and that confusion
in turn will only increase costs, and therefore this
bill is not needed. In addition, this bill could be
construed to support a claim for compensation for
disability regardless of whether there was a clear
connection based on medical evidence to employment.
With this in mind, this bill has the potential to
place a very heavy financial burden on municipalities,
boroughs, towns, villages, and the citizens of Alaska
who pay property taxes to support the cities,
boroughs, and towns.
REPRESENTATIVE CRAWFORD asked Mr. Kester to explain the phrase,
"once a preliminary link has been established between work and
the condition" and referred to his wife's case of contracting
hepatitis as an example.
MR. KESTER responded that such a case would be presumed
compensable until the employer proved otherwise; the burden of
proof lies on the employer.
REPRESENTATIVE ROKEBERG commented that there was an analysis by
the National Council on Compensation Insurance, Inc (NCCI) in
the committee packet that said, "Due to the retroactive coverage
provided by this proposal, the overall cost could be
significant. Since coverage for such claims may not have been
contemplated in previous loss cost filings, such retroactive
costs would be unfunded." He asked Mr. Kester to comment on the
"issue about the retrospectivity and then the effect on the loss
cost underwriting."
MR. KESTER replied that he was not familiar with the analysis
but said:
If I understand it correctly, the National Council has
determined that because there is going to be an
increase cost which is not currently contemplated in
the workers' compensation rates, that that will in
itself create a burden upon the system ... and that
one be able to get corrected until ... these costs
start entering into the rate-making formula.
3:48:26 PM
REPRESENTATIVE GUTTENBERG asked Mr. Kester, "Is your cost
savings based upon the ability to more easily and more
successfully challenge claims?"
MR. KESTER answered, "I don't believe so."
REPRESENTATIVE GUTTENBERG expressed his concern for "people
whose claims have been denied and they simply don't have the
ability to aggressively pursue them."
MR. KESTER replied that, under the existing act, if a person can
establish a connection between his/her condition and the
workplace, the person has met the presumption.
REPRESENTATIVE ROKEBERG asked Mr. Kester to explain what the
appeal rights are under a workers' compensation claim.
MR. KESTER responded that if a person's claim has been denied,
the person can go before the Alaska Workers' Compensation Board
for a hearing. He explained that the hearing panel would
consist of a hearing officer, a representative from management,
and a representative from labor. The panel would hear the case
and make a decision. If the person is not satisfied with the
panel's decision, the person may appeal to the superior court,
and continue to the supreme court if needed.
3:52:25 PM
ERIC TUOTT, Alaska Professional Fire Fighters Association
(APFFA) stated that APFFA has about 500 members in Anchorage,
Fairbanks, and Juneau, but the bill would represent fire
fighters throughout the state, including volunteer fire
fighters. He said,
On a day-to-day basis we are asked to go into
situations where we do not have any idea what kind of
things we're going into, whether it's toxins in the
air, or if we're going in to help a patient, we have
no idea of their previous medical history.... We
don't have the luxury of knowing what ... we're going
into. ... If we [were] to contract one of these
diseases or one of these heart conditions or cancers
down the road, [the presumptive disability] gives us
an avenue to go back and ask the [Worker's
Compensation Board] to presume that we got it as a
direct result of our occupation. Presently ... you
can still go through the hoops of workers' comp but
the sad fact is, in a lot of our cases, these diseases
are terminal, and we don't have a whole lot of time to
jump through these hoops, asking for workers' comp.
One example we have [at the] Anchorage Fire Department
right now is one of our long time veteran fire
fighters has contracted Hepatitis C. He's not exactly
sure where he got this, but in the course of 30 years
on the line, it's almost certain that he got it as a
result of his occupation. However, his insurance is
asking at which point in [his] career ... did [he] get
this ..., and the sad fact is, we don't know. Because
he's not sure, ... his personal insurance company
refuses to cover him, saying it's a workers' comp
issue; workers' comp on the other hand is saying [that
he needs to prove exactly when he contracted it.] So
we're kind of in a catch-22.
MR. TUOTT commented that there have been cases in the Lower 48
and in Canada in which employees have cancer and the workers'
compensation boards ask the employee at which fire he/she
contracted the disease. He pointed out that after 30 years of
exposure [to toxins], the fire fighters cannot determine the
particular incident that caused their diseases. He continued:
I've heard a lot of commentary on the amount of claims
that we might see [if HB 31 was passed] ... but our
associates in Washington state, the Washington State
Council of Fire Fighters, told us that in the two
years since they enacted this legislation in
Washington, they've had six total claims with about
7,000 fire fighters being covered. I'm assuming that
the number of claims that we will have, because of the
number of fire fighters and the number of personnel
that's covered by this, will be much less than six
claims.
3:57:35 PM
MR. TUOTT explained that the Hepatitis C cases are the ones that
seem to last the longest because most of the cancer,
respiratory, and lung diseases are terminal within months or a
few years. He noted, "We don't have a whole lot of information
about the cost of the cancer because the guys die just as
quickly as they get it. I guess that's why this is so important
to us."
REPRESENTATIVE ROKEBERG stated concern that the basic health
care should be taken care of by a health insurance policy. He
asked Mr. Tuott if the health care costs are the primary concern
of the fire fighters. He mentioned that another benefit of
workers' compensation includes retraining.
MR. TUOTT replied that most of the workers' compensation cases
he was familiar with involved retirees. He noted that he hadn't
seen retraining become an issue.
REPRESENTATIVE GUTTENBERG asked, "When your members are caught
in a turf war between medical carrier and the workers' comp, who
has to pay the bill?"
MR. TUOTT replied that the employee pays the bill. He explained
that the man with Hepatitis C has exhausted his personal
savings, and he can't work every day because he is sick, so the
department might terminate him.
CHAIR ANDERSON closed public testimony.
4:03:07 PM
REPRESENTATIVE CRAWFORD commented that he preferred the original
version of the bill.
REPRESENTATIVE ROKEBERG noted that he had some concerns about
the NCCI analysis regarding the "affectability issue."
4:06:21 PM
REPRESENTATIVE LYNN moved to report SSHB 31, labeled 24-
LS0225\F, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, SSHB
31 was reported from the House Labor and Commerce Standing
Committee.
HB 33-EFFECT OF REGULATIONS ON SMALL BUSINESSES
4:07:34 PM
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 33, "An Act relating to the effect of
regulations on small businesses; and providing for an effective
date."
MIKE PAWLOWSKI, Staff to Representative Kevin Meyer, Alaska
State Legislature, presented HB 33 on behalf of Representative
Meyer, bill sponsor. He noted that [there was a proposed
committee substitute] in response to the committee members'
questions from the previous committee meeting. He said:
The key changes made to HB 33 in CS Version I really
involve the trigger mechanisms and the definition of
small business. Several members of the committee
raised the concern that asking agencies to determine
the adverse effect prior to conducting any economic
effects statement ... really didn't make any sense.
... We've changed the standard in the bill on page 1,
lines 5-12 to the standard of ... govern the conduct.
And while broader, we feel it's a lot clearer standard
for the regulatory agencies to consider. An agency
will only go through the process set in HB 33 for new
regulations or when a person files a petition under
the existing provision in state law that allows a
person to file a provision. This gets to the root of
the question that was asked, "Why would you consider
regulations that no one had a problem with?" We had a
periodic review in the bill that would look at the
regulations every five years. ... It should be a
process that's initiated for new regulations or when
someone raises a concern on a previous regulation.
MR. PAWLOWSKI continued:
Additionally we have changed the definition of small
business. I believe Representative Crawford in the
previous hearing had talked to us a bit about how the
standard of under 100 employees and sales revenues of
$6 million was a bit of an arbitrary definition. We
agreed with that and looked back to state law and went
with the standard of ... less than 50 employees. We
removed any reference to revenue largely because small
business and business in general doesn't report
revenue figures to the state government; there's no
reason that government needs to know about that,
whereas the [Alaska Department of Labor and Workforce
Development] keeps very good statistics on employment.
So the information would be readily available to an
agency conducting the review under this. We have also
included a more extensive group of exemptions on page
3, starting on line 5. And this was really in
response to the concern that Representative Rokeberg
raised, that in increasing costs, businesses are often
the ones the bear the cost of the regulatory process,
and we were creating a loop that really wouldn't have
any added benefit to small businesses, the beginning
of which we've exempted from the process any
regulation adopted by a board or commission whose
members are subject to confirmation of the
legislature.
4:11:12 PM
REPRESENTATIVE KOTT moved to adopt the proposed committee
substitute for HB 33, labeled 24-LS0239\I, Bannister, 3/2/05, as
the working document. There being no objection, Version I was
before the committee.
MR. PAWLOWSKI returned to the issue of changes made for CSHB 33:
Page 3, starting on line 5: removing regulations
adopted by boards or commissions. The idea there was
that there're several boards and commissions in this
state, and they are confirmed by the legislature with
members from industry on the board. So to ask people
who represent the industry to go through this type of
exercise seemed to be redundant, and so we removed
that. And then looking at several different agencies
and departments in the state whose regulations really
didn't need to be subject to the type of review we
were talking about in this bill. Those are the broad
sweeping changes we made in response to the
committee's questions. We really feel that it's made
the bill quite a bit better. Representative Meyer
asked me to express that his main concern is to create
an added benefit for small businesses. ... The bill
has been passed in 37 other states.
4:13:00 PM
REPRESENTATIVE GUTTENBERG asked Mr. Pawlowski to explain what HB
33 does.
MR. PAWLOWSKI replied:
What this bill does is set a process in the regulatory
process where, when looking at a new regulation or
upon petition, a regulatory body asks itself the four
questions on page 2, starting on line 3. They look at
and identify the number of small businesses that would
be subject to the proposed regulation. They look at
the projected record keeping, recording, [and] other
administrative costs that a small business would be
required to incur in order to comply with the
regulation. They do a statement of the probable
effect and they describe any alternative methods of
achieving the same purposes. Then in [subsection (c)
on page 2, lines 15-21] they perform a regulatory
flexibility analysis, and what this is is essentially
the regulatory agency looking at ways they could
achieve the same regulatory goal with less onerous
requirements on small businesses. The cost to small
business often is in complying with regulation, and
this is where an agency can ask itself, "Is reporting
monthly or quarterly appropriate for this type of
regulation and this type of business class." The
staff time that it takes in the business to meet the
requirements of the regulation takes resources and
money away from hiring new employees, spending it all
on growing the business. And now under this process
the agency spends time thinking about better ways to
do business, so perhaps you could report once a year
rather then monthly or quarterly. And it invites that
type of dialogue. That's what this bill does; ... it
puts an emphasis on small businesses who might not
have the time, inclination, and/or ability to be
involved in the regulatory process in the first place.
4:14:41 PM
REPRESENTATIVE GUTTENBERG commented, "When [regulations] are
being written, there's an opportunity for public input. And
business has that opportunity as does the public in general."
He asked how many times regulations have been rewritten or
deleted in regulation review. In addition, he said: "I'm trying
to find out where this works into the process where ... it
really is something that works better for business. Because in
many instances, you'll be pitting business against business."
4:17:21 PM
MR. PAWLOWSKI responded:
We have continually worked with the administration.
The letter in your packet from the state Chamber of
Commerce, I think, is fairly clear in that the concept
... is a broad one that they support. ... We do know
that this started in 1980 when the Regulatory
Flexibility Act was passed at the federal level, and
federal agencies have been following this for ... 24
years now. ... In 2004 reduced compliance costs saved
small businesses in this country over $19 billion.
And so there's a long track record of this being
something that works. ... Every state is different;
that's why we continue to tweak and work with this
piece of legislation.
REPRESENTATIVE ROKEBERG commented that he had concerns regarding
the changed definition of a small business. He stated that he
thought 50 employees was much too small.
MR. PAWLOWSKI responded that in the committee packet there is a
breakdown by business class by the Alaska Department of Labor
and Workforce Development. He noted that 50 was an arbitrary
number.
REPRESENTATIVE ROKEBERG asked how current statutes define small
businesses.
MR. PAWLOWSKI replied that it varies; the federal definition is
500 employees or less, but, he commented, "At that level, I
think you include almost every single employer in the State of
Alaska."
REPRESENTATIVE LEDOUX commented that if the people running the
agencies aren't doing "commonsensible" things right now, there's
almost no regulation or statute that [the legislature] could
pass that would change attitudes. She stated, "I would think
that ... they'd be making sure that ... the regulations are
consistent with health, safety, economic welfare, and so forth."
4:20:46 PM
MR. PAWLOWSKI agreed and said that this is part of the
difficulties: "You can never legislate common sense." He
continued:
You pass a statute that is explicit in what it says,
and the agency does its best to implement regulation
that meets the goals of that statute. The end of that
process and the beginning of that process is always
focused on the statute. What this does is build in an
aside that says, "As you're working through that
process, consider these other things," and adds
another level of dialogue to the process."
CHAIR ANDERSON provided an example to demonstrate what would be
included in an economic effect statement, as defined on page 2,
lines 3-14 of CSHB 33. He also applied the example to the
regulatory flexibility analysis as written on page 2, line 22
through page 3, line 2.
MR. PAWLOWSKI commented that the statute would only identify the
issue while the department would promulgate the specific
regulation to deal with the issue. He stated:
Through these economic effect statements and through
these regulatory flexibility analyses, when these
regulations do come before the regulatory review
committee at the legislative level, there is a thought
process that the legislature can look back to in
considering why the end product and the regulation
came out. And so if anything, it's also a supportive
record for the legislature to use in their oversight
of regulation.
REPRESENTATIVE LEDOUX opined that it might be better to only
require certain "troubled" agencies to follow these guidelines,
but if an agency seemed to be running well it could be left
alone.
MR. PAWLOWSKI noted that he thought this was an appropriate
statement. He explained that this was part of the reason that
the bill would only apply to new regulations or to regulations
that someone has complained about.
4:27:31 PM
REPRESENTATIVE CRAWFORD stated that he had been told that for
insurance purposes in Alaska statutes, a small business has 2-50
employees. He commented that maybe these numbers were solely
for insurance purposes.
REPRESENTATIVE KOTT commented that his impression was that the
bill would establish a small business bureaucracy. He said, "It
suggests what various departments should look at and should
consider, but at the end of the day there's nothing that
mandates or instructs them to do anything. ... I just don't see
any teeth in it."
MR. PAWLOWSKI responded that the first version of the bill
contained judicial review over the economic effects statements
and regulatory flexibility analyses. He said:
When the Regulatory Flexibility Act was passed in
1980, it too had no teeth. It was amended in 1996 to
include the provision of judicial review and I think
part of the logic behind that is [that] judicial
review is something that you bring along after there
has been a chance to implement this. But if you open
the door for lawsuits and challenges at the very
beginning, then you don't give agencies a chance to
get up to speed. And I think that's the primary
concern in adding that level of teeth that was in the
original bill.
4:30:42 PM
CHRISTOPHER KENNEDY, Senior Assistant Attorney General,
Environmental Section, Civil Division, Alaska Department of Law,
stated that the Department of Law had been working with
Representative Meyer to refine HB 33, a process which was not
yet complete because more input was needed from a wide variety
of agencies. He presented the committee with an example of
matters that are under discussion with the sponsor:
First there's the issue of emergency regulations. The
process in this bill could add some time to the steps
that are needed to approve changes in regulations or
to approve new regulations. The extra time could come
in two places: first in waiting for the [Alaska
Department of Commerce, Community, & Economic
Development] to respond with comments that it's
required to provide on regulatory proposals, and the
second increment of extra time could come in preparing
the required analyses ... on page 2 of the CS. We
feel the delay would likely be of limited significance
in a lot of instances with ordinary regulations
projects. But it is ... not likely compatible with
the quick responses that are needed in true
emergencies. And so we are going to be discussing
with Representative Meyer and his staff the
possibility of exempting the emergency regulations
process from this bill.
MR. KENNEDY continued:
Also under discussion is the list of ... categorical
exemptions that you see in its current form on page 3
of the CS. We keep thinking of more and that's just
because state government is large and no one has a
complete grasp on the full range of regulations that
exist. Some of the examples that are on the table ...
for including in this list in the future are, for
example, the regulations directly issued by [the
Alaska Department of Fish & Game], such as the
anadromous stream catalog.... We just don't know what
the role of the small business analysis would be in a
regulation of that type. In a slightly different
vein, there are the regulations that are issued by
[the Alaska Department of Natural Resources] under the
Forest Resources and Practices Act, and there we
foresee some tension if there's some discussion of
discriminating between mill owners based on the number
of employees they happen to have. Another possible
exemption is fire marshal regulations.... Many other
states with acts like this have a very long list of
exceptions. Instead of exceptions we could have a
shorter list of key agencies to which this process
would apply.... And the administration would be
minimal to discussing approaching it from the other
direction, from the direction of either pilot project
or more limited piece of legislation aimed ... only at
agencies who issue regulations that are of particular
concern in their impact on small businesses.
4:35:29 PM
MR. KENNEDY continued:
Another area under discussion with Representative
Meyer's office is the concept of limiting coverage of
this bill to significant regulatory changes. Often
after a large regulations project there's a follow-on
set of amendments to correct errors or to make
technical adjustments. And we see little benefit in
putting that type of amendment through a ... small
business impact review, and we hope to continue
working with Representative Meyer on ways to refine
the bill to exclude technical amendments. ... [But]
it's difficult to define what a technical amendment
is, so it's going to take some work.
CHAIR ANDERSON stated that the idea of the bill is good, and
asked Mr. Kennedy if the committee should hold the bill.
MR. KENNEDY said that he had no objection to the committee
passing the bill on, and he would continue his dialogue with
Representative Meyer through the next committee.
REPRESENTATIVE GUTTENBERG asked Mr. Kennedy how far he thought
the bill was from being finished.
MR. KENNEDY replied that the process of preparing for today's
meeting brought in comments from agencies, and he could see from
the comments that some of the agencies are only now hearing
about the bill. He said that it may be a matter of weeks for
the additional comments to be assembled. He noted, "The time
needed to work on the bill would be shortened if the scope of
the bill was narrowed [such as] if we were to decide on two or
three agencies to which this bill would apply rather than to all
agencies in state government."
REPRESENTATIVE GUTTENBERG asked if Mr. Kennedy had any input
into the fiscal note.
MR. KENNEDY answered that he did not.
REPRESENTATIVE GUTTENBERG pointed out that the fiscal note that
he was looking at for $417,000 didn't describe its purpose.
MR. KENNEDY stated:
I really can't answer any questions about the fiscal
note other than to observe in general that obviously
some staff support in the [Alaska Department of
Commerce, Community, & Economic Development] would be
necessary and then much smaller increments of staff
effort from the participating departments.
REPRESENTATIVE GUTTENBERG pointed out that the fiscal note says,
"See individual department fiscal notes for fund sources and
detailed explanations". He asked if those individual fiscal
notes were available.
MR. PAWLOWSKI responded the fiscal notes were not available. He
commented that the bill had evolved rapidly and therefore
sometimes the agencies were working off of older versions of the
bill.
REPRESENTATIVE ROKEBERG asked Mr. Kennedy if he had ever been
involved in the process of regulation writing, and if so, if he
thought that the enactment of this legislation would have any
impact on that process.
MR. KENNEDY replied that he had been involved in the regulatory
process by assisting both the Alaska Department of Environmental
Conservation (ADEC) with the initial development of regulations
and the Alaska Department of Law with the review of regulations
after they had completed the public comment process. He noted
that he does not foresee the bill making a major change in the
way that ADEC currently approaches regulations. He said that
ADEC has a practice of [giving substantial public notice] of
regulatory proposals, and then preparing a responsiveness
summary to the comments that it receives on the proposals. This
way a detailed document is already being written in response to
all of the suggestions. He said that in the case of ADEC, HB 33
would slightly change the form of the work product that ADEC is
already creating; the department would need to separate out the
comments made regarding small business impact. He continued:
It would not make a major change in the way [ADEC]
approaches its regulations. I really can't speak to
whether that would be true in the case of some other
agencies that do not prepare responsiveness summaries
for their regulations. Those agencies might need to
do quite a bit more work than they currently do and
whether that would change their whole thought process
is something somebody closer to their process would
have to answer.
4:44:12 PM
CONNIE MARSHALL, Regional Advocate, Region 10, Office of
Advocacy, U.S. Small Business Administration (SBA) explained
that her job is to be a direct link between state and local
governments, small business groups, small business owners, and
the SBA office in Washington D.C. She stated:
My chief concern is to help identify regulatory
concerns that small businesses have by monitoring the
impact of federal and state policies at the grassroots
level. It's my goal to see that programs and policies
encourage fair regulatory treatment of small
businesses, that they are the ones developed to ensure
future growth and prosperity.... The Office of
Advocacy enforces the Regulatory Flexibility Act
[RFA], much like what you're talking about, on the
federal level, in order to lessen the regulatory
burden on small businesses. More that 93 percent of
businesses in every state are small businesses. Small
businesses with less than 20 employees ... spend
roughly $7,000 each year per employee to comply with
federal regulations. That is 60 percent more per
employee than large firms spend. And that's just the
cost of federal regulations. ... Small businesses also
have to pay cost of state regulations. Under the RFA,
advocacy has shown time and time again that
regulations can be reduced and the economy improved
without sacrificing important goals such as
environmental quality, travel safety, and workplace
safety. By working with federal agencies to implement
the RFA, in 2004 our office saved small businesses
nationwide over $17 billion in foregone regulatory
costs. Those savings can be used to create new jobs,
buy new equipment, expanse access to health care, or
just simply to maintain their competitiveness in the
marketplace.
MS. MARSHALL continued:
While some states have state regulatory flexibility
legislation that mandates state agencies to perform an
economic impact analysis before they regulate, many do
not. For that reason we helped draft a regulatory
flexibility model legislation and introduced a report
on that to the states two years ago. We found that
there are five critical elements that any successful
state regulatory flexibility law should have:
[First], you decide on what your small business
definition is, we don't tell you. Second, a
requirement that state agencies perform the economic
impact analysis before they regulation.... Third, a
requirement that state agencies consider less
burdensome alternatives that still meet their goals.
Fourth, the judicial review ... so that the law has
teeth. And last, a provision for state government to
periodically review all of its regulations. To be
effective we would hope that there would be few if any
exemptions from the law.... Even the best regulatory
flexibility initiative has little value if everything
is exempted.
4:49:02 PM
MS. MARSHALL continued:
So in order for regulatory flexibility to really work,
you need to have the governor on board and ... to
train and educate your state agencies to understand
this responsibility. It just becomes part of their
workplace. And then just continually involve small
business community, as many of you have already
suggested. During the time of tight state budgets,
you may be wondering how much it costs. ...
Implementing a regulatory flexibility system, we
believe, can be done at little or no additional cost.
MS. MARSHALL gave two examples of states that had recently
implemented [legislation similar to HB 33], and yet had no
additional costs. She explained that last year 17 states
introduced regulatory flexibility and seven states signed the
legislation into law, and in 2003 12 states introduced such
legislation. She pointed out that governors in two states
signed legislation into law, and two other governors signed
executive orders to implement RFAs. So far this year 12 states,
including Alaska, have introduced regulatory flexibility. She
commented:
One of the many reasons this legislation has been so
successful over the last two years ... [is] because
policy makers across the country are realizing that
regulatory flexibility is an economic development
tool. There are over 23.7 million small businesses in
the United States and they are the job creators.
Small firms create between 60 and 80 percent of all of
the new jobs in our economy. ... According to the
federal definition of small business which ... is 500
employees or less, almost 97 percent of Alaska's
employers are considered small, and employ almost 60
percent of all of your non-farm sector employees.
4:52:53 PM
MS. MARSHALL commented:
Sometimes, because of their size, small businesses'
importance to the economy can be overlooked. Because
of this it's also very easy to overlook the negative
impacts of regulatory activities. The intent of your
legislation is to compel regulatory agencies just to
consider small businesses when regulations are
developed, and particularly consider the
disproportionate impact those regulations might have.
I believe this legislation is needed.
REPRESENTATIVE ROKEBERG asked Ms. Marshall what form of the
judicial review other states apply.
MS. MARSHALL stated, though a judicial review is not included in
HB 33, Alaska already has statutes that entitle any interested
person to a judicial review. She said that of the five critical
elements she had recommended earlier, Alaska already has two.
REPRESENTATIVE ROKEBERG commented that he likes redundancy in
statutes.
CHAIR ANDERSON closed public testimony.
REPRESENTATIVE GUTTENBERG stated that he was not going to vote
to move the bill from the committee at this point. He said, "I
think there's considerable amount of work left to do on it
before it leaves here." He voiced concern about the lack of
information on the fiscal notes, and pointed out that the letter
from the Alaska State Chamber of Commerce was "very tepid." He
noted, "I think everybody sees this as a work in progress and I
don't think it's ready to be moved out."
REPRESENTATIVE ROKEBERG commented, "I do take exception to the
50 number in terms of definition. What we've tried to do in
this committee over the years is try to make a consistent ruling
in our state statutes about what is defined as a small business.
I don't think it serves the public interest at all to have
different definitions. ... I believe that our goal should be a
certain consistency, whatever that is."
4:57:24 PM
REPRESENTATIVE CRAWFORD reiterated that the number 50 is
arbitrary.
CHAIR ANDERSON noted that there was an objection by
Representative Guttenberg.
REPRESENTATIVE GUTTENBERG opined that the bill was not complete
and there was a lot of further work to be done on it. He
reiterated that the committee did not know anything about the
fiscal notes.
MR. PAWLOWSKI pointed out that he and Representative Meyer would
both be happy to continue to work on the bill. He said, "The
goal is to produce a good piece of legislation that has real
value for the state."
REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 1
which would change the definition of a small business to "a
current statutory definition that would not be less than 100
people." There being no objection, Conceptual Amendment 1 was
adopted.
CHAIR ANDERSON announced that CSHB 33, Version I, would be held
over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:01:27 PM.