JOINT COMMITTEE ON ADMINISTRATIVE REGULATION REVIEW April 15, 1999 3:05 p.m. MEMBERS PRESENT Representative Jeanette James, Vice-chair Senator Georgianna Lincoln Representative Mary Kapsner Representative John Harris MEMBERS ABSENT Senator Robin Taylor, Chairman COMMITTEE CALENDAR Proposed Airport Regulations WITNESS REGISTER Mr. Kurt Parkan, Deputy Commissioner Department of Transportation and Public Facilities 3132 Channel Dr. Juneau, AK 99801-7898 POSITION STATEMENT: Presented proposed regulations Mr. Steve Pavish, Leasing Officer Department of Transportation and Public Facilities 2525 Aviation Blvd. Anchorage, AK 99519 POSITION STATEMENT: Presented proposed regulations Mr. John Steiner, Assistant Attorney General Department of Law 1031 W. 4th Ave. suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT: Commented on proposed regulations Mr. Eddie Trimmer PO Box 361 Willow, AK 99688 POSITION STATEMENT: Suggested changes to the proposed regulations Ms. Kim Ross, Director Alaska Air Carriers Association 929 E. 81st #108 Anchorage, AK 99518 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Ralph Semuels Pen Air 6100 Boeing Ave. Anchorage, AK 99502 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Grant Thompson Cape Smythe Air PO Box 549 Barrow, AK 99723 POSITION STATEMENT: Offered testimony on proposed regulations Mr. John Eckles, President Alaska Air Carriers Association 5701 Silverado Way #L Anchorage, AK 99518 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Fred Charlo Tanana Air Service PO Box 60713 Fairbanks, AK 99706 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Tim LaPorte Iliamna Air Taxi PO Box 109 Iliamna, AK 99606 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Mike Morgan Warbelows Air Ventures 3758 University Ave. S. Fairbanks, AK 99709 POSITION STATEMENT: Offered testimony on proposed regulations ACTION NARRATIVE TAPE 99-02, SIDE A Number 001 VICE-CHAIRMAN JEANETTE JAMES called the Joint Committee on Administrative Regulation Review meeting to order at 3:05 p.m. and announced the committee would consider new proposed regulations from the Department of Transportation and Public Facilities (DOT/PF). MR. KURT PARKAN, Deputy Commissioner of the Department of Transportation and Public Facilities (DOT/PF), directed the committee's attention to the handout entitled Airport Regulations Update Project: Title 17, Project Objectives. MR. PARKAN explained he would review the handout with the help of MR. STEVE PAVISH, leasing officer for DOT/PF. REPRESENTATIVE JAMES said she feels the most important thing to understand is the process by which these regulations have come about and the process by which the final form will be adopted. She expressed concern with the speed of the process. MR. PARKAN said the handout explains the objectives of the proposed regulations, reviews the history of the project, and points out the ambiguities and obsolescence of the current airport regulations. The handout compares existing and proposed regulations, explains the reasons DOT/PF took a comprehensive approach to new regulations and why negotiated rule-making was not pursued, and gives examples of regulations that have been substantially changed in response to public comment. MR. PARKAN said though the original proposed regulations had a fiscal note attached, the new proposed regulations should generate income. REPRESENTATIVE JAMES asked if program receipts are expected and have been calculated into the budget for Fiscal Year 1999 (FY '99) and FY 2000. Number 140 MR. STEVE PAVISH explained there are four major objectives that DOT/PF sought to accomplish with new regulations: to replace obsolete regulations, to adopt new regulations necessary to comply with Federal Aviation Administration (FAA) requirements, to implement a new statute (HB 543), and to address aircraft parking problems. MR. PAVISH said this project dates back to 1994; five different versions of regulations were modified from the previous in response to public input and advice from the Department of Law. MR. PAVISH noted this section of the packet includes statistics on the number of hearings held and the amount of public comment. Number 177 SENATOR LINCOLN asked where the 30 public hearings were held. MR. PAVISH replied, "Everywhere." He listed Anchorage, Bethel, Dillingham, Fairbanks, Juneau, Kotzebue, Nome and Sitka. SENATOR LINCOLN noted no hearings were held in Aniak or McGrath. MR. PAVISH replied hearings were held in major centers of rural Alaska. SENATOR LINCOLN asked about the notices mailed informing tenants of these hearings. MR. PAVISH replied DOT/PF mailed notices to all tenants and users: tie down renters, commercial carriers, communities and city governments. He said a typical mailing would have gone out to 3,500 people. Number 224 SENATOR LINCOLN said she has read all 113 pages of information provided by the Department and she is concerned that the recent public comment workshops did not begin until after Easter and were not made a part of the record. She asked if all the comments made since the beginning of the process were included in the record or if people had to comment more than once for their ideas to count. MR. PAVISH responded that before the most recent public comment period, all the public comment ran together. Now, the Department of Law has advised that too much time has passed and this new proposal must be considered a new project, not a continuation of the original project. He said this separation was also necessary to ensure public comments addressed the newest proposed regulations rather than older drafts. Number 285 REPRESENTATIVE JAMES asked if DOT/PF would provide the committee with an example of a typical public hearing notice mailing. MR. PAVISH assured the committee he would send one to them. REPRESENTATIVE JAMES asked MR. PAVISH if this packet of information was just put together. He said some of the information dates to April 2, but most of it has been compiled in the past few days. REPRESENTATIVE JAMES remarked, "It's overwhelming." Number 309 REPRESENTATIVE KAPSNER asked how it could be possible for them to tackle this volume of information. She further wondered what it might be like for rural Alaskans and the general public to attempt to interpret this information. She asked if a brief condensation of the information had been made available. MR. PAVISH replied no summary had been done; "The devil is in the details, so, you have to show people everything you are doing." REPRESENTATIVE KAPSNER expressed concern that rural Alaska is very different than any other part of the world. She asked how many people at DOT/PF are sensitive to, and knowledgeable about, the dynamics of rural communities. MR. PAVISH said a team of twenty experienced people worked on this proposal. MR. PARKAN added that all DOT/PF leasing officers have been out to the lease sites in the communities. Number 348 MR. PAVISH continued to explain the handout and reported that there is "very little in the existing regulations that doesn't need clarification, updating, amplification or repeal; most of the regulations are very old." He gave examples of outdated regulations regarding airport fueling regulations that conflict with the state fire code and business activity regulations that are so broad they are nearly impossible to enforce. REPRESENTATIVE JAMES asked MR. PAVISH what DOT/PF has done to fix these problems. MR. PAVISH explained they have been dealt with effectively with the new regulations. He suggested members look at the comparison of old and new regulations in the handout. MR. PAVISH emphasized that no one is sure of the rules under the current regulations. He said the Department of Law made it clear to DOT/PF that rules the public have to follow must be made in regulation, not by ad hoc policy. Number 400 REPRESENTATIVE KAPSNER asked how much discretion the proposed regulations allow as compared to the old regulations. MR. PAVISH replied the amount of discretion has been limited. MR. PARKAN added the regulations clearly allow discretion, but a concern expressed by the public was that current regulations allow too much discretion. He said some situations merit discretion for airport managers and that has been included. REPRESENTATIVE KAPSNER recalled a conversation from the first ARR meeting in which it was said that sometimes discretion is abused harshly and leads to liability for the state. MR. PAVISH said the discretion left in the proposed regulations has been confined and identified, "It's not a whole universe of discretion, it's limited", he said. MR. PAVISH gave another example of existing regulations relating to weapons which conflict with current statute. He said currently DOT/PF is compelled to enforce FAA security requirements with no regulations and it is very confusing. REPRESENTATIVE JAMES said one of the issues with the concealed carry legislation was that bush pilots must carry a gun (which they do), but they do so in violation of state law. She asked how the proposed regulations addressed that situation. MR. PAVISH said they have let the law supersede regulations, except in two specific situations. MR. PARKAN added that the existing regulations are so broad, they sought to narrow them and limit the discretion allowed. REPRESENTATIVE JAMES agreed with REPRESENTATIVE KAPSNER that rural Alaska is totally unique and the restrictions that apply generally to most areas may not be needed in others. She said past regulations have allowed the Commissioner of DOT/PF discretion without any guidelines. REPRESENTATIVE JAMES acknowledged it is a difficult task to write regulations to cover all the varied areas of Alaska. She said regulations like this need "room for movement and room for reasonableness . . . I'm waiting to see if this does that." MR. PARKAN agreed. Number 485 SENATOR LINCOLN stated she believes there should be three types of regulations: urban, rural and bush. She hopes that urban regulations will apply only to urban areas. MR. PARKAN said the Department tried to address both similarities and differences of urban and rural Alaska and tried to avoid "treating people differently just for the sake of being different." MR. PAVISH indicated that some of the proposed regulations will only apply if and when the Commissioner makes a determination they are needed. REPRESENTATIVE KAPSNER stated she does not want disparity in how people are treated. She has heard from some pilots who feel picked on by airport bureaucrats, and she hopes for consistency in regulations. MR. PARKAN said inconsistency is the problem with the current regulations and the Department hopes to improve things with the new system. Number 517 MR. PAVISH moved on to his next point: airport regulations are so interrelated that comprehensive change is the best way to proceed. REPRESENTATIVE JAMES remarked that perhaps changes could be categorized into "smaller bites." MR. PAVISH moved on to describe progress and change made in response to public comment on the proposed regulations since 1994. He showed how an initial proposal has changed several times over the course of several public comment and revision periods. REPRESENTATIVE JAMES asked about the section that reads "except as otherwise provided by this section or as authorized by the Department." She asked if the authorization would be in writing. MR. PAVISH replied it would be. MR. PAVISH concluded his comments by emphasizing the fact that airports are complex facilities used by people with different and often conflicting interests; they need rules. Also, he said these proposed regulations are the most liberal regulations in the U.S. They offer the most detail and less airport operator discretion than is typical of public and community operated airports. MR. PAVISH said, "They are good. They're good because we've had a lot of input from the public. The state airport system and airport users would be much better off with new regulations than living with the existing ones." TAPE 99-02, Side B Number 592 REPRESENTATIVE JAMES said Alaska is different because many parts of the state cannot be reached without airplanes, that is why the State must be more lenient with regulations. REPRESENTATIVE JAMES mentioned Administrative Order 157 (A.O. 157), issued by Governor Knowles June 5, 1995. She said this order implemented some of her ideas about revising the regulation making process. She asked if the Department had considered minimizing the cost of the proposed regulations to the public as is directed in A.O. 157. She remarked she knows this is a revenue generating project. MR. PAVISH replied that the new regulations contain revenue generating provisions that are expected to produce six to seven hundred thousand dollars annually. MR. PAVISH said the issue of cost was raised at each phase of the public comment period. These regulations are not cost-free but they "cover those blank spots in existing regulations." Generally, these regulations do not institute a lot of changes, they merely clear up the existing policy and spell out the rules more clearly. Number 535 REPRESENTATIVE JAMES asked at what point the regulation process is now and what the deadline will be for public comment on the proposed changes. MR. PAVISH replied the deadline is April 23. REPRESENTATIVE JAMES asked if the comments need to be in writing. MR. PARKAN believed the Department could consider comments made at this public hearing. MR. STEINER interjected that if the hearing was recorded and transcribed and the record was submitted, the Department could consider the comments as part of the record. Number 509 REPRESENTATIVE JAMES asked where the Department gets its authority to require testimony be submitted in writing. MR. STEINER responded that the Department is required to keep a record of testimony and though the statute allows both written and oral comments, taking oral comments is not required. REPRESENTATIVE JAMES asked if legislative comments also need to be in writing. MR. STEINER said he is not aware of any distinction between legislative comments and comments from the general public. REPRESENTATIVE JAMES said she would look into the statutory authority of the Administrative Regulation Review Committee(ARRC). She explained the committee generally reviews proposed regulations and regulations that are problematic. She said the committee would like to communicate and work with the agencies, as this may defuse some of the animosity between the Departments and the Legislature. MR. STEINER noted that the Department is at all times free to consider the committee's remarks regarding the regulation process. The limitation he mentioned refers only to specific comments on the proposed regulations. REPRESENTATIVE JAMES noted that timing is critical, as there is such a short period before the deadline, and legislators are in the middle of the budget process. She said this is overwhelming for legislators. Number 461 SENATOR LINCOLN stated her concern with the process is that the public has one month to read volumes of regulations and information contained within this proposal. "I think that's unreasonable . . . the Department sat on it for 8 months . . .that's the problem I've got with the process." MR. EDDIE TRIMMER, testifying from Mat-Su, alleged that even with all the people given notice of the proposed regulations, not all affected parties are informed. MR. TRIMMER said that the use of discretion on the part of airport managers leads to discrimination in the application of that discretion. He said the proposed regulations will affect every person who flies in Alaska and the restrictions contained within them are devastating. MR. TRIMMER claimed inefficiency in the Department caused months of delay in releasing the proposed regulations and now the public has only one month to respond. MR. TRIMMER opposed the proposed regulations, saying the draft is wordy, lengthy, confusing and overly discretionary. It makes too many changes to the current regulations and MR. TRIMMER blamed the failure of the proposal on inefficiency and over staffing within DOT/PF. Number 330 MS. KIM ROSS, Director of the Alaska Air Carriers Association, said she has waged an 11-year battle with DOT/PF over leasing requirements. She expressed frustration with the time period allotted for public comment and said the Department of Law took 8 months to make substantial changes to the earlier draft of the proposed regulations that the air carriers had reviewed. Now, air carriers have less than six weeks to comment on them. MS. ROSS said the Air Carriers Association worked with the Department during their workshop process, but the fact that this was not on the record was considered a "slap in the face" to the industry. She mentioned that, at this point, the ten years of previous public comment had all been thrown out. MS. ROSS reported that she and Mr. Kip Knudsen reviewed the proposed regulations line by line and she feels as if they are some of the few users that actually understand what is contained in that 226 page document. She noted that Administrative Order 157 called for the use of plain language and an attempt to make regulations more accessible to the general public. She alleged this "mind- boggling" document does not comply. MS. ROSS stated air carriers are too busy organizing the summer season to try and respond to this document. Even Alaska Airlines said they need at least an additional 90 day extension to reply to DOT/PF regarding these proposed regulations. Number 250 MS. ROSS gave credit to DOT/PF for the improvements they made, but pointed out there is still an underlying problem with the lack of definition of the phrase "State's best interest." She said the proposed regulations still give too much discretion to airport managers and the Commissioner of DOT/PF. The State still has too much authority to refuse to issue leases, renewals and extensions "at a whim." MS. ROSS said she initially thought these proposed regulations were an improvement, but feels they still do not give enough consideration to the airport tenants. The breadth of discretion allowed does not ensure fair lease terms and fees. She quoted AS 02.15.090(a) in calling for "rates and fees that are reasonable and uniform for the same class of privilege or service." Number 181 MS. ROSS concluded the State of Alaska is unique and should not be compelled to operate airports like in the Lower 48. Since the State owns the airports, air carriers have no other option. Also, due to existing statute, they can't even build their own airports and "have no place else to go." She assured the committees the air carriers want a "partnering" relationship with the State and are willing to work with DOT/PF on this issue. Number 147 MR. SEMUELS, Operations Manager from PenAir, thanked DOT/PF for their work on the proposed regulations and stated he needed an additional 90 days to review them. MR. SEMUELS detailed his specific problems with the proposed regulations. First, allowing discretion to airport managers results in different "operational details." This requires site specific training for every new employee. PenAir wants to train all its employees to do things safely, the same way every time. MR. SEMUELS agreed with Ms. Ross that the definition of the State's best interest is too vague. He gave several conflicting ideas of what might be considered the State's best interest, and said he would like to see more definition added to that phrase. REPRESENTATIVE JAMES agreed this is a difficult area to sort out. SENATOR LINCOLN asked Mr. Semuels if he would find it difficult to live under the current regulations if the comment period on the new proposed regulations was extended. MR. SEMUELS said he would look forward to that. MR. GRANT THOMPSON, representing Cape Smythe Air Service, raised the question of leases. He asked if the new regulations are adopted that would mean all new leases. He also shared the concerns expressed about the definition of the State's best interest. TAPE 99-03, Side A Number 001 MR. PARKAN said an old lease would be honored until a new lease was entered into. MR. JOHN ECKLES, President of the Alaska Air Carriers Association, agreed with the comments made by Ms. Ross and Mr. Semuels. He said the air carriers are the tenants that will be affected by the regulations. He expressed his concern with the speed of the process and the discretion the State has reserved within the regulations. SENATOR LINCOLN asked how much time he would need to adequately review the proposal, and he replied "a minimum of five months." Number 046 MR. FRED CIARLO, representing Tanana Air Service, reiterated that the public comment period is very short and the best interest of the State is vaguely defined. He added that the length of the appeal process is unreasonable and gives him the feeling the Department is saying "take it or leave it"; he thinks DOT/PF needs to work together with business on this. MR. TIM LAPORTE, from Iliamna Air Taxi, wanted to know if they would get the same lease back. He said it is difficult for business owners to invest in property without some certainty of retaining their lease. MR. PARKAN said that is a concern under the old regulations, but DOT/PF would be able to address MR. LAPORTE'S situation under the new regulations. Number 116 MR. MIKE MORGAN, from Warbelow Air Service in Fairbanks, agreed with previous testimony and added that the lack of assurance in the continuity of a lease can cause a businessperson not to invest in new facilities. He also asked why the negotiated rule-making process was not used in this case. He suggested, "Maybe we should go back to the drawing board, start from scratch and do it right." REPRESENTATIVE KAPSNER asked the Department what their time line for making a decision would be after hearing the testimony. MR. PARKAN said as things stand, the deadline for comments will be the 23rd of April. MR. PAVISH said DOT/PF would then consider all the comments, accept or reject individual comments, revise the regulations where applicable, and then turn the results over to the Commissioner for adoption and a review by the Department of Law. Then, if all went as could be expected, the new regulations would be effective around October 1, 1999. Number 165 REPRESENTATIVE JAMES commented that once the deadline has passed, there will be a "blind section" of time, in which there will be no word from the Department about the substance of the regulations and changes that may or may not have been made. REPRESENTATIVE KAPSNER asked if DOT/PF waited five months, it would be a matter of five months delay. MR. PARKAN agreed this is correct. He said, "We're hoping for some finality to these. It has been years . . . this is not new, clearly it is the latest draft, it is substantially similar to what has been worked on before. At some point you have to draw the line. REPRESENTATIVE JAMES said in her opinion, 30 days, at this point in time, is not enough. MR. PARKAN said, "It's been tough any time of the year we've tried to do this. . .." Number 220 SENATOR LINCOLN echoed REPRESENTATIVE JAMES'S statement that time is critical to this issue. She repeated that the Governor's Administrative Order 157 set out a goal of clear language, a better relationship with the public, a more accessible regulations process with minimized costs and public and industry cooperation. She pointed to the letter from Commissioner Perkins, the fact that all the workshops were held in Anchorage, the one day only call in line for oral comments, and the fact that the Department disregarded years of prior comments made on these regulations as they were being developed, and concluded that this process has not been consistent with the directives of Administrative Order 157. SENATOR LINCOLN asked if DOT/PF cannot extend this comment period. Number 308 SENATOR LINCOLN stated her intent to have the committee send a letter strongly urging DOT/PF to extend the comment period. She asked MR. PARKAN what the agency would have to do in order to extend the comment period. MR. PARKAN said they would have to send out a written notice that would cost $5,000. Number 341 REPRESENTATIVE JAMES stated she has not had time to review the proposed regulations. She said the next meeting on this issue is scheduled at 3:00 p.m. on Thursday. MR. STEINER said the Department of Law strongly endorses public comments in the regulations process. The Department of Transportation is now operating with certain statutory changes and no regulations to provide the mechanism for carrying them out. The result has not allowed the Department to process certain applications. They have promulgated interim policies, but the precise legal status is somewhat in limbo were it to ever be challenged in court. Because of those factors, he said consideration should be given to establishing regulations that could be modified later. REPRESENTATIVE JAMES responded that her experience with regulations is that they are designed to be a time consuming exercise and amending them is the same process as writing them. MR. STEINER said there is one slight distinction with existing regulations. Because there are only a few that cover broad areas and more with specific application, it is very difficult to do piece meal changes. Once regulations are adopted, it is much easier to make smaller changes. Number 387 SENATOR LINCOLN moved to extend the public comment period from April 23 to September 23 on the proposed airport regulations, including both the rural airport regulations and the Anchorage and Fairbanks International Airport Regulations. REPRESENTATIVE JAMES noted as an Administrative Review Committee, they couldn't extend the time, but they could request an extended time. There were no objections and the motion was approved. REPRESENTATIVE JAMES said that Mr. LaPorte, Iliamna Air Taxi, wanted to get an extension on his lease and asked if that would have been possible under the old policy. MR. PAVISH said the problem is the imposition of HB 543. Before HB 543, the existing regulations were fine, although narrow. HB 543 passed in 1996 and caused conflicts between statute and existing regulations. There is an interim policy that tries to fix this situation, and Mr. Steiner thought Mr. LaPorte's problem could be resolved if they could talk. REPRESENTATIVE JAMES urged him to do that and added that it seemed like a statute would override regulations. She failed to understand why a statute couldn't be implemented before the regulations were written. MR. PAVISH commented that HB 543 is a very brief statute with very broad application and even the issue of the State's best interest is a much bigger question. REPRESENTATIVE JAMES said she thought the Legislature should use clear language in statutes so that their intent is clear. She then adjourned the meeting at 5:12 p.m.