MINUTES SENATE FINANCE COMMITTEE March 9, 1999 9:02 AM TAPES SFC-99 # 49, Side A & Side B 50, Side A CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:02 AM 902 PRESENT Senator John Torgerson, Senator Sean Parnell, Senator Dave Donley, Senator Loren Leman, Senator Gary Wilken, Senator Al Adams and Senator Pete Kelly. Senator Lyda Green arrived shortly thereafter. Also Attending: JACK KREINHEDER, Senior Policy Analyst, Office of Management and Budget, Office of the Governor; DEIGHT PERKINS, Deputy Commissioner, Department of Labor; AL DWYER, Director, Division of Labor Standards and Safety, Department of Labor; DEBORAH BEHR, Assistant Attorney General, Legislation and Regulation Section, Civil Division, Department of Law; PAM LABOLLE, President, Alaska State Chamber of Commerce; Attending via Teleconference: From Anchorage: MARJORIE VANDOR, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law; TERESA WILLIAMS, Assistant Attorney General, Fair Business Practices Section, Civil Division, Department of Law. SUMMARY INFORMATION SB 33-TASK FORCE ON PRIVATIZATION The committee considered three amendments and adopted one. The bill was held in committee. SB 50-BOILER AND PRESSURE VESSEL INSPECTIONS Representatives of the Department of Labor testified and this bill was reported out of committee. SB 24-REGULATIONS: ADOPTION & JUDICIAL REVIEW Senator Dave Donley detailed the provisions of this bill. The committee adopted a CS and Amendment #1 to that CS. A representative from Department of Law testified. The bill was held in committee. SENATE BILL NO. 33 "An Act relating to the Task Force on Privatization; and providing for an effective date." This bill was heard in committee once before. Senator Al Adams returned to the separation of powers debate from the previous meeting. He thanked the sponsor, Senator Jerry Ward, for sharing the legal opinion written by the Legal Services Division. He said the Legislature's opinion differed from the Department of Law. The two amendments he was offering would address those issues. One amendment addressed the selection of members and would assign selection to the Legislature rather than the Governor as stated in the bill. The second amendment would remove the Governor from the selection process and grant per diem to the public members of the commission. Senator Al Adams moved for adoption of Amendment #1, which would remove members appointed by the Governor and the local boundary commission position. Senator Sean Parnell objected. Senator Gary Wilken requested the question be divided to separate the boundary commission appointment and the appointments by Governor's office. Co-Chair John Torgerson granted the request. Amendment #1A would change page 2 line 16 deleting "11" and inserting "8" and delete lines 17 and 18 delete two members selected by the governor. Amendment position of the local boundary commission member. Amendment public members of the commission. Co-Chair John Torgerson repeated the Department of Law's concerns with the separation of powers issue. The Legislative Legal Services Division gave the opinion that because the commission was advisory it was not subject to separation of powers rules. Co-Chair John Torgerson said he had no opinion on the amendment but had felt it was important that the Administration be involved in the selection of the commission members. Amendment #1A was adopted without objection. Senator Gary Wilken commented on Amendment #1B, saying he felt that representation from the local boundary commission was important. Senator Al Adams pointed out that the Governor would also appoint the local boundary commission position and because the other Governor appointed positions had been removed, this should be removed also. He suggested the local boundary commission could be consulted in an advisory capacity. Amendment #1B failed by a vote of 2-4-3. Senator Loren Leman and Senator Al Adams cast yea votes. Senator Pete Kelly, Senator Lyda Green and Senator Randy Phillips were absent. Co-Chair John Torgerson asked Senator Al Adams if Amendment Senator Al Adams affirmed and suggested technical corrections could be made if necessary. Amendment #1C was adopted without objection. Co-Chair John Torgerson noted the conceptual change to page 2 line 16 reflecting that the commission would consist of nine members. Senator Al Adams spoke to Amendment #2 and moved for adoption. He explained that with the removal of the Governor's appointments to the commission, this amendment would provide for the appointment of two members of the public selected from a list of nominees submitted by labor organizations that represent state employees. Senator Dave Donley objected. Senator Al Adams believed it was important for union members were associated with this effort. The motion failed by a vote of 2-4-3. Senator Gary Wilken and Senator Al Adams cast yea votes. Senator Pete Kelly, Senator Lyda Green and Senator Randy Phillips were absent. Senator Dave Donley moved to rescind action taken on Amendment #1A. Senator Al Adams objected. Senator Dave Donley spoke to motion saying he felt the Governor and subsequently, labor unions, should be involved in this process and were essential for the effort to be successful. He didn't think there was a constitutional problem with separation of powers. Senator Al Adams restated the legal debate regarding separation of powers. He felt this would set bad precedent. Agency personnel would participate in the process and offer their resources, he argued. The motion to rescind action on Amendment #1A passed by a vote of 5-2-2. Senator Al Adams and Senator Gary Wilken cast the nay votes. Senator Pete Kelly and Senator Randy Phillips were absent. Senator Dave Donley commented that this was a good way to get statewide representation of both labor organization and the Governor on the commission. They were necessary for the success of the commission. He noted that because this would be an advisory commission, it was exempt from the separation of powers restrictions. He asked the sponsor if this would be similar to the membership system in the bill from the prior year. Mark Hodgins affirmed. Senator Dave Donley noted that version passed both the Senate and the House of Representatives and was then vetoed. Mark Hodgins made the correction that SB 68 was from several years ago and vetoed by governor. The privatization bill brought forward last year did not pass from the House of Representatives. Senator Dave Donley asked if the prior bills had a similar membership system. Mark Hodgins said they did. One of the three reasons given by the Governor for vetoing SB 68 was the separation of powers issue. Under this context, separation of powers was not a problem according to Legal Services' Tam Cook's legal opinion. Senator Al Adams requested a representative of the Department of Law to speak on the separation of powers matter. MARJORIE VANDOR, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law, said the department had looked at Tam Cook's analysis and didn't debate her method of analyzing the Uniform Rules. However, the different branches of government had different views on the separation of powers when it came to advisory committees. Whether a committee was advisory would not change the underlying analysis according to the Department of Law. The Administration did not oppose this task force or its goals Marjorie Vandor stressed. The problem was that it was a bill and had the force of law and mandated the Governor to appoint, and who to appoint, which raised separation of powers concerns. The Governor might chose to comply and appoint members to the commission, she said. However, historically this would be considered a separation of powers problem and would be an infringement on his normal, and strong, appointment powers. It was important for the historical record for future Governors that it not be consider a waiver of appointment on future task forces, she stated. Senator Sean Parnell wanted to know if, when the bill that established the long range financial planning commission passed, was there a requirement of who the governor would appoint. Marjorie Vandor was not familiar with that bill, but offered to check. Co-Chair John Torgerson clarified that the Department of Law's main difference of opinion with the Legal Services Division was that if the commission was under Uniform Rules there would not be the separation of powers issue. But because it would be in statute the issue was a problem. Marjorie Vandor responded that it was a constitutional issue. She felt that Tam Cook's opinion seemed to be more geared toward the Uniform Rules but did not address the constitutional issue, which the department believed was the major underlying problem. "Any time you mix committees, its going to be raised", she surmised. Co-Chair John Torgerson didn't understand the Administration's objection. Was it because the Legislature would direct the Governor to appoint a union representative or was it because the Legislature was directing him to appoint anybody, he asked. Marjorie Vandor said it was a combination of both. She suggested that the reason the commission was being created in the form of a bill was that the Legislature was afraid the Governor would not appoint a member. "We're not saying that the Governor may not want to do it, that he doesn't believe this committee has a good purpose," she said. She was concerned with the historical precedence. Co-Chair John Torgerson surmised that the Governor would look awful silly vetoing this under those grounds. Senator Gary Wilken said his support of Amendment #1A was more practical than legal. He wanted to see this effort to go through and to have a commission on privatization. Past problems had been with the Governor's Office so it seemed to him that removing the Governor from the equation would remove the roadblock. This was focusing efforts on the wrong thing, he stressed. If the Governor appointments were removed, the Legislature could be relatively sure the bill would become law and the process could begin. Senator Dave Donley commented that one thing he liked about the language was that the Governor, sitting statewide, picked someone from organized labor to sit on the task force. He thought that was an important element in the process. If the Governor was removed, he suggested allowing the labor organization to appoint their own representative the same as with the Alaska State Chamber of Commerce member. That would solve part of his concern. He felt there needed to be some participation from the Executive Branch. Senator Gary Wilken agreed with Senator Dave Donley and thought there should be a representative from organized labor on the task force. However that was a different issue than involvement from the governor's office. Senator Dave Donley said the reason he brought it up was because the amendment would remove the provision to provide for the labor representation. Senator Gary Wilken pointed out another amendment before the committee that would add two members of organized labor and said that could be taken up with the Governor's Office. Co-Chair John Torgerson liked the original language of the bill but agreed with Senator Dave Donley's concerns. His intent was that the Governor be a part of the task force. He didn't think the governor would veto this bill simply on the premise that he was to appoint a labor union representative. Co-Chair John Torgerson noted he just received a copy of the creation long range planning commission in which the Governor did not veto and stipulated "two members of the Executive Branch appointed by the Governor." Co-Chair John Torgerson pointed out the inconsistency. He hoped the Administration would work with the Legislature in forming this task force. Senator Loren Leman believed the long range planning commission was formed under a different Governor and suggested that the committee might not want to rely on that application. Senator Lyda Green asked if the bill passed without Amendment #1A and if the Governor refused to appoint members, if the Legislature could appoint members. Co- Chair John Torgerson answered that failure to appoint wouldn't defunct the committee. Amendment #1A failed by a vote of 3-5-1. Senator Al Adams, Senator Gary Wilken and Senator Loren Leman cast yea votes. Senator Randy Phillips was absent. Senator Loren Leman moved for adoption of Amendment #3. Senator Al Adams objected for question. Senator Loren Leman explained the amendment, which was in two parts. The first change would insert language to empower the commission to make government work smarter. The second change would empower the commission to appoint an advisory council to give a broader base of opinions and information. Senator Loren Leman moved to amend Amendment #3 to delete the language, "composed of representatives from the private sector of the state economy" (page 1 lines 17 and 18 of the amendment.) He fully expected all members of this advisory committee would be representatives of the private sector but didn't want to limit the commission's ability to appoint others. His intention was that members of the advisory council would donate their time and cover expenses incurred in their duties on this council and provide specialized expertise. The motion to amend Amendment #3 passed without objection. Senator Loren Leman explained that this would be an advisory council to the commission and would serve at the commission's request in functions such as subcommittee membership. Senator Gary Wilken asked why the commission itself wouldn't do those things. Senator Loren Leman answered saying nine members would not be enough in his opinion. He wanted the commission to have a broader reach and to hear further from the communities and pull together those with expertise. Those people would not be compensated. Senator Gary Wilken asked if the commission itself, if they saw a need, could form its own council. Senator Loren Leman said that was what this amendment would accomplish. Senator Gary Wilken hated to see the bill fail from its own weight so he would vote against the amendment. Co-Chair John Torgerson asked Senator Gary Wilken if he had a problem with the provisions in the rest of the amendment. Senator Gary Wilken did not. Senator Pete Kelly noted Senator Loren Leman's suggestion that the commission could appoint an advisory council. However, the language stated "shall". Therefore, it would be a necessary part of the commission. Senator Loren Leman responded that was correct, but it did not dictate how the council would operate and left those decisions up to the commission. He fully expected the commission would want to seek others to help with their work. Amendment #3 as amended, failed by a vote of 4-4-1. Senator Dave Donley, Senator Loren Leman, Senator Sean Parnell and Senator John Torgerson cast yea votes. Senator Randy Phillips was absent. Co-Chair John Torgerson said he was having another amendment drafted that would return the word "privatization" at the request of the sponsor. Senator Gary Wilken asked that another amendment be drafted to include the consolidation and efficiency language from Amendment #3. Senator Al Adams requested another day to look at both amendments in writing. Co-Chair John Torgerson ordered the bill held in committee. SENATE BILL NO. 50 "An Act relating to certain boiler and pressure vessel inspections and inspectors; and providing for an effective date." DWIGHT PERKINS, Deputy Commissioner, Department of Labor testified in support of the bill, which the department requested. He told the committee that the department was backlogged in its inspection of boilers and pressure vessels. Of the 6000 vessels that were overdue, over one- half were cast iron boilers and domestic hot water heaters. This legislation would allow the commissioner to identify certain state employees as approved inspectors for the purpose of performing routine annual inspections on this type of vessel. He pointed out that the state plumbing inspectors were journeyman plumbers trained to install and service this type of equipment and could, with minimum amount of training from a board certified boiler inspector, be able to perform annual inspections of this type. It would better help the department utilize existing employees within the department and help bring down the backlog of inspections. He noted a positive fiscal note accompanied the bill. Senator Lyda Green asked what was the current status of the inspectors and if they were on contract or employees of the state. She wanted to know if they were certified inspectors. Dwight Perkins said they currently had certified boiler inspectors that did a wide range of inspections. This bill would allow plumbing inspectors, with minimal amount of training to do the inspections for low-pressure boilers. The department did not plan on hiring additional staff to perform these inspections. Senator Lyda Green asked if there was any reason to go outside of the department to contract others to do the inspections. She referred to rural areas. Dwight Perkins responded that the intent was not to hire new employees but to better use the staff already. Senator Lyda Green asked if there was reason to contract the inspections outside the Department of Labor. She suggested staff from Department of Transportation and Public Utilities or an individual in a remote area that could do the inspections could be hired on a contract basis. Dwight Perkins replied that the intent was not to hire new people. The department had staff available for this. Senator Lyda Green asked what was the examination taken to qualify for certification. Dwight Perkins answered that examination was for the full-fledged boiler inspection certification and was intense and encompassing. Senator Gary Wilken asked if this would expand the duties of the inspectors. He wondered what were the current duties and if they inspected home hot water heaters. Dwight Perkins responded that hot water heaters were inspected. Senator Gary Wilken asked if this legislation would expand the duties the department currently performed. Dwight Perkins said this would help reduce the backlog of existing services provided. Tape: SFC - 99 #49, Side B 9:49 AM AL DWYER, Director, Division of Labor Standards and Safety, Department of Labor, explained that inspections were done for new construction and larger, commercial facilities, such as for an apartment building. This would not expand the duties, but would allow the department to utilize their plumbers for the inspections. Inspections of domestic hot water heaters were currently in the department's code, he stated. Senator Sean Parnell understood Senator Lyda Green's concerns and read language from page one of the bill regarding the special inspector: "The Commissioner of the Department of Labor may appoint an employee of the Department of Labor as an approved inspector." He then referred to language from page two that dictated certification as a special inspector, a person must have passed an examination, or hold a certificate. He wanted to know if the special inspector was different than the approved inspector of the first section. Al Dwyer responded that there was a difference. He explained that half of the boilers and pressure vessels were inspected by insurance company inspectors and were commissioned by the Commissioner. It only used large companies, such as oil companies that had experts who had passed the national board test. To do the remaining half of the inspections, the department had a difficult time retaining qualified boiler inspectors who would go into the private sector positions. The department hoped that by using the plumbing inspectors, the backlog could be reduced. Senator Sean Parnell wanted to know if these inspectors were trained workers that could only be found in the department. Al Dwyer explained the inspectors were highly trained and must work with the commissioner, who was ultimately responsible for the inspections. Conflict of interest concerns were also a consideration with plumbers inspecting the same system they installed. There was discussion on the requirements of inspectors of the smaller cast iron boilers and the training and testing required. Senator Gary Wilken made a motion to move SB 50 from committee with individual recommendations and the negative fiscal note. Without objection, Co-Chair John Torgerson so ordered. CS FOR SENATE BILL NO. 24(JUD) "An Act relating to regulations; relating to administrative adjudications; amending Rule 65, Alaska Rules of Civil Procedure; and providing for an effective date." Senator Dave Donley, sponsor of the bill, testified on its behalf. This was part of a decades long effort that stemmed from the general frustration heard in the Legislature from the public as to how regulations were adopted and what was contained in regulations. Most people didn't understand that the Administration wrote the regulations as delegated by the Legislature, he stated. Once a regulation went through the procedure laid out in the Administrative Procedures Act and was adopted the Legislature could not repeal it but only pass a statute that made the regulation inconsistent. He detailed the regulation process, pointing out the differences with the legislative process. SB 24 would provide that when the Executive Branch proposed a regulation change, they would be required to notify the public of the substance of the change, rather than simply the intent to make a change, and allow for public comment. He noted that this would be a change from the normal operations of the Administration. However, he didn't feel this would cause as large a conflict as feared. He testified that SB 24 was an effort to try to increase public input into the regulatory process. Senator Dave Donley noted the bill had grown as it traveled the legislative process. He spoke to some of the changes. Page 1 dealt with the core of the relationship between the Legislature, the Executive Branch and the regulatory process. Section 2 was the existing law that guided how regulations were adopted in the State Of Alaska. It dictated there was to be a consistency between regulation and statute. However, it was written in an open manner in saying a regulation was not valid if it wasn't reasonably necessary to carry out the purpose of the statute. He felt it gave the Executive Branch very broad ranging powers to adopt regulations. Senator Al Adams asked if the sponsor was reading from the Judiciary version of the bill or the proposed finance committee substitute. Senator Dave Donley clarified Version M, CS SB 24 (JUD) was the version he was speaking to. The proposal from the Senate Judiciary Committee would make a significant change in this area by replacing the word, "reasonably" with "clearly". He anticipated arguments from the Attorney General claiming that the Administration knew what "reasonable" meant and had 20 years of case law to guide them but had no understanding of "clearly". Another argument would be that there would be litigation and regulators would be unable to perform their duties as in the past because of this language. Section 3 set out new, specific language providing that a new regulation should follow the intent of the statute it was implementing. Because of concerns raised by the Attorney General's office regarding litigation, the burden of proof on a regulation challenged under this section, would be on the challenger rather that the state to show that it was the intent. This section was a concession to the Executive Branch to make regulations easier to defend, Senator Dave Donley told the committee. A clause was inserted preventing anyone from obtaining a temporary restraining order, preliminary or permanent injunction on the regulation based on failure to comply with the intent of the Legislature. He said that was because many interest groups had used the regulatory process to block economic development and other aspects of changes to the society that the majority of the people would support. The Senate Judiciary Committee wanted the Executive Branch to follow the intent of the Legislature and the intent of the statute, not provide an inappropriate tool to people who just wanted to be obstructionists toward progress. Therefore, this would place the burden on the challenger if they wanted to contest a regulation. At the same time, it provided additional guidance to the Executive Branch, in his opinion. Section 4 dealt with the idea that the federal government had already incorporated into its regulatory process. That was to have a cost benefit requirement for regulations. Senator Pete Kelly interrupted asking about the cost benefits section, which he said he liked. He spoke to a bill last year that allowed adoption of "regulations by reference" for non-substance changes. He gave an example of Department of Health and Social Services and their dealings with pages of Medicaid code changes. Before the passage of the law, those changes had to go through the entire regulatory process for adoption. He wanted to know if this bill made allowances for those kinds of regulation changes. Senator Dave Donley responded that this legislation had specific exceptions for regulations that were necessary to meet federal requirements. He suggested it might be appropriate to add this situation to the section. Because of concerns raised by the Executive Branch on the cost benefits requirements, a provision was added that would allow department heads to make a finding that a particular item was not appropriate for a cost benefit analysis. A cost benefit requirement was currently in Policy, but the Administration was concerned that by having a cost benefit requirement in statute, it would be an item that could be litigated. Therefore, this legislation allowed for flexibility to give exceptions. Specific exemptions listed were the Board of Fisheries, the Board of Game and the Commercial Fisheries Entry Commission, since it would be particularly difficult to do cost benefit analysis for their functions. He suggested other departments could be added as exemptions to avoid challenges. Senator Al Adams referred to page 2 lines 17-20 in Section 4 regarding the cost benefit analysis. He read, ".most state agencies may not adopt a regulation covered by this section unless the benefit to the public outweighed the cost to the public." His concern was what would happen to public safety or the health of the constituents if the cost outweighed that in regulations. Senator Dave Donley responded that specific provisions were made to allow cost benefit analysis to consider non-tangible elements as well as specific tangible elements. In the public safety area, the purpose of public safety was to protect the public safety of the communities across the state and if a cost benefit analysis determined there was a more efficient way to deliver a service, that system of delivery should be considered. A more non-specific method of measurement could be used in public safety areas, he suggested. Line 15 allowed for that in stating that issues were non- quantifiable. Senator Dave Donley continued with Section 5 saying it continued with the changes from Section 4 requiring the notices posted on the Internet if the department had the technology. Section 6 would add to the proposed public notices regarding regulation changes, a statement saying that a cost-benefit analysis was available if one were prepared. Section 7 was a technical provision necessary to implement Section 8. Section 8 addressed the supplemental public notices when substantial changes were made to the content of a proposed regulation. It would set out a system by which, if an agency provided the initial notice and after public comment, decided to significantly change the proposed regulation, the agency would issue another public notice detailing the changes. This was with the exception of federal requirements, emergency regulations and the Board of Game, Board of Fisheries and the Commercial Fisheries Entry Commission. Section 9 was another technical provision to implement some of the other sections. Section 10 expanded on the emergency regulations making exceptions for them. Section 11 was not mentioned. Section 12 was added because of public testimony heard in the Senate Judiciary Committee complaining about delays in the time it took to adopt some regulations to carry out new statutes. He gave an example of the ignition interlock legislation that took a lawsuit to compel the state to finally adopt regulations. He surmised that this method was a way for the Executive Branch to essentially veto statutory provisions by simply not adopting necessary regulations. Therefore, the Senate Judiciary committee inserted a two-year maximum deadline for a department to adopt regulations pertaining to a particular statute. Senator Dave Donley said agencies voiced concerns about what would happen if after the two-year time period, no regulations were adopted. Would that then prevent them from ever writing regulations? Senator Dave Donley said that was not the intent. The intent was to encourage agencies to get them done. To do so without stopping the regulatory process, the provision stipulated that if an agency failed to adopt regulations within two years, they would need to file a written report containing the reasons for the failure and submit it to the Legislature. Senator Al Adams asked if there was a provision to allow for the public and their initiatives. Was there a time period for them to challenge a statute? He suggested that the deadline should allow an agency to delay implementing regulations until the initiative process was completed. Senator Dave Donley felt the best place for that would be with the court. He repeated the option agencies would have in filing a report listing the legitimate reasons for delays. Section 13 dealt with the issues involving what grounds of invalidity could be used for overturning a regulation. He wanted to adopt the concept that regulations accomplish their goals in the least intrusive way to individual and property rights. He noted that this was part of the Governor's regulation policy. Although sometimes the common good had to override the individual rights and property rights, but they should be considered wherever feasible, Senator Dave Donley stressed. Another intent of this section was to prevent people from taking advantage of the situation and cause unnecessary delay of regulation implementation. Under the provision, if a court reviewed the validity of a regulation it must consider the least intrusive method for people affected by the regulation. If another method other than the least obtrusive was chosen, it could be shown that a substantial state interest was required. This would serve as a safety valve. There were also special provisions that placed prohibitions on the court from stopping necessary regulations based on lawsuits on this issue of least intrusive method. The intent was that the regulations would proceed and this argument could not be used as a tool to stop regulations. He suggested this would be important for natural resource development projects. Senator Al Adams pointed out certain exemptions listed in the bill. Senator Dave Donley said they were put in specifically to avoid the holdup with court proceedings. The new language could otherwise be used as a tool to block necessary regulations for the Department of Corrections and Department of Natural Resources. Therefore, they were specifically excluded. Another exception was added base on comments received from the Attorney General's Office. Because the board or commission regulation process involved greater public participation, they were also exempted. Senator Dave Donley wanted to note a reoccurring theme, if members felt there was a particular area that this would cause a problem, that area could be exempted. He said this process was a tremendous and complicated step and if there were areas of concern, they could be exempted. He felt it might be appropriate to exempt the Department of Natural Resources. He also suggested this could be turned into an experimental bill and only target some problematic departments. Section 14 imposed time limits on departments to handle the challenge to regulations. Part of the regulatory process was not just producing new regulations, but to make decisions based on those regulations, he argued. Before going to court, a challenger to a regulation had to get a final administrative adjudication. If that was delayed, justice was delayed. In response to public testimony, the Senate Judiciary Committee added a method to ensure that the departments made the decisions in a reasonable and timely manner. A deadline required hearing officers to close the record with a final administrative order within a timely manner or two years after the statement of issue. Other complaints were with once a hearing officer issued a final order, there was no standard for the exception to allow the Commissioners to overrule the decision and request additional facts on the issue, which put the process back at the beginning. Therefore standards were added to provide when an agency could order a record reopened for additional factual findings. The Commissioner would have to get permission from the Lieutenant Governor as an outside party. The intent was to give some avenue for finality if the department was unresponsive. Section 15 addressed applicability issues and gave an effective date of July 30, 2000. Senator Dave Donley suggested that the different sections of the bill were each strong enough to stand as a separate bill. The bill had grown much larger than he anticipated and he offered to break it down into areas the committee wished to address. He supported a flexible approach. Senator Al Adams suggested looking at the functions of the Regulation Review Committee and their workload. He pointed out the high cost of implementing this statute. He also suggested a pilot program for some agencies that could be worked within their budgets. He offered working on a subcommittee. TERESA WILLIAMS, Assistant Attorney General, Fair Business Practices Section, Civil Division, Department of Law, testified via teleconference from Anchorage. She addressed Section 14, the time limits provision on Version M of the bill. It provided for a final decision within 60 days of the closing of the hearing record. Tape: SFC - 99 #50, Side A During that timeframe, if parties wished to submit briefs, that would come out of the time frame. The hearing officer would have to prepare a proposed decision. The final decision maker must review the decision and if there were a determination to review the record, the record would need to be prepared and reviewed within that time period. There were complex and controversial cases that came before hearing officers and agencies for determination and this deadline could not be met in those kinds of cases, she stressed. She gave an example of a recent Medicaid rape case where an attorney for the private party indicated that the transcript was 1500 pages long and had taken about four and a half weeks to prepare. That person wanted to have more than a month to prepare the brief that would be filed after the record had been closed so the hearing officer would be able to benefit from the analysis by the party. Clearly, that process could not be allowed within a sixty- day window between the close of the record and a proposed decision. That was a concern for the interest of the parties as well as whether the administrative hearing process could even work. Teresa Williams continued with the other deadline requiring the hearing to be concluded within two years. Again, there were complex proceedings in which both parties agreed that there was a need to develop testimony, talk to experts, find out what the facts were before the actual hearing, and do briefing. Sometimes there was a parallel criminal proceeding, which much conclude before the administrative proceeding could start. Other times there was a parallel civil proceeding that also must conclude first. To require both proceedings to go on simultaneously would double the cost for the party, she advised. If a stay were requested there was no provision under the bill to provide that any request for an extension would stop the clock. The administrative hearing would be cancelled. Another concern was that the preparation of the transcript took time. The final decision-maker could not change the proposed decision made by the attorney how acted as the hearing officer without reviewing the record. Some agencies did that by listening to the tape. For instance the Human Rights Commission listened to the tapes and it sometimes took weeks. In Teresa William's opinion, the bill needed to be drafted I such a way to recognize that respondents sometimes legitimately request delays and other times cause the delay by not being cooperative, not meeting deadlines, etc. They could manipulate the process and move it to the Superior Court. Any of that time should be excluded from the clock. The remedy provided in the bill was extreme. Currently, parties had the power to petition the Superior Court to request the agency to act if it was felt the agency was acting unreasonably. Under the provision in the bill, the process would have to start over in the Superior Court. As a result, the agency's cost and the respondent's costs incurred in the proceedings would be lost when the process started over in state court, which was more expensive. Another concern Teresa Williams voiced was with the role of the Lieutenant Governor that had been injected in a couple stages in the proceedings. That would open administrative adjudication to the political process with political pressure. That may not be the public interest and would be an unknown quantity since there was no provision stating the standards the elected official must exercise. There also was no preclusion of ex partay contact. Co-Chair John Torgerson requested her comments in writing. Senator Dave Donley said his proposed committee substitute addressed some of the testifier's concerns. He asked that the committee adopt the CS so future public comments could be addressed to that version. Senator Al Adams said he had no objection and asked about the sectional analysis between the two versions. Senator Dave Donley spoke to the changes made in the CS. Section 2 tried to reach a middle ground by replacing the word "clearly" with "reasonable". The new language would say that the reasonable approach was clearly within the intent of the statute. The bill drafters suggested the new language. Section 12 was the adoption time limit section. The CS made a specific exception indicating that when a regulation did not get adopted within the two-year deadline, the court would not hold the regulation invalid. This was to encourage agencies to adopt regulation, not to give a reason to hold a regulation invalid. Section 13 was rewritten to reverse the presumption from the Judiciary CS that the regulation was automatically invalid if it did not meet the specified criteria. The new language stated that the regulation was valid and the challenger had the burden of proof to show the specific criteria were not met. Section 14 replaced the term "final administrative order" with the term "proposed administrative order". It also added an additional 30 days to the 60-day period by which time a final administrative order would be provided. He felt this should alleviate some of the witness's concerns. He referred to a proposed Amendment #1 and said his motion to adopt the CS would include the changes listed in Amendment #1. The amendment added a specific exemption for situations with a simultaneous criminal case to wait until the criminal case was resolved. The amendment also added a provision to allow a period of time until the next regularly scheduled board meeting, plus an additional 30 days after the board meeting, for regulations written by a board or commission. He felt these changes tried to address specific issues worked on since the adoption of the Judiciary CS. There was nothing radical, but changes that tempered the effect of the legislation. Senator Dave Donley moved to adopt the Version "N" committee substitute incorporating Amendment #1. Senator Al Adams objected for question. He wanted to know if, with the two differences to Sections 12,13 and 14, did any of those changes alter the numerous fiscal notes accompanying the bill. Senator Dave Donley said all the departments had their own positions on the fiscal notes and he couldn't speak for the departments. He noted that the changes would give them more time and mitigate the impacts of the bill, so they would not increase the fiscal notes. Senator Al Adams removed his objection. The committee adopted CS SB 24 Version "N" incorporating Amendment #1, without objection. Co-Chair John Torgerson ordered the bill held in committee. He reminded the committee that amendments to the FY99 Supplemental Budget bills were due by 11:00 AM. ADJOURNED Senator Torgerson adjourned the meeting at 10:52 AM SFC-99 (20) 3/9/99