Legislature(2003 - 2004)
05/07/2003 08:03 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 295 - REGULATIONS: NOTICE AND DISTRIBUTION Number 0130 CHAIR WEYHRAUCH announced that the next order of business would be HOUSE BILL NO. 295, "An Act relating to the publishing and furnishing of certain public notices regarding regulations or rules of certain state agencies; relating to distribution of the Alaska Administrative Code, Alaska Administrative Register, and supplements to the code or register; and providing for an effective date." Number 0110 CRAIG TILLERY, Assistant Attorney General, Environmental Section, Civil Division (Anchorage), Department of Law (DOL), presented HB 295 on behalf of the administration. He explained that the purposes of HB 295 are two-fold: to improve public notice for changes made to regulations; and to reduce the costs of public notice through the elimination of unnecessary actions by the state, the use of the Internet where appropriate, and by allowing briefer, more easily understood notices. Because the legislation impacts a broad number of statutes, he mentioned that his presentation might jump around a bit. The primary change, which is extensive and applies to most regulations, is found in Sections 23 and 24. Under this change, newspaper notices would be somewhat altered to include a statement of what is being changed; a briefer general description of the changes in the regulations; information on how to obtain more detailed information; and a statement of when hearings and other processes will take place. TAPE 03-55, SIDE A Number 0001 MR. TILLERY said that the administration anticipates that this change will reduce the size of a newspaper notice by about 75 percent; thus making it more noticeable, more easily understood, and effecting a reduction in cost. Under HB 295, use of broadcasts for public notices would remain optional; the Alaska Online Public Notice System would continue to carry the current longer informative summary; and there would still be other methods of public notice such as mailings - if requested - and so forth. Importantly, HB 295 does not prohibit more notice, or a more detailed notice, if a particular situation calls for it. Finally, historically, the concept embodied in HB 295 is not new; rather, it has been around for a while. For example, six years ago, the Knowles Administration requested the introduction of a bill that sought to make similar changes. During the intervening six years, the availability of the Internet and the public's ability and willingness to use it has increased dramatically, making an even stronger case for reforming the state's methods of public notice by using newspapers where necessary to alert people to proposed changes while providing the details of those changes on the Internet or, if requested, through hard copy. MR. TILLERY noted that the "second ... major area of this bill" reflects changes to the individual agency regulations where specific statutes may govern public notice rather than the more general statutes of the Administrative Procedure Act (APA). He elaborated: Section 1 relates to the trust company Act, and what it does is it basically says that ... these agencies that are subject to the APA are not required to put notice of particular regulations ... [and] changes in the newspapers at all. And what we have done is, we've gone through the statutes ... [and] regulations, and tried to select those particular ones where, really, the user groups of those regulations - those people who are interested, those people who've historically commented or cared about those regulations - are very sophisticated users: typically industries and so forth. The first one is found in Section 1; it is the trust company Act. ... Number 0256 MR. TILLERY continued: Section 2 is electronic signatures, and this one that actually may be replaced by current pending legislation. Section 7 relates to insurance .... Section 10 relates to the Alaska Oil and Gas Conservation Commission [AOGCC] .... Section 11 is for [Department of Natural Resources (DNR)] oil and gas leases. Sections 12 and 13 relate to state personnel rules. Section 16 is the Regulatory Commission of Alaska [RCA] with regard to the pipeline Act. Section 19 is the corporate income tax. Section 20 are our oil and gas taxes. Section 26 is securities .... And Section 27 is Medicaid, although it is ... specifically limited to three particular parts of the Medicaid provisions - none that really affect recipients of Medicaid services, but rather ... things like Medicaid rate determinations; systems for accounting, budgeting and reporting for health facilities; and time limits for rate appeals by health facilities. The third major part of the bill ... is the one that actually deals with ... independent or separate provisions for public notices. Sections 3 and 4 relate to the teachers retirement board, and what this does is to change it from ... a requirement of one public notice in each judicial district, to simply one newspaper of general circulation. This brings this in line with the more general requirements of the [APA]. And I would also note ... [that] this is kind of a clean up [of what] ... we went through in 2000, where we changed a requirement of mailing to furnishing, which allows the state to use electronic mail where people prefer, but it also contains a requirement that if people ask, we will hard copy mail them. Some of the agencies were missed in that clean up, and this does also clean that up for the teacher retirement board. In Section 5, [for] the Alaska Aerospace Development Corporation [AADC], [it] would change [the] requirement from three newspapers to one. In Section 6, [for] the Alaska Housing Finance Corporation [AHFC], [it] would change from three newspapers to one. Sections 8 and 9 relate to the judicial retirement system, and would change [the requirement] from one newspaper [in] each judicial district, to one. Sections 14 and 15 relate to the Public Employees' Retirement System [PERS], and would change [the requirement] from one newspaper in each judicial district, to one. ... Sections 17 and 18 relate to the Alaska Railroad - rules promulgated by the railroad - and would change [the requirement] from three newspapers to one. And Section 25 ... relates to the [Alaska Industrial Development & Export Authority (AIDEA)], and would change [the requirement] from three newspapers to one. Number 0540 MR. TILLERY concluded: There is finally a fourth section of the bill - found in Sections 21 and 22; those sections ... [pertain to] a distribution of the Alaska Administrative Code [ACC] to municipalities. Currently, all municipalities get the [AAC] whether they want it or not, and frequently we are informed that they do not really want them ... [or] know what to do with them. This would allow the state to provide them only upon request and then also upon payment of cost; it would give us the option of ... people receiving them electronically. ... Mr. Chairman, that concludes my testimony. REPRESENTATIVE BERKOWITZ noted that a number of the entities that are the subject of HB 295 are exempted from the abbreviated newspaper-notice requirements. MR. TILLERY concurred, reiterating that a limited number of entities will be exempted because it is believed that the user groups of those entities are so sophisticated that they would not be looking in newspapers; instead, they are on e-mail lists or they use the Internet. REPRESENTATIVE BERKOWITZ asked what evidence there is to show that the aforementioned user groups don't also include members of the general public; for example, on issues of oil and gas leasing, or those pertaining to the AOGCC, to personnel rules, or to the RCA. MR. TILLERY, noting that individuals from some of the aforementioned entities are available to testify, suggested that others might be better able to respond to Representative Berkowitz's concerns. He pointed out that the part of the bill that relates to the RCA is limited to pipeline tariffs. In response to another question, he confirmed that the fiscal note dated 4/23/03 should be disregarded in favor of the one dated 5/6/03. REPRESENTATIVE GRUENBERG asked that a sectional analysis be provided to the committee. MR. TILLERY indicated that one would be provided. CHAIR WEYHRAUCH asked whether there have been any court cases specifically dealing with the issue of notice as proposed by HB 295. Number 0950 MR. TILLERY said no. He added that some federal agencies are moving totally towards a web-based system, which is an emerging area that depends upon a combination of factors such as user groups and the extent to which other means of notification are currently being provided. He opined that the changes proposed by Sections 23 and 24 are not problematic, and mentioned that the provisions which reduce notification from three newspapers to one newspaper are in line with aspects of the APA. The dramatic change, he offered, is that of completely eliminating newspaper notice; but in those situations, he observed, the administration believes that it is constitutional. He again noted that under HB 295, an entity/agency will retain the ability to go beyond the minimum notice requirements being proposed. MR. TILLERY, in response to questions, relayed that current notice requirements for the Alaska Department of Fish and Game's (ADF&G) emergency orders are not affected by HB 295. REPRESENTATIVE BERKOWITZ asked what happened to the bill introduced by the Knowles administration and what the differences are between it and HB 295. MR. TILLERY explained that the previous legislation had a variety of regulatory reforms, one of which was very similar to that being proposed by Sections 23 and 24 of HB 295. He noted that the previous legislation simply did not receive a hearing. REPRESENTATIVE BERKOWITZ opined that the changes proposed in Sections 23 and 24 make sense, but the exemptions granted in other portions of HB 295 seem to evince a pattern of disdain for public participation in the process. He added: I balk, considerably, at the extent that this piece of legislation goes. I'm also concerned that ... requiring municipalities to pick up the tab for the administrative codes [is] another part of pushing the cost of government from the state down to local governments and it's not being done in a systematic format. And I'm very curious, on account of these concerns, ... [to know] who in the administration is taking responsibility for this piece of legislation. MR. TILLERY indicated that that those questions could be better addressed by others from the administration. Number 1315 MARK DAVIS, Director, Division of Banking, Securities & Corporations, Department of Community & Economic Development (DCED), opined that HB 295 is consistent with the administration's attempt to reduce the cost of publication while using effective and efficient notification methods to reach people and entities with an interest in commenting on proposed regulations. He said that his division estimates a savings of approximately $7,800, adding that there have been trends towards electronic notification, both in the federal government and in other states. For example, the U.S. Department of Labor makes its federal register notices available on the Internet, and California has enacted legislation which permits and encourages the use of electronic communication. He opined that electronic communication is at the heart of the bill. MR. DAVIS said that the procedures set out in Sections 23 and 24 would apply to the division in its entirety, including the corporations and banking sections. The exemptions affecting the trust act and the securities Act are contained in Sections 1 and 26. He opined that user groups which routinely use electronic communication should continue to receive notifications via the means with which they are familiar, and used the revised trust Act as an example: We have two trust companies in Alaska; the user list we have for regulation is partially made up of attorneys, and/or those trust companies, and banks. To my knowledge, all of those groups have electronic communication, and we receive electronic communication from them. That doesn't mean we wouldn't continue to use other means of notification such as a mailing list, but it would mean that we would not have to publish a notice in the newspaper. MR. DAVIS said that similar circumstances apply with regard to the revised securities Act, adding that the "whole securities world" is quickly moving toward online notification, particularly with regard to securities registration through a national organization. He suggested that one possible exemption would be with regard to the requirements under AS 45.55.139, but offered that the division would continue to use a variety of publications for that particular statute. REPRESENTATIVE BERKOWITZ asked whether any members of the public ever show up at any of the division's meetings and, if so, how many show up because of "the public notice." MR. DAVIS indicated that according to his experience, members of the public have not shown up even though the meetings have been publicly noticed. In response to further questions, he noted that for the sections of his division that do not completely eliminate newspaper ads, the cost reduction, just under the general newspaper ad size reduction, is anticipated to be 75 percent. He observed that the question then becomes whether even that size ad is actually necessary for certain users such as trust officers and lawyers that do watch the division's web site and who get the division's electronic communications. Number 1675 SARAH PALIN, Commissioner/Chair, Alaska Oil and Gas Conservation Commission [AOGCC], Department of Administration, said that HB 295 would provide a more cost effective notice process for the AOGCC. She elaborated: We notice very specialized industry-interested parties, those who aren't perusing the classified section of a newspaper to read details of our regulations. And remember, our regulations ... pertain to things like well-plugging requirements, ... [the] underground injection process, ... production metering, equipment required for drilling monitoring of reservoir conditions - really specialized [regulations], of course. We give those to our customers, and they include the tech divisions of Oil and Gas companies, DNR, [U.S.] Department of the Interior, [Department of Revenue (DOR)], [Environmental Protection Agency (EPA)] - very, again, industry-interested parties. It is important to remember that the Knowles Administration did take good steps towards becoming more efficient by publishing notices via electronics as sort of a progressive, sound, administrative theme. They, too, recognized the value of the Internet and the good tools we have now to notice the details of [regulation] changes, and our customers are already readily utilizing paperless technology and working with us via our web site and electronics to produce oil and gas for our state. The original practices of notification ... probably did make perfect sense 20, 10, maybe even 5 years ago, but you all know ... that the world has changed. And Alaska can be really proud of our technological progress, and government can do its job better and more efficiently and at a lower cost by utilizing the technology that the private sector relies on and, as was pointed out, many branches of even the federal government are now relying on to publish detailed notices. We can do this via HB 295; it allows flexibility and, thankfully, it doesn't prohibit good judgment in publishing processes. Thank you. Number 1828 REPRESENTATIVE BERKOWITZ asked how much AOGCC currently spends on [notice] publication. MS. PALIN indicated that she did not bring those exact statistics with her, but estimated that they were perhaps similar to what previous speakers have testified to. REPRESENTATIVE BERKOWITZ asked whether members of the public show up at the AOGCC meetings. MS. PALIN noted that Theresa Obermeyer attends the AOGCC's public hearings; that she is the only public member to have done so; and that she does visit the AOGCC's office, which also posts notice of public hearings meetings. Ms. Palin added that Ms. Obermeyer is also on the AOGCC's mailing list. CHAIR McGUIRE announced that the hearing on HB 295 would be recessed in order to take up HB 40. [The hearing on HB 295 was recessed until later in the meeting.] HB 295 - REGULATIONS: NOTICE AND DISTRIBUTION Number 0055 CHAIR WEYHRAUCH announced that the committee would resume the hearing on HOUSE BILL NO. 295, "An Act relating to the publishing and furnishing of certain public notices regarding regulations or rules of certain state agencies; relating to distribution of the Alaska Administrative Code, Alaska Administrative Register, and supplements to the code or register; and providing for an effective date." Number 0131 LINDA HALL, Director, Division of Insurance, Department of Community & Economic Development (DCED), offered the following: Newspaper publications as notices are not particularly effective communication for the Division of Insurance. Most of our regulations are very technical in nature and are directed at those people we regulate. Example: we have 1,200 registered companies; 2,500 registered licensees/agents; and over 12,000 nonresident licensed agents. With this large number of nonresident licensees and "non-domiciled in Alaska" companies, newspaper publications only have the potential to reach 16 percent of ... the people that we actually regulate. I do feel that ... this bill does allow ... - when need arises, when we have an issue that is of public interest, of public concern - ... [us] to do a target- marketing type of newspaper advertisement, where we can make sure the public is aware of when it's in their interest. And I have an example of that. Last fall there were hearings on privacy regulations; those affect consumers as well as the people and companies that we regulate. Those types of public interest hearings, I believe, should have publication. When we talk about the amount of expenditures we have for newspaper advertisements, we can still ... be allowed to do some of that when it is in the public interest. Number 0341 We have a fairly sophisticated group of people that we regulate; they're very technically advanced - they consult our web site on a regular basis. All of our regulations, notices, [and] bulletins are posted on our web site. We have a section that's called "What's New "; it has a calendar of things that are coming in the future, and that would include hearings, so it's very easy to check our web site and get that type of information. Last year, our charges for newspaper advertisements totaled roughly $9,700. If we target 75 percent of that as our best estimate of what we would save under this bill, our division alone would save approximately $7,300. MS. HALL concluded: We also do targeted mailings; when we have regulation changes, we do mailings in addition to the newspaper publications. For example, last year we had some surplus lines; regulatory notices go out to 9,000 of our licensed agents - we do some very large mailings. We had a mailing on the privacy regulations I ... referenced earlier that went to 10,000 people. We have particular members of the public who have asked, over the years, to be included on our mailing list, so those people automatically get notices when we are having regulatory hearings. And with that, I would support these changes and be willing to answer any questions anyone may have. REPRESENTATIVE SEATON asked Ms. Hall whether the Division of Insurance uses the Alaska Online Public Notice System, which is referenced on page 5 of the bill. MS. HALL indicated that the division does use that system in addition to posting notice on its own web site. Number 0603 STAN RIDGEWAY, Deputy Director, Division of Insurance, Department of Community & Economic Development (DCED), in response to a question, indicated that he would find out whether the Alaska Online Public Notice System is listed as a link on the State of Alaska home page. Number 0642 REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 1, to delete Sections 1, 7, 10, 11, 16, 19, 20, 26, and 27. Number 0651 REPRESENTATIVE HOLM objected. REPRESENTATIVE BERKOWITZ pointed out that the sections he is proposing to delete are the sections that are exempted from subsection (a)(7) of Section 23. Subsection (a)(7) of Section 23 requires an abbreviated form of newspaper notice, and this is the provision that the administration is proposing will save 75 percent of advertisement costs. He said that he does not see a need to exempt certain agencies/entities from the requirement laid out in subsection (a)(7). He elaborated: There's problem enough in this state with people not knowing what government's going to do, and I'm increasingly leery ... of an administration that makes it harder and harder for the public to know what's going on and that wrests more and more control away from local government. You see it with coastal management, you see it on HB 69, ... I've seen it time and again, and, frankly, I don't like the direction that we're heading. I understand the need to save money, but we can save money - [a] considerable amount of money - and still retain the notice. MS. HALL, in response to the question regarding the Alaska Online Public Notice System, indicated that the state's home page does have a link to that system. CHAIR WEYHRAUCH, on the issue of Amendment 1, ventured that taking away the requirement to have some kind of notice in the newspaper does appear to somewhat diminish the public's ability to know what government is doing. He asked Representative Berkowitz whether that was his sentiment in offering Amendment 1. REPRESENTATIVE BERKOWITZ said it was. Number 0910 CRAIG TILLERY, Assistant Attorney General, Environmental Section, Civil Division (Anchorage), Department of Law (DOL), said: I would concur that that does happen and, in fact, I think that recognition is implicit in this bill. As I believe Representative Berkowitz mentioned, the real guts of the bill, ... the focus of it, from my perspective, is in Sections 23 and 24. What happens in the sections that this amendment speaks to is, they are sort of the cutting edge of where this country, all states and the federal government, [is] headed, but they're very small steps. These have been areas and regulations that we believe are carefully targeted to not affect those people who are not generally online and who do not look for their notices online. But the fact that we actually have targeted it to these very fairly narrow exceptions I think does recognize that the newspapers continue to play a significant role in alerting the general public. We just believe that in these areas, it's not necessary and therefore they can be eliminated at some savings to the state. CHAIR WEYHRAUCH suggested adding a specific effective date and language mandating that the state provide notice in newspapers explaining that after that effective date, for notice on certain issues, the public will have to start going to the state's web page. He asked Mr. Tillery whether the administration would be amenable to such a change. MR. TILLERY asked whether the Chair's suggestion would be applied to Amendment 1. CHAIR WEYHRAUCH said no, adding that he was just speaking conceptually. MR. TILLERY indicated that he would be willing to "take that back and find out the answer." He added that conceptually, perhaps Sections 2, 12, and 13 ought to be added to Amendment 1. REPRESENTATIVE BERKOWITZ thanked Mr. Tillery for his suggestion. Number 1190 REPRESENTATIVE LYNN, after mentioning that he uses the computer all the time, observed that "Alaska is one of the most wired states in the union - and in the world, perhaps - and I think it's time to get past the horse and buggy and start moving into the modern era." REPRESENTATIVE BERKOWITZ agreed that Alaska is one of the "most wired" states in the country, but pointed out that there are substantial parts of Alaska and substantial portions of Alaska's population that aren't yet "wired." REPRESENTATIVE LYNN asked whether newspaper ads or direct mailings would still be used in areas of the state that don't have access to the Internet. MS. HALL indicated that direct mailings would continue to be sent to those on her division's mailing list regardless of whether "they" have access to the Internet. She surmised that all HB 295 does, with regard to her division, is remove the requirement to do newspaper publications. REPRESENTATIVE LYNN asked whether villages that don't have access to the Internet would still receive notice via newspaper ads. MS. HALL indicated that she didn't have an answer to that question. REPRESENTATIVE SEATON asked whether the division's mailing list includes all cities. MS. HALL indicated that her division's mailing list includes people, companies, and entities that her division regulates, as well as anyone who requests to be on that mailing list, but does not ordinarily include cities. REPRESENTATIVE SEATON noted that the language in the sections themselves doesn't let one know what it applies to. REPRESENTATIVE BERKOWITZ remarked that that information would normally be included in the sectional analysis. MS. HALL remarked that Section 7 refers to Title 21, which applies to the Division of Insurance. MR. TILLERY noted that per Representative Gruenberg's earlier request, the administration is in the process of compiling a sectional analysis. Number 1517 REPRESENTATIVE BERKOWITZ withdrew Amendment 1. REPRESENTATIVE BERKOWITZ said that he intended to offer an Amendment 2, to delete Sections 21 and 22. He noted that these two sections require communities to pay for the Alaska Administrative Code (AAC). In response to a question, he said that he liked the provision that requires local governmental agencies to ask for the AAC, but does not like the provision that requires them to pay for it. Number 1638 ROBERT PEARSON, Regulations/Online Public Notice, Office of the Lieutenant Governor, on the issue of Sections 21 and 22, said that currently, the state is required to provide copies of the AAC and quarterly supplements to every local government unit regardless of whether they want it. The total cost to the state for doing this is approximately $22,000 per year, and the total cost to the state for publishing the AAC is approximately $30,000. He offered that the AAC is available online, and relayed that the Alaska Municipal League (AML) has not yet raised any objection to the concept proposed in Sections 21 and 22. He mentioned that according to information provided by the Department of Community & Economic Development, many of the smaller municipalities do not make use of either the AAC or the supplements during the normal course of business. Because the AAC is available online, he offered, Sections 21 and 22 should not cause any hardship, and will instead provide the state with the flexibility to provide the AAC on compact disc to those government units that wish to receive it in that format. CHAIR WEYHRAUCH announced that HB 295 would be held over.