Call to Order and Roll Call
The December meeting of the Administrative Regulation Review Subcommittee was held on Tuesday, December 6, 2011, at 1:00 PM, in Room 149 of the Capitol Annex. Senator Joe Bowen, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Joe Bowen, Co-Chair; Representative Johnny Bell, Co-Chair; Senators David Givens, and Joey Pendleton; Representatives Robert R. Damron, and Jimmie Lee.
Guests: Sue Cain, Travis Powell, Council on Postsecondary Education; Tim Bennett, Rob Carter, DeVon Hankins, Doug Hendrix, Jeff Mosley, Department of Revenue; Mike Burleson, Board of Pharmacy; Harold Brantley, Larry Disney, Jim Grawe, Real Estate Appraisers Board; Margaret Everson, Karen Waldrop, Mark Mangeot, Department of Fish and Wildlife Resources; Michael Mullins, Billy A. Ratliff; Department for Natural Resources; John Cummings, Verman Winburn, Parole Board; Graham Gray, Heather Wagers, Kentucky State Police; Vickie Bourne, Ann D'Angleo, Jeremy Thompson, Alice Wilson, Jeff Wolfe, Transportation Cabinet; Bill Clark, Russell Cory, Blanche Minor, DJ Wasson, Cecilia Webber, Department of Insurance; Virginia Carrington, Elizabeth Caywood, Cabinet for Health and Family Services; Brent King, KYTC Office of Audit; Roy Cornett, Marvin Dever, Ky Association of Real Estate Appraisers; Peter Stephatch, Campbell Transportation Company.
LRC Staff: Dave Nicholas, Emily Caudill, Donna Little, Sarah Amburgey, Emily Harkenrider, Karen Howard, Betsy Cupp, and Laura Napier.
The Administrative Regulation Review Subcommittee met on Tuesday, December 6, 2011, and submits this report:
The Subcommittee determined that the following administrative regulation did not comply with statutory requirements and was deficient:
FINANCE AND ADMINISTRATION CABINET: Department of Revenue: Office of Property Valuation: Ad Valorem Tax; State Assessment
103 KAR 8:010. Watercraft allocation. Doug Hendrix, staff attorney, and Jeff Mosley, general counsel, represented the office. Peter Stephatch, CEO, Campbell Transportation Company, and Mark Summers, counsel, appeared in support of this administrative regulation.
Mr. Stephatch stated the he was the CEO of Campbell Transportation Company, whose home office was in Pittsburg. He was also chair of the American Waterways trade association, whose home office was in Washington, D.C., and he was a member of another national association of barge companies. He stated that he supported this administrative regulation, which would make exports from Kentucky more competitive with exports from other states. He said that Mark Summers, an attorney, was available if needed for legal inquiries from the members.
Mr. Hendrix stated that this administrative regulation was first promulgated in 1975. The authorizing statutes for that 1975 version were repealed, effective 2008, and replaced with new provisions. Some taxpayers claimed that those provisions violated the Commerce Clause of the United States Constitution.
Mr. Mosley stated that potential litigation concerning this administrative regulation was expected; therefore, the office’s testimony may be limited.
In response to a question by Co-Chair Bowen, Mr. Mosley stated that the office respectfully declined to defer consideration of this administrative regulation or to withdraw it from consideration.
In response to questions by Senator Givens, Mr. Hendrix stated that the original authorizing statutes had been repealed and replaced. The current statute established a formula for determining the tax amount based on a route miles calculation. This administrative regulation established an alternative method of determining the tax amount. There was concern that the department did not have constitutional authority to process the apportionment calculations as established by statute. KRS 13A.120 allowed for promulgation of an administrative regulation pursuant to a federal mandate. Mr. Mosley stated that a federal mandate was in place if the administrative regulation was unconstitutional, even if state law provided otherwise. Mr. Mosley stated that the legislative process was also a vehicle to achieve the same end; however, making the amendment to the administrative regulation benefitted the department by avoiding legal challenges and by interpreting the statutes in accordance with the United States Constitution.
In response to questions by Co-Chair Bell, Mr. Stephatch stated that this administrative regulation would make Kentucky more competitive because more barge companies would choose to use Kentucky waterways for transportation; therefore, the overall cost to import and export goods into and out of Kentucky would be lowered. Mr. Hendrix stated that the constitutionality of the underlying statute depended on the type of business using the apportionment formula. Mr. Mosley stated that the department’s legal opinion was that the authorizing statute, as applied, may be unconstitutional. If so, the statute was void.
Co-Chair Bell stated that the question of constitutionality was a matter for the court system, not a subcommittee of the legislature. Amending an administrative regulation to correct a statutory problem bypassed the legislative process and violated the separation of powers, which would also be unconstitutional.
In response to questions by Co-Chair Bowen, Mr. Mosley stated that, although the 2012 legislative process began in less than thirty (30) days and offered another vehicle for making the needed correction, the agency respectfully declined to defer consideration of this administrative regulation or to withdraw the amendment. The agency believed it was on firm legal ground by making the correction via an administrative regulation.
Co-Chair Bowen stated that it was inappropriate to bypass the legislative process by attempting to correct a statutory problem with an amendment to an administrative regulation. He stated that he had a consistent record of being “pro business” and was an advocate for competition; however, it was necessary to make this change through the proper legal process.
A motion was made and seconded to approve the following amendments: (1) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs and Section 2 to make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by the agency; (2) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; and (3) to amend Section 1 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
Co-Chair Bowen made a motion, seconded by Representative Damron, to find 103 KAR 8:010, as amended, deficient. On a roll-call vote, the administrative regulation was found deficient with Co-Chair Bowen, Senator Givens, Senator Pendleton, Co-Chair Bell, Representative Damron, and Representative Lee voting in favor of the finding of deficiency.
Administrative Regulations Reviewed by the Subcommittee:
COUNCIL ON POSTSECONDARY EDUCATION: Public Educational Institutions
13 KAR 2:020. Guidelines for admission to the state-supported postsecondary education institutions in Kentucky. Sue Cain, coordinator, college readiness and developmental education, and Travis Powell, general counsel, represented the council.
A motion was made and seconded to approve the following amendments: to amend Sections 1 through 5 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
FINANCE AND ADMINISTRATION CABINET: Department of Revenue: Office of Sales and Excise Taxes: Forms
103 KAR 3:020. Sales and Telecommunications Forms Manual. Tim Bennett, assistant director, and Robert Carter, revenue tax policy research consultant, represented the office.
In response to questions by Senator Givens, Mr. Bennett stated that this administrative regulation was amended to make administrative and technical changes and to revise definitions. This administrative regulation facilitated efforts to consolidate, minimize, and reduce forms. For example, farmers would only have two (2) forms to complete after this administrative regulation became effective. Mr. Carter stated that many of the forms were exemption requests that went directly to vendors rather than to the department. Mr. Bennett stated that some forms were available on line, but on-line availability was not an option for the forms that went directly to the individual vendors.
In response to a question by Representative Lee, Mr. Bennett stated that Congress held a hearing on the proposed compact to streamline sales taxes nationwide. The idea of the compact seemed well received. The compact standardized definitions, but each state would still have its own sales tax rate.
A motion was made and seconded to approve the following amendment: to amend Section 3 to correct the edition date of one (1) form incorporated by reference. Without objection, and with agreement of the agency, the amendment was approved.
GENERAL GOVERNMENT CABINET: Board of Pharmacy: Board
201 KAR 2:170. Computerized recordkeeping. Mike Burleson, executive director, represented the board.
A motion was made and seconded to approve the following amendments: (1) to amend Sections 1 and 2 to make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by with agency; (2) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs to correct statutory citations; and (3) to amend the NECESSITY, FUNCTION, AND CONFORMITY and Sections 1 and 2 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
Real Estate Appraisers Board: Board
201 KAR 30:310 & E. Fees for registration of appraisal management companies. Harold Brantley, board member; Larry Disney, executive director; and Jim Grawe, assistant attorney general, represented the board. Marvin Dever, past president, Kentucky Association of Real Estate Appraisers, and current appraiser, appeared in support of this administrative regulation.
Co-Chair Bowen and Representative Damron thanked the board for working to amend these administrative regulations.
Mr. Dever stated that he supported these administrative regulations, as amended, and thanked the board and Representative Damron for working on these provisions.
A motion was made and seconded to approve the following amendments: to amend Section 1 to lower the registration fee from $3,500 to $2,000. Without objection, and with agreement of the agency, the amendments were approved.
201 KAR 30:320 & E. Surety bond.
A motion was made and seconded to approve the following amendments: (1) to amend Section 1 and the material incorporated by reference to reduce the amount of the required surety bond from $500,000 to $25,000; and (2) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs, Sections 1 and 2, and the material incorporated by reference to update citations and to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
201 KAR 30:330 & E. Application for registration.
A motion was made and seconded to approve the following amendments: (1) to amend the material incorporated by reference to reduce the amount of the registration fee from $3,500 to $2,000; (2) to amend Section 1 and the material incorporated by reference to clarify application procedures and to comply with the application requirements of KRS 324A.152; and (3) to amend the RELATES TO paragraph and Sections 1 and 2 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
201 KAR 30:360. Operation of an appraisal management company.
A motion was made and seconded to approve the following amendments: (1) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph and Section 1 to update citations; (2) to delete provisions in Section 1 that repeated statutory provisions in violation of KRS 13A.120; and (3) to amend Section 1 to clarify which types of indemnification agreements are prohibited. Without objection, and with agreement of the agency, the amendments were approved.
TOURISM, ARTS AND HERITAGE CABINET: Department of Fish and Wildlife Resources: Game
301 KAR 2:142. Spring wild turkey hunting. Margaret Everson, assistant general counsel; Mark Mangeot, legislative liaison; and Karen Waldrop, director, Wildlife Division, represented the department.
A motion was made and seconded to approve the following amendments: to amend the RELATES TO and NECESSITY, FUNCTION, AND CONFORMITY paragraphs to comply with the drafting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
301 KAR 2:221 & E. Waterfowl seasons and limits.
301 KAR 2:222 & E. Waterfowl hunting requirements on public lands.
ENERGY AND ENVIRONMENT CABINET: Department for Natural Resources: Division of Mine Reclamation and Enforcement: Surface Effects of Noncoal Mining
405 KAR 5:085. Enforcement. Michael Mullins, regulation coordinator, and Billy A. Ratliff, director, Mine Reclamation and Enforcement, represented the division.
A motion was made and seconded to approve the following amendments: (1) to amend Section 3 to add specific language; (2) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs to correct statutory citations; (3) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; and (4) to amend Sections 1 through 6 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
405 KAR 5:095. Administrative hearings, informal settlement conferences, and general practice provisions.
A motion was made and seconded to approve the following amendments: (1) to amend the RELATES TO paragraph to correct statutory citations; (2) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; and (3) to amend Sections 1 through 2 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
General Provisions
405 KAR 7:091. General practice provisions.
A motion was made and seconded to approve the following amendments: (1) to amend Section 2 to add specific language; (2) to amend the RELATES TO paragraph, to correct statutory citations; and (3) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph, and Sections 1 through 7 and 11 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
Inspection and Enforcement
405 KAR 12:020. Enforcement.
A motion was made and seconded to approve the following amendments: (1) to amend Section 2 to add specific language; (2) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; and (3) to amend Sections 1 through 7 and 9 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
JUSTICE AND PUBLIC SAFETY CABINET: Department of Corrections: Parole Board: Board
501 KAR 1:080. Parole Board policies and procedure. John Cummings, staff attorney, and Verman Winburn, chairman, represented the board.
A motion was made and seconded to approve the following amendments: (1) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs and Section 1 to comply with the drafting and formatting requirements of KRS Chapter 13A; (2) to amend Section 1 and the material incorporated by reference to clarify provisions and make technical corrections; and (3) to make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by the agency. Without objection, and with agreement of the agency, the amendments were approved.
Department of State Police: Concealed Deadly Weapons
502 KAR 11:020. Applicant photograph requirements for license to carry concealed deadly weapon. John Cummings, staff attorney, represented the cabinet.
A motion was made and seconded to approve the following amendments: (1) to amend the STATUTORY AUTHORITY paragraph and Section 1 to comply with the drafting and formatting requirements of KRS Chapter 13A; and (2) to make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by the agency. Without objection, and with agreement of the agency, the amendments were approved.
TRANSPORTATION CABINET: Office of the Secretary: Office of Audits: Professional Engineering and Related Services
600 KAR 6:080. Financial records and audit or other engagement of firms. Brent R. King, assistant director, Ann D’Angelo, assistant general counsel; and Alice Wilson, executive director, represented the office.
A motion was made and seconded to approve the following amendments: to amend Sections 1 through 4 and 6 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
Department of Highways: Traffic
603 KAR 5:050. Uniform traffic control devices. Vickie Bourne, executive director; Ann D’Angelo, assistant general counsel; Jeremy Thompson, branch manager; and Jeff Wolfe, director, represented the department.
A motion was made and seconded to approve the following amendments: (1) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs to correct statutory citations; (2) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; (3) to amend Sections 1, 2, and 3 to: (a) comply with the drafting and formatting requirements of KRS Chapter 13A; and (b) make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by the agency. Without objection, and with agreement of the agency, the amendments were approved.
Office of Transportation Delivery: Mass Transportation
603 KAR 7:080. Human service transportation delivery.
Representative Lee thanked the department for working with patient advocates to make changes to nonemergency medical transportation provisions. Vickie Bourne, executive director; Ann D’Angelo, assistant general counsel; Jeremy Thompson, branch manager; and Jeff Wolfe, director, represented the department.
In response to a question by Senator Givens, Subcommittee staff stated that the amendment specified the counties for each region to comply with statutory requirements.
A motion was made and seconded to approve the following amendments: (1) to amend the RELATES TO and STATUTORY AUTHORITY paragraphs to correct statutory citations; (2) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph and Sections 1 through 8, 10 through 19, and 21 through 26 to: (a) comply with the drafting and formatting requirements of KRS Chapter 13A; (b) clarify provisions; and (c) make CONFORMING AMENDMENTS to correct inconsistencies between the currently effective administrative regulation and the proposed administrative regulation filed by the agency; (3) to amend Section 2 to: (a) specify the counties in each of the established regions; and (b) require that if a company is awarded more than one (1) region and those regions geographically touch, the regions shall be administratively combined; and (4) to amend Section 26 to incorporate by reference the required forms. Without objection, and with agreement of the agency, the amendments were approved.
PUBLIC PROTECTION CABINET: Department of Insurance: Financial Standards and Examination Division: Authorization of Insurers and General Requirements
806 KAR 3:190. Risk-based capital for insurers. Russell Coy, attorney, and DJ Wasson, staff assistant, represented the division.
A motion was made and seconded to approve the following amendments: (1) to amend the NECESSITY, FUNCTION, AND CONFORMITY paragraph to clearly state the necessity for and function served by this administrative regulation, as required by KRS 13A.220; and (2) to amend Sections 1 through 7, and 10 through 12 to comply with the drafting and formatting requirements of KRS Chapter 13A. Without objection, and with agreement of the agency, the amendments were approved.
CABINET FOR HEALTH AND FAMILY SERVICES: Department for Community Based Services: Division of Family Support: Food Stamp Program
921 KAR 3:030. Application process. Virginia Carrington, branch manager, and Elizabeth Caywood, internal policy analyst, represented the division.
The following administrative regulations were deferred to the January 9, 2012, meeting of the Subcommittee:
GENERAL GOVERNMENT CABINET: Board of Licensed Professional Counselors: Board
201 KAR 36:060. Qualifying experience under supervision.
201 KAR 36:070. Education and examination requirements.
The Subcommittee adjourned at 2 p.m. until January 9, 2012.