Legislature(2017 - 2018)ADAMS ROOM 519

04/07/2018 01:00 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Continued from 4/6/18
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 299(FIN) Out of Committee
Moved CSHB 322(FIN) Out of Committee
<Bill Hearing Canceled>
Scheduled but Not Heard
Moved CSSSHB 268(FIN) Out of Committee
HOUSE BILL NO. 299                                                                                                            
     "An Act extending the termination date of the                                                                              
     Alcoholic Beverage Control Board; and providing for an                                                                     
     effective date."                                                                                                           
1:10:46 PM                                                                                                                    
Co-Chair Foster noted  the bill had been  heard the previous                                                                    
day  and  three amendments  had  been  passed. A  letter  of                                                                    
intent had been drafted, which  may not be needed because he                                                                    
anticipated an amendment may be rescinded.                                                                                      
REPRESENTATIVE  ADAM WOOL,  SPONSOR, reviewed  the committee                                                                    
action  from the  previous day.  Three  amendments had  been                                                                    
adopted,  after  which the  committee  was  interested in  a                                                                    
letter  of  intent.  After more  consideration  he  believed                                                                    
Amendment 2,  which gave the  commissioner power  to reverse                                                                    
board  decisions, may  not be  the best  way to  achieve his                                                                    
intended  goal.  He provided  a  scenario  where a  licensee                                                                    
objected  to  a  ruling  made  by the  board.  He  had  been                                                                    
searching for  an expedited way  for another set of  eyes to                                                                    
look  at  the  issue   through  a  Department  of  Commerce,                                                                    
Community and Economic Development  (DCCED) lens rather than                                                                    
a Department of  Public Safety or law  enforcement lens. The                                                                    
division had  been moved to  DCCED in  the past, but  he was                                                                    
uncertain there had been a  transformation in the way things                                                                    
were viewed.                                                                                                                    
Representative Wool believed the  attachment to DCCED should                                                                    
have been more significant, which  was one of the reasons he                                                                    
had included the appeal process  that could happen within 30                                                                    
days.   Additionally,  if   someone  had   a  grievance   or                                                                    
disagreement with  the board they  could appeal -  the board                                                                    
met  every  three months  and  an  administrative law  judge                                                                    
could  get involved.  He explained  the  process could  take                                                                    
many  months and  two  or three  board  meeting cycles.  The                                                                    
timeframe  could  close a  business  down,  especially if  a                                                                    
business  was forced  to close  during the  period due  to a                                                                    
board  decision. When  a small  business operating  on tight                                                                    
margins closes for a few months,  it could mean going out of                                                                    
business.  He  hoped DCCED  staff  understood  the issue  as                                                                    
well. He surmised  it may not be the best  process where the                                                                    
commissioner was only able to  see the records the board was                                                                    
able to see and was not  able to discuss the issues with the                                                                    
director because they may be adjudicating the case.                                                                             
1:14:22 PM                                                                                                                    
Co-Chair Foster  MOVED to RESCIND the  adoption of Amendment                                                                    
2 [adopted on 4/6/18].                                                                                                          
Representative Wilson OBJECTED for discussion.                                                                                  
MIKE   NAVARRE,   COMMISSIONER,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY,  AND ECONOMIC  DEVELOPMENT, relayed  that he  had                                                                    
not  spoken with  the Department  of Law  (DOL), but  he had                                                                    
spoken with  Representative Wool  and Alcohol  and Marijuana                                                                    
Control Office  Director Erika McConnell since  the previous                                                                    
meeting  to  gain  a better  understanding  of  the  current                                                                    
process.  He had  also reviewed  whether  Amendment 2  would                                                                    
help  accommodate Representative  Wool's  goal of  achieving                                                                    
quicker decisions  in the appeal process.  Ms. McConnell had                                                                    
communicated  there  was  an  informal  appeal  process  (in                                                                    
addition to  the formal process)  that could be  made within                                                                    
the  division or  by  the board.  He believed  it  may be  a                                                                    
better  opportunity  to  truncate  the  conflict  resolution                                                                    
issues  Representative  Wool  was   trying  to  get  to.  He                                                                    
believed  the   ability  for   an  appeal   to  go   to  the                                                                    
commissioner  would  compromise  commissioner's  ability  to                                                                    
participate in the  process because he would not  be able to                                                                    
gather  information  in  an  informal   process  if  he  was                                                                    
adjudicating an appeal.                                                                                                         
Mr. Navarre  had also spoken with  Representative Wool about                                                                    
the fact  that it  was an administrative  issue; it  had not                                                                    
been something identified  in the audit with  respect to the                                                                    
board  and "this  is  an  extension of  the  board." He  was                                                                    
disinclined to  deal in  a rushed manner  in a  process that                                                                    
should  be  deliberative  in terms  of  changes  that  could                                                                    
manifest as  unforeseen impacts within the  division and for                                                                    
individuals regulated  by the division.  He would  work with                                                                    
Ms. McConnell  and the  board to  develop a  better conflict                                                                    
resolution process  that would  hopefully meet the  needs of                                                                    
individuals being regulated  and the unique responsibilities                                                                    
the division had for the protection of public safety.                                                                           
1:17:14 PM                                                                                                                    
ERIKA  MCCONNELL, DIRECTOR,  ALCOHOL  and MARIJUANA  CONTROL                                                                    
OFFICE,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT  (via  teleconference),  relayed  that  she  had                                                                    
spoken with the  ABC Board chair and he did  not support the                                                                    
amendment.  She   shared  that  the  chair   had  called  an                                                                    
emergency meeting  for the following Tuesday  with the board                                                                    
to discuss  the amendments. She  also had concerns  with the                                                                    
amendments. She spoke to her  concern about Amendment 2 with                                                                    
prepared remarks:                                                                                                               
     Regarding  Amendment 2,  the five  member ABC  Board is                                                                    
     comprised  of  2  industry  members,  a  public  safety                                                                    
     member, a  rural member, and  a general  public member.                                                                    
     The  members are  vetted by  the governor's  Boards and                                                                    
     Commissions  Office,  appointed  by the  governor,  and                                                                    
     confirmed  by the  legislature.  These individuals  are                                                                    
     familiar with  the industry and  with the  statutes and                                                                    
     regulations  that govern  the manufacture,  possession,                                                                    
     and  sale of  alcohol. They  manage over  1,800 alcohol                                                                    
     licenses. As  required by statute,  the board  meets at                                                                    
     least once  per year in  each judicial district  in the                                                                    
     state  "to  study this  title  and  to modify  existing                                                                    
     board  regulations  in  light of  statewide  and  local                                                                    
     problems."  The  board  may  hold  public  hearings  to                                                                    
     ascertain  the  reaction  of  the  public  or  a  local                                                                    
     governing  body to  a license  application and  where a                                                                    
     local  government   protest  or  public   objection  is                                                                    
     received, such a hearing is required.                                                                                      
     As all of  you are aware, alcohol  has both significant                                                                    
     negative effects  on communities  in our state  as well                                                                    
     as  significant positive  economic  effects. Under  the                                                                    
     current Title IV, the legislature  has committed to the                                                                    
     five member  board with expertise, knowledge  base, and                                                                    
     sensitivity  to the  issues to  appropriately ascertain                                                                    
     the public interest  in controlling alcoholic beverages                                                                    
     within the state.                                                                                                          
     The  amendment   adopted  yesterday  could   cede  this                                                                    
     authority to the commissioner who  has none of the same                                                                    
     requirements  relating   to  the  establishment   of  a                                                                    
     knowledge  base,  development  of an  understanding  of                                                                    
     statewide  and  local  problems  relating  to  alcohol,                                                                    
     through travel and public meetings,  and actions in the                                                                    
     public  interest.  To  replace the  judgement  of  five                                                                    
     individuals with  the judgement  of one is  puzzling at                                                                    
     There   are  additional   sections   of  statute   that                                                                    
     authorize  the  board   to  take  particular  licensing                                                                    
     actions that may be  affected particularly by Amendment                                                                    
     2,  which  has  the   potential  to  create  regulatory                                                                    
     confusion.   Those  sections   are  AS   04.06.090,  AS                                                                    
     04.11.040,  and AS  04.11.480. Yesterday's  Amendment 2                                                                    
     in Section 3  would appear to muddy  the appeal process                                                                    
     for  applicants   and  licensees.   AS  04.11.510(b)(1)                                                                    
     states that  if an application is  denied the applicant                                                                    
     is  entitled  to  a formal  hearing  conducted  by  the                                                                    
     office  of administrative  hearings in  accordance with                                                                    
     the  Administrative Procedures  Act, Section  44.62.330                                                                    
     through  Section 44.62.630.  AS  44.62.500 states  that                                                                    
     the proposed  decision of the administrative  law judge                                                                    
     may  be  adopted by  the  agency,  which would  be  the                                                                    
     board,  and is  considered the  final decision  for the                                                                    
     purposes of  AS 04.11.560,  which may then  be appealed                                                                    
     to  superior court.  It is  entirely unclear  where the                                                                    
     appeal  to  the  commissioner  of  Commerce  would  fit                                                                    
     within that process.                                                                                                       
     Another   concern,  having   participated  in   several                                                                    
     administrative hearings  in my  tenure as  director, is                                                                    
     who would be  assisting the commissioner in  his or her                                                                    
     review of the records and  how the review of the record                                                                    
     would proceed.  In some of  these cases the  record can                                                                    
     go  to hundreds  of pages  and can  require significant                                                                    
     time and resources to adequately  review. Thank you for                                                                    
     the opportunity to speak on Amendment 2.                                                                                   
1:22:14 PM                                                                                                                    
Representative Wilson  asked if  the removal of  Amendment 2                                                                    
impacted the other two adopted amendments.                                                                                      
Ms. McConnell  replied that  based on  Representative Wool's                                                                    
testimony from  the previous day,  she believed  Amendment 3                                                                    
had been offered because of  Amendment 2. She questioned the                                                                    
purpose of Amendment 3 if Amendment 2 was repealed.                                                                             
Representative  Wool   agreed  that  Amendment   3  followed                                                                    
Amendment 2 since  it was no longer  only for administrative                                                                    
purposes. He stated  that to have something  in a department                                                                    
for  administrative purposes  only, it  was possible  to put                                                                    
the ABC Office  or the Alcohol and  Marijuana Control Office                                                                    
(AMCO)   in  any   department   (e.g.   the  Department   of                                                                    
Corrections)  -  he wondered  what  the  difference was.  He                                                                    
stated,   "they're  moving   them   around  from   different                                                                    
departments with  intent." He did  not have  the legislative                                                                    
intent on  hand describing  the reason  the office  had been                                                                    
moved from DPS to DCCED. He  believed the intent was to make                                                                    
the  division  more  sensitive   to  the  needs  of  private                                                                    
Representative  Wool referenced  testimony by  Ms. McConnell                                                                    
that alcohol had a negative  impact on society in Alaska and                                                                    
a positive economic  impact. He stressed alcohol  also had a                                                                    
positive impact on  society - there were  people who enjoyed                                                                    
a  glass of  wine  with  dinner, which  was  not a  negative                                                                    
thing. He was in favor of  Amendment 3 that would delete the                                                                    
language  specifying  the  ABC  Board was  under  DCCED  for                                                                    
administrative  purposes  only.  He supported  a  connection                                                                    
between the  AMCO and  ABC Board  with DCCED.  He reiterated                                                                    
there  was  economic  value.  He  reviewed  Ms.  McConnell's                                                                    
explanation of  the appeal process  the previous  day, which                                                                    
required going  to the board,  an administrative  law judge,                                                                    
and the state  superior court. He stated the  process took a                                                                    
year  on  average.  He  stressed the  average  mom  and  pop                                                                    
business owner should  have access to a  shorter recourse to                                                                    
try to  resolve issues. He  was not claiming  resolution did                                                                    
not occur  in an informal way,  but he had read  about cases                                                                    
that were not resolved.                                                                                                         
Representative Wool supported having  eyes on the issue that                                                                    
were more commerce friendly. He  wanted to keep Amendment 3.                                                                    
He  understood  the  confusion   that  could  be  caused  by                                                                    
Amendment 2, but he did  not believe the current process was                                                                    
all  that  great.  He  specified that  when  someone  had  a                                                                    
disagreement  it could  take months.  He  continued that  if                                                                    
someone's license  was denied  because they  did not  have a                                                                    
set of  finger prints  and the  operation of  their business                                                                    
was  on hold,  they may  close. He  did not  believe it  was                                                                    
fair.  He wanted  to hear  from  someone else  on the  topic                                                                    
besides the board and the director.                                                                                             
1:25:48 PM                                                                                                                    
Representative Wilson referenced  Ms. McConnell's mention of                                                                    
an ABC  Board meeting the  coming Tuesday. She asked  if the                                                                    
meeting would  look at the  impact of the  amendment changes                                                                    
during the  meeting. She wondered  if the agency  planned to                                                                    
weigh  in  on the  bill's  impact  on  the board  after  its                                                                    
Tuesday meeting.                                                                                                                
Ms. McConnell  answered in the  affirmative. The  intent was                                                                    
for the board  to provide its opinion to  the legislature on                                                                    
whatever amendments remain in the bill.                                                                                         
Vice-Chair Gara stated that Amendment  2 was the guts of the                                                                    
agency    review.   He    asked   for    verification   that                                                                    
Representative Wool  was comfortable that  without Amendment                                                                    
2, Amendment  3 still  satisfied the goal  of having  a more                                                                    
independent review.                                                                                                             
Representative Wool answered in  the negative. He understood                                                                    
the  concern that  as written,  Amendment 2  may hamper  the                                                                    
ability  for   someone  in  the  commissioner's   office  to                                                                    
interface with the division to  resolve an issue in a timely                                                                    
manner,  while offering  another  set of  eyes.  He did  not                                                                    
really  want  to go  through  the  administrative law  judge                                                                    
process  - he  noted he  was not  claiming there  was not  a                                                                    
place for that.  He wanted to resolve some of  the issues in                                                                    
a timelier  manner. He  was amenable  to the  elimination of                                                                    
Amendment  2 if  it  could help  the  situation. He  thought                                                                    
perhaps there  would be another  solution down the  road. He                                                                    
noted  there  was  a  Title IV  rewrite  going  through  and                                                                    
perhaps that was a more appropriate time.                                                                                       
1:27:57 PM                                                                                                                    
Commissioner Navarre commented  on Ms. McConnell's testimony                                                                    
that the  board had  five vetted  members. He  remarked that                                                                    
the members were also lay  members who came together at four                                                                    
meetings  per   year  (or  more   if  called   into  special                                                                    
meetings).  He stated  the individuals  could  not speak  to                                                                    
each other  to make  decisions prior  to meetings.  He added                                                                    
the   members  all   had  lives   they  were   leading.  The                                                                    
information  that came  to  the board  came  in a  truncated                                                                    
period  of time  when  meeting for  board deliberations.  He                                                                    
explained  that most  of the  board  packet information  was                                                                    
provided by the division.  He explained from his perspective                                                                    
and   he    believed   the   frustration    experienced   by                                                                    
Representative  Wool, reflected  a desire  to find  a better                                                                    
way to  do conflict  resolution. He  did not  think usurping                                                                    
the appeal process  had that outcome. He  believed the issue                                                                    
had more  to do  with an  administrative function.  He would                                                                    
try  to  have the  discussion  with  the board  and  further                                                                    
discussions with  Ms. McConnell to determine  something that                                                                    
worked for everyone.                                                                                                            
Representative   Wool   referenced  Commissioner   Navarre's                                                                    
mention of  an informal hearing  process. He did  not recall                                                                    
Ms. McConnell  mentioning the process  in her  testimony the                                                                    
previous day.  He asked to  hear from Ms. McConnell  that it                                                                    
was part  of the  process. Additionally,  he wondered  if it                                                                    
was  something that  someone from  the  department could  be                                                                    
notified  of  or  asked for  advice  on.  Alternatively,  he                                                                    
wondered if that was off limits.                                                                                                
Ms. McConnell replied that after  the board denied a license                                                                    
application, the  applicant had  the opportunity  to request                                                                    
an  informal  conference with  either  the  director or  the                                                                    
board.  She  believed  it  would  be  up  to  the  board  to                                                                    
determine  whether or  not  other  individuals within  DCCED                                                                    
could  be  included.  She  stated   it  was  something  that                                                                    
Commissioner Navarre and the board could discuss.                                                                               
1:30:34 PM                                                                                                                    
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, action on Amendment 2 was RESCINDED.                                                                      
Co-Chair Seaton  was unsure of  the purpose of  Amendment 3.                                                                    
He  stated it  meant DCCED  would have  some regulatory  and                                                                    
intermediate   function,  without   identifying  what   that                                                                    
function was. He was uncertain  it would help the situation.                                                                    
He  thought the  interaction could  be quite  different than                                                                    
what   the  legislature   intended   because   it  was   not                                                                    
identifying anything.  He continued  that the  committee had                                                                    
just  eliminated the  process  discussed in  Amendment 2  to                                                                    
allow that  normal interaction and  control in  a department                                                                    
and  one   of  its   agencies.  The  amendment   would  have                                                                    
dramatically changed the structure  when the agency had been                                                                    
placed under the department  for administrative purposes. He                                                                    
was uncertain how the legislature  would be implementing the                                                                    
desire  by   leaving  some  amorphous   goal  to   have  the                                                                    
department control the board or interact with the board.                                                                        
1:32:51 PM                                                                                                                    
Representative  Wilson   agreed.  She  no  longer   saw  the                                                                    
connection  with Amendment  3.  She understood  there was  a                                                                    
rewrite of  Title IV. She  thought perhaps Title IV  was the                                                                    
more appropriate  place to consider the  issue. She reasoned                                                                    
that the  bill's purpose was  to provide a  board extension,                                                                    
which  was necessary.  She asked  how Amendment  3 could  be                                                                    
beneficial. She  wondered what could happen  by changing the                                                                    
board  to  a  regulatory   and  quasi-judicial  agency.  She                                                                    
reiterated her belief  there was no longer  a connection for                                                                    
Amendment 3.                                                                                                                    
Representative  Wool   thought  taking  away   the  language                                                                    
[specifying   that   the   board  was   under   DCCED   for]                                                                    
administrative  purposes only  did not  give the  department                                                                    
more  power. He  believed for  example, if  the commissioner                                                                    
was called upon  to advise or listen in on  a case, suddenly                                                                    
the board would no longer  be under DCCED for administrative                                                                    
purposes only. He  did not believe that was a  bad thing. He                                                                    
reasoned  that if  there  was a  need  for communication  it                                                                    
would not  be forbidden [if  the amendment was  adopted]. He                                                                    
liked the amendment even without Amendment 2.                                                                                   
Co-Chair  Foster  asked if  Ms.  McConnell  had comments  on                                                                    
Amendment 3.                                                                                                                    
1:35:08 PM                                                                                                                    
Ms.  McConnell  shared  the  same  uncertainty  as  Co-Chair                                                                    
Seaton and Representative Wilson on Amendment 3.                                                                                
Representative  Wilson  MOVED  to RESCIND  the  adoption  of                                                                    
Amendment 3 [adopted on 4/6/18].                                                                                                
Vice-Chair Gara OBJECTED.                                                                                                       
Representative Wool  believed moving  the board from  DPS to                                                                    
DCCED for administrative purposes  only seemed like a waste.                                                                    
He thought the  move should have some  meaning, otherwise he                                                                    
believed  it was  for naught.  He opined  that removing  the                                                                    
language  "for  administrative   purposes  only"  gave  some                                                                    
intent  to the  move between  two departments.  He added  he                                                                    
could look  up the  historical record  to determine  why the                                                                    
move had taken place.                                                                                                           
Vice-Chair Gara  thought they  were arguing  over semantics.                                                                    
He thought the semantics in  Amendment 3 were more accurate.                                                                    
Under   DCCED,  the   ABC  Board   was   allowed  to   issue                                                                    
regulations. Part  of the amendment specified  the board was                                                                    
regulatory  because  it  issued regulations.  He  elaborated                                                                    
that  the  board  made  decisions  on  licenses,  penalties,                                                                    
renewals, and revocations. Amendment  3 classified the board                                                                    
as a quasi-judicial agency, which  he believed was accurate.                                                                    
He believed  the amendment merely  specified what  the board                                                                    
does. He  did not see a  problem with the amendment.  He did                                                                    
not  see the  amendment  getting  where Representative  Wool                                                                    
wanted in  terms of giving  the commissioner the  ability to                                                                    
make  decisions, but  he believed  the amendment  accurately                                                                    
described what the board did.                                                                                                   
1:37:24 PM                                                                                                                    
Co-Chair   Seaton   stated    that   normally   departmental                                                                    
regulations  had to  be approved  by  the commissioner.  The                                                                    
wording in  Amendment 3  specified it would  not be  the way                                                                    
the board  would work. He  elaborated that  the commissioner                                                                    
would  not  be able  to  override  regulations. He  believed                                                                    
removing the  language would mean the  commissioner would be                                                                    
in charge  of and the  final decision maker  on regulations.                                                                    
He  speculated the  language  had  originally been  included                                                                    
because  the  intent   had  been  to  move   the  board  for                                                                    
administration to get  it out of DPS, but not  for the final                                                                    
approval of regulations made by the  board to be made by the                                                                    
commissioner. He thought the  amendment muddied the question                                                                    
of regulations and approval of regulations.                                                                                     
Co-Chair Foster listed individuals available for questions.                                                                     
Vice-Chair Gara  addressed a  question to  Legislative Legal                                                                    
Services. He  reviewed that the committee  had rescinded its                                                                    
action on  Amendment 2, which  would have given  the [DCCED]                                                                    
commissioner   certain   decision  making   authority.   The                                                                    
committee  was currently  considering  a  motion to  rescind                                                                    
Amendment  3.  His  understanding  was  the  board  proposed                                                                    
regulations  (confirmed by  others)  and  made decisions  on                                                                    
licenses including revocations  and penalties. Therefore, he                                                                    
did not  believe it seemed  odd to  classify the board  as a                                                                    
regulatory and  quasi-judicial agency. He asked  for comment                                                                    
on Amendment 3.                                                                                                                 
1:41:00 PM                                                                                                                    
LINDA   BRUCE,   LEGISLATIVE  COUNSEL,   LEGISLATIVE   LEGAL                                                                    
SERVICES (via  teleconference), stated her  understanding of                                                                    
the  question. She  questioned whether  Vice-Chair Gara  was                                                                    
asking if the amendment  would affect the board's regulatory                                                                    
and  quasi-judicial authority.  Alternatively, she  wondered                                                                    
if   he  was   asking  what   would  happen   if  the   "for                                                                    
administrative purposes" language was removed.                                                                                  
Vice-Chair Gara clarified he wondered  what the effect would                                                                    
be  of leaving  Amendment  3  in the  bill.  He thought  the                                                                    
amendment  seemed consistent  with  the board's  activities.                                                                    
Alternatively,  he   wondered  what   the  removal   of  the                                                                    
amendment would do.                                                                                                             
Ms.  Bruce  responded that  by  removing  the language  "for                                                                    
administrative  purposes only,"  the  department would  have                                                                    
the power  to manage the ABC  Board like any other  board as                                                                    
permitted within the statutory  power of the department. The                                                                    
department would  have potentially oversight  over operating                                                                    
and administrative procedures of  the board. However, within                                                                    
Title IV there was no  specification where duties and powers                                                                    
were  directed towards  the department  over the  board. She                                                                    
stated it was a little unclear.  She noted she had not had a                                                                    
chance to fully  analyze the question and would  be happy to                                                                    
provide a written response with more detail.                                                                                    
1:42:32 PM                                                                                                                    
Co-Chair Seaton  pointed out  that the  duties of  the board                                                                    
were listed in current statute.  The only change Amendment 3                                                                    
would make  was the removal of  "for administrative purposes                                                                    
only"  language. He  stated that  if the  amendment did  not                                                                    
pass,  current  statute  already contained  the  amendment's                                                                    
language in lines 7 through 12.                                                                                                 
Representative   Wilson  stated   that  normally   when  the                                                                    
legislature  changed  the duties  of  a  board, the  process                                                                    
involved seeking  the board's  input. She  was uncomfortable                                                                    
that the amendments had sparked an emergency board meeting.                                                                     
Representative  Guttenberg supported  the motion  to rescind                                                                    
the amendment. He looked at  AS 04.06.010 and relayed he had                                                                    
been  present when  the board  had  been moved  from DPS  to                                                                    
DCCED. He  believed one  of the reasons  the move  had taken                                                                    
place was they wanted to deal  with DCCED instead of being a                                                                    
police board.  He continued that  under current  statute the                                                                    
board  was  a  regulatory   and  quasi-judicial  agency.  He                                                                    
recalled dialogue  about the commissioner  having discussion                                                                    
with  the  board.  He  stated  that  if  the  amendment  was                                                                    
adopted, the commissioner would  have no function remaining.                                                                    
He  believed  there was  a  positive  aspect of  having  the                                                                    
commissioner serve an administrative  role in the discussion                                                                    
with the administrative function of  the board. He stated if                                                                    
the  language  was  removed,  the  commissioner's  role  was                                                                    
Representative Wool replied that  the amendment would remove                                                                    
the language  "administrative purposes only," but  would not                                                                    
take    away    administrative    purposes.    He    thought                                                                    
Representative  Guttenberg was  saying the  department would                                                                    
lose all administrative purposes.                                                                                               
Representative  Guttenberg  believed   the  amendment  would                                                                    
remove   the  department's   role  for   all  administrative                                                                    
purposes.  He stated  the situation  had arisen  before when                                                                    
the  board  had  specified  it   was  independent  from  the                                                                    
department and  that the department  had nothing to  do with                                                                    
how  the  board operated.  He  stated  it  had led  to  some                                                                    
problematic situations in the past.  He wanted to ensure the                                                                    
commissioner had some role in  oversight. He stated that the                                                                    
board  would  have  the  regulatory,  quasi-judicial  agency                                                                    
role, but the commissioner had some purpose as well.                                                                            
1:46:41 PM                                                                                                                    
Representative  Wool was  confused with  the interpretation.                                                                    
He  thought by  removing  the  language "for  administrative                                                                    
purposes only"  meant the department's role  was not limited                                                                    
to  administrative  purposes.  He explained  that  it  would                                                                    
remove the  commissioner from the  process. He  directed the                                                                    
question  to Legislative  Legal  Services and  asked if  the                                                                    
marijuana board also had similar language.                                                                                      
Ms. Bruce asked for the question to be restated.                                                                                
Representative  Guttenberg  complied.  He  asked  about  the                                                                    
commissioner's   role    and   what   the    language   "for                                                                    
administrative purposes only" meant in the statute.                                                                             
Ms. Bruce  answered that currently  the department  only had                                                                    
oversight over  the board  for administrative  purposes. The                                                                    
deletion of the language  "for administrative purposes only"                                                                    
would  still  mean the  department  had  oversight over  the                                                                    
board for  administrative purposes.  She confirmed  that the                                                                    
same  language  was used  for  the  Marijuana Control  Board                                                                    
under  AS  17.38.080, which  provided  the  board was  under                                                                    
DCCED for administrative purposes only.                                                                                         
Representative Guttenberg  asked what role  the commissioner                                                                    
would have  in relationship  to the  board if  the amendment                                                                    
was maintained.                                                                                                                 
Ms.  Bruce   was  uncertain.  There  would   potentially  be                                                                    
operating and administrative  oversight by the commissioner,                                                                    
but  it depended  on the  statutory authority  given to  the                                                                    
department and commissioner,  which she had not  had time to                                                                    
1:49:50 PM                                                                                                                    
Representative   Guttenberg   asked   if  anyone   had   the                                                                    
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, relayed that  the Division of Legislative                                                                    
Audit looked  at numerous quasi-judicial  entities including                                                                    
the  Commercial Fisheries  Entry Commission  and the  Parole                                                                    
Board.  The  entities were  required  to  be independent  in                                                                    
their  judicial   function.  She  believed  that   the  "for                                                                    
administrative purposes  only" language would  almost always                                                                    
appear associated  with the various entities.  She suggested                                                                    
the language  likely existed when  the board  had previously                                                                    
been under DPS and the Department of Revenue (DOR).                                                                             
Representative  Pruitt believed  the  board  had been  moved                                                                    
from  DPS to  DCCED because  DPS had  been too  involved and                                                                    
there was  a feeling  of punishment  of license  holders and                                                                    
the  desire to  move  the  board to  a  more  of a  business                                                                    
mindset.   He reasoned the existing  statutory language went                                                                    
along  with that  line of  thinking. He  wondered about  the                                                                    
intent  and thought  the current  language aligned  with the                                                                    
move from DPS to DCCED.                                                                                                         
1:52:22 PM                                                                                                                    
Ms.  McConnell  answered that  she  had  not worked  in  her                                                                    
current position in 2012 when  the board had been moved from                                                                    
DPS  to  DCCED.  She  offered to  research  the  legislative                                                                    
history  and provide  a written  response to  the committee.                                                                    
She added  that under AS 04.06.070  "appointment and removal                                                                    
of  the  director,"  the  director   was  appointed  by  the                                                                    
governor, but  absent some malfeasance only  the board could                                                                    
remove  the  director. She  worked  for  the board;  if  the                                                                    
interpretation of the  effects of the amendment  was to give                                                                    
the commissioner of  DCCED the authority over  the agency it                                                                    
became very confusing  in her role. She  elaborated that she                                                                    
answered  to   the  board,  yet  under   the  amendment  the                                                                    
commissioner  would have  undefined authority.  She believed                                                                    
the  intent needed  clarification.  She planned  to ask  the                                                                    
board for  its opinion on  the amendment during  its meeting                                                                    
the coming Tuesday.                                                                                                             
Representative Pruitt  stated they were having  to piece the                                                                    
items  together  to  fully  understand.  He  referenced  the                                                                    
testimony  by  Ms. Curtis  and  testimony  by Ms.  McConnell                                                                    
about trying  to keep the  independence of the  board. Based                                                                    
on the testimony he believed  the current language should be                                                                    
maintained. He  did not believe  the debate was  merely over                                                                    
semantics.  He  thought  rescinding the  amendment  was  the                                                                    
appropriate action.                                                                                                             
Co-Chair  Seaton  directed  a  question to  Ms.  Bruce  with                                                                    
Legislative Legal  Services. He stated that  normally agency                                                                    
regulations  were  approved  by   the  commissioner  of  the                                                                    
department. He  asked if  the removal  of the  language "for                                                                    
administrative  purposes  only"  would  call  into  question                                                                    
whether  the  board  could  independently  set  regulations.                                                                    
Alternatively,  he wondered  if the  regulations would  fall                                                                    
under the commissioner.                                                                                                         
Ms.  Bruce answered  that the  commissioner  would not  have                                                                    
final say on regulations adopted by the board.                                                                                  
Co-Chair Foster  noted Representative  Ortiz had  joined the                                                                    
meeting earlier via teleconference.                                                                                             
Vice-Chair  Gara  spoke  to the  Amendment  3  language.  He                                                                    
thought  he had  heard statements  that the  amendment would                                                                    
make the department a  regulatory and quasi-judicial agency.                                                                    
However, he  believed the amendment  would make the  board a                                                                    
regulatory  and  quasi-judicial  agency. He  read  from  the                                                                    
amendment. He asked if his understanding was accurate.                                                                          
1:57:33 PM                                                                                                                    
Ms. Bruce  responded that the  board was the  regulatory and                                                                    
quasi-judicial  agency  under   current  statute  and  would                                                                    
remain so under Amendment 3.                                                                                                    
Commissioner Navarre  relayed that the board  had previously                                                                    
been housed under  DOR before moving to DPS  and then DCCED.                                                                    
He  believed the  transfers had  occurred because  there had                                                                    
been some frustration about  maintaining the independence of                                                                    
the board and administering of  a division or department. He                                                                    
believed   maintaining   the    board's   independence   was                                                                    
important.  He thought  the head  of  the department  should                                                                    
have some  ability to advise  a division about how  the laws                                                                    
were  administered, but  he did  not  believe the  amendment                                                                    
language would fix the issue.  He thought the language would                                                                    
be  inconsistent  with  the   way  independent  boards  were                                                                    
administered throughout various departments.                                                                                    
Vice-Chair Gara MAINTAINED his OBJECTION.                                                                                       
A roll  call vote  was taken  on the  motion to  rescind the                                                                    
adoption of Amendment 3.                                                                                                        
IN FAVOR: Tilton,   Wilson,   Kawasaki,  Pruitt,   Thompson,                                                                    
OPPOSED: Gara, Grenn, Guttenberg, Ortiz, Foster                                                                                 
The MOTION  PASSED (6/5). There being  NO further OBJECTION,                                                                    
the adoption of Amendment 3 was RESCINDED.                                                                                      
Vice-Chair  Gara reviewed  the fiscal  note from  DCCED. The                                                                    
note  reflected  annual  board   operation  costs  of  $1.66                                                                    
million (through FY 23) to be paid for with fees.                                                                               
Co-Chair  Seaton  MOVED  to  REPORT  CSHB  299(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
CSHB  299(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation and  with one  new fiscal  impact note                                                                    
from  the Department  of  Commerce,  Community and  Economic                                                                    
2:02:05 PM                                                                                                                    
AT EASE                                                                                                                         
2:09:00 PM                                                                                                                    

Document Name Date/Time Subjects
HB 322 - Amendment packet.pdf HFIN 4/7/2018 1:00:00 PM
HB 322
HB 299 - Letter of Intent.pdf HFIN 4/7/2018 1:00:00 PM
HB 299
HB 316 Support 4-6-18.pdf HFIN 4/7/2018 1:00:00 PM
HB 316
HB 322 Support 4-6-18.pdf HFIN 4/7/2018 1:00:00 PM
HB 322
HB 322 - DEC Response to H FIN re HB322.pdf HFIN 4/7/2018 1:00:00 PM
HB 322