Legislature(2015 - 2016)BARNES 124
04/04/2016 03:15 PM LABOR & COMMERCE
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SB 125-LEGISLATIVE MEMBERS OF AGDC BOARD 3:23:01 PM CHAIR OLSON announced that the first order of business would be CS FOR SENATE BILL NO. 125(RES), "An Act adding legislative nonvoting members to the board of directors of the Alaska Gasline Development Corporation." 3:23:31 PM SENATOR MIA COSTELLO, Alaska State Legislature, speaking as the sponsor, informed the committee [HCS CSSB 125(RES)] is a bill that strengthens and diversifies the board of directors (board) for the Alaska Gasline Development Corporation (AGDC), which is the state's primary representative in the Alaska LNG project, and will be the focal point for policy decisions in the coming years. She said the bill would facilitate communication and a teamwork approach between the board and the legislature by adding three legislators as nonvoting members to the board, one from the Senate, one from the House, and one from either minority caucus. The bill also ensures the original intent of the legislature by reserving four out of the five public seats on the board for appointees with expertise in natural gas, pipeline construction, finance, project management, or other relevant experience. Senator Costello stated that having legislators on a board as important as AGDC would provide perspective, institutional knowledge, and continuity. She read from a memorandum provided in the committee packet from Legislative Legal Services, Legislative Affairs Agency, dated 3/30/16, and signed by Emily Nauman, as follows [in part]: Given the split in how other states treat nonvoting legislative members, perhaps nothing can be relied upon to divine the outcome in this state. SENATOR COSTELLO then referred to a ruling in South Carolina in 2013 that upheld legislators having an ex-officio role on state boards and commissions [document not provided]. She opined that legislators serving in nonvoting positions alleviates constitutional concerns, and pointed out that precedent has been established by the fact that legislators currently serve on state boards and commissions, including state corporations such as the Knik Arm Bridge and Toll Authority, the Alaska Aerospace Corporation, the Alaska Seafood Marketing Institute, the Alaska Commission on Postsecondary Education, the Alaska Health Care Commission, the Alaska Criminal Justice Commission, and the Alaska Tourism Marketing Board. She urged for the committee's support. 3:27:07 PM WESTON EILER, staff to Senator Mia Costello, Alaska State Legislature, on behalf of Senator Costello, paraphrased the sectional analysis for SB 125, Version S, as follows: [original punctuation provided] Section 1: Amends AS 31.25.020(a), (Alaska Gasline Development Corporation), Governing body. Adds a member of the House, appointed by the Speaker, a member of the Senate, appointed by the Senate President and a member of the minority caucus jointly- appointed by the presiding officers, as nonvoting members to the AGDC Board. Section 2: Amends AS 31.25.020(b), (Alaska Gasline Development Corporation), Governing body. Requires four of the five public board members to have qualifications in natural gas pipeline construction, operation and marketing; finance; large project management; or other expertise and experience relevant to the corporation. Section 3: Amends AS 31.25.020(d), (Alaska Gasline Development Corporation), Governing body. States legislative members of the board may not be reimbursed or compensated by AGDC for their service on the board and related costs. Section 4: Adds new subsection AS 31.25.020(e), (Alaska Gasline Development Corporation), Meetings of the board. Specifies legislative members of the board may participate in all board activities except voting. Legislative members may not be excluded from executive sessions, and may not be appointed for a term longer than two years. Section 5: Amends AS 31.25.030(a), (Alaska Gasline Development Corporation), Meetings of the board. Conforming language outlining that only voting members of the AGDC Board may be selected to serve as chair, secretary or treasurer. Also defines a quorum as a majority of voting members of the board. Section 6: Amends AS 31.25.040(a), (Alaska Gasline Development Corporation), Administration of affairs; program directors. Conforming language that Sectional Analysis - SB 125 2 allows only voting members of the board to manage the assets and business of the corporation and that voting members will delegate supervision of the administration of the corporation to the executive director. MR. EIHER noted that conforming changes are also found in Sections 7, 8, and 9, and Section 11 provides an immediate effective date. 3:29:14 PM REPRESENTATIVE JOSEPHSON directed attention to a memorandum provided in the committee packet from the Department of Law (DOL) dated 3/20/16, that referred to AGDC as an executive branch entity. He then directed attention to a table provided in the committee packet by Senator Costello entitled, "Legislative Membership on State of Alaska Boards and Commissions" and asked whether the entities listed thereon were executive branch agencies. MR. EILER deferred to Legislative Legal and Research Services on the definition, and opined the entities complied on the list are a variety of capacities in which legislators, as nonvoting members, advise the functions of the administration through commissions, independent state corporations, divisions, and departments of state government, "by which the legislature is advising the administration, and the overall process of state government." REPRESENTATIVE LEDOUX inquired as to any boards and commissions on which legislators serve that are identical - legally - to the corporate structure of AGDC. MR. EILER offered to provide additional information comparing state corporations; he added that there are many similarities between state corporations involved in large projects, and legislators are serving in a nonvoting, ex-officio manner on boards of directors that make business decisions. REPRESENTATIVE JOSEPHSON referred to another memorandum (memo) [document not provided] dated 12/7/15 in which Emily Nauman, an attorney for Legislative Legal and Research Services, concluded that the proposal related to the bill was likely not constitutional; however, in the 3/30/16 memo she said it may not be constitutional when " ... speaking to nonvoting membership ...." He asked for the basis for her change in position. 3:34:51 PM MR. EILER recalled that the issue of "voting legislative members" was the subject of an earlier Legislative Legal and Research Services memo. REPRESENTATIVE JOSEPHSON remarked: ... legislative lawyers on the seventh of December were inclined to say, "This proposal, broadly speaking, doesn't, is not consistent with the constitution." Last week, the same attorney said, "Well, it may very well be consistent with the constitution." And I'm asking, whether you know ... what the difference is. MR. EILER offered to research previous Legislative Legal and Research Services opinions on this matter. He acknowledged that voting legislative members "would run into conflict, with regards to the constitutional issues." He directed attention to page 4 of the memo dated 3/30/16, which read [in part]: What is clear is that the issue of nonvoting legislative members on executive branch boards is unsettled. ... I do not believe the risk is great enough that I would advise removing the legislative board members from the bill. REPRESENTATIVE LEDOUX suggested the committee address questions directly to Ms. Nauman in this regard. 3:37:12 PM The committee took an at ease from 3:37 p.m. to 3:39 p.m. 3:40:00 PM EMILY NAUMAN, Attorney, Legislative Legal Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, directed attention to page 3 of a memo dated 12/7/15 [document not provided], and pointed out that she noted ex-officio members may possibly reduce the infringement on executive branch powers, thereby lessening the constitutional issues. The main point of the 12/7/15 memo addressed legislative members serving on the AGDC board that would be voting and participating in officer selection and other duties. The 3/30/16 memo deals with legislative members who are ex-officio and nonvoting members. Ms. Nauman opined that a court opinion is needed to determine whether nonvoting legislative members are unconstitutional. REPRESENTATIVE JOSEPHSON said the aforementioned attorney general's opinion relies upon 1968 and 1976 State of Alaska decisions, and on several attorney's general opinions (AGOs). He said AGO's are presumptively law and asked whether Ms. Nauman does not rely on state opinions "as sort of an overall jurisprudential analysis." MS. NAUMAN said correct. She added that there is no AGO that addresses nonvoting legislative members seated on boards and commissions. REPRESENTATIVE KITO questioned the need for legislative representation on the AGDC board because legislators can attend any AGDC meeting, and request and receive information from the corporation. Furthermore, if legislative members do not have the ability to vote, he inquired as to the role of legislative board members. SENATOR COSTELLO reminded the committee of the importance of the gasline project to Alaska's future. Recently, there has been a high turnover of AGDC board members, and members of the legislature have held a long interest in the project, and developed the project's guiding documents. She acknowledged that legislative members can attend meetings, except the board meetings often go into executive sessions that exclude members of the legislature. She opined service on the AGDC board is no different than that on the Alaska Seafood Marketing Institute or the Alaska Travel Industry Association boards. Senator Costello restated the intent of the bill is to foster communication, cooperation, and trust, and legislative members are needed on the board to represent the people of Alaska and advise the corporation. 3:45:08 PM REPRESENTATIVE KITO turned to the following concerns: legislative members in attendance during executive sessions; the continuity of the board; the qualifications of the board members. He pointed out that legislators are lay leaders and although his personal expertise is in engineering, he would not presume to understand the technicalities of, for example, a gas liquefaction plant, and cautioned that "we're relying on lay legislators like ourselves that might not have technical expertise in natural gas pipelines to be that continuity." In addition, legislators could be called on by the board to participate in decisions whenever necessary. He pointed out that although a legislative member of the board could participate in an executive session, he/she would be unable to share information with the full legislature, which calls into question the benefits thereof. Representative Kito restated his question as to the role of the legislative board member. SENATOR COSTELLO said legislators have to decide whether to "agree ... with the premise of the bill which is the people's branch has a seat at the table, no matter if that table is inside a locked door or outside in the public view." Regarding the value, she recalled that the legislature passed [Senate Bill 138, passed in the Twenty-Eighth Alaska State Legislature] - the guiding structure for the project - and legislators are interested in further participation in the project. CHAIR OLSON stated his and other members' concern with the current structure of the board, which has board members with experience limited to serving on the Alaska Gasline Port Authority. He reviewed the qualities of two unsuccessful appointees to the AGDC board, and said legislators want to see legislative members on the board because " ... the direction that it may be going may not be the direction that was envisioned by the bulk of the people that got the ball rolling." REPRESENTATIVE HUGHES expressed strong support for the provision of the bill that requires expertise and experience. She inquired as to the nature of executive sessions, and asked for the reasons the AGDC board would go into executive session. MR. EILER advised that AGDC is exempt from many parts of the Administrative Procedure Act, except for the open meetings law. He deferred to AGDC. 3:51:36 PM REPRESENTATIVE HUGHES asked whether the bill sponsor can assure the committee that if there are nonvoting legislative members on the board, the board would remain apolitical. SENATOR COSTELLO pointed out that the legislature votes on the appointments of members of the board, except for the commissioners. She remarked: I would like to see the people's branch be represented there. Whether you see that as political ... I see it as only adding value to, to the board, and adding some depth in terms of the history of the legislation, the history of the project. REPRESENTATIVE HUGHES then asked whether the sponsor is confident that if during executive sessions with legislative board members present, the other AGDB board members would be free to "lay things out on the table." SENATOR COSTELLO opined that all board members would follow guidelines and procedures. REPRESENTATIVE JOSEPHSON inquired as to the laws related to when executive branch officials can listen to legislative executive sessions; for example, whether they can attend an executive session of a Legislative Budget and Audit (JBUD) committee meeting. SENATOR COSTELLO declined to answer. MS. NAUMAN said she was not aware of any law that allows a member of the executive branch to sit in on a legislative committee executive session. In further response to Representative Josephson, she restated her answer. REPRESENTATIVE JOSEPHSON questioned whether other commissions and boards such as the Alaska Aerospace Corporation, Department of Military & Veterans' Affairs, and the Knik Arm Bridge and Toll Authority, Department of Transportation & Public Facilities, have been challenged by a claim that legislators should not serve. SENATOR COSTELLO said, "Not that I am aware." 3:57:16 PM CHAIR OLSON was told that Commissioner Sheldon Fisher, Department of Administration, was invited to the last Legislative Council meeting executive session but declined to attend at the direction of the governor. REPRESENTATIVE KITO advised that Legislative Council and Legislative Budget and Audit committees have the ability to invite any individual, but an individual must be invited to participate in executive sessions. CHAIR OLSON understood that any member of the House and Senate can attend, but not participate in, an executive session. REPRESENTATIVE LEDOUX asked whether the committee would hear testimony from the administration in opposition to the bill. She gave her history of serving on the Aerospace Corporation board of directors. 3:59:56 PM CHAIR OLSON opened public testimony. 4:00:22 PM REPRESENTATIVE LIZ VAZQUEZ, Alaska State Legislature, reminded the committee that the board is not set up as part of the executive branch - reporting directly to the governor - but is set up as an independent corporation and is exempt from personnel and procurement regulations, and statutes that pertain to the rest of the state. She opined AGDC is only required to comply with the open meetings law; in fact, if a legal decision rendered in the state were found, it would relate to an entity closer to or within the executive branch, as opposed to AGDC, which is "totally distinct." 4:01:53 PM CHAIR OLSON, after ascertaining that no one further wished to testify, closed public testimony. REPRESENTATIVE COLVER expressed his concern that with a constitutional issue outstanding, AGDC board actions may be subject to litigation, and "cloud business that we expect AGDC to do." He read from the Constitution of the State of Alaska, Article II, Section 5, as follows [in part]: No legislator may hold any other office or position of profit under the United States or the state. REPRESENTATIVE COLVER continued, noting that AGDC is supposed to look and act like a business, and should not be encumbered with politics. CHAIR OLSON advised that there are "at least a dozen other boards, similar boards, and to the best of my knowledge, we've never had that issue arise ...." REPRESENTATIVE KITO questioned the benefit of adding members to a board that is operating. Adding three additional members, especially legislative members whose appointments will change every two years, does not provide continuity. He said the bill is not necessary. REPRESENTATIVE JOSEPHSON stated the following concerns: 1.) memos written by Legislative Legal Services that cite two other states are persuasive authority, however, the memo written by the Department of Law cites actual state authority on dual office holding and separation of powers, and is supported by three AGO statements; 2.) turnover on the board due to legal requirements of residency; 3.) politicizing of the agency; 4.) the inability of legislative board members to share executive session comments; 5.) constitutionality; 6.) possible litigation. He said he was a "no vote." REPRESENTATIVE HUGHES gave her experience serving on the board of directors of the Alaska Travel Industry Association, and said the addition of legislative members to the AGDC board could improve communications. 4:09:34 PM REPRESENTATIVE HUGHES moved to report [HCS CSSB 125(RES], Version 29-LS1250\S, out of committee with individual recommendations and the accompanying fiscal notes. 4:09:44 PM REPRESENTATIVE JOSEPHSON objected. 4:10:26 PM A roll call vote was taken. Representatives Tilton, Hughes, LeDoux, Colver, and Olson voted in favor of HCS CSSB 125(RES). Representatives Kito and Josephson voted against it. Therefore, HCS CSSB 125(RES) was reported out of the House Labor and Commerce Standing Committee by a vote of 5-2.