Legislature(2005 - 2006)CAPITOL 106
02/21/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Public Defender | |
| HB375 | |
| SB224 | |
| SB12 | |
| HB344 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 375 | TELECONFERENCED | |
| + | SB 224 | TELECONFERENCED | |
| *+ | HCR 27 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 12 | TELECONFERENCED | |
| += | HB 344 | TELECONFERENCED | |
SB 12-LIMIT RELATIONS WITH CERTAIN NATIONS 8:57:02 AM CHAIR SEATON announced that the next order of business was CS FOR SENATE BILL NO. 12(STA), "An Act relating to financial relationships with persons conducting business in or having headquarters in countries that support or ignore slavery and trafficking in persons." 8:57:15 AM SENATOR FRED DYSON, Alaska State Legislature, as sponsor of SB 12, told the committee that leaving in Section 4, on page 3 of CSSB 12(STA), was an oversight, and he would appreciate a motion from the committee to remove that language. 8:57:49 AM REPRESENTATIVE GATTO moved Amendment 1, to delete Section 4 from the bill. There being no objection, Amendment 1 was adopted. 8:58:40 AM SENATOR DYSON said subsequent to the last hearing of SB 12 on 2/16, he spoke with the people in the governor's office who expressed concern that the bill goes beyond the [Administrative Order No. 227 (AO 227)] issued in December of 2005 in two ways. First, he said AO 227 only covers purchases made by the executive branch, and does not include the judicial and legislative branches. Second, while encouraging purchasers and contractors in the administration to inquire into the policies of the companies that are headquartered in Tier 3 countries, it does not preclude companies from purchasing from Tier 3 companies. The proposed legislation would preclude Alaska from purchasing from Tier 3 companies, as well as from companies that are headquartered in those countries. Additionally, companies that conduct business in those countries "may" be requested to state their policy when doing business there. SENATOR DYSON stated, "It is our intention that we not be aiding and abetting those who are trafficking in human bodies - women and children, mostly - by inhuman conduct while we're there." He spoke of an article which reported that during the United Nations' efforts rebuilding in Kosovo, it was revealed that there were contractors and United Nations officials who were, during the course of their stay in Kosovo, contracting for child prostitutes to live in their home and be servants. Senator Dyson said he asked every one of the major oil companies that deal with Alaska [how SB 12 would affect them]. He said they responded that this is something that ought to be done. SENATOR DYSON told committee members that they may hear from the administration that it is concerned about the bill's requirement that Alaska not make purchases from companies that have their headquarters in Tier 3 countries. He said, "If you look at the list for the Tier 3 countries, I think it's very unlikely that that will happen." 9:02:02 AM SENATOR DYSON said the committee may also hear that whenever an investment firm or entity gets involved in doing anything except being a prudent investor, it opens the door to all kinds of problems. He said he expects the administration to warn the legislature that it needs to be extremely careful when it starts "serving social purposes and idealistic purposes with [its] fiscal policy - [its] purchasing and investments." Senator Dyson indicated that he thinks the committee has taken care of most of the problems in the bill with the adoption of Amendment 1. 9:03:22 AM CHAIR SEATON, referring back to Senator Dyson's mention of the individuals in Kosovo who had "contracted for child prostitutes," asked, "This doesn't address individual acts at all, does it?" 9:04:02 AM SENATOR DYSON answered that's correct. He added, "But we're interested in the company having an exclusive policy." 9:04:14 AM CHAIR SEATON reasoned, "If a company has an explicit policy precluding any of those kind of actions, but they're headquartered in one of the countries that gets identified, we would be precluded from buying from that company, even though it has that policy." He then surmised that the intent is to get the companies headquartered in those countries to put pressure on the countries in order to do business with the State of Alaska. 9:04:59 AM SENATOR DYSON responded that's correct. He offered his understanding that the governments of all the Tier 3 companies are often openly complicit in the human rights abuses that are going on. 9:05:21 AM REPRESENTATIVE GARDNER asked for clarification regarding language [relating to requirements for procedures] on page 2, lines 12-13, which read: "must be adapted to the special needs of the judicial branch". 9:05:53 AM SENATOR DYSON said he will find out the meaning of that language and get back to Representative Gardner. 9:06:06 AM REPRESENTATIVE GARDNER asked if the State of Alaska currently has any contracts or dealings that would be modified or invalidated as a result of SB 12. 9:06:28 AM SENATOR DYSON said he doesn't know. He said, "In light of some information that Representative Ramras has come up with in another related field, it's very possible." He said he has heard that on a federal level the ranking of the nations has had a salutary effect, and he expressed his hope that as other states adopt this kind of legislation, the financial pressure will have an impact. He noted that the State of California ranks as the eighth or ninth biggest economy in the world, and getting states to do what Alaska is doing - to be responsible about their investments - should be helpful. 9:07:29 AM REPRESENTATIVE LYNN noted that there are 14 nations listed [at the Tier 3 level], mentioning in particular an issue about port security and the United Arab Emirates. He also mentioned the countries of Saudi Arabia, Qatar, and Kuwait. He asked Senator Dyson to comment on helping to "liberate these people." 9:08:12 AM SENATOR DYSON responded: Several of the oil companies that do business here are also doing major business in those countries, and I am hoping that this will be a clarion call for those guys to have an explicit policy that they communicate to those governments that in this area of trafficking in human beings, you can't go on with business as usual. 9:08:39 AM REPRESENTATIVE GRUENBERG observed that the bill talks about whether a company has headquarters in another country, whereas Administrative Order No. 227 talks about the company being established and headquartered, or incorporated and headquartered in the country. He said he can see why "established and incorporated" was eliminated because of the conjunctive "and"; however, he noted, "You could have a company that isn't 'headquartered,' but is incorporated in the country, or is established in the country, or is owned in whole or in major part by a person residing in the country." He asked the bill sponsor how he would feel about including that type of language in the bill. 9:10:31 AM SENATOR DYSON said he would have no problem adding that language to the bill, because it is more explicit and complete. 9:10:52 AM CHAIR SEATON opened public testimony. 9:11:25 AM MICHAEL BARNHILL, Assistant Attorney General, Labor and State Affairs Section, Civil Division (Juneau), Department of Law, explained that his purpose in being present for the hearing was to answer questions regarding Section 4, which was removed. 9:12:31 AM CHAIR SEATON asked if the bill would cause the state to avoid contracts that are currently constructed or if it would just apply to future contracts. 9:12:40 AM MR. BARNHILL replied, "I think it would only apply with prospective effect, because it requires the implementation of procedures, and I would assume that those procedures would only take effect for the future, not for the past." 9:13:09 AM CHAIR SEATON asked Mr. Barnhill to give the matter further consideration. 9:13:25 AM MR. BARNHILL explained that the Alaska State Constitution includes a contracts clause; the state cannot unilaterally void contracts that are in existence. He indicated that the state could seek to amend those contracts through a process of negotiation. CHAIR SEATON said, "So then, the contract provision in the constitution would basically prevent this from putting us into a situation where we would be violating a contract and ... would have financial liabilities for the violation of that." MR. BARNHILL responded, "I believe that's correct." 9:13:58 AM REPRESENTATIVE GRUENBERG said there is a statute that says that acts are prospective only, unless there is a retroactivity clause adopted. 9:14:05 AM MR. BARNHILL said that is true with respect to the effective date of the legislation. 9:14:20 AM REPRESENTATIVE GRUENBERG asked Mr. Barnhill if, with that in mind, he thinks it would be necessary to add an applicability clause to the bill stating that "this only applies to ... future contracts." 9:14:27 AM MR. BARNHILL answered no. He explained that SB 12 calls for the implementation of new procedures, thus, the applicability could be taken up in the regulations or the procedures. 9:15:08 AM REPRESENTATIVE GARDNER referred again to the language on page 1, beginning on line 8, which read: The procedures must be based on the competitive principles consistent with this chapter and must be adapted to the special needs of the legislative branch, as determined by the legislative council REPRESENTATIVE GARDNER noted that the same language exists on page 2, beginning on line 11, but pertaining to the judicial branch. She asked Mr. Barnhill for a definition of "special needs". 9:15:46 AM MR. BARNHILL explained, "This is existing language in the state's procurement code, so I can only assume that both the legislative and the judicial branches, when this statute was being drafted, felt they had special needs that were unique to their branches, with respect to procurement, and so, this would give them flexibility to tailor their procurement needs to the uniqueness of those branches." 9:16:13 AM REPRESENTATIVE GARDNER asked Mr. Barnhill if he thinks those "special needs" could be used as an excuse or a reason to not comply with the intent and provisions of SB 12. 9:16:35 AM MR. BARNHILL answered, "I doubt it." 9:18:17 AM CHAIR SEATON asked, "When the administrative order went in that dealt with these same issues in a ... slightly different way, ... was there an impact on contracts at that time?" 9:18:38 AM TOMAS H. BOUTIN, Deputy Commissioner, Office of the Commissioner, Department of Revenue, answered, "Not to my knowledge." 9:18:55 AM VERN JONES, Chief Procurement Officer, Central Office, Division of General Services, Department of Administration, stated that AO 227 requires the state to seek a certified copy of a company's policy against human trafficking if that company was incorporated and headquartered in a Tier 3 country. The proposed legislation would prevent the state from doing business with any of those same companies. Since AO 227 was enacted in December, the administration knows of no instances where it has received a copy of the certified statement against human trafficking. Mr. Jones stated, "The only conclusion that we can draw from that is that since then, I believe, we have not done business with any countries that are headquartered ... and incorporated in those Tier 3 countries." He said there is a lack of data relating to how much business is done with companies that are headquartered in [Tier 3] countries. Furthermore, he said there is no good way of determining which companies are or are not headquartered in Tier 3 countries, other than asking the question each time the state does a procurement, which is what it has been doing. 9:20:38 AM CHAIR SEATON asked Mr. Jones to confirm that the administration normally doesn't know where companies are headquartered when they contract with the state. 9:20:57 AM MR. JONES answered that's correct. He said the companies are only required to have an Alaska business license and be qualified to do business within Alaska. 9:21:09 AM REPRESENTATIVE GARDNER asked Mr. Jones if it is reasonable to conclude that SB 12 is about making an important statement and perhaps having a certain leadership role in an attempt to address the issues, but won't have any "real effect on the ground here in Alaska." 9:21:46 AM MR. JONES told Representative Gardner that she is probably correct; the information that the administration has been able to collect indicates that it doesn't do much business with [companies] that are headquartered in Tier 3 countries. 9:21:56 AM REPRESENTATIVE GATTO expressed concern about the word "headquarters". He said the company Sony is headquartered in Japan; however, there may be other headquarters for the same company elsewhere. He asked, "Do ... we define it as a single location in one of these Tier 3 countries?" 9:22:38 AM MR. JONES said he is not certain what the definition of headquarters is. Notwithstanding that, he noted that in AO 227, the administration defined the companies in question as "established and headquartered" or "incorporated and headquartered" in a Tier 3 country. He deferred to Mr. Barnhill for further definition. 9:23:30 AM REPRESENTATIVE GRUENBERG said he would be offering an amendment regarding that issue. Regarding language in the bill, he noted that the bill drafter had written the legislature and the court system adopts procedures, whereas the administration adopts regulations, [as shown on page 2, line 26]. Representative Gruenberg asked Mr. Jones if he would be amenable to changing the word "procedures" to "regulations" on page 2, line 28, to be consistent. He said procedures is "an informal kind of a thing." 9:24:47 AM MR. JONES responded that changing that language would clarify that the administration does have to enact regulations and that "the administrative order would have to be superseded by regulations more specific to this bill." REPRESENTATIVE GRUENBERG remarked that AO 227 is interesting, and he said he thinks it's an excellent idea for people submitting responses to requests for proposals (RFPs) to have to disclose their policy concerning human trafficking. He said he is considering whether it would be a good idea also to require companies that are involved in state procurement to "have to disclose what you have in the administrative order." He added, "Not that it would be an either/or, but that we would engraft that into the bill itself." He asked Mr. Jones for his feedback. 9:26:17 AM MR. JONES said the governor's administrative order requires a certified copy of the company's policy against human trafficking, only if that company is headquartered and established in a Tier 3 country. He stated that it may be problematic for the state to be collecting that paper for each and every [company] that operates in a Tier 3 country. He pointed out that there are several South American countries on the Tier 3 list, and virtually every major corporation that Alaska deals with has operations in those countries. He concluded, "Of course, we'll defer to the legislature, as far as complying with the laws that you pass, but in my opinion, that might be a bit onerous for us." 9:27:17 AM REPRESENTATIVE GRUENBERG said he sees benefits in this, because it would focus companies' attention on this particular issue. He asked if companies typically have written policies on human trafficking. 9:27:39 AM MR. JONES guessed that probably some of them do, but a majority of them don't. He expressed his fear that a lack of compliance would "prevent us from making an award in probably numerous instances." REPRESENTATIVE GRUENBERG said, "I'm not sure I'm satisfied totally, but I'll come back to this." 9:28:20 AM CHAIR SEATON closed public testimony. 9:29:35 AM CHAIR SEATON clarified the differences between the administrative order and the bill. 9:30:30 AM REPRESENTATIVE GRUENBERG turned to Section 2 of the bill [beginning on page 2, line 8]. He directed attention to a handout he had provided [included in the committee packet], which shows Administrative Rules. He referred to the introductory sentence for Rule 1, which read: There shall be an administrative director of courts who shall, under policy guidelines provided by the supreme court: REPRESENTATIVE GRUENBERG then directed attention to subsection (o), which read: (o) Adopt and publish procedures to govern the procurement of supplies, services, professional services, and construction by the judicial branch. REPRESENTATIVE GRUENBERG said: My question is whether Section 2 of this bill modifies that court rule and, if so, whether constitutionally we need to put in that this is an indirect amendment of the court rule, which will ensure that this is constitutional. It'll require a concurrent resolution and a title change. 9:31:53 AM MR. BARNHILL responded that he has never thought about the extent to which modification of the court's administrative rules requires the enhanced vote. 9:32:09 AM REPRESENTATIVE GRUENBERG said he would ask the Legislative Legal and Research Services to consider that matter, "because if we don't do it, it's not constitutional." 9:32:26 AM REPRESENTATIVE GARDNER asked the bill sponsor if he wants to get a legal opinion as to whether the language adopted to the special needs of the judicial or legislative branches could be used "to step around the provisions of this bill." 9:33:07 AM SENATOR DYSON responded that he suspects it could be used that way; however, both those branches of government are mostly buying supplies, contract services, and a little bit of equipment, and he doesn't think "it will practically have any difference." 9:33:13 AM REPRESENTATIVE GATTO reiterated his question regarding the interpretation of the meaning of the word headquarters. 9:33:23 AM MR. BARNHILL said he believes it is possible for corporations to have multiple headquarters. He said he suspects that the bill sponsor intends the term "headquarters" to be used broadly. 9:34:04 AM CHAIR SEATON offered an example wherein a company had its main headquarters in the United Kingdom [a Tier 1 country], and also had regional headquarters in Saudi Arabia, or the United Arab Emirates [both Tier 3 countries]. He asked if that company could be prevented from contracting with the State of Alaska. 9:34:52 AM MR. BARNHILL answered that that is a potential possibility. He said he thinks there is a difference between an office and a headquarters in the United Arab Emirates. However, if the company characterized its operations in the United Arab Emirates as a headquarters, then [Alaska could be precluded from doing business with that company]. He deferred to the bill sponsor for clarification on his intent for the meaning of the word "headquarters." 9:35:25 AM SENATOR DYSON responded that he meant the word to mean "the [emphasis on 'the'] headquarters." He stated that any of the companies doing business in a Tier 3 country will quickly make the adaptation to make sure that "they either have sufficient company policy to meet our standards, or that we're doing business with one of their other headquarters in a non-Tier 3 country." 9:36:09 AM CHAIR SEATON asked Mr. Barnhill if he thinks "that clarification is ample on the record that this is talking about the main headquarters of the corporation." 9:36:19 AM MR. BARNHILL answered yes. 9:36:37 AM REPRESENTATIVE GRUENBERG urged the bill sponsor to define "headquarters" in the bill and leave the definition as broad as possible. In response to a remark made by Senator Dyson, he offered his understanding that a definition of "headquarters" is not in AO 227. He suggested he could work on the issue with the sponsor and Legislative Legal and Research Services. SENATOR DYSON said he wants to understand what Representative Gruenberg means by "as broad as possible." He pointed to the phrases [previously mentioned by Representative Gruenberg] regarding headquarters, which are written in the first paragraph at the top of page 2 in AO 227: "established and headquartered, or incorporated and headquartered". 9:38:55 AM REPRESENTATIVE GRUENBERG responded that that's a very narrow definition and asked Senator Dyson if that's what he wants. SENATOR DYSON answered yes. 9:39:20 AM REPRESENTATIVE GRUENBERG suggested he and Senator Dyson could continue the conversation later. 9:39:41 AM CHAIR SEATON turned to the list of tier placements and noted that Mexico is listed on the Tier 2 Watch List. He asked, "Would we be creating an absolute treaty violation if we require this of [North American Free Trade Agreement (NAFTA)] countries?" 9:40:06 AM MR. BARNHILL said he doesn't know, but would research that question and get back to the committee with an answer. 9:40:54 AM REPRESENTATIVE RAMRAS stated his support of SB 12. He said he thinks the bill "addresses a very germane and important issue," and is "an appropriate moral direction" for the legislature to take after carefully constructing the language it adopts. 9:41:32 AM REPRESENTATIVE GRUENBERG moved Amendment 2, as follows: On page 2, line 28: Delete "procedures" Insert "regulations" 9:41:56 AM CHAIR SEATON objected for discussion purposes. 9:42:03 AM REPRESENTATIVE GRUENBERG noted that this change would effect the commissioner of administration, who would be required to adopt changes to the regulatory process, which he said is set up in the administrative procedures Act and provides for public input, notice, and hearing if necessary. 9:42:40 AM REPRESENTATIVE GARDNER asked Representative Gruenberg if he wanted the amendment to also apply to the court system and the legislature. 9:42:53 AM REPRESENTATIVE GRUENBERG answered no. He explained that both the court system and the legislature use the term "procedures" rather than "regulations", which he said, "probably gets back to the interplay between the statute and the court rule." 9:43:18 AM JASON HOOLEY, Staff to Senator Fred Dyson, Alaska State Legislature, on behalf of Senator Dyson, sponsor of SB 12, noted that the word "procedures" appears again in the section of the bill relating to the administration, on page 3, line 1. 9:44:29 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 1 to Amendment 2, as follows: On page 3, line 1: Delete "procedures" Insert "regulations" CHAIR SEATON asked if there was any objection to Amendment 1 to Amendment 2. There being none, it was so ordered. 9:44:46 AM CHAIR SEATON removed his objection [to Amendment 2, as amended]. He asked if there was any further objection to Amendment 2, [as amended]. There being none, it was so ordered. 9:45:17 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 3, which read as follows [original punctuation provided, with some formatting changes]: Page 1, line 12 After "that has headquarters in" insert: ", is incorporated in, is established in, or is owned in whole or in major part by a person residing in." Page 2, line 15 After "that has headquarters in" insert: ", is incorporated in, is established in, or is owned in whole or in major part by a person residing in." Page 2, line 28 After "that has headquarters in" insert: ", is incorporated in, is established in, or is owned in whole or in major part by a person residing in." 9:45:50 AM CHAIR SEATON objected to Amendment 3. 9:46:05 AM REPRESENTATIVE GRUENBERG spoke to Amendment 3. He said the purpose is not only to include the companies that are headquartered in Tier 3 companies. He said the language was basically taken from AO 227. He explained the reason for using the phrase "owned in whole or in major part" is so that "we are not dealing with a subsidiary of some company." He said "person" is defined in Title 1. He said Amendment 3 casts a broader net. 9:46:43 AM CHAIR SEATON spoke to his objection. He said he thinks it would be administratively impossible to enforce "the percentage of ownership of a corporation of a person who owns part of a corporation and where that person lives." 9:47:39 AM MR. JONES said he would agree with Chair Seaton. He said presently the honor system is used, asking people to let the state know if they are headquartered in [Tier 3] countries. 9:48:51 AM REPRESENTATIVE GRUENBERG suggested asking if the company is "owned in whole or in major part by a person residing in" [a Tier 3 country], and having the person who answers that question do so under oath. He explained that if the person is false swearing, then he/she would be committing a crime. He asked Mr. Jones if that would be administratively difficult. 9:49:50 AM MR. JONES replied that it would not be "difficult to ask a second question." 9:49:54 AM REPRESENTATIVE GARDNER told Representative Gruenberg that she runs a small business and every once in awhile there is a potential customer with documentation requirements, and her business complies with certain regulations "at the point of origin." She stated, "I throw them in the trash and don't even reply. I don't even pursue taking an order. They can give us an order or not, but I'm not willing to spend a lot of time on these kind of things." She continued: And this bill, as I think we've established, isn't going to have a huge impact on anything we do. It's a statement of purpose, and it's taking a position on a very important issue and, as I said, hopefully a leadership position. But on the ground, in the actual contracts of the State of Alaska, it may not affect a single one. So, I don't think we need to worry about whether people have to say under oath where they reside .... I mean, I think it just becomes unnecessarily cumbersome and doesn't do anything to really help our real goal here. 9:51:19 AM MR. JONES concurred with Representative Gardner. He said some people believe that procedures that the state follows now are already overly complicated, bureaucratic, and burdensome, and [Amendment 3] may not have any practical impact, given the activity that has been seen since the administrative order was enacted. He said, "I think we'd tend to, on occasion, discriminate or eliminate an otherwise responsive proposal or bid because they didn't get their paperwork in on time, and it would be that much more paper for us to chase." 9:52:11 AM REPRESENTATIVE GATTO said, "We could be dealing with a place where there are only administrators and not dealing with the country that is full of the production, because the headquarters is in a safe place, but the production is scattered across Tier 3 ...." MR. JONES opined that that is certainly a possibility. 9:53:17 AM CHAIR SEATON said a corporation would have to know who owns a major portion of its stock and will have to certify that the major stockholder does not reside in any of the [Tier 3] countries. He said it would be administratively difficult for a corporation. 9:53:50 AM REPRESENTATIVE GRUENBERG asked if there would be any benefit to deleting the words, "is owned in whole or in major part by a person residing in". 9:54:15 AM SENATOR DYSON said, "My guess is the chair's right: ... demanding to know who their major owners are is probably a step beyond ... that which is practical and [wouldn't] really do us any good." He said the state is already saying to companies that are bidding that it wants them to be compliant in many areas, and [Amendment 3] would just be "adding ... another phrase to the requirements of who we're going to do business with." He concluded: When I talked to the major oil companies about this, they said, "This isn't a problem. If our company doesn't have a good policy about how our citizens will conduct themselves - our employees in these countries - we will get one, and should have done it." And I think that's really true. And, by and large, the folks that the state is doing business with that are overseas are not ... Mom and Pop shops like you and me, they are ... big countries. 9:56:08 AM REPRESENTATIVE GRUENBERG withdrew Amendment 3. [SB 12 was heard and held.]
| Document Name | Date/Time | Subjects |
|---|