Legislature(2017 - 2018)BUTROVICH 205
03/27/2018 03:30 PM STATE AFFAIRS
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|Confirmation Hearing(s): Alaska Police Standards Council, Alaska Public Office Commission|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 44-LEGISLATURE: ETHICS, CONFLICTS, PER DIEM 3:50:42 PM CHAIR MEYER announced the consideration of House Bill 44 (HB 44). He noted that the bill was heard on February 22 and there was a Senate committee substitute (CS) for consideration. 3:51:07 PM SENATOR GIESSEL moved to adopt the Senate CS (SCS) for CSSSHB 44, version 30-LS0208\N as the working document. CHAIR MEYER objected for discussion purposes. 3:51:45 PM CHRISTINE MARASIGAN, Staff, Senator Meyer, Alaska State Legislature, Juneau, Alaska, stated that the Senate CS makes some substantive changes to the bill. She explained that it takes the rest of an initiative called "The Alaska Government Accountability Act," Petition ID: 17AKGA, and puts it squarely into HB 44. She specified that there were five ideas in the initiative: • Declaration of conflict; specifically, if a legislator or legislator's family has a financial interest of $10,000 or more. • Acceptance of de minimis food or non-alcoholic beverage for immediate consumption. • Banning foreign travel. • Eliminating per diem after 121 days. • Not allowing foreign corporation or agents. MS. MARASIGAN provided the following sectional analysis, pointing out where the "five ideas" are located: In your CS, version: N, sections 1 and 2 are taken from the initiative, it's basically Section 9; this deals with the foreign corporation or national language, and that's what is in those two sections. Sections 3, 4 and 5, found on page 6 of version N, the Section 3 addresses the issue of disallowing any foreign travel to be funded unless a report is made. Section 4 deals with no per diem after 120 days. Section 5 deals with moving expenses. Section 6, we have the mention of the nonalcoholic beverage piece. The majority of the rest of the bill was in your original version R that you heard previously. Section 7, that corresponds to Section 1 that you've heard previously about conflict of interest. Section 8 corresponds to Section 2. Section 9 corresponds to Section 3. Section 11 corresponds to section 4. Section 10 addresses alcoholic beverages. The other major addition is having a new effective date, which is found in Section 17. 3:55:08 PM She continued as follows: Taking this initiative and putting it into statutory language, it takes some time simply because each, Department of Law, the Legislature, each organization has their way of drafting materials in order to conform with their material that they have with statute or etcetera. So, there was an accompanying legal memo that was produced from Legislative Legal that points out that while this version N before you, the CS you have adopted is not absolutely identical, it is very similar in that both the initiative and the bill also raise constitutional issues. The memo also points out the differences between the bill drafted before you and the initiative in that it can be attributed to drafting styles that I mentioned previously but it is still substantive; for example, one of little changes is that in the initiative we talk about a de minimis for food and drink where the bill before you simply states what we've been abiding by in our ethics language as $15. Also, the applicability of the initiative's prohibition on campaign contributions and expenditures by foreign influenced corporations, that language did not meet up very well in the bill and in the initiative, and there's some issues with constitutionality that the drafter then points out in the legal memo to the committee. So, having said that, the memo is pretty clear that while there are some substantive differences between the bill, the real differences are very few and they amount to different ways of addressing identical issues. So, the drafters themselves said therefore while you can't predict the certainty of the outcome of potential litigation, if a court were to apply the three-part test to this that the bill would in fact displace the initiative from the election ballet. There were four areas of constitutionality that the legal memo addressed. One was the salary and expenses of legislators, second was federal preemption, the third was freedom of speech and association, and the fourth was equal protection. I do have legislative attorney Dan Wayne online to answer any specific questions. Committee members should be aware that this bill has a further referral to Senate Judiciary and has had an additional referral to Senate Finance. 3:58:03 PM CHAIR MEYER asked Ms. Marasigan to verify that foreign travel is not prohibited, but it must be approved as a legislative purpose and a report must be filed after a legislator returns. MS. MARASIGAN answered correct. She noted that the foreign travel stipulation is in both the bill and the initiative. CHAIR MEYER commented on HB 44 and the initiative as follows: I want to let the committee know HB 44 dealt with the conflict issue which I thought did a good job of defining what a conflict is, I believe it is $10,000; and then we got thinking if that matches the initiative, let's look at the other things on the initiative and just see if we can combine everything else into this one bill, and if so then the initiative wouldn't need to go before the voters if we are close or close enough to the initiative. So, looking at the other four items in the five parts of that initiative, they all seem to be, I think, a good idea as far as I was concerned and I'm hoping that the committee does as well, and I did talk to the sponsor both of this bill, HB 44, and also I believe he's one of the three cosponsors on the initiative, that's Representative Grenn, I spoke to him on Thursday and asked him if he was okay with this, and I didn't get answer. So, I guess I don't know if no news is good news or he hadn't had a chance to talk to the other two yet; but, this bill does have two more committees to go to and I think the biggest question right now is the constitutionality of the bill and the initiative and so the bill goes to Judiciary next which I'm sure the Judiciary chair will iron that all out. He addressed Mr. Wayne from Legislative Legal and noted that he wrote his opinion making himself clear that HB 44 may be unconstitutional; however, he noted that Mr. Wayne also believed that the initiative was also unconstitutional. He asked Mr. Wayne how the initiative got approved if the initiative was unconstitutional. 4:00:51 PM DAN WAYNE, Legislative Counsel, Division of Legal and Research Services, Legislative Affairs Agency, Alaska State Legislature, Juneau, Alaska, explained that the attorney general's opinion that accompanied the initiative does not talk about the constitutionality of the bill other than whether it meets the single-subject requirement in the constitution. He added that the same requirement that it applies to bills before the Legislature was addressed in the document on page 4 that says, "The bill is not clearly unconstitutional." He specified that the document did not certify that there were no constitutional problems with the bill and continued as follows: They are not required to do that, they are just, I think, required to say whether or not the bill is clearly constitutional or not; they said it wasn't clearly unconstitutional, that's not really the same thing as saying that the bill is constitutional, and I don't think that they would disagree that there may be constitutional issues raised by the initiative. One of the parts of the initiative that we think might have constitutionality issues is the prohibiting of payment of legislative per diem after 121 days. There's Article 11, Section 7 that says that, "The initiative shall not be used to dedicate revenues or make or repeal appropriations." If the initiative passed it could be interpreted as tantamount to repealing an appropriation, so we think that that is one constitutional issue; now, that issue isn't presented by the bill because the bill is an act by the Legislature, so it's not covered by Article 11, Section 7 of the constitution, that issue wasn't raised in my memo of March 21 because that is not an issue with the bill. 4:04:44 PM MR. WAYNE continued to address constitutional issues as follows: The constitutional issues raised in the bill, there's Article 2, Section 7 of the constitution, it says that, "Legislators shall receive annual salaries and they may receive a per diem allowance." If this bill passed or the initiative passed, either one, and the Legislature decided not to follow it, the court probably wouldn't intervene, they would say the payment of per diem is an internal legislative matter, it's a legislative prerogative, it's "nonjusticiable." I say that based on some past holdings of the court, they cited one of them here on page 4 of my memo. Another constitutional issue is federal preemption. The initiative creates something called "foreign influence corporation" and defines what that is and says that, "Any foreign influence corporation can't donate anything to a campaign or spend any money on a campaign at all." Federal law already prohibits any foreign national from contributing, donating or spending funds in connection with federal, state or local elections either directly or indirectly. A contribution or expenditure by a foreign-influence corporation which is defined as one that takes a certain amount of money from a foreign national might be the same thing as an indirect expenditure or contribution by a foreign nationals, it's probably already covered by federal law and so a state law that does the same thing might be preempted by the federal law, especially if it conflicts with the federal law and that's probably one of the main substantive differences between the bill, the draft in front of you today, and the initiative. The initiative doesn't limit the application of the restrictions on expenditures and contributions by foreign-influence corporations, the bill does, it says that in a state election the prohibition on those expenditures and contributions only applies if it's allowed by federal law. So, it tries to reconcile that the state and federal law says that if there isn't a conflict and that's why when they drafted it, I added instead of creating a new law section like the initiative does. I added the language to existing law that already had some of that reconciliation language in it to deal with contributions by foreign nationals. So, it addresses the same issue which is a concern about campaign contributions or expenditures by foreign- influenced corporations, but it addresses it in a slightly different way and also in a way that takes care of part of a concern about federal preemption. 4:08:49 PM MR. WAYNE continued to address constitutional issues as follows: Under "possible constitutional issues" are listed on pages 6 and 7 of my memo. The first one was "freedom of speech in association" because it is a fundamental right to be able to speak out and to make contributions and so forth. The court looks really carefully whether or not the action taken goes too far in addressing the government's concern. So, as I had written on page 7, it says that the bill's sections 1 and 2 have to do with spending by foreign-influenced corporations might go so far that a court would say that they are not sufficiently narrowly tailored to the state's interest in protecting its processes of self-government because it limits all expenditures, even a penny would be limited. There's also an equal protection concern; again, the attorney general's opinion as I've read it doesn't say there are no constitutional concerns with the initiative, just that the initiative is not clearly unconstitutional, it's not a slam dunk in their opinion, so that's why they recommended certification. 4:10:42 PM CHAIR MEYER asked Mr. Wayne how a foreign corporation is defined. He asked if Apple Computer would be considered a foreign-controlled corporation if people outside of the U.S. owned 10 percent of its stock. If so, Apple would be prohibited from giving money to a political action committee (PAC). MR. WAYNE replied that both HB 44 and the initiative define "foreign corporations." He conceded that the definition for a foreign-influenced corporation is long, but in summary, "Any corporation would be foreign influenced if a foreign national or foreign owner holds, owns, controls or has direct or indirect beneficial ownership of equity or voting shares in an amount equal to or greater than five percent of all corporate voting shares outstanding or all corporate equity." He continued as follows: There are two other ways that something could be a foreign-influenced corporation also could be, "Two or more foreign nationals or foreign owners combined, holds, owns, controls or have direct or indirect beneficial ownership or equity or voting shares in an amount equal to or greater than 20 percent of all corporate voting shares outstanding or all corporate equity, or a foreign national or foreign owner participates directly or indirectly in decisions relating to covered expenditures or contributions;" in other words, directly or indirectly they are somehow involved in the deciding whether to or how to spend money on a campaign. So, it's really a super-broad definition and one wonders how it could be enforced. I suppose you could look at every single corporation to see if they are on the date the contribution was made if they fit into one of these three possible categories, it might take some doing, but that's what the initiative does, and we put it into the bill. CHAIR MEYER concurred with Mr. Wayne that figuring out who owns what shares that equated to more than 5 percent would be difficult. He asked if it was his opinion that inserting the initiative into HB 44 would be close enough to not need the initiative on the ballot. 4:14:38 PM MR. WAYNE answered yes. He explained as follows: I looked at the three-part test, it was articulated in Warren v. Boucher, that 1975 case cited in the memo, and then it is was elaborated on 30 years later in a 2005 case, and it seemed to me like those cases make it clear that the Legislature has some leeway in what it can do as long as it stays within certain boundaries that the court will consider a bill substantially similar for the purposes of displacing the initiative from the ballot if it meets that three- part test and one of the parts that it addresses the same general concerns that are addressed in the initiative, and this bill certainly does that; but, it doesn't have to be addressed in exactly the same way. I think that a bill going even further afield than this one does could probably still meet those tests, this one sticks pretty close. A lot of the differences are just in style; for example, combining some language with a current statute instead of creating a whole new statute, putting the substantive changes, putting that limitation on how the foreign-influenced corporation provision would work in order to address the preemption issue is something that the court would say, "Well this was, you know, done to address a constitutional issue and not to frustrate the purpose of the initiative makers," and that's another thing that they look for, is the bill just some kind of a sneak attack on the initiative and I don't think that a court would say that this bill is a sneak attack on the initiative, it addresses the same kind of concerns, does it a little bit differently, I think in some extent probably does it a little bit better and so it is substantially the same. SENATOR WILSON commented that he was not sure why the Department of Law and the Office of the Lieutenant Governor did not raise more questions after having Mr. Wayne's review regarding issues and problems. He said he was concerned and questioned whether he could provide his support due to the issues he noted. CHAIR MEYER asked Assistant Attorney General Libby Bakalar to address the committee's constitutional questions regarding HB 44 and the initiative. 4:18:07 PM LIBBY BAKALAR, Assistant Attorney General, Civil Division, Labor & State Affairs Section, Alaska Department of Law, Juneau, Alaska, commented on HB 44 as follows: I did author that attorney general opinion on "17AKGA," the process to determine whether an initiative is certified as to see whether the initiative complies with Article 11, Section 7 of the Alaska Constitution. That means there are four things we are allowed to look at: whether a bill makes an appropriation, whether the bill makes local or special legislation, whether it creates rules of court, and there is one other that I can't think of off of the top of my head right now; but, there may very well be constitutional infirmities with an initiative bill down the line, the supreme court says we are not supposed to look at that stuff in advance of certification. The only things we are allowed to consider when we certify or don't certify an initiative is whether Article 11, Section 7 is violated. So, this initiative bill did not violate any of that. So, that's the basis of the lieutenant governor's certification of the ballot measure. So, it's not that these issues have not been identified or looked at, it's just that we are not permitted under case law to deny certification of a ballot measure that does not present a "Section 7, Article 11" problem. 4:19:21 PM CHAIR MEYER asked if an initiative is legal until it is challenged. SENATOR COGHILL added that he was going to remind Ms. Bakalar that she was referring to the single-subject rule. MS. BAKALAR replied as follows: That's the fifth one, actually. There's a fourth one that I'm not thinking of, appropriations, local- special, rules of court, one more that I can't think of, and the single-subject rule which is the Croft v. Parnell case, but in any event, it is extremely limited. There are many initiative bills that raise potential due process concerns, contract issues, takings issues, equal protection problems, those are not things that we are permitted to look at under the case law when we certify a measure, that's not appropriate for pre-election review. CHAIR MEYER said he appreciated Ms. Bakalar's explanation. 4:20:08 PM SENATOR WILSON commented as follows: I guess that question would be on the single-subject in an appropriation that Mr. Wayne has in his memo. MS. BAKALAR replied as follows: The single-subject issue was looked at specifically related to Section 9 of that bill. I'm going from memory here, Section 9 of the bill was the part that dealt with campaign finance that was a little bit divergent from the other sections of the bill. We concluded that given the broad scope under which the supreme court reviewed single-subject, that it met the single-subject requirement. So, that's the one area in the case law that is developed around what we look at pre-election and that's the Croft v. Parnell case. SENATOR GIESSEL asked if the constitutionality would only be settled by "taking it to court." MS. BAKALAR answered as follows: Yes, other parts of the initiative's constitutionality would have to be litigated in an as-applied challenge or perhaps a facial challenge but some form of a challenge that actually looked at constitutional issues in the bill post-enactment. Initiatives don't get the same vetting that legislation does because the supreme court has said that prior to an election all we are allowed to look at, all the lieutenant governor or a municipal clerk, for example, is permitted to look at is these four or five areas. SENATOR GIESSEL asked her to address how the "salmon initiative" is being challenged in court prior to passage. MS. BAKALAR specified that "17FSH2" was denied certification by the lieutenant governor as follows: It is our position that that ballot measure unconstitutionally violates the appropriations restriction in Article 11, Section 7; so, it does violate one of the four core restrictions of enactments by initiative. The constitution says that an initiative cannot make an appropriation, make or repeal an appropriation, we think "17FSH2" does do that. We recommended against certifying the measure, that was litigated, a trial-court judge ruled in the sponsor's favor and now the state appealed. CHAIR MEYER noted that Senator Coghill may have a question. He asked if he wanted to wait until the bill is heard in the Senator Judiciary Committee. SENATOR COGHILL answered yes. CHAIR MEYER thanked Ms. Bakalar for her testimony. He stated that he had learned a lot in the committee meeting. He asked Mr. Johnston if he had any feedback from Representative Grenn regarding combining the initiative into HB 44 4:23:12 PM RYAN JOHNSTON, Staff, Representative Grenn, Alaska State Legislature, Juneau, Alaska, replied as follows: Representative Grenn has been trying to work to get into communication with the other members, trying to get a consensus. Again, he's been very busy, and he apologizes for the delay. In my capacity to speak for him, he thinks this is a good avenue to go forward with since the chair brought the motion forward, but he hasn't heard back from the initiative yet. CHAIR MEYER asked who the other two sponsors of the initiative are. MR. JOHNSTON replied that he did not know. CHAIR MEYER stated that he thought the other two sponsors are Bonnie Jack and Representative Kreiss-Tompkins. MR. JOHNSTON answered correct. CHAIR MEYER summarized that the committee had taken public testimony. He inquired if HB 44 had fiscal notes. 4:24:49 PM At ease. 4:26:15 PM CHAIR MEYER called the committee back to order and commented as follows: The fiscal notes will be forthcoming with the new CS, but it's similar to the original HB 44 which had zero fiscal notes. Since we have modified this bill somewhat, there will also have to be a title change resolution. 4:26:42 PM SENATOR GIESSEL moved to report SCS CSSSHB 44(STA), version 30- LS0208\N from committee with individual recommendations and attached zero fiscal note. She also made a motion to adopt the forthcoming title change resolution. [Title change resolution SCR 19 was read the first time on 3/29/18 and held on the Secretarys desk until it was taken up on final passage on 5/8/18.] CHAIR MEYER announced that without objection, SCS CSHB 44(STA) and forthcoming title change resolution was reported from the Senate State Affairs Standing Committee.