Legislature(2017 - 2018)ADAMS ROOM 519

04/06/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/7/18 at 1:00 pm --
+= HB 231 CFEC: BD. SALARY;STAFF CLASSIFIED SERVICE TELECONFERENCED
Moved CSHB 231(FIN) Out of Committee
+= HB 299 EXTEND: ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
+= HB 217 RAW MILK SALES; FOOD EXEMPT FROM REGS TELECONFERENCED
Moved CSHB 217(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Meeting will recess to 4/7/18 at 1:00 pm
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 6, 2018                                                                                            
                         1:36 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:36:04 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:36 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Diana  Rhodes,   Staff,  Representative  Geran   Tarr;  Fate                                                                    
Putman,    Commissioner,    Commercial    Fisheries    Entry                                                                    
Commission,  Department  of  Fish  and  Game;  Sylvan  Robb,                                                                    
Deputy    Commissioner,   Department    of   Administration;                                                                    
Representative   Adam    Wool,   Sponsor;    Mike   Navarre,                                                                    
Commissioner,   Department  of   Commerce,  Community,   and                                                                    
Economic Development; Laura  Stidolph, Staff, Representative                                                                    
Adam   Wool;  Kris   Curtis,  Legislative   Auditor,  Alaska                                                                    
Division of Legislative Audit.                                                                                                  
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Linda  Bruce,  Legislative  Legal  Services,  Juneau;  Erica                                                                    
McConnell, Director,  Alcohol and Marijuana  Control Office,                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 217    RAW MILK SALES; FOOD EXEMPT FROM REGS                                                                                 
                                                                                                                                
          CSHB 217(FIN)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously  published  fiscal   impact  note:  FN3                                                                    
          (DNR).                                                                                                                
                                                                                                                                
HB 231    CFEC: BD. SALARY;STAFF CLASSIFIED SERVICE                                                                             
                                                                                                                                
          CSHB 231(FIN)  was REPORTED out of  committee with                                                                    
          a  no  recommendation  and  with  one  new  fiscal                                                                    
          impact note  from the Office  of the  Governor for                                                                    
          the Department of Fish and Game.                                                                                      
                                                                                                                                
HB 299    EXTEND: ALCOHOLIC BEVERAGE CONTROL BOARD                                                                              
                                                                                                                                
          HB  299  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
Co-Chair Foster reviewed the meeting agenda.                                                                                    
                                                                                                                                
HOUSE BILL NO. 217                                                                                                            
                                                                                                                                
     "An  Act  relating  to  the   Alaska  Food,  Drug,  and                                                                    
     Cosmetic  Act;  relating  to the  sale  of  milk,  milk                                                                    
     products,  raw   milk,  and  raw  milk   products;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
1:37:26 PM                                                                                                                    
                                                                                                                                
DIANA RHODES, STAFF,  REPRESENTATIVE GERAN TARR, highlighted                                                                    
that the raw  milk and food exempt from  regulations bill no                                                                    
longer included  raw milk or  food exempt  from regulations.                                                                    
She relayed the sponsor supported the [upcoming] amendment.                                                                     
                                                                                                                                
1:38:31 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:40:33 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster relayed the amendment sponsor, Vice-Chair                                                                       
Gara, was not present to offer the amendment.                                                                                   
                                                                                                                                
Representative Guttenberg MOVED to ADOPT Amendment 1, 30-                                                                       
LS0593\T.2 (Wayne, 3/3/0/18) sponsored by Vice-Chair Gara                                                                       
(copy on file):                                                                                                                 
                                                                                                                                
     Page 2, line 26, through page 3, line 10:                                                                                  
     Delete all material and insert:                                                                                            
     11* Sec.  4. AS 29.71.040(a) is  repealed and reenacted                                                                    
     to read:                                                                                                                   
     (a)  If a municipality that  receives state money seeks                                                                    
     to   purchase   an    agricultural   product   and   an                                                                    
     agricultural   product  harvested   in  the   state  is                                                                    
     available  that  is of  like  quality  compared with  a                                                                    
     similar  agricultural  product  harvested  outside  the                                                                    
     state, the municipality                                                                                                    
     (1) shall  purchase the product harvested  in the state                                                                    
     if the  product is priced  not more than  seven percent                                                                    
     above the similar product harvested outside the state;                                                                     
     (2)   may purchase the  product harvested in  the state                                                                    
     only if the product is  priced not more than 15 percent                                                                    
     above the similar product harvested outside the state.                                                                     
     * Sec. 5. AS 29.71.040(b)  is repealed and reenacted to                                                                    
     read:                                                                                                                      
     (b) If  a municipality that receives  state money seeks                                                                    
     to  purchase  a  fisheries   product  and  a  fisheries                                                                    
     product harvested or  processed within the jurisdiction                                                                    
     of  the state  is  available that  is  of like  quality                                                                    
     compared with a similar  fisheries product harvested or                                                                    
     processed outside  the jurisdiction  of the  state, the                                                                    
     municipality                                                                                                               
     (1)  shall purchase the  product harvested or processed                                                                    
     within the jurisdiction of the  state if the product is                                                                    
     priced not  more than seven  percent above  the similar                                                                    
     product    harvested   or    processed   outside    the                                                                    
     jurisdiction of the state;                                                                                                 
     (2) may purchase the product  harvested or processed in                                                                    
     the jurisdiction  of the state  only if the  product is                                                                    
     priced  not  more than  15  percent  above the  product                                                                    
     harvested or processed outside  the jurisdiction of the                                                                    
     state.                                                                                                                     
     * Sec. 6. AS 29.71.040(c) is amended to read:                                                                              
     (c) A  solicitation by a municipality  for the purchase                                                                    
     of  agricultural  or  fisheries products  must  include                                                                    
     written  notice   of  the  purchase   requirements  and                                                                    
     limitations  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state will [SHALL] be used where possible.                                                                                 
     subject to  the limitations under  (a) and (b)  of this                                                                    
     section. If  a municipality  that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside the  jurisdiction of  the state,  the municipal                                                                    
     officer responsible  for the purchase shall  certify in                                                                    
     writing   the   reasons  that   agricultural   products                                                                    
     harvested in the state  or fisheries products harvested                                                                    
     or processed within the jurisdiction  of the state were                                                                    
     not purchased."                                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, line 13:                                                                                                           
     Delete "of'                                                                                                                
    Insert "not less than seven percent nor more than"                                                                          
                                                                                                                                
     Page 3, line 17:                                                                                                           
     Delete "of'                                                                                                                
    Insert "not less than seven percent nor more than"                                                                          
                                                                                                                                
     Page 3, following line 19:                                                                                                 
     Insert a new bill section to read:                                                                                         
     "* Sec. 9. AS 36.15.050(c) is amended to read:                                                                             
     (c) A solicitation for the  purchase of agricultural or                                                                    
     fisheries products  must include written notice  of the                                                                    
     preferences  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state  will  [SHALL] be  used  where  possible. If  the                                                                    
     state or  a school  district that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside  the  jurisdiction  of the  state  the  officer                                                                    
     responsible for  the purchase shall certify  in writing                                                                    
     the  reasons that  agricultural  products harvested  in                                                                    
     the state or fisheries  products harvested or processed                                                                    
     within  the   jurisdiction  of   the  state   were  not                                                                    
     purchased."                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Representative Kawasaki OBJECTED for discussion.                                                                                
                                                                                                                                
Ms.  Rhodes   detailed  the   amendment  had   been  briefly                                                                    
addressed by Representative Geran Tarr  at a past meeting as                                                                    
it  had  been   included  in  a  previous   version  of  the                                                                    
legislation.  There was  an existing  7 percent  procurement                                                                    
preference. The  sponsor wanted  to provide  flexibility for                                                                    
agencies  that wanted  to purchase  Alaska grown  items. The                                                                    
amendment would  allow agencies  to spend  up to  15 percent                                                                    
more on an Alaska grown product.                                                                                                
                                                                                                                                
Co-Chair Foster  noted that Vice-Chair  Gara had  joined the                                                                    
meeting.                                                                                                                        
                                                                                                                                
Vice-Chair Gara  shared he  was open  to the  bill sponsor's                                                                    
views  on  the amendment.  The  amendment  maintained the  7                                                                    
percent  local  producer's   preference  for  fisheries  and                                                                    
agricultural products; local producers  could charge up to 7                                                                    
percent higher and still win  in the procurement process. He                                                                    
noted it had been the law for  a long time. There had been a                                                                    
discussion  about changing  the  preference  to 15  percent,                                                                    
which had  caused some  concern that the  amount may  be too                                                                    
expensive  for schools  and  other  entities facing  limited                                                                    
funds.  The amendment  reflected an  earlier version  of the                                                                    
bill  that included  a 7  percent local  preference to  help                                                                    
local producers and  if a state or community  entity (e.g. a                                                                    
school)  wanted to  go above  the 7  percent they  could add                                                                    
another 8 percent to the price  in order to select the local                                                                    
product. He  explained it would  save money for  schools and                                                                    
other  entities strapped  for  cash as  the  bill would  not                                                                    
force them to  pay the extra 8 percent.  The negative aspect                                                                    
was the uncertainty  that entities would ever opt  to pay an                                                                    
additional  8  percent  for local  dairy  or  fisheries.  He                                                                    
requested to hear the sponsor's view on the amendment.                                                                          
                                                                                                                                
1:44:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  replied that Ms.  Rhodes had  indicated the                                                                    
sponsor's support.                                                                                                              
                                                                                                                                
Representative Wilson  communicated she was amenable  to the                                                                    
7 percent. She provided a  scenario where an entity chose to                                                                    
go up to 12 percent  to purchase carrots, but simultaneously                                                                    
opted not to pay 9 percent  for another type of product. She                                                                    
remarked the amendment took a  subject with strict rules and                                                                    
would leave it  up to each district to choose  between 7 and                                                                    
15 percent. She  was uncertain how the  change would comport                                                                    
with existing  procurement rules.  She wondered  whether the                                                                    
change could result  in law suits or  complaints because the                                                                    
percentage   would  no   longer  be   consistent.  Currently                                                                    
entities had  to opt for  the producer within the  7 percent                                                                    
range. She did  not know how allowing an entity  to select a                                                                    
producer between the 7 and 15 percent range would work.                                                                         
                                                                                                                                
Vice-Chair Gara  did not see  a possibility for a  law suit.                                                                    
The  law  would  maintain  the   existing  7  percent  local                                                                    
preference. No  one would have  the ability to sue  a school                                                                    
district or other  entity for deciding to  pay an additional                                                                    
8 percent.  For example,  the law  would require  paying the                                                                    
additional 7  percent and  if a local  dairy cost  9 percent                                                                    
more,  the school  district, prison,  or other  state entity                                                                    
could choose to pay the extra amount.                                                                                           
                                                                                                                                
Representative Wilson clarified there  were two bidders on a                                                                    
procurement. She gave an example  of an Alaskan business and                                                                    
a  Washington  business  submitting bids  to  provide  milk.                                                                    
Under existing  law, an Alaskan  business could bid up  to 7                                                                    
percent more and still win the  bid. She believed if the bid                                                                    
from  the Alaskan  business was  9 percent  more the  entity                                                                    
would have  to select the Washington  business because there                                                                    
was only  a 7 percent  addition. She believed  the amendment                                                                    
would allow  an entity to  pay 9 percent, which  she thought                                                                    
was contrary to procurement rules.                                                                                              
                                                                                                                                
Representative Pruitt  agreed with the amendment.  He stated                                                                    
a  municipality or  school district  would have  to put  the                                                                    
range  in  their procurement  code  because  they could  not                                                                    
randomly change the percentage.  He detailed entities had to                                                                    
have a  standard in their  procurement codes.  He elaborated                                                                    
that  a code  could either  specify 7  percent or  up to  15                                                                    
percent. Entities'  procurement decisions would be  based on                                                                    
their procurement  codes. The entities would  not decide how                                                                    
to  apply  their  procurement haphazardly,  which  would  be                                                                    
subject  to  a  lawsuit.  He explained  that  would  not  be                                                                    
allowable. He detailed a municipality  would have to publish                                                                    
its  procurement rules  at the  beginning of  a process.  An                                                                    
applicant   would  then   apply  based   on  the   specified                                                                    
procurement  rules. He  clarified  the rules  would be  made                                                                    
known  beforehand,  not  in  the  middle  of  a  procurement                                                                    
process.                                                                                                                        
                                                                                                                                
1:49:06 PM                                                                                                                    
                                                                                                                                
Representative Wilson  asked if  it was  the intent  for the                                                                    
state to  use the range  of 7  and 15 percent.  She remarked                                                                    
the  state  would  still  have  the  requirement  for  state                                                                    
contracts including corrections and other.                                                                                      
                                                                                                                                
Vice-Chair Gara replied that a  bidder would bid a price. If                                                                    
a  price  was  8  percent  more,  the  municipality,  school                                                                    
district, or state entity would  be allowed to pay the extra                                                                    
1 percent. There were already rules  to apply to two sets of                                                                    
bids for milk  - they were both at 7  percent and there were                                                                    
rules for deciding  which bids qualified and  which did not;                                                                    
those  rules  would  remain. The  amendment  merely  gave  a                                                                    
district  or  other  entity  the right  to  choose  a  local                                                                    
product  as  long as  it  did  not  exceed an  additional  8                                                                    
percent.                                                                                                                        
                                                                                                                                
Representative  Wilson clarified  her  understanding of  the                                                                    
amendment. She believed Vice-Chair  Gara was stating that in                                                                    
the first round  of bidding if with the 7  percent added, an                                                                    
Alaskan entity would still be  lower than the milk from out-                                                                    
of-state and they would win the  bid based on the 7 percent.                                                                    
She asked for  verification that the school  district or the                                                                    
state could  choose to then pay  8 percent instead of  the 7                                                                    
percent that had been bid.                                                                                                      
                                                                                                                                
Vice-Chair Gara  replied in the  negative. He  believed that                                                                    
was  the  source of  the  confusion.  He clarified  that  if                                                                    
something  was bid  at 7  percent, the  school district  [or                                                                    
other entity] would  take the product at the  7 percent. The                                                                    
school  district would  not be  allowed to  give a  producer                                                                    
more than the bid price.  He provided an example where local                                                                    
dairy  bid  at  9  percent more.  He  explained  the  school                                                                    
district could  choose whether to  accept the 9  percent bid                                                                    
or go with another bid because  it was only obligated to pay                                                                    
7 percent.                                                                                                                      
                                                                                                                                
1:51:26 PM                                                                                                                    
                                                                                                                                
Representative Wilson  pointed to  language in Section  9 of                                                                    
the  amendment  on pages  2  and  3.  She observed  that  if                                                                    
something  was  bought  from  out-of-state,  the  purchasing                                                                    
entity  may  be  required  to  submit  additional  paperwork                                                                    
detailing  why the  out-of-state bidder  had been  selected.                                                                    
She  asked  where  the  paperwork would  go  and  who  would                                                                    
determine what it looked like.                                                                                                  
                                                                                                                                
Vice-Chair Gara  asked Representative  Wilson to  repeat the                                                                    
location in the amendment she was referencing.                                                                                  
                                                                                                                                
Representative Wilson read from Section 9 of the amendment:                                                                     
                                                                                                                                
     A  solicitation for  the  purchase  of agricultural  or                                                                    
     fisheries products  must include written notice  of the                                                                    
     preferences  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state  will  [SHALL] be  used  where  possible. If  the                                                                    
     state or  a school  district that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside  the  jurisdiction  of the  state  the  officer                                                                    
     responsible for  the purchase shall certify  in writing                                                                    
     the  reasons that  agricultural  products harvested  in                                                                    
     the state or fisheries  products harvested or processed                                                                    
     within  the   jurisdiction  of   the  state   were  not                                                                    
     purchased."                                                                                                                
                                                                                                                                
Representative Wilson  observed the  section was  a mandate.                                                                    
She asked where  the paperwork would be filed  and who would                                                                    
determine its accuracy.                                                                                                         
                                                                                                                                
Vice-Chair  Gara  answered that  it  was  a requirement  for                                                                    
entities  to state  the  reason why  they  rejected a  local                                                                    
bidder. The reasons would be included in procurement code.                                                                      
                                                                                                                                
Representative  Guttenberg   stated  the  language   in  the                                                                    
amendment  consistently referred  to municipality.  He noted                                                                    
it did  not refer to  school districts  until page 3  of the                                                                    
bill.  He asked  if the  definition of  municipality covered                                                                    
school  districts. He  noted that  not all  school districts                                                                    
were  connected  to  a municipality.  He  provided  examples                                                                    
including the Yukon Koyukuk School  District in the Interior                                                                    
and some  Southeast and  possibly Southwest  communities. He                                                                    
wanted  to ensure  the reference  to  municipalities in  one                                                                    
section covered school districts.                                                                                               
                                                                                                                                
1:54:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara replied  that  the  amendment governed  the                                                                    
same  entities  that  the   procurement  code  covered.  The                                                                    
amendment  did nothing  to change  that. He  noted the  bill                                                                    
sponsor may  know exactly which  entities were  covered, but                                                                    
the amendment did not change that law.                                                                                          
                                                                                                                                
Ms. Rhodes  answered that Vice-Chair  Gara was  correct. She                                                                    
elaborated the amendment changed  nothing in the procurement                                                                    
code.  The  covered  entities   were  school  districts  and                                                                    
municipalities that received state money.                                                                                       
                                                                                                                                
Representative Wilson MAINTAINED the OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Ortiz, Pruitt, Thompson,  Gara, Grenn, Guttenberg,                                                                    
Seaton, Foster                                                                                                                  
OPPOSED: Kawasaki, Tilton, Wilson                                                                                               
                                                                                                                                
The MOTION  PASSED (8/3). There being  NO further OBJECTION,                                                                    
Amendment 1 was ADOPTED.                                                                                                        
                                                                                                                                
Vice-Chair  Gara   addressed  the  fiscal  notes   from  the                                                                    
Department of Commerce,  Community and Economic Development.                                                                    
The note reflected a cost of  $5,000 and a change in revenue                                                                    
of $10,000 for FY 19 through FY 24.                                                                                             
                                                                                                                                
1:57:21 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  MOVED  to  REPORT  CSHB  217(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSHB  217(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN3 (DNR).                                                                                                  
                                                                                                                                
1:58:07 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:58:44 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 231                                                                                                            
                                                                                                                                
     "An Act relating to the Alaska Commercial Fisheries                                                                        
     Entry Commission; and providing for an effective                                                                           
     date."                                                                                                                     
                                                                                                                                
1:59:09 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
SYLVAN    ROBB,   DEPUTY    COMMISSIONER,   DEPARTMENT    OF                                                                    
ADMINISTRATION, introduced herself.                                                                                             
                                                                                                                                
FATE  PUTMAN,   COMMISSIONER,  COMMERCIAL   FISHERIES  ENTRY                                                                    
COMMISSION,   DEPARTMENT  OF   FISH  AND   GAME,  introduced                                                                    
himself.                                                                                                                        
                                                                                                                                
Representative  Wilson  MOVED  to  ADOPT  Amendment  1,  30-                                                                    
GH1053\O.1 (Bullard, 4/2/18)(copy on file):                                                                                     
                                                                                                                                
     Page 1, lines 4 - 5:                                                                                                       
     Delete "assigning employees of the commission to the                                                                       
     classified service;"                                                                                                       
                                                                                                                                
     Page 2, lines 14 - 17:                                                                                                     
     Delete all material.                                                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 2, line 30:                                                                                                           
     Delete all material. 11                                                                                                    
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, lines 5 - 19:                                                                                                      
     Delete all material.                                                                                                       
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
Representative Kawasaki OBJECTED for discussion.                                                                                
                                                                                                                                
Representative  Wilson  explained  the amendment  would  not                                                                    
unionize existing  employees and  would leave them  in their                                                                    
existing  classification.  She  reported  that  based  on  a                                                                    
survey it appeared to be the will of the employees.                                                                             
                                                                                                                                
Representative Kawasaki WITHDREW  his OBJECTION. There being                                                                    
NO further OBJECTION, Amendment 1 was ADOPTED.                                                                                  
                                                                                                                                
2:00:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  MOVED to  ADOPT Amendment  2, 30-OH1053\O.5                                                                    
(Bullard, 4/4/18) (copy on file):                                                                                               
                                                                                                                                
     Page 2, following line 8:                                                                                                  
     Insert a new bill section to read:                                                                                         
     "* Sec. 4. AS 16.43.050 is amended to read:                                                                                
     Sec.  16.43.050. Qualifications.  The commission  shall                                                                    
     consist of  two [THREE] members  with a broad  range of                                                                    
     professional experience,  neither [NONE] of whom  has a                                                                    
     vested  economic  interest  in an  interim-use  permit,                                                                    
     entry permit, commercial fishing  vessel or gear, or in                                                                    
     any   fishery   resource    processing   or   marketing                                                                    
     business."                                                                                                                 
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, line 2:                                                                                                            
     Delete "sec. 4"                                                                                                            
     Insert "sec. S"                                                                                                            
                                                                                                                                
     Page 3, line 11:                                                                                                           
     Delete "sec. S"                                                                                                            
     Insert "sec. 6"                                                                                                            
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Foster asked one of  the departments to explain the                                                                    
amendment   that   had   been   brought   forward   by   the                                                                    
administration.                                                                                                                 
                                                                                                                                
Ms. Robb explained one of  the primary functions of the bill                                                                    
was  to decrease  the number  of Commercial  Fisheries Entry                                                                    
Commission  (CFEC)  commissioners  from three  to  two.  She                                                                    
noted that the  change had inadvertently been  missed in one                                                                    
location in  the bill. The  amendment corrected an  error to                                                                    
align with the rest of the document.                                                                                            
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment 2 was ADOPTED.                                                                                  
                                                                                                                                
2:01:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  MOVED to  ADOPT Amendment  3, 30-GH1053\O.4                                                                    
(Bullard, 4/4/18) (copy on file):                                                                                               
                                                                                                                                
     Page 2, lines 24 - 29:                                                                                                     
     Delete all material and insert:                                                                                            
     "(d) Except when  there is a vacancy as  provided in AS                                                                    
     16.43.030(c),  the [THE]  show cause  hearing shall  be                                                                    
     conducted before  a quorum  of commissioners  and shall                                                                    
     be presided over by a  hearing officer appointed by the                                                                    
     commission  who  shall  rule  on  the  presentation  of                                                                    
     evidence and  other procedural matters.  Hearings shall                                                                    
     be conducted in accordance with regulations adopted                                                                        
     under AS 16.43.110(b)."                                                                                                    
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair  Foster  asked  the   departments  to  explain  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Ms. Robb explained  the amendment clarified when  one of the                                                                    
two commissioner seats was vacant,  the commissioner may act                                                                    
alone; however, when both  commissioner seats were occupied,                                                                    
one commissioner could not act alone.                                                                                           
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment 3 was ADOPTED.                                                                                  
                                                                                                                                
Co-Chair Seaton MOVED conceptual  Amendment 1, page 2, lines                                                                    
12  and 13,  which would  change the  salary range  for both                                                                    
CFEC commissioners to 25.                                                                                                       
                                                                                                                                
Co-Chair Foster  asked for  verification that  the amendment                                                                    
applied to future CFEC commissioners only.                                                                                      
                                                                                                                                
Co-Chair  Seaton answered  in  the  affirmative. He  thought                                                                    
discriminating  between salary  for  commissioners with  the                                                                    
same  duties was  not necessary.  He noted  there were  some                                                                    
legislative  staff  at  a  range  24  and  he  believed  the                                                                    
commissioner should be  somewhat higher, but a  range 27 was                                                                    
$40,000  more   than  a  range   24.  He  thought   the  two                                                                    
commissioners should be equal in pay.                                                                                           
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
2:04:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster asked to hear from the departments.                                                                             
                                                                                                                                
Representative  Pruitt  asked   for  verification  that  the                                                                    
amendment would replace  "Range 27" with "Range  25" on line                                                                    
12 and would replace "Range 24" with "Range 25" on line 13.                                                                     
                                                                                                                                
Co-Chair Seaton agreed.                                                                                                         
                                                                                                                                
Ms.  Robb  did  not  have an  objection  to  the  conceptual                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO OBJECTION, conceptual Amendment 1 was ADOPTED.                                                                               
                                                                                                                                
Representative Guttenberg  remarked he  had not  objected to                                                                    
Amendment  1,   which  maintained  the  status   of  current                                                                    
classified [CFEC]  employees. He  referenced a letter  and a                                                                    
survey [from  CFEC employees] received by  the committee. He                                                                    
stated  it was  difficult to  see documents  of that  nature                                                                    
that may  not be  valid or were  done in a  way to  give the                                                                    
committee  the   wrong  impression.  He  noted   the  survey                                                                    
contained  15  or  20  signatures (copy  on  file).  He  was                                                                    
concerned  about receiving  something  without  a notary  or                                                                    
other indication  legitimizing the document. He  stated that                                                                    
theoretically one person could  have created and submitted a                                                                    
document. He  thought the committee  should be  cognizant to                                                                    
make  certain something  was as  it was  represented in  the                                                                    
future.                                                                                                                         
                                                                                                                                
Vice-Chair Gara reviewed the fiscal  note from the Office of                                                                    
the  Governor  for the  Department  of  Fish and  Game  (OMB                                                                    
Component  Number  471).  The   reduction  in  one  position                                                                    
resulted in  a designated  general fund savings  of $187,000                                                                    
in FY  19 through FY 22  and $228,800 starting in  FY 23. He                                                                    
thought there would be a  forthcoming fiscal note to reflect                                                                    
the passed amendment.                                                                                                           
                                                                                                                                
Representative  Wilson asked  whether  the  bill would  move                                                                    
forward  with  a  forthcoming fiscal  note  to  reflect  the                                                                    
change  of  both CFEC  commissioner  positions  to a  salary                                                                    
range 25.                                                                                                                       
                                                                                                                                
2:08:06 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:08:29 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster acknowledged Representative Wilson's point.                                                                     
                                                                                                                                
Co-Chair  Seaton  MOVED  to  REPORT  CSHB  231(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying forthcoming fiscal note.                                                                                           
                                                                                                                                
CSHB  231(FIN)  was  REPORTED  out  of  committee  with  "no                                                                    
recommendation"  and with  one new  fiscal impact  note from                                                                    
the Office  of the Governor  for the Department of  Fish and                                                                    
Game.                                                                                                                           
                                                                                                                                
2:09:14 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:10:59 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 299                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Alcoholic Beverage Control Board; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
2:11:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ADAM  WOOL, SPONSOR,  had no  further remarks                                                                    
on the bill. He was prepared for the amendment process.                                                                         
                                                                                                                                
Co-Chair Foster listed individuals available for questions.                                                                     
                                                                                                                                
2:12:29 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:13:08 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Foster  stated  that the  amendment  would  expand                                                                    
Department    of    Commerce,   Community    and    Economic                                                                    
Development's  (DCCED)  role  as  a  regulatory  and  quasi-                                                                    
judicial agency  over the  Alcoholic Beverage  Control (ABC)                                                                    
Board's  decisions.  He  asked   if  the  change  would  add                                                                    
additional costs to the department.                                                                                             
                                                                                                                                
MIKE   NAVARRE,   COMMISSIONER,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY,  AND  ECONOMIC  DEVELOPMENT,  answered  it  would                                                                    
depend  on the  number [of  ABC Board  cases] that  ended up                                                                    
being appealed.  He believed  it would  be limited  based on                                                                    
the  way the  amendment was  written to  apply to  an appeal                                                                    
based  on the  decision  of  the board.  The  intent was  to                                                                    
review whether it was consistent with law.                                                                                      
                                                                                                                                
Co-Chair Foster  MOVED to  ADOPT Amendment  1, 30-LS1281\J.2                                                                    
(Bruce, 4/3/18) (copy on file):                                                                                                 
                                                                                                                                
     Page 1, line 2, following the second occurrence of                                                                         
     "Board;":                                                                                                                  
     Insert "relating to the application of precedent to                                                                        
    decisions of the Alcoholic Beverage Control Board;"                                                                         
                                                                                                                                
     Page 1, following line 10:                                                                                                 
     Insert a new bill section to read:                                                                                         
     "* Sec. 3. AS 04.11.537 is repealed."                                                                                      
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Wool   explained  that  Amendment   1  would                                                                    
provide an  appeal provision to  the DCCED  commissioner. He                                                                    
detailed that  in the past  the ABC Board had  resided under                                                                    
the  Department  of  Revenue (DOR)  and  the  Department  of                                                                    
Public Safety (DPS). The move from  DPS to DCCED had been an                                                                    
effort to make the ABC  Board more receptive to business and                                                                    
commerce  and  less like  a  law  enforcement division.  The                                                                    
amendment  would  give  DCCED  a connection  to  the  board;                                                                    
currently   the   board   was    in   the   department   for                                                                    
administrative purposes  only. The amendment would  enable a                                                                    
person or  entity to appeal  a board decision.  Existing law                                                                    
required a person or entity to  take a board decision to the                                                                    
state superior court. The amendment  would provide an option                                                                    
that  did not  involve courts,  attorneys, and  accompanying                                                                    
complications.                                                                                                                  
                                                                                                                                
2:16:24 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  who  the board's  decision                                                                    
would be appealed to. He  asked if the decision was appealed                                                                    
back to the  board. He provided a scenario  where a decision                                                                    
was appealed and  went back to the board and  the result was                                                                    
still adversarial  for one party.  He asked about  the steps                                                                    
that would follow.                                                                                                              
                                                                                                                                
Representative Wool answered that  currently it was possible                                                                    
to appeal to the board, but if  a person got to a point they                                                                    
felt  another appeal  was needed,  the amendment  would mean                                                                    
DCCED  would  be the  next  adjudicating  body before  state                                                                    
court.                                                                                                                          
                                                                                                                                
LAURA STIDOLPH, STAFF, REPRESENTATIVE  ADAM WOOL, added that                                                                    
the    process   under    discussion   was    considered   a                                                                    
reconsideration process  instead of an appeals  process. The                                                                    
party  the board  made the  decision against  would have  30                                                                    
days to  make a  motion for  reconsideration to  the [DCCED]                                                                    
commissioner. The  commissioner would  then make  a decision                                                                    
based  on  his/her review  of  any  evidence that  had  been                                                                    
presented  to the  board. Subsequent  to the  commissioner's                                                                    
decision, a  party could  choose to  appeal the  decision to                                                                    
the superior court.                                                                                                             
                                                                                                                                
Representative Guttenberg reviewed  the process explained by                                                                    
Ms.  Stidolph. He  asked about  the portion  of the  process                                                                    
under  the  DCCED commissioner's  purview.  He  asked if  it                                                                    
involved an administrative law judge or a review.                                                                               
                                                                                                                                
2:18:46 PM                                                                                                                    
                                                                                                                                
Ms. Stidolph answered  that the process would  be similar to                                                                    
several  other statutes  including AS  14.11.016, pertaining                                                                    
to  when  school  districts could  request  decisions  of  a                                                                    
department that  the department  had made.  Additionally, AS                                                                    
19.20.015 allowed a  municipality to request reconsideration                                                                    
to the  Department of  Transportation and  Public Facilities                                                                    
(DOT)   commissioner  regarding   local  control   of  state                                                                    
transportation  corridors. She  clarified the  process under                                                                    
Amendment  1  applied  after  the [ABC]  board  had  made  a                                                                    
decision and  would allow  a party  to ask  the commissioner                                                                    
for reconsideration.  Under the reconsideration  process the                                                                    
commissioner would  receive all of the  information that had                                                                    
been previously used by the  board to make its decision. She                                                                    
characterized  the reconsideration  process  as an  informal                                                                    
appeals process.                                                                                                                
                                                                                                                                
Representative Guttenberg  asked Commissioner  Navarre about                                                                    
the review criteria the commissioner  would use. He wondered                                                                    
if  the  commissioner  would  give  the  information  to  an                                                                    
administrative law  judge and ask  for an opinion.  He asked                                                                    
if there would be a hearing held.                                                                                               
                                                                                                                                
Commissioner Navarre  answered the appeal process  was based                                                                    
on the  record of decision  before the board and  whether it                                                                    
was  consistent  with  law. He  explained  the  commissioner                                                                    
would be another set of eyes  on the final decision before a                                                                    
party could opt to take  the decision to the superior court.                                                                    
The commissioner  review would happen more  quickly than the                                                                    
superior court  process. The  commissioner would  review the                                                                    
record of  decision in consistency  with law and  would have                                                                    
assistance from the Department of Law (DOL).                                                                                    
                                                                                                                                
Representative   Wool  referenced   a  letter   from  Alaska                                                                    
Airlines in members' packets as  an example of entities that                                                                    
may appeal  a decision  (copy on file).  He noted  that many                                                                    
entities  that may  choose  to appeal  a  decision would  be                                                                    
small  businesses.   He  detailed  that  a   small  business                                                                    
adversely impacted  by an  ABC Board  decision may  not have                                                                    
ample  time to  drag the  issue out  in court.  He expounded                                                                    
that small businesses needed to  keep their doors open, keep                                                                    
their  lights  on, and  keep  their  employees employed.  He                                                                    
intended  that  DCCED would  be  cognizant  of those  things                                                                    
while   following  the   law.  He   believed  providing   an                                                                    
opportunity for  the commissioner to  act as another  set of                                                                    
eyes was important.                                                                                                             
                                                                                                                                
Commissioner   Navarre   stated    there   had   been   some                                                                    
frustrations  because the  board was  a division  within his                                                                    
department  that  he had  no  authority  to administer.  The                                                                    
department   had  been   undergoing  discussions   with  the                                                                    
division  director to  determine how  to include  some input                                                                    
into  the  administration by  the  department.  There was  a                                                                    
decision  by  the board  that  also  had the  administrative                                                                    
authority  over the  division regulating  and enforcing  the                                                                    
alcohol laws.  The amendment would allow  the commissioner's                                                                    
office to  take a second  look at  the specifics of  a board                                                                    
decision  before getting  to the  more expensive  litigation                                                                    
process. He  added that  he did  not believe  the amendments                                                                    
would  have fiscal  impact as  currently  written. He  noted                                                                    
that if  there was  a significant  number of  appeals, which                                                                    
would  not  be known  for  some  time,  the issue  would  be                                                                    
addressed   in  future   budget  deliberations   before  the                                                                    
legislature.                                                                                                                    
                                                                                                                                
2:23:53 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  appreciated   the  response.  He                                                                    
recognized there were boards  and commissions in departments                                                                    
that acted  independently, which sometimes caused  people to                                                                    
wonder where the  adult supervision was. He  believed it was                                                                    
an  appropriate step  for the  department. He  supported the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative  Kawasaki asked  if  Amendments 1,  2, and  3                                                                    
were connected as a packet.                                                                                                     
                                                                                                                                
Representative   Wool  agreed   that  the   amendments  were                                                                    
connected. He  noted Amendment 3  was a result  of Amendment                                                                    
1.                                                                                                                              
                                                                                                                                
Representative  Kawasaki   had  a  question   pertaining  to                                                                    
Amendment  2. He  summarized  his  understanding that  after                                                                    
reconsideration   was  given   by   the  commissioner,   the                                                                    
commissioner would  have some sort  of veto power  and could                                                                    
affirm, modify,  or reverse the  board's decision.  He asked                                                                    
if his understanding was accurate.                                                                                              
                                                                                                                                
Representative Wool replied in  the affirmative. He believed                                                                    
the  reconsideration   process  would   be  futile   if  the                                                                    
commissioner  did  not  have the  ability  to  overturn  the                                                                    
board's   decision.  The   point  was   to  obtain   another                                                                    
perspective on a  case and to have the ability  to come to a                                                                    
different decision.                                                                                                             
                                                                                                                                
Representative  Kawasaki pointed  to Amendment  2, lines  19                                                                    
through   21  laid   out  the   decision  point   where  the                                                                    
commissioner  would have  some sort  of ability  to exercise                                                                    
veto  over the  board's decision.  He  asked if  it was  the                                                                    
power the commissioner would have.                                                                                              
                                                                                                                                
2:27:30 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:29:29 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster returned  the topic to Amendment  1 and held                                                                    
the question by Representative Kawasaki.                                                                                        
                                                                                                                                
Co-Chair  Seaton stated  that Amendment  1 pertained  to the                                                                    
application of precedent to decisions  of the ABC Board. The                                                                    
amendment  would  repeal AS  04.11.537.  Amendment  1 had  a                                                                    
Legislative Legal Services opinion  attached (copy on file),                                                                    
which specified that  no other board had  the same criteria.                                                                    
He  asked what  the  effect  would be  if  AS 04.11.537  was                                                                    
repealed.                                                                                                                       
                                                                                                                                
Representative  Wool  answered   that  the  amendment  would                                                                    
require  the board  to apply  precedent. He  stated that  no                                                                    
other board  had the removal  of precedent  clause including                                                                    
the  Marijuana  Control  Board. He  stated  the  clause  was                                                                    
unique to the  ABC Board. He clarified  that precedent could                                                                    
be considered in a decision,  but the board was not required                                                                    
to adhere  to the precise way  it had acted in  the past. He                                                                    
referenced the  letter from Alaska  Airlines (copy  on file)                                                                    
explaining  that  for  many years  their  license  had  been                                                                    
renewed by  submitting the finger  prints of  its president,                                                                    
treasurer, secretary, and about  four corporate officers. In                                                                    
the current year, the ABC  Board had told Alaska Airlines it                                                                    
wanted  finger prints  from  all 22  of  the company's  vice                                                                    
presidents. The  company had  told the  board that  its vice                                                                    
presidents changed  frequently, the request  was cumbersome,                                                                    
and in  the past the  process had  been done a  certain way.                                                                    
The board had countered that  according to law the licensing                                                                    
required the additional finger prints.  He clarified that he                                                                    
was not  taking a position  on the board's decision,  but he                                                                    
believed  precedent  had  some   bearing  on  decisions.  He                                                                    
reasoned  that  in  the  case of  Alaska  Airlines,  if  the                                                                    
process had  been available, perhaps the  company could have                                                                    
taken  the  issue  to the  commissioner  for  an  additional                                                                    
opinion. He  reiterated he  was not taking  a position  on a                                                                    
board decision. He believed  precedent should be considered,                                                                    
not  eliminated.  He believed  it  was  consistent since  no                                                                    
other board  had the power, including  the Marijuana Control                                                                    
Board. The  opinion provided  by Legislative  Legal Services                                                                    
indicated the  issue could  be a problem  in due  process as                                                                    
well. He believed it was prudent to repeal the provision.                                                                       
                                                                                                                                
2:33:24 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton surmised  that  Legislative Legal  Services                                                                    
had specified  the current  statute could  be a  due process                                                                    
problem and that repealing AS  04.11.537 would be beneficial                                                                    
in two ways. First, the  courts would have the documentation                                                                    
considered  by the  ABC Board  in  the past  in addition  to                                                                    
documents on  a case  it was  reviewing. Second,  the repeal                                                                    
would eliminate potential due process problems.                                                                                 
                                                                                                                                
Representative    Wool   replied    in   the    affirmative.                                                                    
Additionally,  repealing  the  statute would  be  consistent                                                                    
with all other state boards.                                                                                                    
                                                                                                                                
Representative  Pruitt remarked  that  he did  not have  the                                                                    
letter  from Alaska  Airlines  in his  packet.  He asked  if                                                                    
there were other examples where  there had been concern that                                                                    
the  board   had  not  considered  precedent.   He  believed                                                                    
Legislative Legal Services was  highlighting the statute was                                                                    
opening the state up to potential litigation.                                                                                   
                                                                                                                                
Representative Wool  referenced a bill that  he believed had                                                                    
been  considered by  the House  Finance Committee.  The bill                                                                    
had  addressed beverage  tourism  BDLs [beverage  dispensary                                                                    
licenses] that  had been renewed consistently  for 25 years.                                                                    
The  law  had  been  further scrutinized  and  it  had  been                                                                    
determined  the  law required  an  establishment  to have  a                                                                    
certain number of rooms (e.g.  40 to 50). License owners had                                                                    
countered that they had been  doing things a certain way for                                                                    
25   years,  which   he  believed   should  be   taken  into                                                                    
consideration. He  did not have  other examples on  hand. He                                                                    
compared  the  situation to  a  scenario  where two  license                                                                    
holders  were treated  differently  in one  community -  one                                                                    
licensee was  allowed to do  something, while the  other was                                                                    
not.  He  believed  something allowed  in  one  circumstance                                                                    
should  be   taken  into  account  when   considering  other                                                                    
licenses.   He  did   not   believe   something  should   be                                                                    
automatically waived  because precedent  was not  taken into                                                                    
consideration.                                                                                                                  
                                                                                                                                
Representative  Wilson  noted   the  current  discussion  to                                                                    
repeal  AS 04.11.537.  She asked  if the  following language                                                                    
currently in AS 04.11.537 would  be addressed in a different                                                                    
amendment:                                                                                                                      
                                                                                                                                
     In determining whether issuance, renewal, transfer,                                                                        
     relocation, suspension, or revocation of a license is                                                                      
     in the best interests of the public...                                                                                     
                                                                                                                                
2:37:13 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:38:40 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Commissioner Navarre  answered that the  language referenced                                                                    
by Representative Wilson was specific  to the application of                                                                    
precedent.  The   protection  of  the  public   was  already                                                                    
included in several  sections of Title 4  related to issuing                                                                    
licenses and the action taken by the board and division.                                                                        
                                                                                                                                
Representative Wilson replied that  Amendment 1 would insert                                                                    
the language  "relating to the application  of precedent..."                                                                    
She wondered if  the wording no longer needed to  be part of                                                                    
the precedent section.                                                                                                          
                                                                                                                                
Representative Wool  answered that the amendment  would mean                                                                    
the removal  of the  application of precedent  and specified                                                                    
what the  application of precedent applied  to. The language                                                                    
[referenced by Representative Wilson]  was included in other                                                                    
sections of statute.                                                                                                            
                                                                                                                                
Representative Wilson  asked if  precedent would not  be set                                                                    
any  longer.  She wondered  if  the  other amendments  would                                                                    
address why the language would be inserted by Amendment 1.                                                                      
                                                                                                                                
Representative  Wool   replied  that  the   amendments  were                                                                    
related. He read language from  AS 04.11.537 that the "board                                                                    
need not  conform to  or distinguish  its decision  from any                                                                    
action it has  taken in the past." He  believed the language                                                                    
was  unique to  the ABC  Board and  for numerous  reasons he                                                                    
believed it should be removed.  He cited the Alaska Airlines                                                                    
letter as an example. He reported  Amendment 3 was more of a                                                                    
technicality based on the appeal process.                                                                                       
                                                                                                                                
Representative Wilson  agreed on  the repeal portion  of the                                                                    
amendment because  the second half  specified the  board did                                                                    
not  have to  consider what  it had  done in  the past  when                                                                    
considering   new   cases.   She  wanted   to   ensure   the                                                                    
applications  were  in  the   public's  best  interest.  She                                                                    
requested  follow up  on  the protection  of  the public  in                                                                    
other areas of statute.                                                                                                         
                                                                                                                                
Representative Wool  answered that  he or  Legislative Legal                                                                    
Services would follow up.                                                                                                       
                                                                                                                                
2:42:02 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara  stated  that   the  statutory  chapter  on                                                                    
alcohol included a  number of rules of  enforcement and cost                                                                    
when a  license was issued, revoked,  suspended. He stressed                                                                    
that all of the rules  still applied. The rules were applied                                                                    
based  on the  facts of  a case.  Even though  the amendment                                                                    
would repeal  the part of  statute specifying the  board did                                                                    
not have to  follow precedent, the facts of  the case should                                                                    
be  followed.  He  stated  the  language  existed  in  other                                                                    
statutes  -  other   statutes  specifying  rules  implicitly                                                                    
stated they were based on the  facts of the case. He thought                                                                    
the special  rule on precedent  for the ABC Board  was wrong                                                                    
and should  be removed. He  explained that if a  person lost                                                                    
their license  under various  rules, the  facts of  the case                                                                    
were  considered  to  make the  determination.  He  was  not                                                                    
concerned and  reiterated the rules  were in other  areas of                                                                    
statute.                                                                                                                        
                                                                                                                                
Representative Guttenberg  referred to the last  sentence of                                                                    
the   Legislative  Legal   Services   opinion  attached   to                                                                    
Amendment 1:                                                                                                                    
     It is my  opinion that this language  could present due                                                                    
     process  and  equal  protection  problems  by  treating                                                                    
     similarly    situated    licensees   differently    and                                                                    
     potentially  giving different  punishments for  similar                                                                    
     violations.                                                                                                                
                                                                                                                                
Representative Guttenberg  asked if the opinion  referred to                                                                    
the existing AS  04.11.537 or the repeal of  the statute. He                                                                    
was  looking  for clarity  and  the  simplest way  to  avoid                                                                    
conflict.                                                                                                                       
                                                                                                                                
Representative Wool replied that  the legal opinion sentence                                                                    
was addressing what  the author believed could  occur if the                                                                    
language was not repealed.                                                                                                      
                                                                                                                                
Representative  Kawasaki noted  that licensing  in the  same                                                                    
section   talked   about   board  imposed   conditions   and                                                                    
restrictions. He  noted that  AS [04.11].395  specified that                                                                    
"The board may, in the  best interests of the public, impose                                                                    
conditions or  restrictions on a license..."  He believed it                                                                    
was imbedded within the licensing  and zoning. He stated the                                                                    
only thing  the amendment pertained to  was precedent, which                                                                    
he was comfortable with.                                                                                                        
                                                                                                                                
Representative  Wool  responded to  Representative  Wilson's                                                                    
earlier request and read an excerpt from AS 04.11.330:                                                                          
                                                                                                                                
     Denial of License or Permit Renewal.                                                                                       
     (a)  An application  requesting  renewal  of a  license                                                                    
     shall be denied if                                                                                                         
     (1)  the  board finds,  after  review  of all  relevant                                                                    
     information, that  renewal of the license  would not be                                                                    
     in the best interests of the public;                                                                                       
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment 1 was ADOPTED.                                                                                  
                                                                                                                                
2:45:57 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  MOVED to  ADOPT Amendment  2, 30-LS1281\J.1                                                                    
(Bruce, 3/9/18) (copy on file):                                                                                                 
                                                                                                                                
     Page  1,  line 2,  following  the  first occurrence  of                                                                    
     "Board;":                                                                                                                  
     Insert "relating  to the authority of  the commissioner                                                                    
     of  commerce, community,  and  economic development  to                                                                    
     reconsider decisions of  the Alcoholic Beverage Control                                                                    
     Board;"                                                                                                                    
                                                                                                                                
     Page 1, following line 7:                                                                                                  
     Insert new bill sections to read:                                                                                          
     "* Sec. 2. AS 04.11.070 is amended to read:                                                                                
     Sec. 04.11.070.  Power limited to the  board. Except as                                                                    
     provided in AS 04.11.560(c),  only {ONLY] the board may                                                                    
     issue, renew, transfer, relocate,  suspend, or revoke a                                                                    
     license under this title.                                                                                                  
     *  Sec.  3.  AS  04.11.560 is  amended  by  adding  new                                                                    
     subsections to read:                                                                                                       
     (c)   An  aggrieved   party   may   request  that   the                                                                    
     commissioner  reconsider   a  decision  by   the  board                                                                    
     relating   to   the    issuance,   renewal,   transfer,                                                                    
     relocation,  suspension,  or  revocation of  a  license                                                                    
     under this  title. A  request for  reconsideration must                                                                    
     be  filed  within 30  days  after  the date  the  board                                                                    
     issues its decision.  The commissioner shall determine,                                                                    
     based  on  the record  before  the  board, whether  the                                                                    
     board's decision  is supported by  substantial evidence                                                                    
     and  whether  the  decision is  contrary  to  law.  The                                                                    
     commissioner shall issue  a written decision affirming.                                                                    
     modifying, or reversing the  board's decision within 30                                                                    
     days after receiving the request for reconsideration.                                                                      
     (d) Reconsideration under (c) of  this section is not a                                                                    
     precondition of  an appeal to the  superior court under                                                                    
     (b) of  this section.  If reconsideration  is requested                                                                    
     under  (c)  of  this   section.  the  decision  by  the                                                                    
     commissioner to affirm, modify.  or reverse the board's                                                                    
     decision is the final agency  action for purposes of an                                                                    
     appeal to the superior court under AS 44.62.560.                                                                           
     (e) The commissioner  may stay all or part  of an order                                                                    
     pending  administrative  review or  reconsideration  or                                                                    
     judicial review.  The aggrieved party may  not appeal a                                                                    
     stay  separately  from  an appeal  of  the  substantive                                                                    
     decision.                                                                                                                  
     (f)   In  this   section,   "commissioner"  means   the                                                                    
     commissioner  of  commerce,   community,  and  economic                                                                    
     development."                                                                                                              
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 1, line 12:                                                                                                           
     13 Delete "Section 2"                                                                                                      
     14 Insert "Section 4"                                                                                                      
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Wool explained  the amendment  addressed the                                                                    
appeal  and reconsideration  process to  DCCED after  an ABC                                                                    
Board decision and prior to going to state superior court.                                                                      
                                                                                                                                
Representative Kawasaki read  lines 19 through 21  on page 1                                                                    
of Amendment 2:                                                                                                                 
                                                                                                                                
     The  commissioner   shall  issue  a   written  decision                                                                    
     affirming.   modifying,   or  reversing   the   board's                                                                    
     decision  within 30  days after  receiving the  request                                                                    
     for reconsideration.                                                                                                       
                                                                                                                                
Representative  Kawasaki asked  if the  provision ultimately                                                                    
gave a commissioner veto power.                                                                                                 
                                                                                                                                
Commissioner Navarre  saw the provision  as a review  of the                                                                    
decision. He stated  it was not a veto power  because it had                                                                    
to be based  on the record before the board  and whether the                                                                    
board's decision  was supported by substantial  evidence and                                                                    
whether or  not it was contrary  to law. He believed  it was                                                                    
only  in  specific purposes  and  was  another set  of  eyes                                                                    
before going to an appeal before the courts.                                                                                    
                                                                                                                                
Representative Kawasaki  spoke to  an ABC Board  decision on                                                                    
distilleries and  what constituted  a mixed drink.  He noted                                                                    
there had  recently been news  that there had been  an error                                                                    
in the action  taken by the board, meaning the  issue had to                                                                    
come before  the board  again in the  future. He  stated the                                                                    
board had  come to  the decision in  February and  there had                                                                    
been  information  not  given   to  the  board  members  for                                                                    
consideration.  He asked  if the  department would  have any                                                                    
capacity to get additional  information "in between the time                                                                    
in which  that time  happened and  the board  rendered their                                                                    
decision."                                                                                                                      
                                                                                                                                
Commissioner  Navarre would  have to  get Legislative  Legal                                                                    
Services, but  he believed it  would be based on  the record                                                                    
of decision and information that  had been considered by the                                                                    
board and not based on any new information.                                                                                     
                                                                                                                                
2:48:54 PM                                                                                                                    
                                                                                                                                
LINDA  BRUCE,   LEGISLATIVE  LEGAL  SERVICES,   JUNEAU  (via                                                                    
teleconference),  asked  Representative Kawasaki  to  repeat                                                                    
his question.                                                                                                                   
                                                                                                                                
Representative  Kawasaki  complied.   He  referenced  a  2-2                                                                    
decision  by the  ABC Board  (one member  recused themselves                                                                    
from the  vote) to  disallow distilleries  to mix  drinks in                                                                    
their  facilities. He  asked  whether  a commissioner  would                                                                    
have  the  ability  to  veto the  board's  decision  or  get                                                                    
additional   information   in   affirming,   modifying,   or                                                                    
reversing  the  board's  decision.  He asked  what  kind  of                                                                    
information  would be  available  to  the commissioner  when                                                                    
considering the issue.                                                                                                          
                                                                                                                                
Ms. Bruce pointed  to lines 14 and 15 of  Amendment 2, which                                                                    
only permitted the commissioner  to reconsider a decision by                                                                    
the  board  relating  to the  issuance,  renewal,  transfer,                                                                    
relocation,  suspension, or  revocation  of  a license.  The                                                                    
provision  did not  give the  commissioner the  authority to                                                                    
veto  regulations  adopted by  the  board.  However, when  a                                                                    
commissioner was reviewing a decision  of the board (e.g. to                                                                    
issue  or  deny a  license)  they  could only  consider  the                                                                    
record that had been before the board.                                                                                          
                                                                                                                                
2:50:44 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki  wanted to  understand the  power of                                                                    
the commissioner.  He surmised that affirming  a decision by                                                                    
the board would  be rubber stamping that  decision. He asked                                                                    
how  modifying and  reversing a  board recommendation  would                                                                    
work.                                                                                                                           
                                                                                                                                
Ms. Bruce  explained her understanding that  modifying would                                                                    
come  into play  when there  may be  multiple facets  of the                                                                    
board's decision.  The commissioner could decide  to affirm,                                                                    
deny, and make changes to parts of a decision.                                                                                  
                                                                                                                                
Representative  Kawasaki referenced  the language  "based on                                                                    
the record before the board,"  and asked how much latitude a                                                                    
commissioner  would  have,  in   the  absence  of  presented                                                                    
information,  to  make  a decision  to  modify  the  board's                                                                    
decision.                                                                                                                       
                                                                                                                                
Ms. Bruce replied  that it would depend on  the facts before                                                                    
the board and the factual circumstances.                                                                                        
                                                                                                                                
Representative Wilson  referenced the board's  past decision                                                                    
on distilleries  and surmised the  amendment would  not help                                                                    
businesses impacted by the decision  because it had not been                                                                    
attached to  anyone renewing [a  license]. She  reasoned the                                                                    
decision had been about activity  businesses were allowed to                                                                    
conduct under their license.                                                                                                    
                                                                                                                                
Representative  Wool   answered  in  the   affirmative.  The                                                                    
amendment was  limited and  did not  cover any  decision the                                                                    
board  may  make about  cocktails  or  other. The  amendment                                                                    
specified what could be appealed.                                                                                               
                                                                                                                                
Representative Wilson  asked about  cases where  someone had                                                                    
been fined. She  wondered if the amendment  would allow them                                                                    
to take  the issue  to the commissioner.  Alternatively, she                                                                    
wondered if  the amendment only  pertained to  the issuance,                                                                    
renewal, transfer, relocation  [suspension, or revocation of                                                                    
a  license]. She  provided  an example  of  someone doing  a                                                                    
renewal  who  claimed  they  had   submitted  all  of  their                                                                    
paperwork, but  the board  had not received  it all  and had                                                                    
fined the  individual $1,000. She  asked if the  issue could                                                                    
be taken to the commissioner.                                                                                                   
                                                                                                                                
Representative  Wool  answered  that technically  the  issue                                                                    
could be  [taken to the  commissioner] when pertaining  to a                                                                    
renewal. He  thought Representative Wilson's example  may be                                                                    
a question  for Legislative Legal Services.  He listed items                                                                    
the  commissioner  could   reconsider  under  the  amendment                                                                    
including  the  issuance,   renewal,  transfer,  relocation,                                                                    
suspension, or revocation of a  license. He reasoned that if                                                                    
a  fine fell  under one  of the  categories, perhaps  it was                                                                    
applicable.                                                                                                                     
                                                                                                                                
2:54:03 PM                                                                                                                    
                                                                                                                                
Representative Wilson understood  the amendment pertained to                                                                    
the issuance, renewal, and transfer  of a license. She asked                                                                    
the board  would have to  decide against renewing  a license                                                                    
for the issue to go  to the commissioner. Alternatively, she                                                                    
wondered if someone could appeal  to the commissioner if the                                                                    
board imposed fines or penalties  on the license holder. She                                                                    
was trying to determine how broad the amendment was.                                                                            
                                                                                                                                
Ms. Bruce responded  that it may be  open to interpretation;                                                                    
however, the  term "relating to"  in the  amendment language                                                                    
"decision by  the board relating  to the  issuance, renewal,                                                                    
transfer,  relocation,   suspension,  or  revocation   of  a                                                                    
license," made the  amendment a bit broader  than merely the                                                                    
renewal or issuance  of a license. The  provision applied to                                                                    
something relating to the issuance or renewal of a license.                                                                     
Representative Wilson asked  how many times in  the past two                                                                    
years  someone had  taken  a board  decision  to court.  She                                                                    
understood that  court was expensive  and cost  someone more                                                                    
than  fines imposed  by the  board. She  wondered about  the                                                                    
added burden that would be placed on the commissioner.                                                                          
                                                                                                                                
Representative Wool replied that he  did not know the number                                                                    
of cases that  had gone to state superior  court. He guessed                                                                    
it was  not that many. He  deferred the question to  the ABC                                                                    
Board director.                                                                                                                 
                                                                                                                                
2:56:18 PM                                                                                                                    
                                                                                                                                
ERICA  MCCONNELL, DIRECTOR,  ALCOHOL  and MARIJUANA  CONTROL                                                                    
OFFICE  (AMCO),   DEPARTMENT  OF  COMMERCE,   COMMUNITY  AND                                                                    
ECONOMIC  DEVELOPMENT  (via  teleconference),  believed  one                                                                    
licensee had  appealed to court  in the past year.  She made                                                                    
clarifying remarks  about the appeal process.  She explained                                                                    
there  was  a very  clear  appeal  process in  statute.  She                                                                    
detailed if  a licensee was  unhappy with a decision  by the                                                                    
AMCO director,  they were authorized to  appeal the decision                                                                    
to  the ABC  Board. She  elaborated that  if a  licensee was                                                                    
unhappy with  a board decision  they appealed to  the Office                                                                    
of Administrative Hearings and  received a hearing before an                                                                    
administrative  law  judge.  The  administrative  law  judge                                                                    
established the record, held a  hearing, and made a proposed                                                                    
decision. The proposed  decision went back to  the ABC Board                                                                    
for a final decision and  the board was authorized to agree,                                                                    
disagree,   or  modify   the   administrative  law   judge's                                                                    
decision. At that point the  decision was final and could be                                                                    
appealed to superior court.                                                                                                     
                                                                                                                                
Representative  Guttenberg addressed  Ms. Bruce  and relayed                                                                    
the  committee  had  adopted  Amendment  1.  He  stated  the                                                                    
committee  was taking  out the  precedent  process from  the                                                                    
decisions of  the board. He reviewed  his understanding that                                                                    
the board could  make a change to the  license process after                                                                    
businesses had been renewing licenses  the same way for many                                                                    
years. He wondered if there  was time given to businesses to                                                                    
adjust business practices inside of the process.                                                                                
                                                                                                                                
2:59:22 PM                                                                                                                    
                                                                                                                                
Ms.  Bruce stated  her understanding  of  the question.  She                                                                    
believed Representative Guttenberg  was asking whether there                                                                    
was an alternative avenue for  a licensee if the board found                                                                    
a licensee had been doing something unlawfully.                                                                                 
                                                                                                                                
Representative  Guttenberg clarified  he was  speaking to  a                                                                    
scenario where the  way a business had operated  in the past                                                                    
was no longer allowed [based on changes made by the board].                                                                     
                                                                                                                                
Ms.  Bruce deferred  to the  Ms.  McConnell. She  speculated                                                                    
that the board  may have the ability  to temporarily suspend                                                                    
a license and  give the licensee time to conform  to the new                                                                    
interpretation.                                                                                                                 
                                                                                                                                
Ms. McConnell  responded it was  always the board's  goal to                                                                    
consistently   apply  statute   and  regulation.   When  the                                                                    
division  encountered  a  situation where  it  appeared  the                                                                    
statute  had not  been correctly  applied in  the past,  the                                                                    
division  did  its  best  to   work  with  the  licensee  or                                                                    
applicant to  bring them into  compliance with the  law. She                                                                    
believed there was  court ruling that related  to the amount                                                                    
of time something that did  not comply with statute had been                                                                    
allowed to  go on. The less  time it had been  allowed to go                                                                    
on,  the  easier  it  was   to  correct,  while  the  longer                                                                    
something had gone on improperly,  the more difficult it was                                                                    
to  correct.  She   did  not  believe  there   was  a  rigid                                                                    
timeframe, but  the board  did its best  to work  within the                                                                    
means it  was allowed to  bring applicants and  licensees in                                                                    
compliance  with statute.  The  division's goal  was not  to                                                                    
revoke  licenses,  but  to ensure  statute  was  applied  as                                                                    
written.                                                                                                                        
                                                                                                                                
Vice-Chair Gara  supported the amendment.  He stated  it was                                                                    
common for an  agency to have a double layer  of an appeals.                                                                    
He thought the  ABC Board should have the  double layer. The                                                                    
amendment did  not address regulations  like a  rule imposed                                                                    
in  distilleries  requiring  consumers   to  mix  their  own                                                                    
drinks,  which many  members had  questions about.  The same                                                                    
board  members  were  making  the  decisions  on  individual                                                                    
cases. He  was comfortable  having the board's  decisions be                                                                    
subject  to  appeal to  the  commissioner.  He referenced  a                                                                    
question from  Representative Kawasaki  about the  basis for                                                                    
the  commissioner's decision.  He stated  the commissioner's                                                                    
decision had to be  supported by substantial evidence, which                                                                    
was the  common standard.  He remarked  it was  not uncommon                                                                    
within an  agency to have  a second appeal layer  higher up.                                                                    
He  had enough  questions  throughout  time about  decisions                                                                    
made by the ABC  Board that he did not mind  the review of a                                                                    
decision based on substantial evidence.                                                                                         
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment 2 was ADOPTED.                                                                                  
                                                                                                                                
3:03:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  MOVED to  ADOPT Amendment  3, 30-LS1281\J.3                                                                    
(Bruce, 4/5/18) (copy on file):                                                                                                 
                                                                                                                                
     Page 1, line J, following "Act":                                                                                           
     Insert  "relating   to  the  Department   of  Commerce,                                                                    
     Community, and Economic Development;"                                                                                      
                                                                                                                                
     Page 1, following line 4:                                                                                                  
     Insert a new bill section to read:                                                                                         
     "* Section 1. AS 04.06.0 IO is amended to read:                                                                            
     Sec.  04.06.010.  Establishment   of  board.  There  is                                                                    
     established in  the Department of  Commerce, Community,                                                                    
     and   Economic  Development   the  Alcoholic   Beverage                                                                    
     Control  Board  as   a  regulatory  and  quasi-judicial                                                                    
     agency. [THE  BOARD IS IN  THE DEPARTMENT  OF COMMERCE,                                                                    
     COMMUNITY,   AND   ECONOMIC    DEVELOPMENT,   BUT   FOR                                                                    
     ADMINISTRATIVE PURPOSES ONLY.]"                                                                                            
                                                                                                                                
     Page 1,line 5:                                                                                                             
     Delete "Section 1"                                                                                                         
     Insert "Sec. 2"                                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 1, line 12:                                                                                                           
     Delete "Section 2"                                                                                                         
     Insert "Section 3"                                                                                                         
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Wool explained  that  the amendment  removed                                                                    
the language specifying the board  was in the department for                                                                    
"for  administrative  purposes  only." He  believed  it  was                                                                    
important  to   remove  the  language  because   a  previous                                                                    
amendment  had  added  the appeal  process;  therefore,  the                                                                    
board   was   no   longer    within   the   department   for                                                                    
administrative  purposes only.  Amendment 1  had established                                                                    
more of a connection between the board and department.                                                                          
                                                                                                                                
Representative  Wilson asked  whether removing  the language                                                                    
"for administrative purposes only"  would give the board any                                                                    
other  powers  aside  from  what   had  been  shown  in  the                                                                    
amendments.                                                                                                                     
                                                                                                                                
Representative Wool answered in  the negative. He elaborated                                                                    
that  the  ABC  Board  had  resided in  DOR,  DPS,  and  was                                                                    
currently under  DCCED. He  reasoned that  if the  board was                                                                    
under DCCED  for administrative  purposes only, it  could be                                                                    
under DOT and it would not  make a difference. He was trying                                                                    
to  create  some connection  between  the  board and  DCCED,                                                                    
which he believed  was the reason for moving  the board from                                                                    
DPS  because  the  licensees were  businesses.  He  believed                                                                    
whatever thin filament of connection  could be sustained was                                                                    
a positive thing.                                                                                                               
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment 3 was ADOPTED.                                                                                  
                                                                                                                                
3:05:31 PM                                                                                                                    
                                                                                                                                
Representative  Wilson had  a question  for the  Division of                                                                    
Legislative Audit  (Legislative Audit). She noted  there had                                                                    
been numerous  recommendations in the audit  report. She did                                                                    
not believe any of the  items added by the amendments helped                                                                    
any of  the eight issues  mentioned in the audit.  She asked                                                                    
if any  of the amendments  would cause additional  issues or                                                                    
help resolve any of the audit recommendations.                                                                                  
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT, replied  that the  eight recommendations                                                                    
were not related  to the amendments. She  answered that when                                                                    
the division came back to review  the board it would use the                                                                    
eleven criteria  identified in the  audit appendix.  Most of                                                                    
the  criteria  were geared  towards  whether  the board  was                                                                    
serving the interest  of the public. She  considered how the                                                                    
position of the commissioner  related to Legislative Audit's                                                                    
review of the ABC Board.  She explained that if the auditors                                                                    
did not agree  with a decision made by  the commissioner, it                                                                    
would  not relate  to the  board.  She did  not believe  the                                                                    
actions  by  the  commissioner   would  be  subject  to  the                                                                    
division's  sunset review.  She  stated  it was  interesting                                                                    
that  the board  was a  quasi-judicial, independent  agency.                                                                    
Based   on  her   understanding  of   the  amendments,   the                                                                    
commissioner  would  be  given   the  ability  to  veto  the                                                                    
decision of  an independent  body. She highlighted  that the                                                                    
commissioner was a political appointee.  She did not believe                                                                    
the legislative  oversight would have any  ability to review                                                                    
the decisions by the commissioner.                                                                                              
                                                                                                                                
3:08:19 PM                                                                                                                    
                                                                                                                                
Representative  Wilson assumed  there was  no way  to add  a                                                                    
review [of decisions made by  the commissioner] to something                                                                    
Legislative Audit would look at.  She reasoned it would be a                                                                    
separate review the legislature  would have to consider. She                                                                    
assumed  Ms.  Curtis  was  still  okay  with  the  four-year                                                                    
extension because the  action taken by the  committee in the                                                                    
current meeting really did not have to do with boards.                                                                          
                                                                                                                                
Ms.   Curtis  answered   she   was   comfortable  with   the                                                                    
recommended  extension   that  was   half  of   the  maximum                                                                    
[allowable  extension], which  was in  regards to  the eight                                                                    
audit  recommendations. A  special  audit  request would  be                                                                    
required in terms  of looking at decisions  and whether they                                                                    
were  supported  by  evidence. She  elaborated  the  special                                                                    
request would be added to  the queue - the division operated                                                                    
on a first-in-first-out basis - and  it may take time to get                                                                    
to a review.                                                                                                                    
                                                                                                                                
Representative  Pruitt  thought  the committee  should  have                                                                    
asked to  hear from  Ms. Curtis earlier  in the  meeting. He                                                                    
asked  whether the  sunset audit  that would  take place  in                                                                    
four years could include an  analysis on whether the [DCCED]                                                                    
commissioner was  working alongside  the stated goal  of the                                                                    
commission or  whether there were  actions being  taken that                                                                    
were contrary to the commission.                                                                                                
                                                                                                                                
Ms. Curtis  answered that  in the  past the  legislature had                                                                    
directed, via  uncodified law, Legislative Audit  to look at                                                                    
something  in a  certain amount  of time.  She believed  the                                                                    
direction would prompt  the division to review  the issue as                                                                    
part of the  sunset process. She added  that intent language                                                                    
may  also work.  She explained  that if  she saw  the intent                                                                    
language she would most likely  have the committee put it on                                                                    
record to direct the division to look at something.                                                                             
                                                                                                                                
Representative Pruitt  thought something should  be included                                                                    
in the bill to give  Legislative Audit direction to ensure a                                                                    
commissioner   did  not   operate   outside   of  what   the                                                                    
legislature  believed the  commission was  tasked to  do. He                                                                    
thought perhaps an  amendment could be offered  on the House                                                                    
floor.                                                                                                                          
                                                                                                                                
3:11:53 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  stated  she  had  not  expected  the                                                                    
answers she  had been given.  She remarked the  changes made                                                                    
during the  meeting had  impacts outside  the board  and the                                                                    
existing audit process  that she had not been  aware of. She                                                                    
requested  to hold  the bill  until the  following day.  She                                                                    
thought the  committee should  include intent  language. She                                                                    
wanted to make sure someone was checking the issue.                                                                             
                                                                                                                                
Vice-Chair Gara hoped individuals  with concerns could speak                                                                    
to  the sponsor  and  address  any issue  on  the floor.  He                                                                    
supported moving the bill forward.                                                                                              
                                                                                                                                
Commissioner  Navarre  relayed  that   he  had  not  had  an                                                                    
opportunity to discuss the items  with Ms. McConnell or DOL.                                                                    
He  intended to  fully engage  the parties,  but he  did not                                                                    
believe  that   was  possible  by  the   following  day.  He                                                                    
committed to speaking with the  parties before the bill went                                                                    
to the House floor.                                                                                                             
                                                                                                                                
Representative Wool  remarked on  Ms. Curtis's  comment that                                                                    
the commissioner  was a political  appointee. He  noted that                                                                    
director of  the ABC Board  was also a  political appointee.                                                                    
He  stated that  the director  made numerous  decisions that                                                                    
impacted  many people.  He addressed  that the  first appeal                                                                    
process  went to  an administrative  law judge  and did  not                                                                    
know  whether  it  fell under  the  purview  of  Legislative                                                                    
Audit. He referenced Ms. Curtis's  testimony that audits did                                                                    
not address anything at the  commissioner level. He asked if                                                                    
the  audits  to  the  board  included  the  appeals  to  the                                                                    
administrative law judge.                                                                                                       
                                                                                                                                
Ms.   Curtis  answered   that  when   looking  at   a  case,                                                                    
Legislative Audit  could and  had, looked  at administrative                                                                    
law  decisions,  knowing  it  was  an  independent  process.                                                                    
Mainly  the audit  considered how  the board  reacted to  an                                                                    
independent  decision. For  instance, whether  they reversed                                                                    
it and what type of support they had.                                                                                           
                                                                                                                                
3:15:54 PM                                                                                                                    
                                                                                                                                
Representative  Wool  remarked  that   in  the  past  audit,                                                                    
Legislative Audit  did not look  into the decisions  made by                                                                    
the  administrative law  judge -  whether they  supported or                                                                    
did not support the board's decision.                                                                                           
                                                                                                                                
Ms.  Curtis answered  that Legislative  Audit  did not  look                                                                    
into the  administrative law judge  decision, but  it looked                                                                    
at  the timeliness  of investigative  process,  which was  a                                                                    
criterion  the  division  was   directed  to  consider.  The                                                                    
division's primary  focus was whether the  board was serving                                                                    
the public's interest, which would  be the main focus in the                                                                    
sunset process.                                                                                                                 
                                                                                                                                
Representative  Guttenberg asked  about  the audit's  second                                                                    
recommendation:                                                                                                                 
                                                                                                                                
     Recommendation 2: The board should issue recreational                                                                      
     site    licenses   in    accordance   with    statutory                                                                    
     requirements.                                                                                                              
                                                                                                                                
Representative   Guttenberg   elaborated  that   the   audit                                                                    
recommendations  referenced noncompliant  licenses including                                                                    
travel  tour companies,  bowling allies,  an art  council, a                                                                    
pool  hall, a  movie theater,  and  a spa.  He referenced  a                                                                    
situation where the Fairbank Drama  Association used a bar's                                                                    
license to sell  alcohol 30 minutes prior  to a performance.                                                                    
He  stated  it was  around  $50  for every  performance.  He                                                                    
believed  the  Alaska  Center for  the  Performing  Arts  in                                                                    
Anchorage used the  same process. He asked if  either of the                                                                    
organizations  would be  able to  have  a recreational  site                                                                    
license   to  serve   during  performances   if  the   audit                                                                    
recommendation was followed.                                                                                                    
                                                                                                                                
Ms.   Curtis   replied  that   Representative   Guttenberg's                                                                    
description was  of a  bar with  a license  serving alcohol.                                                                    
She deferred the question to Representative Wool.                                                                               
                                                                                                                                
Representative Wool answered that  there were several things                                                                    
occurring. There  was a  catering permit  allowing a  bar to                                                                    
cater its license to the  theater, which he believed was the                                                                    
case  with the  Fairbanks  Drama Association  (organizations                                                                    
paid  per event).  Additionally,  there  was a  recreational                                                                    
site license  for certain sporting events  and other related                                                                    
situations.  Recommendation 2  in the  audit found  that the                                                                    
board had gone  outside the definition of  the intended use.                                                                    
He believed  the Alaska  Center for  the Performing  Arts in                                                                    
Anchorage  had a  theater license.  He noted  there were  22                                                                    
types of licenses, which could  be complicated. He explained                                                                    
the many  licenses caused confusion when  licensees wondered                                                                    
why they could not do  something another business was doing.                                                                    
He believed Title  4 was attempting to clean up  some of the                                                                    
issue,  but there  would still  be  22 or  24 licenses.  The                                                                    
catering   permit  in   Fairbanks  was   different  than   a                                                                    
recreational  site  license,  which  was  different  than  a                                                                    
theater  license. He  reiterated  that  the performing  arts                                                                    
center  used a  theater license  and had  to get  a catering                                                                    
permit  from an  established beverage  person. He  explained                                                                    
the permit was  good for an entire season, but  it meant the                                                                    
center had to use it for every show.                                                                                            
                                                                                                                                
3:19:13 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg noted  that  the Fairbanks  Drama                                                                    
Association  had  been  in  touch   with  AMCO  because  the                                                                    
association had to  get a permit for  every individual show.                                                                    
He wondered if he had the  information wrong - he was trying                                                                    
to gain resolution on the issue for the association.                                                                            
                                                                                                                                
Ms. McConnell  replied that Representative Wool  had been 99                                                                    
percent  correct on  his response.  She  corrected that  his                                                                    
last  statement about  the performing  arts center  had been                                                                    
incorrect.  She  detailed  that   AMCO  had  encouraged  the                                                                    
Fairbanks Drama Association to apply  for a theater license,                                                                    
which  existed  currently  in  regulation.  The  association                                                                    
would have  to partner  with a beverage  dispensary licensee                                                                    
that  would  have  consistent permission  to  serve  at  the                                                                    
theater.  She  explained that  was  the  situation with  the                                                                    
performing arts center in Anchorage.                                                                                            
                                                                                                                                
Representative Kawasaki  did not  have a problem  moving the                                                                    
bill   forward.   He   referenced   Commissioner   Navarre's                                                                    
testimony  that it  would take  him longer  than one  day to                                                                    
provide  additional  information.  He recognized  it  was  a                                                                    
board extension that  was needed with eight  days of session                                                                    
remaining.  He intended  to  recommend potentially  amending                                                                    
the  bill at  a later  time in  the legislative  process. He                                                                    
stated  that   members  could  connect  directly   with  the                                                                    
commissioner  and   AMCO  director   if  they   had  further                                                                    
questions.                                                                                                                      
                                                                                                                                
3:21:09 PM                                                                                                                    
                                                                                                                                
Representative Pruitt  referenced that  Commissioner Navarre                                                                    
had  stated  that  he  would  not  have  time  to  speak  to                                                                    
personnel  by the  following day.  He did  not know  whether                                                                    
that was  needed if the  issue was more about  ensuring that                                                                    
the audit analyzed  some of the actions that  could be taken                                                                    
by the  commissioner's office. He addressed  the House floor                                                                    
calendar and supported holding the  bill until the following                                                                    
day. He reasoned the committee  could request language for a                                                                    
potential  amendment  to  consider the  following  day.  The                                                                    
committee was  aware of  the conversation,  while colleagues                                                                    
on the floor may not be.                                                                                                        
                                                                                                                                
Co-Chair Foster believed Representative  Wool may be leaving                                                                    
town.                                                                                                                           
                                                                                                                                
Representative  Wool supported  moving the  bill during  the                                                                    
current meeting. His second preference  was to move the bill                                                                    
the  following day.  He  stated  the bill  was  of a  timely                                                                    
nature and  had to  go through  the other  body as  well. He                                                                    
detailed the  bill was  a board extension  and needed  to be                                                                    
done.  He had  wanted to  amend  the bill  due to  different                                                                    
situations. He had used the  Alaska Airlines situation as an                                                                    
example -  he believed  the decision  was still  pending. He                                                                    
clarified  he was  in no  way picking  on the  board or  Ms.                                                                    
McConnell.                                                                                                                      
                                                                                                                                
Representative  Wool  referenced   the  letter  from  Alaska                                                                    
Airlines and explained the Alaska  Airlines renewal form had                                                                    
been sent before  the end of the year  because it referenced                                                                    
a  letter dated  December  29. The  company  had been  later                                                                    
informed it  needed the finger prints  of its 20 or  so vice                                                                    
presidents. The company  had responded that it  did not need                                                                    
to provide  the detail because  it had not been  required to                                                                    
do so in  the past. The board had told  Alaska Airlines that                                                                    
statute  specified the  information needed  to be  provided.                                                                    
Additionally, the  board had  told the  company it  would be                                                                    
fined  $10,500   because  the   application  had   not  been                                                                    
completed by the  deadline. The company had  been told there                                                                    
was  no way  to waive  the  penalty. He  explained that  the                                                                    
paperwork  had  been  provided  on  time,  but  due  to  the                                                                    
disagreement over  what was required, the  company was fined                                                                    
for an incomplete  application. As a business  owner, he had                                                                    
a  problem with  the  process. He  reasoned Alaska  Airlines                                                                    
could likely  afford the fine,  but it  may be harder  for a                                                                    
small business, especially  if they had to  close because of                                                                    
a suspended  license. He  stated that if  he flew  on Alaska                                                                    
Airlines in the coming month  and could not purchase a glass                                                                    
of  red wine,  it would  not be  the end  of the  world. The                                                                    
company would stay in business.  However, the issue impacted                                                                    
different people differently.                                                                                                   
                                                                                                                                
Representative  Wool   supported  an  appeal   procedure  to                                                                    
expedite  the  process.  He  did   not  know  how  long  the                                                                    
aforementioned administrative law route  took. He noted that                                                                    
the board  met every  three months  and reasoned  if someone                                                                    
had to wait  a couple of board cycles for  resolution it was                                                                    
a  substantial  length of  time.  He  apologized if  he  was                                                                    
incorrect  about   the  frequency  of  board   meetings.  He                                                                    
reiterated that  the process could take  months, which could                                                                    
mean closure for a small  business. His desire was to ensure                                                                    
the board  was service the  public's interest. He  wanted to                                                                    
see another  set of  eyes when needed  that could  provide a                                                                    
different perspective than  law enforcement or prosecutorial                                                                    
point of view.                                                                                                                  
                                                                                                                                
3:26:34 PM                                                                                                                    
                                                                                                                                
Ms.   McConnell   reported   that   the   process   for   an                                                                    
administrative law  judge to hold  a hearing on a  case took                                                                    
several months.                                                                                                                 
                                                                                                                                
Vice-Chair  Gara  spoke  to  a   concern  mentioned  that  a                                                                    
commissioner's   decision   would   not   be   reviewed   by                                                                    
Legislative  Audit.  He  added  that the  division  did  not                                                                    
review superior  or supreme court  decisions either.  He did                                                                    
not  share the  concern and  did  not have  the interest  in                                                                    
expanding the role of Legislative  Audit. He believed it was                                                                    
beyond  the purview  of the  bill. He  supported moving  the                                                                    
bill forward and  having any new questions  addressed as the                                                                    
bill moved along in the legislative process.                                                                                    
                                                                                                                                
Representative  Wilson remarked  that there  was no  way the                                                                    
committee would have known the  amendments were coming until                                                                    
the current  day. She was  not disagreeing with  the changes                                                                    
made by the  amendments, but she pointed out  that the board                                                                    
had  not received  an overly  positive  audit. She  reasoned                                                                    
there were already existing issues.  She continued the audit                                                                    
had   included  eight   recommendations   and  a   four-year                                                                    
extension.  She  noted  there   were  numerous  boards  that                                                                    
received eight-year extensions and  had flawless audits. She                                                                    
believed the legislature had punished  the Board of Pharmacy                                                                    
by giving  a six-year  extension and adding  numerous duties                                                                    
to its  purview. She  stated the current  bill did  the same                                                                    
thing  to the  ABC Board;  it  changed how  things had  been                                                                    
done.  She  was  requesting  to  hold  the  bill  until  the                                                                    
following   day   to   include  additional   language.   She                                                                    
reiterated that the  changes were new and at the  end of the                                                                    
four-year extension the legislature  would learn whether the                                                                    
changes  worked. She  understood  that  Alaska Airlines  was                                                                    
having an issue [with the  board], but she wanted the public                                                                    
to realize the  issue was not about one  entity. She pointed                                                                    
out  that  the  audit highlighted  issues  with  compliance,                                                                    
ensuring complaints  were filled  in, and other.  She wanted                                                                    
to  get the  bill right  before it  went to  the floor.  She                                                                    
wanted  to   see  the  board   extension  go   forward.  She                                                                    
reiterated her request to hold  the bill until the following                                                                    
day in order to ensure a good bill was moved forward.                                                                           
                                                                                                                                
3:30:22 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster asked who would work on the language.                                                                           
                                                                                                                                
Representative Wilson replied  she was happy to  work on the                                                                    
new language.                                                                                                                   
                                                                                                                                
Representative   Pruitt   emphasized   that   due   to   the                                                                    
amendments,  the  bill was  not  merely  a board  extension.                                                                    
Given  policy changes  related to  the  board operation  the                                                                    
bill would have more debate  than a typical board extension.                                                                    
He thought  that waiting to  address the issue on  the House                                                                    
floor could  further delay the  bill because the  whole body                                                                    
was not  versed on  its intricacies. He  highlighted comment                                                                    
by  another member  that Legislative  Audit  did not  review                                                                    
superior court cases.  He agreed with that  point, but under                                                                    
existing law, the committee analyzed  the board. He reasoned                                                                    
the  changes made  by the  amendments gave  the powers  to a                                                                    
commissioner. He spoke to the  inability for the auditors to                                                                    
analyze  whether the  commissioner was  acting within  "what                                                                    
everyone  wants the  board  to fall  under."  He wanted  the                                                                    
decisions  to  fall  within  the  realm  of  the  board.  He                                                                    
believed  the  issue  necessitated having  the  conversation                                                                    
about whether  the commissioner was also  following with the                                                                    
legislature's guidelines  set for the board.  He believed it                                                                    
was  worth holding  the  bill until  the  following day  and                                                                    
thought waiting would ultimately make the bill move faster.                                                                     
                                                                                                                                
Co-Chair Foster informed the committee  that the bill had to                                                                    
be  to Senate  Finance Committee  by Wednesday.  He reasoned                                                                    
the  House Finance  Committee was  constantly telling  other                                                                    
committees to do their work  prior to sending bills forward.                                                                    
He  did  not  want  to  advance  the  bill  forward  without                                                                    
considering  the issue  on the  table. He  supported hashing                                                                    
out the language prior to sending the bill forward.                                                                             
                                                                                                                                
3:34:00 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  stated that generally he  thought of intent                                                                    
language  in a  bill relating  to  the intent  of the  bill.                                                                    
Whereas,  the  discussed  intent  would  direct  Legislative                                                                    
Audit on  what the legislature  wanted to see  considered in                                                                    
the next audit. He asked  whether it would be sufficient for                                                                    
the committee  to include a  letter of intent with  the bill                                                                    
specifying  what it  wanted the  auditor to  look at  versus                                                                    
including direction in statute.                                                                                                 
                                                                                                                                
Ms. Curtis  replied in the  affirmative; she would  bring it                                                                    
to the letter of intent  to the Legislative Budget and Audit                                                                    
Committee  for   direction.  She   explained  that   if  the                                                                    
direction  was included  in uncodified  law,  she would  not                                                                    
need  to  take direction  from  the  Legislative Budget  and                                                                    
Audit  Committee. She  believed  in the  past  the Board  of                                                                    
Midwives  had direction  included in  uncodified law,  which                                                                    
would be a useful example if  the committee chose to put the                                                                    
language  in  uncodified law.  She  reiterated  that if  she                                                                    
received  a letter  she  would take  it  to the  Legislative                                                                    
Budget and Audit Committee for direction.                                                                                       
                                                                                                                                
Co-Chair Seaton  reasoned that  putting uncodified  law that                                                                    
did  not relate  to the  law they  were passing  seemed more                                                                    
likely to be  stripped out by the other body.  He stated the                                                                    
other body  tended to  dislike including  superfluous intent                                                                    
language. He thought  including a letter of  intent with the                                                                    
bill  may be  an appropriate  way  to handle  the issue.  He                                                                    
stated putting language in statute  had been disagreeable to                                                                    
the other body  in the past, particularly  when the language                                                                    
did  not  directly relate  to  the  meaning of  the  adopted                                                                    
amendments.                                                                                                                     
                                                                                                                                
3:36:30 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster stated  that regardless  of the  action the                                                                    
issue could be considered overnight.                                                                                            
                                                                                                                                
HB  299  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Foster relayed the meeting  would be recessed until                                                                    
1:00  p.m. the  following  day [see  separate minutes  dated                                                                    
April 7, 2018 1:00 p.m. for detail].                                                                                            
                                                                                                                                
^RECESSED                                                                                                                       
3:37:45 PM                                                                                                                    
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB 231 AKSupremeCourtCasesJan2018 (003).pdf HFIN 4/6/2018 1:30:00 PM
HB 231
Hb 231 - Amendments 1, 2 & 3.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 DOA Response to HFIN 4.5.18.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 - Letter of Support.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 CFEC employees exempt reasons.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 268 - HFIN Amendments.pdf HFIN 4/6/2018 1:30:00 PM
HB 268
HB 316 Amendments.pdf HFIN 4/6/2018 1:30:00 PM
HB 316
HB 299 Amendment packet.doc.pdf HFIN 4/6/2018 1:30:00 PM
HB 299
HB 217 Amendment #1.pdf HFIN 4/6/2018 1:30:00 PM
HB 217