Legislature(2011 - 2012)CAPITOL 120
05/11/2011 08:00 AM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): the Legality & Constitutionality of the Senate's Capital Budget Language | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
Anchorage, Alaska
May 11, 2011
8:06 a.m.
MEMBERS PRESENT
Representative Carl Gatto, Chair
Representative Steve Thompson, Vice Chair
Representative Wes Keller
Representative Bob Lynn
Representative Lance Pruitt
Representative Max Gruenberg
MEMBERS ABSENT
Representative Lindsey Holmes
Representative Mike Chenault (alternate)
OTHER LEGISLATORS PRESENT
Representative Paul Seaton
Representative Dan Saddler
Representative Alan Dick
COMMITTEE CALENDAR
PRESENTATION(S): THE LEGALITY & CONSTITUTIONALITY OF THE
SENATE'S CAPITAL BUDGET LANGUAGE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN J. BURNS, Attorney General
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Testified during the presentation on the
legality & constitutionality of the Senate's capital budget
language.
CHRISTOPHER POAG, Assistant Attorney General
Labor and State Affairs Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the presentation
on the legality & constitutionality of the Senate's capital
budget language.
BRIAN BJORKQUIST, Senior Assistant Attorney General
Labor and State Affairs Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Testified during the presentation on the
legality & constitutionality of the Senate's capital budget
language.
DOUG GARDNER, Director
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Testified during the presentation on the
legality & constitutionality of the Senate's capital budget
language.
PAM FINLEY, Revisor of Statutes
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency (LAA)
Juneau, Alaska
POSITION STATEMENT: Testified during the presentation on the
legality & constitutionality of the Senate's Capital Budget
language.
ACTION NARRATIVE
8:06:07 AM
CHAIR CARL GATTO called the House Judiciary Standing Committee
meeting to order at 8:06 a.m. Representatives Gatto, Lynn,
Keller, Pruitt, and Thompson were present at the call to order.
Representative Gruenberg arrived as the meeting was in progress.
Representatives Seaton, Saddler, and Dick were also in
attendance.
^Presentation(s): The Legality & Constitutionality of the
Senate's Capital Budget Language
Presentation(s): The Legality & Constitutionality of the
Senate's Capital Budget Language
[Contains discussion of SB 46.]
8:06:43 AM
CHAIR GATTO announced that the only order of business would be
the presentation regarding the legality and constitutionality of
the Senate's capital budget language.
8:09:33 AM
JOHN J. BURNS, Attorney General, Department of Law (DOL),
related his understanding the legislature would like to know why
the DOL believes the contingency clause non-severability
language in the version of the capital budget recently
transmitted from the Senate to the House is unconstitutional.
He voiced the caveat that until such time the legislature passes
the capital budget any discussion with respect to the
unconstitutionality of the bill is purely speculative since the
language could change. He stated his responsibility as attorney
general is to uphold the constitution. Thus, politics must
always yield to the constitutional provisions and principles
that govern the administration of the state. He said that the
capital budget issue is not about "building a better mouse
trap." Instead, the issue surrounds the process and the
integrity of adhering to constitutional principles. The
principles of our democratic form of government are grounded in
the constitution. Thus, the state must look to the Alaska State
Constitution to determine the issues on which the capital budget
has floundered. He offered his belief that the Senate clearly
intended to use the contingency and non-severability language to
constrain the power of the executive branch.
MR. BURNS explained Alaska's Constitution establishes an
appropriation process that consists of four discrete steps.
First, the governor is required to submit a budget to the
legislature for consideration. Second, the legislature as a
bicameral body has the power to pass appropriation bills.
Third, the governor, per the constitution, has line item veto
authority. Finally, the legislature has the power and authority
to override the governor's veto. This process has been in place
since statehood and provides the foundation of the checks and
balances that constrain the exercise of power between two co-
equal branches of government. He identified Sections 48 and 49,
which were previously Sections 36 and 37 of SB 46 of the capital
budget, as provisions that disrupt the process and upset the
delicate balance of power set forth in Alaska's constitution.
He asserted that the contingency and non-severability provisions
in Sections 48 and 49 are unconstitutional, individually and
collectively. The power to appropriate money for a public
purpose is vested in the legislature. Nonetheless, the governor
does play a vital role in the appropriation process. The
governor's authority to propose a budget and his power to strike
or reduce appropriation items provide a significant and
important part of this process. He further asserted that any
attempt to disrupt this process violates the balance of power
carefully woven into this process.
MR. BURNS reported the line item veto power has been described
by Professor Richard Briffault, a constitutional scholar quoted
in two prior Alaska Supreme Court cases, as "the coming together
of three widespread state constitutional policies: First, the
rejection of legislature 'logrolling,' second, the imposition of
fiscal constraints on the legislature, and third, the
strengthening of the governor's roles in budgetary matters."
Alaska's constitutional convention delegates intended to create
a strong executive branch with a strong control over the purse
strings of the state, he said. The constitution provides the
governor this control, in part, by granting the governor line
item veto authority to strike or reduce individual items in an
appropriation bill. He said it was both logical and prudent for
the constitutional delegates to confer this power on the
governor. The governor's position is uniquely different than
that of the legislature since the governor has a statewide
constituency as opposed to the legislature, which has discrete
geographic constituencies. Additionally, the governor's
position is obligated with the responsibility to review and
evaluate appropriations on a statewide basis. Therefore, it is
prudent to give the governor the authority to strike or reduce
individual appropriation items and to act as a constraint on
excessive spending. Nonetheless, the constitution makes it
clear that the final power and final step in the appropriation
process rests with this body. The legislature has the power to
override the governor's veto.
8:16:11 AM
MR. BURNS turned to the contingencies in SB 46. He stated that
Section 48, the linkage clause, seeks to link together what is
now approximately 20 appropriation items consisting of 105
separate and distinct projects comprising an estimated $454
million in spending. This section would require the enactment
of all or none of these projects without reductions. He advised
that these linked appropriations constitute approximately 25
percent of the unrestricted general funds proposed to be
expended in the Senate's version of the capital budget. He
said, "Section 48 is unconstitutional." It violates Article II,
Section 15 of the constitution in that it deprives the governor
of his clear authority to reduce or strike individual
appropriation items. He asked members to consider this
logically, and how it would be if the legislature could link one
appropriation item to another, as in this case approximately 20,
or in future cases perhaps linking all transportation projects
or all construction projects, regardless of location. In doing
so the legislature would effectively eliminate the governor's
constitutional power to strike or reduce individual line items.
The governor would only have two choices, to reject all or
accept all as a group. He offered that allowing or linking
appropriations with such contingency language would eviscerate
the line item veto authority vested in the governor by the
constitution. It would enable the legislature by fiat to
circumvent the governor's constitutional authority. Thus, the
language in Section 48 usurps the governor's line item veto
power and upsets the checks and balances built into the
appropriation process by the constitutional framers, he
concluded.
MR. BURNS pointed out the proponents of Section 48 of the bill
argue that linking appropriation items may be constitutional
because the governor still would retain his right to veto the
entire package of bundled appropriations. He asserted this
argument is wrong for three reasons: First, the plain language
of the constitution affords the governor the authority to strike
or reduce appropriation items and not bundles of appropriation
items. Thus, the language in Section 48 violates Article II,
Section 15 of the constitution because it not only prohibits
striking an item but also eliminates the ability of the governor
to exercise his constitutional right to reduce an item.
MR. BURNS continued. Secondly, if the legislature could bundle
appropriation items and require passage of all or none it would
have the authority to "logroll" which is to put together a
Christmas tree of items and impose an all or nothing rule. The
line item veto as vested represents one of the basic principles.
He noted that constitutional delegates had the benefits of
numerous other states when framing Alaska's constitution so it
was able to avoid the mistakes other states made. He related
that Alaska's constitutional framers took the best provisions,
which included providing for a strong executive branch from the
standpoint of the line item veto. Many other states with a line
item veto inserted it later, after their original constitutions
were formed due to runaway budgets and excessive legislative
spending.
8:20:54 AM
CHAIR GATTO asked how many other states have a three-quarter
vote requirement for overriding vetoes.
MR. BURNS deferred to Mr. Poag and Mr. Bjorkquist.
CHAIR GATTO offered his belief it was just a handful. He
related his understanding that Alaska's constitutional framers
went for the strongest possible language. He offered this
requirement provides a good indication that Alaska's
constitutional framers intended to allow the governor and
executive branch a great deal of authority over the budget.
MR. BURNS answered absolutely. He was unsure of the numbers,
but agreed only a few states have a three-quarter vote override
on vetoes. He highlighted the significance of the types of
votes that require a three-fourths vote, such as veto overrides
are which pertain to appropriations issues. This further
indicates the strong desire of the constitutional framers to
give the executive branch the authority over appropriations and
the budgetary process, he said.
CHAIR GATTO recalled only one veto override during his nine-year
tenure with the legislature. He characterized the veto override
as a very high hurdle. He reiterated his belief that the
constitutional framers wanted the executive branch to have a
strong authority.
MR. BURNS added the minutes from the constitutional convention
support that theory. He also noted Representative Gruenberg has
prepared a memorandum that discusses this. He expressed
significant concern over the most current version of Section 49
of SB 46, which essentially eliminates the ability of the
legislature to exercise its judgment in the context of a veto
override. The non-severability provisions basically say that if
the body does not override the veto, then the entire provision
is non-severable and all appropriations fail. He offered his
belief Representative Gruenberg's write-up addresses that issue
admirably.
REPRESENTATIVE GRUENBERG recalled either Mr. Burns or Mr. Poag
said that Alaska is the only state to have a three-fourths vote
to override a veto.
8:25:02 AM
CHRISTOPHER POAG, Assistant Attorney General, Labor and State
Affairs Section, Civil Division (Juneau), Department of Law
(DOL), said he reviewed a law review memo a few years ago that
indicated 43 states had adopted a line item veto, and of those
42 states limit the line item veto to appropriation bills.
Thus, all but one state affirm that the line item veto is
limited to appropriation bills. He said that 34 states require
a two-thirds vote to override a veto, whereas the Alaska
legislature has a two-thirds vote to override an immediate
effective date clause and retroactive provisions. He stressed
that a two-thirds vote is a higher hurdle than a simple
majority. Of the remaining states, other than Alaska, most have
a more diluted override, either a three-fifth or simple
majority, he said. At the time the article was written, Alaska
was the only state with a three-fourths veto override. He
related that members' packets include a copy of minutes of day
49 and day 50 of the Alaska Constitutional Convention. The
delegates held a discussion to amend the three-quarter override
to return to a two-thirds vote. Additionally, they held
discussions to consider requiring an override by each body
instead of in a joint session. However, the amendments failed
after heated discussion. The constitutional framers determined
that the three-quarter override was necessary in joint session
even though by doing so it would dilute the Senate's power since
the Senate only has 20 members while the House has 40. He said
the reason for this is clearly stated and he quoted, "We wish
for our executive branch to have a strong control of the purse
strings." He pointed out that quote was picked up by the Alaska
Supreme Court in the Knowles case [Legislative Council v.
Knowles, 21 P.3d 367 (Alaska 2001)].
MR. POAG said it appears to the DOL that this provision is not
unique among states but is a clear indication that Alaska's
constitutional framers meant for the line item veto power to be
a strong line item veto power, not a weak or diluted one. He
said Alaska's constitution is unique and has a very powerful
line item veto.
8:27:41 AM
REPRESENTATIVE GRUENBERG asked for the date of the law article.
MR. POAG related his understanding that it was in 1993. He
offered to provide a copy to Representative Gruenberg.
REPRESENTATIVE GRUENBERG said it was remarkable that Alaska is
the only state with a three-fourth veto override and is another
factor that distinguishes Alaska, in the event of litigation.
He remarked that it is hard to find cases on this kind of issue.
8:28:43 AM
REPRESENTATIVE KELLER offered his belief that this debate is a
red herring; everyone is fixated on the debate. He offered his
further belief that the budget process is not the place to test
constitutionality. He pointed out as the debate continues
comments have been made that the legislature needs to pass the
bill in order to test its constitutionality, but to his
understanding by definition Article II, Section 16, disqualifies
the entire debate which is germane. It says bills for
appropriation shall be confined to appropriations. He thought
to use this as a test of power seemed to be a stretch for him.
MR. BURNS referred to Article II, Section 13, of the Alaska
Constitution in terms of the confinement provisions. He said
that represents another basis of support that intrudes upon the
legislative bodies under Article II, Section 16, to override the
veto process. He thought the two most directly affected by
Sections 48 and 49 are the line item veto, Article II, Section
15, and the confinement provisions, Article II, Section 13.
8:31:04 AM
REPRESENTATIVE KELLER said it seems that the appropriate way to
address an issue relating to the governor's power would be via
statute. He thought perhaps one germane topic could result in a
resolution. He asked for comments.
MR. BURNS responded that certainly the process by which the
legislature can use the constitutional language and the
authority vested in the governor's office is via a
constitutional amendment. That is the appropriate process
rather than through fiat to amend the constitution, which is
what he believed was the attempt in Sections 48 and 49 of SB 46,
he said.
CHAIR GATTO agreed that Alaska has a powerful executive branch.
However, the power of the purse is in the legislature. The
governor can't add to the budget. The governor can deliver an
enormous budget, but the legislature can make its own. He
thought while the governor and the executive branch have
significant input that is only as accepted by the legislature.
He pointed out that the legislature could reject the entire
governor's budget if it so chooses and just write its own. He
surmised that the legislature has the power and should not lose
sight of the legislature's ability and responsibility to account
for every dollar spent.
CHAIR GATTO noted one reason why the legislature is arguing over
the energy projects being packaged in one place is because it
works to dilute the legislature's ability to account for money
it is spending. He commented that the House has an opposing
viewpoint. In the event that the Senate chooses to leave this
language out of the bill, he asked whether the legislature
should just drop the constitutional question and wait for it to
resurface or seek legal resolution.
8:34:12 AM
REPRESENTATIVE GRUENBERG raised the issue of judicial review.
He reminded members that since Marbury v. Madison [5 U.S. (1
Cranch) 137 (1803)] the judiciary has had the final say on
constitutionality, but what is usually overlooked has been the
legislative review. The legislature has the primary viewpoint
in the sense of first view. He offered his belief that
legislative review is even more important than judicial review
because so few cases overturn statutes. He opined that
generally legislatures do a fairly good job with the advice of
attorneys general and legal services on constitutionality
matters. However, occasionally the concept of executive branch
review happens when the legislature passes something which is
vetoed. The legislature through the judiciary committees, which
have primary jurisdiction over these matters, is at the
epicenter in this case and many other cases since they are the
first to review bills for constitutionality, he pointed out.
8:36:33 AM
MR. BURNS acknowledged Representative Gruenberg appropriately
articulated this in his memorandum that preserves the
relationships between checks and balances, as well as the
legislature's concerns in preserving its rights under Article
II, Section 16, in the veto override process. The constitution
sets a clear process to follow, with respect to bills and
appropriations, and to corrupt or modify that process to force
agreements that bootstrap things is not appropriate procedurally
or constitutionally, he said.
REPRESENTATIVE GRUENBERG referred to Legislative Council v.
Knowles as a paradigm. As a matter of logic in almost every
case, a conflict of interest in the attorney general's staff or
the attorneys for the legislative branch arose. He said the
question the attorneys must ask is whether they represent the
people or the alliance. The issue is ever present and
represents an essential question, he remarked.
8:38:51 AM
MR. BURNS responded he will not hesitate to answer that his
responsibility is first and foremost to uphold Alaska's
constitution. He clarified that he is not at this meeting to
represent the governor, although he works in that capacity as an
appointed attorney general. However, his first and foremost
responsibility, which he believes is clear in the statutes, is
to uphold the constitution and the statutes of this great state.
He concluded that clearly what is at issue is the
constitutionality of Sections 48 and 49 of SB 46.
8:39:49 AM
MR. BURNS referred to Section 49, the non-severability or
inseverability section. He said that Section 49 exacerbates the
constitutional violation because it asks the courts to empower
the legislature to do indirectly what the legislature cannot
achieve directly. Further, it seeks to achieve through the back
door what the legislature cannot achieve through the front door.
Section 49 effectively says that if the bill the legislature
proposes through the contingency is invalid by usurping
constitutional provisions, then the court must invalidate the
entirety of the appropriation. He characterized Section 49 of
SB 46 as a "poison pill." Although there are number of cases
and legal treatises that have spent time discussing non-
severability and deference provided to a legislature in the
context of non-severability, those cases are inappropriate at
the federal level since the federal government does not have
line item veto authority. However, the distinction has been
made with respect to state cases in which non-severability has
been evaluated that it is unconstitutional when the non-
severability is being applied to eclipse or usurp another body's
authority. He said that is precisely what is being sought to be
achieved here and what makes this non-severability provision
problematic and unconstitutional. He reiterated that it
effectively allows the legislature to do indirectly what it
clearly cannot do directly.
CHAIR GATTO, for the public's benefit, explained that
severability in this instance means if any part of the bill is
determined to be unconstitutional, the bill can be severed and
the remainder of the bill remains legal. He reiterated that
non-severability means if one part of the bill is
unconstitutional, then the whole bill is unconstitutional. He
likened it to the national health care bill in that if one part
of the bill is found to be unconstitutional, the whole law would
be found unconstitutional since the health care bill and
subsequent act do not contain a severability clause. He pointed
out that SB 46, the bill under discussion today contains a non-
severability clause so unfortunately the "whole thing falls
apart." He asked if he was correct.
8:44:03 AM
MR. BURNS answered absolutely. He noted that Alaska has passed
a statute that presumes severability. The statute says to the
extent a portion of a bill is invalid, the invalid provision is
presumed to be severed from the remainder of the bill. The
legislature would not want to enact something that was invalid.
The key, however, is to sever something and have the remainder
stay in effect. What U.S. District Court Judge Vinson, Florida,
found with respect to the Patient Protection and Affordable Care
Act (PPACA) case in his ruling in Florida v. Health and Human
Services was while a myriad of provisions existed the
requirement of mandatory health care was so intricately
intertwined with the entirety of the bill that it could not be
severed. Additionally, because Congress had not included a
severability provision, the court was not able to "tease them
apart" so the entirety was held to be invalid due to the one
unconstitutional provision. He related that flows nicely into
the context of what the legislature is trying to achieve here.
The Senate, via Section 49, has sought to infuse everything and
say "you can't pull them apart." However, in reviewing the
provisions in Section 4 of the bill, there is not any way to
construe the projects as intricately intertwined so they cannot
be pulled apart. The premise on which the Senate has sought to
achieve this is to say the projects fall under AS 44.99.115,
which pertains to energy policy. Thus, since the projects are
all energy related, although the projects are not geographically
connected or interconnected, the projects cannot be pulled apart
or removed. He offered his belief that a review of the
individual items reveals that the logic does not flow in the
context of a non-severability provision.
MR. BURNS concluded the provisions and projects are not so
intricately intertwined to the degree they cannot be separated.
The most significant issue is raised in the memorandum from
Representative Gruenberg regarding the following two cases:
State v. A.L.I.V.E. Voluntary, 606 P.2d 769 (Alaska 1980) and
Legislative Research Committee v. Brown, 664 S.W. 2d 970, 925,
927-28 (Ky. 1984), a Kentucky Supreme Court case. Both cases
discuss it is not possible to achieve an unconstitutional
objective through judicial fiat. The legislature cannot ask the
court to do something it cannot do. However, he related that
deference is given to the legislature in the context of its
drafting of legislation, particularly given the context of non-
severability since it demonstrates the legislature has
considered the matter. He offered his belief that the judiciary
is very unlikely to give such deference to allow a legislative
body to usurp or eclipse a power that is clearly conferred upon
the executive branch.
CHAIR GATTO characterized it as "just a second bite of the
apple."
8:48:04 AM
REPRESENTATIVE GRUENBERG related a scenario in which [SB 46]
passes in its current form, the governor imposes a line item
veto, the court rules and finds two sections [Sections 48 and
49] unconstitutional. He inquired as to whether it would be
necessary to sustain the line item veto, or if the court might
remand the case by issuing a simple declaration of
unconstitutionality. In that instance the legislature could
determine whether to allow the line item veto or redo the entire
bill, in other words, not make the final decision on whether the
line item veto would stand. He related his understanding that
two different issues exist: first, whether the clauses are
unconstitutional and the second, what result flows from that
decision. He said he wasn't entirely certain the court would
reach the second issue, but it may determine the clauses were
unconstitutional and that the remedy is up to the legislature to
decide. He asked if anyone has considered whether this would be
a likely outcome.
8:50:35 AM
MR. BURNS hesitated to guess what the court might do. He agreed
the court could do either thing. He offered his belief the
court would first look at Section 48, the contingency language.
He predicted the court would find the provisions
unconstitutional and the provisions would be stripped from the
appropriation. Next, he thought the court will consider the
non-severability provision. He said that courts typically view
provisions in the context of severability and non-severability.
The question is whether the non-severability provision could
essentially be severed from the remainder of the bill while the
rest of the bill is kept intact. He anticipated the court would
do just that and find Section 48 unconstitutional, and would
find the application of Section 49 as the Senate trying to
achieve the unconstitutional provision. He predicted the court
would sever Section 49 from the remainder of the bill and the
appropriation bill would proceed forward with whatever line item
vetoes included. He characterized that approach as "certainly a
heck of a risk" because the practical implications of such
posturing and the concern of going to court is the effect it
would have on the projects in the bill. One possible result
would be that the court puts everyone back to "square one" which
would result in phenomenal delay for the energy projects.
REPRESENTATIVE GRUENBERG argued that sometimes the courts reach
the same result, not on the basis of severability but rather on
the basis of abstention and comity and refusal to interject
itself into a co-equal branch of government. He found that this
issue also leads to further questions. Even if the court
reached the decision Mr. Burns suggested, the court might not
direct a remedy based on abstention and comity. While he did
not view any constitutional impediment or anything in the bill
that would prevent this from happening, the unfortunate result
could potentially delay projects past the construction season.
He wondered whether the court would employ comity, which is
respect for the other branch of government, or abstention, which
is another way of saying the same thing, and would reach the
same result of "tossing the ball back" to the legislature.
8:54:57 AM
MR. BURNS acknowledged that is always a distinct possibility,
particularly with co-equal branches of government, and poses a
significant risk. He hoped that the court would view this
language as so blatantly unconstitutional as to strip it out and
sever it given the context of Sections 48 and 49. He said his
sense from legal cases and treatises and most importantly from
the history of the Alaska Constitutional Convention with regard
to the strong executive branch relative to the line item veto,
the striking or reduction [would cause] the court to find these
sections so unconstitutional as to sever them. However, he
reiterated that he cannot predict what the court will do.
REPRESENTATIVE GRUENBERG offered his hope that was this matter
to be litigated that both sides would address the court
otherwise it could act without guidance of either counsel.
MR. BURNS assured the committee that the DOL would aggressively
articulate its position with the court.
8:57:19 AM
CHAIR GATTO speculated on a scenario in which the court upheld
Sections 48 and 49. He inquired as to whether it would be
possible for the legislature to pass a one line capital budget
appropriation bill and say, "take it or leave it."
MR. BURNS said the real concern is that once the legislature
starts down that path it is difficult to stop. For instance,
there could be a situation in which a contingency clause with
non-severability language could be used for any of the primary
components of the capital budget, including transportation,
education, or facilities. He recalled a bankruptcy adage, "pigs
get fat, hogs get slaughtered" which was given in the context of
overreaching and prefunding retirement plans. The court
typically rules that retirement plans are exempt, but in one
instance someone loaded it with millions of dollars. The court
ruled that clearly the intent was to violate the provisions of
law. He asked, "Where do you draw the line?" In response to
comments, he clarified his point is that typically retirement
plans aren't available to be attached, but someone had loaded
the retirement so as to eclipse the exemption. He made the
analogous point that if 105 items are bundled together, why not
bundle 250 items, or the entire bill. He said in Article 13 of
the Alaska State Constitution, the confinement provision is
clear that there has to be a nexus between the purpose and the
appropriation.
MR. BURNS offered his belief that the whole purpose of giving
the executive branch strong authority in the constitution in the
context of the line item veto was to eliminate "logrolling," or
the bundling together of items, which essentially eliminates the
ability to evaluate into constrained, excessive spending.
9:02:19 AM
MR. BURNS related that the discussion has surrounded Article II,
Section 15, of Alaska's constitution with respect the line item
veto. He asserted that Sections 48 and 49 are also
unconstitutional with respect to the issue of Article II,
Section 13, or the confinement provision. He said that
according to Article II, Section 13, appropriation bills must be
confined to appropriations. The Alaska Supreme Court has
indicated that the confinement clause prevents the legislature
from enacting substantive policy outside of the public eye. In
interpreting the confinement clause the Alaska Supreme Court
adopted a five-part assessment commonly referred to as the
Hammond test.
MR. BURNS reported the Hammond test was articulated in the
Knowles case mentioned by Representative Gruenberg in his memo.
He related five tests were in the Hammond test. The contingency
provision and intent language inserted by the Senate in SB 46
failed the Hammond test. He related his understanding that the
Senate based the SB 46 bundling on AS 44.99.115, which is the
state energy policy. He stressed the importance of AS
44.99.115, which does not mandate an energy policy be
implemented by linking energy projects or appropriations.
Instead, AS 44.99.115 encourages state agencies to communicate
with communities to determine their needs and identify and
develop cost effective sources of energy. Second, this bill
violates the Hammond test since it links appropriations within a
bill, which is not provided for in AS 44.99.115, and in doing so
in this appropriation bill, it effectively amends existing law.
One of the tests in Hammond explains how money is to be spent
and this goes beyond the minimum necessary. Third, linking
appropriations is a direct attempt to control how monies are
spent on projects and SB 46 attempts to administer the program
of expenditures, which again is in violation of the Hammond
test. Fourth, linking appropriations that bear no direct
relationship to one another is not a condition germane to the
purpose of the appropriation, which is again one of the Hammond
tests. He concluded these conditions describe the concerns with
SB 46, relative to the confinement clause. Setting aside all
the legal machinations discussed, from a practical perspective
Sections 48 and 49 bear some discussion and comment. By
including these provisions, essentially anyone would have the
right to challenge the provisions. The legislature, especially
in light of Section 49 (b) would have the authority, as well as
individual legislators since it takes away a legislator's right
in the veto override. Additionally, anyone who is upset or
perturbed by the language and the attempt to usurp the executive
branch's control could effectively disrupt and challenge the
validity of that action via a judicial process. The result is
to cloud the projects such that even if approved, entities may
not be able to receive the appropriated funds. Additionally,
obtaining financing could prove difficult in light of the cloud
that hangs over these projects. Most importantly, the state has
a desire to move the projects forward to completion and to help
the economy without the necessity to wait for a final court
determination.
9:07:08 AM
REPRESENTATIVE GRUENBERG disagreed on the point of the
confinement clause because he did not see the need to do so. He
said the only sentence in Article II, Section 13, of the Alaska
constitution that applies is: "Bills for appropriations shall
be confined to appropriations." He offered his belief that
specifically SB 46 is confined to appropriations. He clarified
that the language does not say one appropriation must have a
relation to another appropriation, but they must all be
appropriations. The only items that are arguably not
appropriations and are relevant in this case are Sections 48(a)
and 49 of the bill. He indicated these sections provide
instructions on how the appropriations shall be treated by a
potential vetoing authority on the one hand and a potential
court on the other. He explained the provisions are necessary,
therefore, to the drafter's opinions to effectuate what the
legislature wishes to do with respect to those appropriations.
9:08:51 AM
MR. BURNS concurred that Section 13 does not articulate anything
beyond what was just quoted. However, he pointed out that the
final determiner of constitutional issues is the Alaska Supreme
Court. The Alaska Supreme Court in two instances, Hammond and
Knowles, clearly articulated what are an appropriation and an
item, by listing five criteria, including the minimum necessary
germaneness. Notwithstanding what the constitution says,
evaluating the appropriation in the context of that litmus test
of five criteria balances this, because in theory, one could use
language that says this is an appropriation and it is all
necessary. Using the logic of appropriateness of appropriation
anything would be appropriate under the confinement clause.
However, the Alaska Supreme Court has already said that one must
consider the content of what is in the appropriation to ensure
that it is truly an appropriation.
REPRESENTATIVE GRUENBERG related his understanding then that Mr.
Burns is saying the language on its face is not necessarily
unconstitutional, but that applying it in certain cases may
violate the confinement clause concept.
MR. BURNS agreed with that summation and deferred to Mr.
Bjorkquist.
9:10:46 AM
CHAIR GATTO referred the Section 13 language in SB 46, which
requires that "appropriations shall be confined to
appropriations." He asked whether the second plural tends to
mean more than one appropriation.
9:11:22 AM
BRIAN BJORKQUIST, Senior Assistant Attorney General, Labor and
State Affairs Section, Department of Law (DOL), responded that
Chair Gatto is correct that bills for appropriation are limited
to appropriations, but he noted multiple appropriations can be
contained in an appropriation bill, which typically does occur.
Appropriation bills are not limited to a single subject and
appropriations can occur for multiple subjects and types of
appropriation. Thus, so long as the bill is limited to
appropriations it would be considered constitutional. He
concluded that is precisely what the constitutional provision is
intended to provide. He related the distinction is that while
an appropriation bill is limited to appropriations it cannot
include substantive law. An appropriation is defined to be an
item designated for a specific purpose with a funding source.
Therefore, as long as an appropriation bill is limited to the
definition of an appropriation the bill is acceptable. He
identified the confinement clause violated in SB 46 is due to
the linkage of various appropriations to each other. The
Hammond test needs to be applied individually on an item-by-item
basis since each item represents an appropriation. He suggested
that an appropriation for one project, such as a transmission
line on the Kenai Peninsula, does not have a connection to
another project, such as a hydro project in Western or Southeast
Alaska. The language goes beyond what is necessary to identify
what the money is intended to be spent for in that the language
with the appropriation item itself identifies the sum of money,
the purpose for which it is directed, and the source of funds.
In the first instance the language is directed to the Intertie,
but there is no connection to the others, he said.
MR. BJORKQUIST pointed out it's also instructive to consider the
intent language in Section 4 of the current version of SB 46, on
page 98, lines 6-12, since it begins by describing the state
energy policy, but on line 10 it switches to, "Therefore, the
legislature intends that the package of appropriations and
projects listed below are all necessary to achieve a statewide
balance in addressing the state's diverse energy needs." He
asserted the language in that sentence creates substantive law.
That sentence creates a new energy program or a new energy
policy and links all of these appropriations together "to
achieve a statewide balance in addressing the state's diverse
energy needs." He said this connection of projects creates the
problem. He suggested looking at it from the standpoint of the
criteria that was used to pick these projects and these
communities which are now part of what is designated as " ...
necessary to achieve a statewide balance." He further asked
what criteria was used for other projects and communities not
included in this mix of appropriation. He said that this
linkage of this mix of appropriations represents a policy,
programmatic decision being made by the legislature. He
suggested in applying the Hammond test that the energy program
itself results in substantive law and this amends or changes
what is in AS 44.99.115, which is the state's policy that
focuses on helping individual communities and does not mention a
statewide balance. He related that the linkage of these
projects, in terms of the legislature administering a program of
expenditures, links all of these projects and is administering
all of the energy programs by linking all of the projects and
appropriations together.
MR. BJORKQUIST said when considering an appropriation as an
individual item that identifies an appropriation, a sum of money
designated for a specific purpose with a funding source, each
individual item lists the amount of the appropriation, purpose
of the appropriation, and funding source of the appropriation.
Thus, each project and item alone is an appropriation. He
referred to page 98, line 18, of SB 46, noting that the Alaska
Industrial Develop & Export Authority (AIDEA) coal to liquids
project stands on its own. The language is the minimum
necessary language for the appropriation. He then directed
attention to the next line, which he opined is superfluous to
the first appropriation because it goes beyond the minimum
necessary language necessary for that particular appropriation.
Thus, that too violates the minimum necessary test of the
Hammond test. He reiterated that from a practical sense, the
linkage of the projects creates a problem with respect to the
confinement clause.
9:17:45 AM
CHAIR GATTO expressed concern with the language that says, "to
achieve a balance" since 60 legislators must strike a balance.
He noted that the word "all" has been used repeatedly. He
offered his belief that the statement itself is strongly subject
to interpretation so he was unsure if it would be considered
illegal or irresponsible, regardless he found it an unacceptable
justification for reaching a conclusion. Thus, he dismissed the
conclusion because the justification for it is unreasonable. He
argued that everyone would not agree on the proper balance,
which is not possible to find for all Alaskans. He asked if the
aforementioned is related to the legality or non-legality of
that section.
9:19:04 AM
MR. BJORKQUIST thought his comments directly related to the
confinement clause in that the energy policy to "identify,
assist with the development of the most cost effective, long
term source of energy for each community statewide." This bill
selects all of the projects necessary for a statewide balance,
but the selection is not done according to statute since
criteria are not in the statute to identify each and every one
of these projects as affecting a statewide balance. He said
that is the reason mentioning the language in SB 46 that refers
to linking projects for a statewide balance, is considered a
substantive decision. It is not an appropriation on an
individual item-by-item basis. He said he agreed with Chair
Gatto's assessment.
CHAIR GATTO pointed out he discussed the differences between
appropriation and allocation. He said an appropriation is a set
amount of money for projects, but the allocation is for each
one. However, the allocations can be swapped per Mr. Poag.
MR. BJORKQUIST acknowledged statutory provisions allow the
administration to move money between allocations of an
appropriation under the Fiscal Procedures Act, an area of law
with which Mr. Poag is more conversant.
CHAIR GATTO related his understanding that an "item" could be
defined in several ways, and therefore he expressed interest in
discussing defining the term "item." He pointed out that in
members' packets the memo from Mr. Gardner to Senator French
describes an "item" in a manner which he thought was clear.
9:22:43 AM
MR. BJORKQUIST acknowledged there are several different ways for
the legislature to choose to make an appropriation, however
there are consequences for each. Additionally, with each of
those options, the governor maintains line item veto power. The
Alaska Supreme Court has found one historical purpose of the
line item veto is to prevent "logrolling," which he opined
happens by linking the projects together in Section 4 of SB 46.
He said that to the extent a project is part of an energy plan,
it is an energy plan created in SB 46, which is substantive law.
In response to a question, he offered his understanding that the
governor has line item veto over an appropriation and
consequences exist to line item veto of an appropriation that
contains allocations.
9:24:10 AM
REPRESENTATIVE GRUENBERG maintained his dissent with respect to
the confinement issue. He said that the only constitutional
provision that is relevant is the single sentence in Article II,
Section 13, which he read, as follows: "Bills for
appropriations shall be confined to appropriations." The
aforementioned language does not say that the legislature cannot
tie appropriations together; rather, he opined that it considers
the entire bill. Therefore, as long as the entire bill deals
solely with appropriations, the clear text would seem to sustain
it. He said he understood the Hammond test, but did not believe
it applied in this particular case because the constitutional
text only considers the bill as a whole. Again, as long as the
bill is an appropriation bill and it doesn't contain other
things, the sentence has been not violated. He ventured his
belief that the discussion on the confinement clause would
happen if Section 48(a) and Section 49 were not in the bill. He
said if it really was a confinement issue and those sections
were not in the bill, the DOL would likely argue that due to the
intent language the confinement was violated. He characterized
that by itself as a weak reed to lean upon. He expressed the
committee's concern with the effect of the two clauses, but the
DOL's argument focuses on a different part of the bill. He
pointed to the intent language on page 98, which he maintained
was simply an expression of legislative intent and is not any
more binding than a policy statement. It would be like a
resolution in the sense that it gives a sense of the
legislature. However, from a constitutional sense, he said he
was unaware it would carry that authority. He also said that
the underpinning of his response is to maintain the conversation
wouldn't be happening today were it not for Section 48(a) and
Section 49. The DOL's argument doesn't deal with those sections
and the text of the constitution looks at the bill as a whole.
9:27:58 AM
MR. BJORKQUIST clarified that he didn't intend for his comments
to be wholly focused on the intent language of Section 4,
however, he did believe the language is instructive as to how a
court would interpret Section 48(a), which links the projects
together. The two must be read in combination with one another.
Additionally, he thought that Section 49 must be read in
combination with the other two sections to understand what is
happening with the bill as a whole. He respectfully disagreed
that the Hammond test isn't instructive as to the constitution
since the Alaska Supreme Court has identified it as the test for
determining the confinement clause and when it is violated.
Thus, the Alaska Supreme Court has already given instruction,
which identifies that is the test to use to interpret the
constitution confinement clause.
REPRESENTATIVE LYNN asked Mr. Burns to provide a copy of his
presentation to the committee.
MR. BURNS agreed to do so.
9:29:50 AM
REPRESENTATIVE PRUITT related that the legislature must make an
assumption that any act is automatically constitutional. The
legislature relies on opposition to prove otherwise, he said.
MR. BURNS acknowledged what he is referring to is considered the
rebuttable presumption, which is the assumption that this body
will do things that are constitutional. However, he noted that
just passing a bill doesn't make it constitutional. Thus, with
respect to Sections 48 and 49 of SB 46, the fact the legislature
passes it, if it does, does not mean that it passes the litmus
test of rebuttable presumption of constitutionality. He related
the presumption is the legislature presumes it is constitutional
and the court looks to the questions of whether it is
constitutional. Based on the reasons just articulated by the
DOL, he offered his belief that the presumption would be
rebutted very quickly. In response to a question, he responded
that the court is the final determiner of constitutionality.
MR. BURNS surmised that the goal of SB 46 was to usurp or
restrict the powers of the governor, given the concern over the
line item veto. He said just passing a bill does not pass
constitutional muster until it is challenged in court. Everyone
taking an oath of office has an obligation to uphold the
constitution. He acknowledged Representative Gruenberg
articulated this well when he said that in large measure, the
legislature must police itself since legislative oversight,
executive oversight, and judicial oversight exist and the hope
and desire is that the legislature will review the bill for
legality and practicality and find the language in those
sections is inappropriate and will strip it from the bill.
CHAIR GATTO said he has a strong appreciation for actions the
Senate took given the use of the term retaliatory veto. He
offered his belief the Senate did not have any recourse but to
seek enough votes for a three-fourth veto override in the event
the governor exercised the line item veto. He further said the
committee has already discussed that an override is an
enormously high bar. Thus, he related that given the threat of
a veto, the Senate is protecting itself by inserting the
language since this is too important to allow the governor to
exercise what he has already threatened to do.
9:34:01 AM
MR. BURNS remarked that he has not seen any indication of a
retaliatory veto, but clearly "two wrongs never make a right."
The governor has an obligation under Article II, Section 15 of
Alaska's constitution that he shall return any vetoed bill with
a statement of his objection to the house of origin. Thus, the
governor would be required to explain the reason for any veto,
which in turn empowers the legislature to override the veto.
When the constitutional founders evaluated the three-fourths
requirement, significant debate ensued. The founders identified
that they knew it would constrain the legislative body, but they
wanted checks and balances and the power to constrain excessive
spending within the executive branch, subject to the burden of
the three-fourths vote on a veto override. He acknowledged the
clear risk, but offered the delegation considered the risk and
decided that in the context of the public arena a governor must
justify the decision, which serves as an appropriate check and
balance as well. He clarified that the basis of the objection
plus the legislature's ability to override a veto is the
appropriate check and balance.
CHAIR GATTO questioned whether simply saying that the capital
budget includes a heat pump for a boat house is too expensive
would constitute sufficient explanation or justification.
MR. BURNS agreed it could be a justification for a veto. He
pointed out that what was described was excessive spending, and
he ventured the governor and the legislature have the
responsibility to ensure expenditures are in the best interest
of the public. He said to the extent that $150,000 is in the
budget for a heat pump may well be sufficient justification.
9:37:16 AM
REPRESENTATIVE THOMPSON, referring to language in Sections 48
and 49 of SB 46, asked how the language would relate to a third
party litigant that may object to a hydro project. He related
his understanding and concern that such action could halt all of
the projects.
MR. BURNS agreed that's a real concern since anyone could
challenge the unconstitutionality of a provision. He related a
scenario in which someone opposed to the Susitna hydro project
could challenge the unconstitutionality of Section 48.
Additionally, as discussed by Representative Gruenberg's memo,
any legislator whose ability to exercise judgment has now been
eclipsed by Section 49(b) could also raise a challenge. He said
the practical implications were that while this may be a
wonderful, theoretical, and academic issue, significant
implications exist in reality as to these projects.
9:39:43 AM
REPRESENTATIVE KELLER related his understanding that this is a
policy question first. He recalled the comment that the
judicial review is the final say, but pointed out that in terms
of the sovereignty of what is in the constitution the [final
say] is had by Alaskans. There is an initiative process and
ultimately the final decision rests with the people.
9:42:19 AM
REPRESENTATIVE GRUENBERG said he hoped that the bill would be
resolved and not proceed to court and expressed concern that the
bill would set a precedent. He said he thought the question
would be on a smaller scale as to whether a clause or two
clauses would be constitutionally permissible. He related a
scenario in which a dam and intertie are directly related. He
suggested a small clause could be appropriate to link the two.
He asked whether it would be appropriately linked in terms of
the constitution. He referred to the A.L.I.V.E. Voluntary v.
State case, since the majority and minority dissent was exactly
on this point. He explained that the majority, on a 3-2 vote,
said that to tie two things together the legislature cannot
impinge the constitutional right of the governor to sever. It's
not a question of the benefit policy wise, but whether the
legislature itself could do so, or whether it must be only the
governor. He asked whether the Alaska constitution would permit
even a "mini tie-together clause."
MR. BURNS offered his belief that there may be situations in
which there is a very close nexus, meeting the Hammond
requirements, and connectivity in which a linkage makes perfect
sense. Again, it's a balancing of the confinement provisions
and Article II, Section 15, of the Alaska State Constitution,
which discusses the ability to line item veto to strike or
reduce. He said it must be a situation in which there is a very
clear nexus between one item and another item, such that in
isolation neither item has any value. Although there could be
instances, they would be rare and would be evaluated on a case-
by-case basis. With regard to Representative Keller's comments,
Mr. Burns noted his agreement that this is about a process. The
process for appropriation bills is critical since it allows
vetting and all parties to have a say. However, creating
agreements "behind the doors" emasculates that type of process.
Again, this is about a process and transparency of government
doing things appropriately. The constitution envisions that
transparent process and it is the legislature and the
administration's obligation to ensure that happens, he said.
9:48:00 AM
The committee took an at-ease from 9:48 a.m. to 9:58 a.m.
9:58:31 AM
DOUG GARDNER, Director, Legislative Legal and Resources
Services, Legislative Affairs Agency, began by reminding members
he has a duty of confidentiality to all 60 legislators and that
the agency is a policy neutral organization. He said although
he agrees with much of the attorney general's comments, he
disagrees with some of the analyses and conclusions. He offered
his belief that another side of the issue exists. However, he
reiterated his role is not to advocate for a specific position,
but to answer questions. He agreed with Representative
Gruenberg's analysis that this case is not a confinement clause
case. He said he did not think the Hammond test is violated by
any of the provisions discussed, including Section 4 intent
language. He also did not think anyone in the room thought that
the intent language and allocations in Section 4 were legally
binding. He related that Section 4 language has a stated
purpose and a funding source has been identified. He reiterated
he did not believe the case was a confinement clause case.
MR. GARDNER agreed with both Representative Gruenberg and
Attorney General Burns, to the extent that the issue has been
framed as a separation of powers issue. He offered his belief
that this case is a classic separation of powers issue between
the legislature's prerogative to appropriate and the executive
branch's derivative power to strike or reduce appropriations in
the line item veto process. He noted that Pam Finley was
legislative counsel in Legislative Council v. Knowles, 21 P.3d
367 (Alaska 2001), a confinement clause case, and therefore he
collaborated with Ms. Finley on drafting the memorandums from
the agency.
10:03:13 AM
MR. GARDNER noted his agreement with Attorney General Burns that
the two remaining issues are the cross contingencies in Section
48, to which he will refer to as the contingencies, and the non-
severability clause. He then provided an overview reinforcing
that Section 4 deals only with the non-severability clause with
respect to the energy projects. With regard to the suggestion
that there is an imbalance in the constitutional framework
between the legislative prerogative to appropriate and the more
limited power of the governor, as described by the Knowles case,
to strike or reduce an appropriation. Thus far SB 46
articulates if all the energy projects cannot be funded, then
none of the projects should be funded. He offered his belief
the legislature is "pushing the envelope" on its appropriation
power and SB 46 places a significant burden on the governor,
which may be considered by some a Draconian result if the
governor were to strike or reduce any of the appropriations in
the bill in Section 4.
MR. GARDNER the related that if an appropriation is contingent
and the governor [uses his veto power], the result of the non-
severability clause is the parties "come back to zero." One way
to view the situation is that it is indeed a perfect balance
despite the extreme circumstances in which a large number of
projects are tied together with contingencies. He pointed out
the funding remains for appropriation. Perhaps the framers
realized both parties would still have to work together in some
way in order to move forward. He then recognized the alternate
view offered by Representative Gruenberg that the legislature
appropriates, the governor uses a line item veto, and the remedy
is contained in the veto override of Article II of Alaska's
constitution. Although there is the possibility that the court
would avoid the contingency analysis and thereby not have to
address the contingency, he was unsure how easy it would be for
the court to do so.
10:08:18 AM
MR. GARDNER returned to Mr. Burns' earlier question regarding
whether this could be done "a little bit," and offered his
belief that fact patterns do exist [to support doing this "a
little bit"]. For example, the Snettisham project consists of
separate items or allocations within an appropriation for a dam,
a power transmission line, an undersea cable, and distribution
center. He opined it would be difficult to argue that the
legislature would want one without the other, so a nexus exists.
Therefore, it would be hard to conceive of a situation in which
the legislature would appropriate funds for the dam and
substation without the cable and it would also be shocking for
the governor to strike one of the items. He suggested that the
discussion needs to probe deeper and look beyond contingencies
preventing a line item veto, which is difficult given that it's
a political conundrum for which the outcome is unknown. He
highlighted that in the Knowles case the discussion by the
Alaska Supreme Court suggested that contingencies closely
related to the appropriation would be appropriate, while ones
that held less of a nexus or relationship might not withstand
scrutiny. He then referred to the Karcher case [Karcher v.
Kean, 479 A.2d 403, 412 (New Jersey 1984)] cited by Mr. Burns in
which there is no question the court observed that most
legislative appropriations do have some kind of contingency or
other reason for them. Mr. Gardner stated he was unaware of any
cases, produced by either party, which indicate that
contingencies are a non-starter.
MR. GARDNER explained that the aforementioned increases the
difficulty in advising the legislature since some cases allow a
"little bit" of contingency or suggest some contingencies are
allowed, although it has not been defined as to how broadly that
could occur. He related agreement with Mr. Burns that SB 46
represents a broad contingency and may be one of the broader
contingencies that the bodies have had to consider. Thus, it
exposes an argument of how a wind generation project in one part
of the state and an electrical transmission line in another part
of the state are related and whether enough of a nexus exists.
He said he was unsure of what action the Alaska Supreme Court
would take. However, he offered his view, with respect to the
Snettisham project, that one would understand that striking one
element would eliminate the whole project. With respect to SB
46, the question is whether a governor would really expect that
striking a wind generation project in Western Alaska would
eliminate all of the other energy projects in the bill. The
countervailing point would be how the term "nexus" would be
defined and whether it would be a physical nexus such as the
case with the Snettisham project in which the nexus is physical,
financial, and functional. He suggested that one result of this
case is that the Alaska Supreme Court would specify for the
legislature the type and scope of contingencies that would be
allowable. In this case [SB 46], it could be argued that the
nexus is an equitable distribution as one of the bodies has
articulated the projects represent an equitable distribution of
energy projects in a very diverse state. Thus, if the projects
represent an equitable distribution, the question becomes
whether the projects represent enough of a nexus to support a
finding that the contingencies are constitutional and do not
offend the notion of strike or reduce. He offered his belief
that arguments exist on both sides of that issue and it will be
a very difficult point for the Alaska Supreme Court to decide.
In conclusion, Mr. Gardner said he did not believe that the
confinement clause is a significant issue at this point, and
therefore he disagreed with the DOL on that point.
10:15:06 AM
CHAIR GATTO asked whether the entire capital budget could be
listed as a single project since the projects all represent the
state's infrastructure, in which case the governor could take it
or leave it. He surmised that everyone could agree with respect
to the Snettisham project that one element has no meaning
without the other components. However, the legislature doesn't
agree that a windmill and building an elementary school 800
miles away are connected. He inquired as to whether the term
"nexus" could be defined.
MR. GARDNER responded that the agency has suggested some
elements in its May 3, 2011, memo to Representative Gruenberg.
He said he would have a difficult time arguing an entire capital
budget had the type of nexus that was appropriate that respected
the governor's executive branch line item veto power and the
legislature's ability to appropriate and address concerns.
10:17:41 AM
MR. GARDNER, in response to a question, pointed out that if the
entire capital budget were considered linked, it would represent
an extreme view and unlikely a court would find it
constitutional. However, a court would likely find that a dam
and a power line were connected in terms of constitutionality.
He offered his belief that "what we're presented with is
something in the middle, probably more towards the upper end and
a little harder to defend." He indicated that whether the
energy projects represent a fair and equitable distribution is a
question he cannot answer. One of the issues upon which lawyers
advise their clients and which he would do, were he asked by
Legislative Council, is that going before the Alaska Supreme
Court over a novel issue of constitutional law may not result in
exactly what was desired and could result in some intermediate
position that may change how appropriations are done.
Therefore, the exploration of a novel constitutional issue has
some real consequences for both sides.
CHAIR GATTO asked whether Legislative Council has some sort of
superior position with respect to making determinations.
MR. GARDNER explained that the Legislative Council converts the
legislature's attorneys into advocates if the council authorizes
the attorneys to represent the legislature. At that point, the
attorneys become advocates, take a position, and essentially
litigate with the DOL.
CHAIR GATTO asked how the agency's attorneys can be an advocate
for one body if the two bodies of the legislature disagree.
MR. GARDNER responded that sometimes the agency hires outside
counsel, though he did not think this would be one of those
situations. He pointed out that his current role is "policy
neutral," which would change if the Legislative Council
otherwise authorized.
10:20:56 AM
REPRESENTATIVE GRUENBERG pointed out that one advantage to this
type of litigation is that it first goes through the Superior
Court and then to the Alaska Supreme Court; the trial courts are
helpful to the advocates. He said he had not considered the
dimension of time. Often an item is struck in a line item veto
not because of the merits of the project but due to the
inability to afford it all at once. Thus, two things could be
linked together, but the projects cannot be completed all at
once. He pointed out that the [DOL] attorneys represent the
executive branch but not from the budget perspective. The
governor and the executive branch, he surmised, will be
concerned about the cost at that point in time, particularly
because of the anti-lapse statute that gives these projects a
five-year life before the project must go through the
reappropriation mode. He concluded if that were the basis for a
reduction, or potentially a strike, and the legislature has tied
projects together in toto it could cause a constitutional
problem. The governor must be able to represent the state and
the budget over time as well as a snapshot in time. The
aforementioned fact argues strongly for the governor having the
maximum flexibility in this area, he said.
REPRESENTATIVE GRUENBERG surmised that it would not be
beneficial to obtain any legal opinions since so many variables
exist. Instead, he hoped the negotiation process would wind up
eliminating the two clauses since litigation could cause more
problems than it would solve. He offered his belief that this
hearing is focused only on the constitutional issues. He
thought this sets a dangerous precedent and this "has got more
wrinkles than the rear end of a hippo."
10:25:01 AM
MR. GARDNER offered his belief that as the process has ensued
the non-severability has been changed and redrafted and that in
and of itself demonstrates the legislature is just at the
beginning of a complex process with permutations that have not
been considered. He opined that exploring the constitutional
issues could raise issues not considered. He was unsure of what
action the Alaska Supreme Court would take during litigation.
10:26:27 AM
REPRESENTATIVE THOMPSON asked his view on how a third party
litigant could bring the process to a halt.
10:26:51 AM
PAM FINLEY, Revisor of Statutes, Legislative Legal and Research
Services, Legislative Affairs Agency (LAA), explained that if
the governor does not use his line item veto power or does and
the legislature overrides the veto, then a third party litigant
would have nothing to gain by litigating the constitutionality
of SB 46. The courts might say that the contingency, which
really hasn't been triggered, probably was invalid. She
explained that the non-severability will only take effect if
there is a veto and there isn't an override of the veto, which
may result in many people in court. The fear has been that if
the legislature and the executive branch did not trigger the
non-severability, someone else could use the provision. As
currently written coming out of the Senate, a third party could
not use it to stop a project such as the Susitna Dam or any
other project. However, if the legislature and the executive
branch are in court, probably a third party could also weigh in.
REPRESENTATIVE THOMPSON said if future litigation were to take
place, it would not have a backwards effect on other projects
contained in Section 4 of SB 46.
MS. FINLEY related her understanding that if the Susitna Dam
project was challenged on some other grounds, this bill would
not affect it.
CHAIR GATTO posed a scenario in which project 31 was challenged
and the Susitna Dam was listed as project 40, and asked whether
the 40 projects would then be in limbo waiting for resolution of
project 31.
MS. FINLEY answered yes, noting it would be worse than that
since the possibility of challenge would prevent contractors
from proceeding due to the projects being in limbo.
CHAIR GATTO understood the contractors' issue, but also wanted
to ascertain whether he understands the legal issue. He noted
that project 40 is also vulnerable if a lawsuit is filed against
another project.
MS. FINLEY agreed, assuming that the contingency clause has been
triggered and everyone is in court.
10:30:06 AM
REPRESENTATIVE THOMPSON, referring to the language with respect
to achieving statewide balance to address the state's diverse
energy needs, pointed out people in Nulato may not feel the
project is equitable.
MR. GARDNER said he did not mean to suggest that he was
endorsing any of the arguments, but instead was simply observing
that the language included by the Senate would be one of the
arguments advanced for the nexus.
10:30:59 AM
MR. GARDNER, referring to the non-severability clause, said
although it's conceivable that an outcome could occur one way or
the other on the nexus analysis, the case law indicates that the
inclusion of a non-severability clause is an instruction to the
court that says if it doesn't work the way it intended, take it
out. Thus, Section 4 would be deleted. Mr. Gardner highlighted
that it's difficult to predict how the court would apply a non-
severability analysis in the context of appropriations, given
the two constitutional provisions. He acknowledged issues exist
and that one can't definitively say the court won't carve out
some type of separate provision for non-severability clause
enforcement in the context of appropriations. However, non-
severability clauses get enforced such as what occurred in Brown
[Comm'n v. Brown, 664 S.W.2d 907, 919 (Ky.1984)], although he
acknowledged the distinctions between the cases. Although he
agreed with Mr. Poag that those cases are as good as the state
and the constitutional law that's in place, he maintained non-
severability clauses tend to get enforced and there isn't any
reason to suspect otherwise. Therefore, if the contingency
clause is found to be unconstitutional, the net result due to
the non-severability clause could be no energy projects, as
outlined in Section 4 of SB 46 as it's currently written would
go forward.
REPRESENTATIVE GRUENBERG did not recall a non-severability
clause ever being included in an appropriation bill. He asked
for clarification.
10:33:50 AM
MS. FINLEY responded that she was unsure whether there has never
been one, but she did not recall any. However, there may have
been non-severability clauses in substantive legislation.
REPRESENTATIVE GRUENBERG asked that this issue be researched
further, and that the result get disseminated in writing.
MS. FINLEY said one of the problems with the contingency clause
and the non-severability clause is that in this particular case
they wind up in the same place though conceptually they are
quite different. She referred to the Alaska Seafood Marketing
Institute (ASMI) appropriation in the Knowles case, in which the
legislature said that the appropriation was contingent on ASMI
having no out-of-state employees above a range of about 21 or
22. The courts ruled that was a violation of the confinement
clause. The court next needed to determine whether to sever the
bad contingency from the appropriation. In other words, the
question became does ASMI get funded despite the confinement
clause violation. In Knowles, the court found the state has a
general presumption of severability and it severed the clause.
However, she urged members to consider situations in which the
legislature does not want to fund a project so it places a
contingency on the funding. Thus, the legislature would place a
non-severability clause to signal to the court the legislative
intent not to fund a project. She reiterated that the concepts
are different and can be different in other situations.
10:37:06 AM
REPRESENTATIVE GRUENBERG agreed and added that his question for
research should also include contingency clauses.
CHAIR GATTO recalled the Carlson case involving fishing fees for
resident and nonresident fishermen.
MS. FINLEY responded the case was not a contingency just a
violation of the constitution. She noted that he is correct
that it is related to the ASMI contingency case, but the court
struck down the ASMI contingency not for the same reason it
struck down the Carlson case just mentioned. The ASMI case was
an attempt to place substantive law into an appropriation. If
the legislature wanted to do that, then it needed to pass a law
specifying ASMI may not employ out-of-state employees, which may
have been unconstitutional. Still, the requirement should have
been in substantive law. In response to whether the state can
insist that an oil company have 80 percent Alaska hire, Ms.
Finley responded that she was not prepared to answer that at the
moment.
10:39:45 AM
REPRESENTATIVE KELLER asked when it might be advantageous for
the legislature to have a case go to the Alaska Supreme Court.
He inquired as to whether there is any instance in which it
would be wise. He thought thoroughly vetting an issue could
lead to a decision being based on debate and records.
MR. GARDNER said he prefers not to comment on policy. He agreed
that going to court provides an answer to the question asked,
but as Representative Gruenberg suggested it may be that the
question is formulated differently. He suggested that lawyers
are generally risk-averse, and prefer to have control of their
own destiny. He speculated that most try to keep their clients
out of court whenever possible. He concluded that it's always
preferable to avoid court and he could not imagine many
situations unless an unresolvable crisis existed and a
constitutional matter needed to be unraveled. However, when
there are other approaches to be taken, lawyers would suggest
those approaches should be pursued first.
10:43:07 AM
REPRESENTATIVE PAUL SEATON commented that the legislature
frequently uses fair and equitable distribution with various
projects, including schools. He pointed out that under the
latest version of SB 46 many things have been moved from the
"item" column to the "allocation" column. He then related his
understanding that for allocations, the agency, with the consent
of the Office of Management & Budget (OMB), can move those
appropriations; that is change the numbers.
MS. FINLEY posed an example in which there were three bridges,
one of which costs a little more and one of which costs a little
less; the point of the allocation is for the legislature to
essentially allow the executive branch to move the funding with
the OMB's approval. She said she has serious doubts that the
executive branch could decide to build one of the three bridges,
but not the other two since it would likely be a violation of
the appropriation power. However, that issue hasn't been
litigated. The legislature, she said, lists the bridges because
it wants them built. If the executive branch ignored the
allocations and decided to only build one bridge, the
legislature would stop doing allocations, she predicted.
CHAIR GATTO suggested it would be reasonable to say the bridge
over the Yukon River is necessary to carry heavy pipe, and
therefore take additional funding from bridges two and three and
put it toward bridge one.
MS. FINLEY responded she was unsure of how that action would be
viewed by either the court or the legislature. However, she
acknowledged some funding could be moved.
CHAIR GATTO inquired as to whether some money or a little money
could be moved, which he interpreted as the item/project having
been over funded.
MS. FINLEY explained that allocations are used because the
amount needed is not a certain amount, but only an approximate
amount. Thus, the actual costs for construction may come in
over or under the projected cost, which is why adjustments are
allowed. In response to a further question, she clarified that
the bill contains allocations in Section 4 as well as
appropriations and some items, such as the large hydroelectric
projects, only are appropriations.
10:47:25 AM
CHAIR GATTO noted that the cover letter indicates the projects
are listed as allocations and the proposed committee substitute
modifies the intent language. He opined that was a significant
change.
10:48:00 AM
REPRESENTATIVE SEATON related his understanding that when it
went from Version B to Version S, the items were changed to
allocations. He questioned whether using "allocations" gives
the executive branch the legislature's authority to appropriate
by allowing the executive branch to change the amount the
legislature appropriated.
MS. FINLEY answered yes; allocations give more power to the
executive branch in terms of where the funds are spent. If the
legislature wants funds only to be spent on a specific project
such as project "x" it needs to appropriate to project "x." In
instances in which the legislature is willing to allow movement
of funds, the legislature sets an appropriation plus an
allocation for that appropriation. Historically, the governor
has used a line item veto on allocations and changed the amount
of the appropriation up above.
CHAIR GATTO asked if an appropriation is allocated as 50 percent
to each of two projects, but the governor moves it to 60 percent
[for one project] and 40 percent [for another project], he/she
has essentially vetoed an allocation.
MS. FINLEY said that is the reason she was reluctant to agree
that all the funding could be moved since it essentially would
undermine the legislature's allocation power. The law is as yet
uncertain about this, she noted.
10:51:38 AM
MR. GARDNER, in response to Representative Seaton's question
regarding the power given to the governor, referred to page 99
of the bill. For example, the $16,333,000 appropriation for the
Alaska Energy Authority has been broken down into the following
allocations: $1 million for the Alaska Energy Plan, $5 million
for bulk fuel upgrades, $330,000 for electrical emergencies, and
$10 million for the Rural Power System. If the governor decided
to line item veto the $1 million for the Alaska Energy Plan
allocation, the governor's practice has been to go to the main
appropriation and reduce it to $15,333,000. He characterized
the practice as a mutual respect between the line item veto and
the legislature being willing to give enough flexibility to put
things into an allocation. He said there has not been a net
result in which other projects have been increased within a
category of appropriation.
10:53:16 AM
REPRESENTATIVE GRUENBERG pointed out that there is an Alaska
Supreme Court case that requires the governor to reduce the full
amount because the effect would be to increase the remaining
items.
CHAIR GATTO acknowledged that the funding would drift up to
another item.
MS. FINLEY concluded that moving the funding without a veto
might be an illegal use of the appropriation.
CHAIR GATTO and REPRESENTATIVE GRUENBERG offered their
understanding that such a scenario would be an illegal use of
the veto.
10:54:34 AM
REPRESENTATIVE GRUENBERG asked where the term allocation is
defined.
MS. FINLEY answered that the term is not defined, but instead
used in the Executive Budget Act. The Act says specifically
that money cannot be transferred between appropriations but can
be transferred between allocations. In further response to
Representative Gruenberg, she acknowledged that conceivably
there could be a constitutional issue with a delegation issue.
10:57:16 AM
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 10:57 a.m.