Legislature(1999 - 2000)
03/10/1999 08:05 AM House URS
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON UTILITY RESTRUCTURING
March 10, 1999
8:05 a.m.
MEMBERS PRESENT
Representative Bill Hudson, Chairman
Representative John Cowdery, Vice Chairman
Representative Pete Kott
Representative Norman Rokeberg
Representative Brian Porter
Representative John Davies
Representative Ethan Berkowitz
Representative Joe Green (alternate)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 101
"An Act relating to the reinstatement of corporations that are
public utilities; and providing for an effective date."
- MOVED HB 101 OUT OF COMMITTEE
HOUSE BILL NO. 62
"An Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
- HEARD AND HELD
PRESENTATIONS: ALASKA TELEPHONE ASSOCIATION AND FOUR DAM POOL
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 101
SHORT TITLE: CORPORATE PUBLIC UTILITY REINSTATEMENT
SPONSOR(S): REPRESENTATIVES(S) MORGAN
Jrn-Date Jrn-Page Action
2/19/99 258 (H) READ THE FIRST TIME - REFERRAL(S)
2/19/99 258 (H) URS, L&C
3/03/99 (H) URS AT 8:00 AM CAPITOL 120
3/03/99 (H) HEARD AND HELD
3/03/99 (H) MINUTE(URS)
3/10/99 (H) URS AT 8:00 AM CAPITOL 120
BILL: HB 62
SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION
SPONSOR(S): REPRESENTATIVES(S) THERRIAULT
Jrn-Date Jrn-Page Action
1/22/99 68 (H) READ THE FIRST TIME - REFERRAL(S)
1/22/99 69 (H) URS, L&C
2/08/99 172 (H) FIN REFERRAL ADDED
2/17/99 (H) URS AT 8:00 AM CAPITOL 120
2/17/99 (H) HEARD AND HELD
2/17/99 (H) MINUTE(URS)
3/10/99 (H) URS AT 8:00 AM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE CARL MORGAN
Alaska State Legislature
Capitol Building, Room 409
Juneau, Alaska 99801
Telephone: (907) 465-4527
POSITION STATEMENT: Sponsor of HB 101.
ASHLEY REED, Lobbyist
for Bush-Tell, Incorporated
360 West Benson Blvd., Suite 200
Anchorage, Alaska 99503
Telephone: (907) 562-2560
POSITION STATEMENT: Testified in support of HB 101.
DAWN WILLIAMS, Supervisor
Corporations Section
Division of Banking, Securities and Corporations
Department of Commerce and Economic Development
P.O. Box 110808
Juneau, Alaska 99811-0808
Telephone: (907) 465-2297
POSITION STATEMENT: Testified in support of HB 101.
HEATHER GRAHAME, Attorney
Dorsey and Whitney LLP
1031 West Fourth Avenue, Suite 600
Anchorage, Alaska 99501
Telephone: (907) 257-7822
POSITION STATEMENT: Testified in support of HB 101.
WILDA RODMAN, Legislative Administrative Assistant
to Representative Gene Therriault
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-4797
POSITION STATEMENT: Testified on behalf of sponsor on HB 62.
WALT WILCOX, Legislative Assistant
to Representative Bill Hudson
Alaska State Legislature
Capitol Building, Room 108
Juneau, Alaska 99801
Telephone: (907) 465-3744
POSITION STATEMENT: Testified on HB 62.
GINNY FAY, Legislative Liaison
Office of the Commissioner
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2503
POSITION STATEMENT: Testified on HB 62.
BOB LOHR, Executive Director
Alaska Public Utilities Commission
Department of Commerce and Economic Development
1016 West 6th Avenue
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Announced that Chairman Cotten is not present.
TIM COOK, Commissioner
Alaska Public Utilities Commission
Department of Commerce and Economic Development
1016 West 6th Avenue
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Testified on HB 62.
DAVID FAUSKE, General Manager
Arctic Slope Telephone Cooperative; and
President, Alaska Telephone Association
4300 "B" Street, Suite 501
Anchorage, Alaska 99503
Telephone: (907) 563-3989
POSITION STATEMENT: Testified on HB 62.
ACTION NARRATIVE
TAPE 99-7, SIDE A
Number 0001
CHAIRMAN BILL HUDSON called the House Special Committee on Utility
Restructuring meeting to order at 8:05 a.m. Members present at the
call to order were Representatives Hudson, Cowdery, Kott, Porter,
and Davies. Representatives Green (alternate), Rokeberg and
Berkowitz arrived at 8:10 a.m., 8:15 a.m., and 8:17 a.m.,
respectively.
CHAIRMAN HUDSON announced there will not be a presentation by Four
Dam Pool today because of errors found by staff.
HB 101 - CORPORATE PUBLIC UTILITY REINSTATEMENT
CHAIRMAN HUDSON announced the first order of business is HB 101,
"An Act relating to the reinstatement of corporations that are
public utilities; and providing for an effective date."
CHAIRMAN HUDSON explained at the last hearing of HB 101 there were
questions of the prime sponsor, Representative Carl Morgan, who was
not there. He is here today, and called him.
Number 0135
REPRESENTATIVE CARL MORGAN, Alaska State Legislature, apologized
for not being there at the last meeting. House Bill 101 is a
vehicle to allow the Department of Commerce and Economic
Development the discretion to reinstate as a corporation a local
telecommunication company that services several communities in
Western Alaska. After reviewing the facts and circumstances that
surround the issue, he hopes that the committee members will agree
this measure warrants attention and support. The following are the
facts surrounding the involuntary dissolution of Bush-Tell,
Incorporated (Bush-Tell):
- Bush-Tell is a small, rural, local telephone company
located in Aniak, Alaska which provides service to ten
small villages in Western Alaska.
- Bush-Tell was incorporated on November 10, 1969 and has
been providing telecommunication service ever since 1970.
- Mr. Harry Colliver, Jr, President and sole shareholder,
was recently informed that Bush-Tell is no longer
registered as a corporation because the registered agent
failed to follow the proper procedures for resigning as
a registered agent resulting in the involuntary
dissolution of Bush-Tell.
- Since the involuntary dissolution, Bush-Tell has
observed all the corporate procedures required by its
bylaws and state laws, including board of director
meetings and paying corporate income taxes.
REPRESENTATIVE MORGAN further noted, for the record, he drafted the
bill on a narrow bias because, according to his understanding, it
is the way the legislature has handled these types of issues in the
past. He feels this is the best approach. He urged the committee
members to support the bill and move it out of the committee
without any amendments.
CHAIRMAN HUDSON announced, for the record, the arrival of
Representative Green.
Number 0408
REPRESENTATIVE COWDERY asked Representative Morgan what has
Bush-Tell changed to keep the same thing from happening again.
REPRESENTATIVE MORGAN replied Bush-Tell hasn't done anything yet,
because it hasn't been reinstated. He is sure, however, that
Bush-Tell will not let this happen again.
Number 0465
REPRESENTATIVE COWDERY asked Representative Morgan whether
Bush-Tell will now be its own registered agent using its own
address for receiving notifications.
REPRESENTATIVE MORGAN replied yes.
Number 0486
REPRESENTATIVE DAVIES asked to review what didn't happen that
resulted in the involuntary dissolution. He wasn't at the last
meeting.
REPRESENTATIVE MORGAN deferred the question to Ashley Reed,
Lobbyist for Bush-Tell.
Number 0520
ASHLEY REED, Lobbyist for Bush-Tell, Incorporated, explained since
1969 Robert Colliver, Jr. has been the sole shareholder of
Bush-Tell, Incorporated. A lawyer in Anchorage acted as the
registered agent to handle corporate filings. That lawyer's life
became more complicated and somewhere along the line his office
closed and he didn't leave a forwarding address, even though it is
required by law to notify the Department of Commerce and Economic
Development of the resignation of a registered agent. This past
year when Mr. Colliver contacted the department to register a new
"d.b.a." (doing business as) he was informed of the involuntary
dissolution. Apparently, the department sent a certified letter to
the registered agent. The letter came back to the department and
went into its file. Criticism has been expressed to the department
and since then policies have been instituted to prohibit this type
of thing from happening again in the future. Apparently, now, when
a certified letter is returned, the department will actually track
down listed board members.
Number 0650
REPRESENTATIVE DAVIES asked Mr. Reed whether there are any
corporate taxes or annual reports due that were not filed as the
result of this.
MR. REED replied Mr. Colliver has conducted his affairs not knowing
that he is not a newly registered corporation. He just found out
at the end of 1998. He has continued to hold board meetings, and
pay federal and state corporate taxes.
Number 0698
REPRESENTATIVE DAVIES stated, clearly, this bill verges on special
legislation. It is obviously intended for a particular situation.
He wondered why the legislature doesn't put a general reinstatement
provision in statute to cover these types of circumstances.
Number 0744
CHAIRMAN HUDSON stated the prime sponsor has asked that the bill
stick to this particular subject.
Number 0759
MR. REED stated, according to research, the last two times this has
been done it related to village corporations. The department likes
the narrow focus because it already is a requirement of law. The
department wants corporations to follow the rules and frankly this
is an extraordinary step that most corporations don't want to do.
The department wants it to be an arduous process to ensure that
everybody else follows the rules to the best of their ability. In
the case of Bush-Tell, there is a unique set of circumstances
because the registered agent left. The outcome would not be the
same today because of policy changes within the department.
Number 0852
REPRESENTATIVE DAVIES stated he doesn't see an automatic repealer
in the bill, and asked whether the language would stay on the
books.
CHAIRMAN HUDSON replied yes.
Number 0881
REPRESENTATIVE DAVIES stated he is troubled by this. He agrees
that there ought to be some big hoops to jump through when these
types of circumstances arise, but on the other hand, it is too much
to put this type of language in statute. Clearly, it is a one shot
affair, but he is not sure how it should be handled exactly.
Number 0908
CHAIRMAN HUDSON noted at the last hearing there was discussion on
expanding the bill to cover corporations in general.
Number 0931
REPRESENTATIVE PORTER stated he agrees with Representative Davies.
There should be a provision to repeal it out of the statutes, once
it has become effective.
CHAIRMAN HUDSON announced, for the record, the presence of
Representatives Rokeberg and Berkowitz.
CHAIRMAN HUDSON called on Dawn Williams from the Department of
Commerce and Economic Development.
Number 1005
DAWN WILLIAMS, Supervisor, Corporations Section, Division of
Banking, Securities and Corporations, Department of Commerce and
Economic Development, stated the division supports the bill. The
division also supports a repealer in order not to clutter the
statutes. The division does not support making a general change to
cover all corporations, however. The Act of the division is
modeled after the Model Business Corporation Act which allows for
involuntary dissolution for the failure to file biennial reports
and maintain registered agents. There is a two year period of
reinstatement for every corporation and that period should stay.
Number 1087
REPRESENTATIVE BERKOWITZ referred to AS 10.06.633(c) and read, "If,
following a hearing, the commissioner determines the presence of
neglect, omission, delinquency, or noncompliance providing grounds
for involuntary dissolution under this section, the corporation may
appeal to the superior court...". He asked Ms. Williams whether
this avenue was pursued in this case.
MS. WILLIAMS replied no. She doesn't have any record of that in
Bush-Tell's file.
Number 1123
REPRESENTATIVE ROKEBERG noted in this case the two years have
elapsed.
Number 1148
REPRESENTATIVE PORTER noted the appeal is if a corporation had felt
something had been done improperly in relation to the requirements
in statute. Obviously, that is not the case here.
Number 1165
REPRESENTATIVE BERKOWITZ stated he reads the appeal to the superior
court as a safety valve.
REPRESENTATIVE PORTER noted that the legislature is the only branch
of government that can make an exception to the law, not the
courts.
Number 1190
REPRESENTATIVE ROKEBERG noted that the Model Business Corporation
Act refers to the secretary of state. He asked Ms. Williams
whether a corporation has the right to appeal to the department
rather than going to court.
MS. WILLIAMS replied yes. A corporation has 60 days to request a
hearing from the commissioner.
REPRESENTATIVE ROKEBERG stated a request for reinstatement would be
to the department and not to the court.
MS. WILLIAMS said correct.
REPRESENTATIVE ROKEBERG asked Ms. Williams whether that is in
statute.
MS. WILLIAMS replied, according to statute, if a corporation files
a biennial report, pays taxes and/or penalties within 60 days, it
can avoid dissolution.
REPRESENTATIVE ROKEBERG stated his question related to the two-year
provision, not the 60 days.
MS. WILLIAMS stated a corporation can reinstate within two years
after dissolution by following a biennial report, paying taxes
and/or fees. There is a two-year period without going or going to
court.
Number 1288
REPRESENTATIVE ROKEBERG stated a compromise could be to extend the
period of appeal to court. He would like to hear why Bush-Tell
didn't go to court.
CHAIRMAN HUDSON called on Heather Grahame, Attorney for Bush-Tell.
Number 1335
HEATHER GRAHAME, Attorney, Dorsey and Whitney LLP, testified via
teleconference from Anchorage. She noted that neither of the
remedies are available for Bush-Tell because a request for a
hearing has to be made within a 60-day period. In this case,
Bush-Tell was involuntary dissolved in 1993, but didn't learn of it
until 1998. In addition, there is no way for Bush-Tell to go to
court because it is outside the two-year time period. The only
remedy now is a legislative Act extending the reinstatement period
to the end of this year. Under AS 10.06.965, there is a provision
that gives the legislature the right to alter, amend or extend any
part of Title 10 with respect to any company doing business within
the state. This is the way the legislature has dealt with these
types of issues in the past. Bush-Tell would rather have the issue
resolved legislatively than go to court. She said, "If you can
imagine, this is a public utility and it needs to get its corporate
affairs in order as quickly as possible."
Number 1444
REPRESENTATIVE DAVIES asked Ms. Grahame whether there is a
prohibition against reestablishing a new corporation.
MS. GRAHAME replied that was looked at, but it doesn't take care of
the time period from 1993 to 1999, and Mr. Colliver would be
exposed to all sorts of Internal Revenue Service (IRS) liabilities
during that period of time. Even under the Model Business
Corporation Act, the only remedy is a legislative one similar to HB
101 relating back to the point in time of dissolution.
Number 1516
REPRESENTATIVE KOTT referred to AS 10.06.633(c) and noted that a
copy of the dissolution "shall" be mailed to the registered agent.
He asked Ms. Williams whether the change made by the division is
internal policy or set in regulation.
MS. WILLIAMS replied it is internal policy. It is not for
notifying a corporation of its dissolution, however. In the past,
biennial reports were sent to the registered agent, but the
division found that many registered agents lost them. Therefore,
the division started updating its files using the principal office
address. If a report is returned now, one is then sent to the
registered agent.
Number 1634
CHAIRMAN HUDSON stated, in reading the bill, it is not necessary to
broaden the bill's application. He asked that the chairman of the
House Labor and Commerce Standing Committee consider the issue in
his committee. He announced that the committee at this point has
exhausted hearing the bill and called for a motion to move it out
of committee.
Number 1653
REPRESENTATIVE PORTER made a motion to move HB 101 out of committee
with individual recommendations and the attached zero fiscal note
with a caveat that the next committee of referral look at a sunset
provision. There being no objection, HB 101 was so moved from the
House Special Committee on Utility Restructuring.
HB 62 - ALASKA PUBLIC UTILITIES COMMISSION
CHAIRMAN HUDSON announced the next order of business is HB 62, "An
Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
CHAIRMAN HUDSON announced there are two amendments to be considered
(1-LS0327\A.2 and 1-LS0327\A.3).
Number 1761
CHAIRMAN HUDSON called for a brief at-ease at 8:35 a.m. and called
the meeting back to order at 8:38 a.m.
CHAIRMAN HUDSON called on Wilda Rodman, staff to Representative
Gene Therriault, sponsor of the bill.
Number 1774
WILDA RODMAN, Legislative Administrative Assistant to
Representative Gene Therriault, Alaska State Legislature, stated in
reference to Amendment A.2, Representative Therriault would prefer
to amend HB 62 instead of separating it into two different bills.
CHAIRMAN HUDSON asked Ms. Rodman for clarification whether
Representative Therriault would like to see the amendment
incorporated into HB 62.
MS. RODMAN said correct.
CHAIRMAN HUDSON asked Ms. Rodman to speak to Amendment A.2
(1-LS0327\A.2, Cramer, 2/26/99). It reads as follows:
Page 1, following line 3:
Insert new bill sections to read:
"* Section 1. AS 42.05.020(b) is amended to read:
(b) The governor shall designate one member of the
commission as chair [CHAIRMAN] of the commission. This
member shall serve as chair [CHAIRMAN] for a term of four
years, but may be appointed for successive terms. The
chair is responsible for the administration of the
commission and commission employees.
* Sec. 2. AS 42.05.101(a) is amended to read:
(a) The chair of the commission shall establish for the
commission a principal office and branch offices
necessary to discharge its business efficiently. For the
convenience of the public or of parties to a proceeding,
the commission may hold meeting, hearings, or other
proceedings at other locations.
* Sec. 3. AS 42.05.111(b) is amended to read:
(b) The chair of the commission may employ temporary
legal counsel for the commission from time to time in
proceedings before the commission in which the attorney
general is representing the public interest or a party
before the commission.
* Sec. 4. AS 42.05.121 is amended to read:
Sec. 42.05.121. Employment of commission personnel. (a)
The chair of the commission may employ an executive
director of the commission. The executive director [WHO]
shall have had at least five years of experience in
public utility management or regulation, law, accounting,
engineering, or an allied field. The executive director
is responsible for directing the administrative functions
of the commission and carrying out the policies as set by
the commission. The chair of the commission may employ
engineers, hearing officers, administrative judges to the
extent provided in AS 42.06.140(b), experts, clerks,
accountant, and other agents and assistants considered
[IT CONSIDERS] necessary. Employees and agents of the
commission who are not partially exempt under AS
39.25.120, other than legal counsel, are in the
classified service under AS 39.25.100.
(b) In addition to the [ITS] staff of regular employees,
the chair of the commission may contract for and engage
the services of consultants and experts the chair
[COMMISSION] considers necessary."
Page 1, line 4:
Delete "Section 1"
Insert "Sec. 5"
Renumber the following bill section accordingly.
MS. RODMAN explained Amendment A.2, in response to testimony at the
last hearing, delineates the power and authority of the chair of
the commission. The chair doesn't have the authority to hold
someone accountable.
CHAIRMAN HUDSON stated there are constitutional problems with
Amendment A.2.
Number 1856
REPRESENTATIVE PORTER stated, in the general consideration that the
committee has had and the exposure that most of the members have
had over the last couple of years, this type of shoring up is
necessary. The greatest concern expressed about the commission is
delay and consequently he feels compelled not to be subject to the
same criticism. He said, "If--if it is that making the individual
chair responsible for hiring is improper, then let's just not do
it. But, if there is an alternative that is acceptable, let's
consider it. If not then, my feeling would be, let's get this
thing moving."
Number 1906
REPRESENTATIVE COWDERY stated he thought the intent of the bill is
a sunset date. It has a wide title, and that is a problem too. He
would like to see the committee address the sunset date and address
the other things in another piece of legislation. The wide title
calls for mischief. He would like to tighten the title to pertain
to the sunset date only.
Number 1950
REPRESENTATIVE DAVIES agreed with tightening the title to reflect
the sunset and the intent of the amendments. If it looks like it
will be dragged on longer beyond these two amendments, then he
agrees the bill should be separated in order to get one going. He
supports Amendment A.2. It is consistent with the material
provided by the independent internal review. It is essentially one
of the recommendations.
Number 1983
CHAIRMAN HUDSON stated he would like to see Amendment A.2 be
incorporated into the bill. In reference to the concern of the
open ended title, he read the following suggestion by
Representative Therriault:
"An Act relating to the extension of the termination date
and the organization structure of the APUC [Alaska Public
Utilities Commission]."
CHAIRMAN HUDSON indicated it would need to be in writing before
taking it up.
Number 2029
REPRESENTATIVE ROKEBERG suggested taking up the amendments
pertaining to the body of the bill then work on a title.
CHAIRMAN HUDSON asked for someone to address the constitutional
problem in Amendment A.1.
MS. RODMAN replied the problem is with the language starting on
line 18, "(a) The chair of the commission may employ an executive
director of the commission...". It is unconstitutional because the
commission needs to vote on an executive director. It can be fixed
by deleting that language so that it reads, "The commission may
employ an executive director...".
CHAIRMAN HUDSON called for a motion to amend Amendment A.2.
Number 2075
REPRESENTATIVE PORTER made a motion to adopt Amendment A.2 deleting
the language as indicated on lines 18-20 that would result in
leaving the current statutory language.
REPRESENTATIVE ROKEBERG objected. He announced he has another
amendment to Amendment A.2 and asked that the motion be restated to
incorporate his amendment.
CHAIRMAN HUDSON stated he assumed that the motion was an amendment
to Amendment A.2.
REPRESENTATIVE PORTER removed his motion.
REPRESENTATIVE PORTER made a motion to delete lines 18-20 of
Amendment A.2 that would result in leaving the current statutory
language.
REPRESENTATIVE DAVIES called for a point of order. Amendment A.2
is not before the committee.
CHAIRMAN HUDSON called for a motion to officially adopt Amendment
A.2.
Number 2126
REPRESENTATIVE PORTER made a motion to adopt Amendment A.2.
CHAIRMAN HUDSON designated the amendment as Amendment 1, and asked
whether there is any objection. There being no objection, it was
so adopted.
CHAIRMAN HUDSON asked whether there is any objection to amending
Amendment 1 as already discussed.
Number 2162
REPRESENTATIVE COWDERY objected. He asked Ms. Rodman how amending
Amendment 1 meets the constitutional standard.
MS. RODMAN replied she can't answer that. She only knows how to
fix it. She deferred the question to Walt Wilcox, staff to
Representative Bill Hudson.
Number 2191
WALT WILCOX, Legislative Assistant to Representative Bill Hudson,
Alaska State Legislature, stated last evening it was brought to his
attention that Section 42.05.121 in the amendment is
unconstitutional under the "Boards and Commissions" section of the
state constitution. That section says the entire commission has to
hire an executive director, not one commissioner.
Number 2217
REPRESENTATIVE COWDERY asked Mr. Wilcox whether the amendment to
Amendment 1 makes it constitutional.
MR. WILCOX replied if that portion is taken out of the amendment it
goes back to the original language. According to his
understanding, the original language is constitutional.
Number 2227
REPRESENTATIVE COWDERY removed his objection.
CHAIRMAN HUDSON asked whether there is any further objection.
There being none, it was so adopted.
Number 2256
REPRESENTATIVE ROKEBERG asked Mr. Wilcox whether the language
starting on line 23 of Amendment 1, as amended, giving the chair
not the executive director the authority to employ remains
constitutional.
MR. WILCOX replied the area just discussed was the only portion
that Legislative Legal Counsel pointed out as being
unconstitutional.
CHAIRMAN HUDSON noted that the new section would read, "The
commission may employ an executive director."
REPRESENTATIVE ROKEBERG stated the language starting on line 23
reads, "The chair of the commission may employ engineers..."
MR. WILCOX explained that has nothing to do with the executive
director or managerial slot for the whole organization. It has to
do with the other employees.
Number 2280
REPRESENTATIVE ROKEBERG made a conceptual motion to delete the word
"governor" and to add the word "commission" to page 1, line 4 of
Amendment 1, as amended.
REPRESENTATIVE ROKEBERG stated the idea of the conceptual amendment
is to allow the members of the commission to appoint the chair
rather than the governor. He has discussed this issue with a
number of people involved and he thinks it might help with the
general morale, efficiency and operation of the agency according to
the study and other reorganization methods. It may be
controversial, but it deserves an airing.
CHAIRMAN HUDSON called on Ginny Fay from the Department of Commerce
and Economic Development to discuss the conceptual motion.
Number 2339
GINNY FAY, Legislative Liaison, Office of the Commissioner,
Department of Commerce and Economic Development, stated the
Administration strongly opposes the conceptual amendment. The
Governor would like to continue to appoint the chair and under the
current circumstances the situation would be worse if the
commissioners appointed the chair.
Number 2363
REPRESENTATIVE DAVIES stated he is against the conceptual
amendment. The structure now achieves a certain balance. The
issue of whether a governor can replace all of the members of the
commission in order to be more responsive to the current
Administration has been struck down in court. He supports a
staggered set of appointments so that the commission, hopefully, is
more depoliticized and that there is representation from a broad
set of views. However, a commission like this needs to be a little
bit more responsive and having the governor appoint the chair is a
compromise between those two circumstances.
Number 2406
REPRESENTATIVE PORTER stated he understands the idea of the
conceptual amendment and he could argue for it, but at the same
time he recognizes that there is a situation that needs to be
worked through with this individual commission. He said, "Until we
get through this, it seems to me making this amendment exasperates
that situation. It would also put a difficult spin on a situation
where there would be one person missing, that having been the chair
for some reason. And, then the four members are required, with an
inability to strike a majority, to appoint a chairman and the
stalemate could go on forever. I think that considering all of
that, it's a close call, but I would speak against the amendment."
Number 2451
REPRESENTATIVE COWDERY stated it is important to remember that the
legislature has its voice in confirming the members. He stated he
is against the conceptual amendment.
Number 2470
CHAIRMAN HUDSON asked Representative Rokeberg whether he still
wants to offer the conceptual amendment after hearing the
testimony.
Number 2477
REPRESENTATIVE ROKEBERG stated it appears that there might be a
constitutional prohibition to...
TAPE 99-7, SIDE B
Number 0001
REPRESENTATIVE ROKEBERG continued. The conceptual amendment is to
help overcome some of the internal problems of the commission by
having a more collegial type of selection of the chair.
Number 0012
REPRESENTATIVE ROKEBERG withdrew his motion based on constitutional
grounds.
CHAIRMAN HUDSON called for a motion to adopt Amendment 1, as
amended.
Number 0021
REPRESENTATIVE DAVIES made a motion to adopt Amendment 1, as
amended. There being no objection, it was so adopted.
CHAIRMAN HUDSON called for a motion to adopt Amendment 2
(1-LS00327\A.3, Cramer, 3/9/99). It reads as follows:
Page 1, following line 3:
Insert a new bill section to read
* Section 1. AS 42.05.035 is amended to read:
Sec. 42.05.035. Removal of commissioners.
The governor may remove a commissioner from
office for cause [BY AND WITH THE CONSENT OF A
MAJORITY OF THE LEGISLATURE]."
Page 1, line 4:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill section accordingly.
CHAIRMAN HUDSON stated Amendment 2 means the governor can remove a
commissioner from office for cause and eliminates the requirement
of going back to the legislature for consent.
Number 0063
REPRESENTATIVE COWDERY asked whether Amendment 2 would be in the
statutes forever.
CHAIRMAN HUDSON replied it would be in the statutes until it is
properly removed by some further action of the legislature. It is
not a time-sequenced amendment.
Number 0085
REPRESENTATIVE COWDERY stated there were lawsuits that cost a lot
of money and misery when there were efforts to do something similar
to this in the past. He can see the reason for it, but on the same
token he doesn't want to have one Administration appoint a
commission for a given length of time and a new Administration wipe
everybody out.
Number 0110
REPRESENTATIVE GREEN stated in most legislation "cause" is pretty
well defined. But, because of the contentious nature of this
particular commission, he is concerned that cause could be
stretched to say that disruption amongst the troops is a reason for
dismissal. He wondered whether Pandora's box is being opened
without a definition of the term "cause".
CHAIRMAN HUDSON deferred the question to Ms. Fay from the
Department of Commerce and Economic Development.
Number 0144
MS. FAY replied the department is concerned about the limitation of
the amendment to address those concerns, especially extensive legal
battles. She wondered whether or not changing the statute at this
time would be applicable to the current situation. She announced
she has an amendment from the Department of Law. It has not been
drafted by Legislative Legal Counsel. It attempts to address the
issue of clarifying cause. This type of amendment has been before
the committee in the past dealing with the Department of Fish and
Game and the Board of Game. The proposed amendment reads as
follows:
* Sec. AS 42.05.035 is repealed and reenacted to read:
Sec. 42.05.035. Removal of commissioners. The governor
may only remove a commissioner from office for
inefficiency, neglect of duty, or misconduct in office,
or because the member while serving on the commission is
convicted of a misdemeanor for violating a statute or
regulation related to public utilities or of a felony.
A copy of the charges shall be delivered to the
commissioner in writing. The commissioner shall have an
opportunity to be heard in person or through counsel at
a public hearing before the governor or a designee upon
at least 10 days notice by registered mail. The
commissioner may confront and cross-examine adverse
witnesses. Upon removal, the governor or a designee
shall file in the proper state office the finds and a
complete statement of all charges made against the
commissioner.
* Sec. In accordance with AS 01.10.100(a), the repeal
and re-enactment of AS 42.05.035 enacted in sec. of this
Act applies to a commissioner of the Alaska Public
Utilities Commission appointed before the effective date
of this Act and is intended to extinguish any existing
right of a sitting commissioner to the removal procedure
specified informer AS 42.05.035.
Number 0197
CHAIRMAN HUDSON asked Ms. Fay whether the recommended language
bears the scrutiny of the Department of Law.
MS. FAY replied it was prepared by the Department of Law.
CHAIRMAN HUDSON asked Ms. Fay whether she is saying that this is
common in other applications.
MS. FAY replied she thinks the legislature recently enacted
something similar with relationship to the Board of Fisheries or
Board of Game. She doesn't recall which one.
Number 0217
REPRESENTATIVE COWDERY referred to the language, "...while serving
on the commission is convicted of a misdemeanor for violating a
statute or regulation related to public utilities or of a felony.
A copy of the charges shall be...". He noted that in this society
the key word is "conviction" and asked Ms. Fay to explain the
language.
Number 0243
REPRESENTATIVE GREEN stated the language reads "or". He thinks it
refers to a sequence rather than having to be convicted of all of
them.
Number 0259
REPRESENTATIVE DAVIES noted the charges refer to the grounds for
removal, not the grounds for conviction.
CHAIRMAN HUDSON stated that is his reading too.
MS. FAY stated she thinks that is correct.
CHAIRMAN HUDSON stated it is up to the committee members to
determine which action to take on either amendments - Amendment 2
or the proposed amendment from the Department of Law.
REPRESENTATIVE DAVIES asked Chairman Hudson whether he intends to
hold the bill over for one more meeting.
CHAIRMAN HUDSON replied, if the bill can get cleaned up and the
committee members feel generally comfortable with it, he would like
to move it out.
REPRESENTATIVE DAVIES asked Chairman Hudson where the bill goes
next.
CHAIRMAN HUDSON replied it goes next to the House Labor and
Commerce Committee.
CHAIRMAN HUDSON labeled the proposed amendment as new Amendment 2
and called for a motion to adopt it.
Number 0334
REPRESENTATIVE DAVIES made a motion to adopt the new Amendment 2.
REPRESENTATIVE ROKEBERG objected. He is not sure where it is
coming from. He is reluctant to see the power of the legislature
when it comes to these constitutionally protected, quasi-judicial
agencies go to the governor. It seems the amendment is skewed
towards an instant fact pattern and not for the benefit of the
state in the long run.
Number 0396
MS. FAY stated, according to her understanding, the APUC statute is
the only place that the legislature votes to concur with the
removal of a member and its constitutionality is questionable. The
new Amendment 2 would make the APUC removal clause constitutional
and more consistent with other removals for boards and commissions.
Number 0420
REPRESENTATIVE ROKEBERG stated he has not had a chance to look over
the new Amendment 2 and its ramifications. It is an interesting
point, but without seeing a legal opinion relating to its
constitutionality and given the importance of this matter, he will
maintain his objection.
Number 0448
REPRESENTATIVE BERKOWITZ stated it seems, when the legislature
takes on the position of a judicial function, it would create some
kind of problem. That would probably be the constitutional concern
with the statute as it is currently configured.
Number 0483
REPRESENTATIVE PORTER stated, in recognizing that an individual
situation has been brought to the legislature's attention, he
agrees with Representative Rokeberg. It should be looked at in the
context of whether or not it is good public policy. It is also his
understanding that this particular statute is the only one that
provides this type of mechanism for the removal of a commissioner.
It is the only one whereby the legislature is required to confirm
a dismissal. Again, looking at the general problems described for
this particular commission, a special session would be needed to
avoid an eight-month delay for the removal of a commissioner which
doesn't seem reasonable. He is more comfortable with language
addressing cause. Well, here is the cause and its a high duty of
cause, and one that he is comfortable with.
CHAIRMAN HUDSON asked Representative Porter whether he is speaking
in favor of the new Amendment 2.
REPRESENTATIVE PORTER replied yes.
Number 0555
REPRESENTATIVE COWDERY stated he would like to speak against the
new Amendment 2. It was just handed to the committee members. He
would like to have some time to review it and explore it with
Legislative Legal Counsel. He might not object to it later, but he
still wants to hold it over.
Number 0579
REPRESENTATIVE DAVIES stated it seems reasonable to address those
concerns in the next committee of referral, especially since
Representative Rokeberg who objected to it is the chairman of the
next committee. He suggested adopting the new Amendment 2.
Number 0599
CHAIRMAN HUDSON stated, on the other hand, if it is taken care of
here, it is only a one week delay. If it is sent to the next
committee of referral...
Number 0613
REPRESENTATIVE ROKEBERG stated it would be valuable to get a legal
opinion on it. He would be appropriate, given the makeup of this
committee versus the makeup of the next committee of referral,
making the decision in this committee. He asked that the bill be
held over one more week to look at the legal aspects and other
avenues of ameliorating the problems. It is appropriate to hold it
over given the fact that the Administration brought it at the last
minute.
CHAIRMAN HUDSON stated those are the right reasons to hold the bill
and new Amendment 2. He will ask for a legal opinion from
Legislative Legal Counsel which will be presented at the next
committee meeting. He also asked the committee members to
contemplate the title. He will send a copy of Representative
Therriault's suggestion to each of the committee members.
Number 0720
MS. FAY stated the Administration supports Representative
Therriault's wish to include these changes into a sunset bill, as
opposed to separate legislation. If the title is changed to the
suggested one, it won't capture the essence of the two amendments.
In addition, the language "organization and structure" in a title
opens it up to other potential changes. She suggested the
following language:
"...the extension of the APUC, the power of the chair,
and the removal of commissioners..."
Number 0785
REPRESENTATIVE DAVIES suggested asking Legislative Legal Counsel to
narrow the title in relation to the concerns.
Number 0795
REPRESENTATIVE COWDERY suggested appointing a subcommittee.
CHAIRMAN HUDSON said he has confidence that it can be done in a
short order, especially with the help of Legislative Legal Counsel
and the committee members.
Number 0825
REPRESENTATIVE KOTT stated a title change will depend on what
happens with Amendment 2 or new Amendment 2. He is not comfortable
with this amendment process. He was looking forward to a clean
bill that would expedite itself through the system, rather than
offering the opportunity for every committee that reviews it to
make administrative changes. While the Administration might
support the inclusion of the administrative remedies in Amendment
1, as it moves through the process some of these things might
become objectionable to the Governor and the tendency to support it
might change.
Number 0881
CHAIRMAN HUDSON opened the meeting up to public testimony.
BOB LOHR, Executive Director, Alaska Public Utilities Commission,
Department of Commerce and Economic Development, testified via
teleconference from Anchorage. He announced that Chairman Cotten
had to return to the APUC for a public meeting. He was here for
most of the discussion, but he was not here for the discussion on
the new Amendment 2.
CHAIRMAN HUDSON asked Mr. Lohr to pass on to Chairman Cotten the
flavor of the comments of the committee members. The committee may
want him to comment next week.
Number 0935
TIM COOK, Commissioner, Alaska Public Utilities Commission,
Department of Commerce and Economic Development, testified via
teleconference from Wasilla. He said: "Yes, sir this is Tim Cook
in Wasilla. And, I'm sorry that I'm missing a public meeting of
the utilities commission, but after listening this morning, I
thought, it was imperative that I stay and give you some of my
thoughts on...I hope that I'm not too long winded in this, but
sometimes I get paid by the nickel as well and I have to talk a
long time to make any nickels. Mr. Chairman, I came this morning
prepared to say one thing. After listening to the proposed
amendments, I guess it really furthers my resolve. I came to
advocate that the legislature either make fundamental structural
changes at the APUC or let the APUC sunset out of existence. The
commission has formally adopted recommendations that we go from
five commissioners to three and that we have an internally elected
chair rather then a chair appointed by the Governor. The reasons
that I take this course--make these recommendations is--is at this
juncture the public utilities commission has become a springboard
for political aspirations by both the Governor and Chairman. And,
after listening to the proposed amendments this morning, I believe
that--that the PUC would become an--an absolute puppet of the
Governor. Mr. Chairman and members of the committee, many of you
know me and supported me in my fight to keep the APUC an
independent agency when the Governor tried to remove me from the
commission. That fight was expensive to me personally. It took a
year of my life and about $65,000 in attorney fees. And we won
that battle, but I believe we're losing the war. Particularly with
the amendments that are talked about this morning, there is no
doubt that the Governor would attack me again as well as other
members of the commission. And it puts the commission member in a
very difficult situation which is now you're fighting the entire
resources of the attorney general's office, the governor's office
and (indisc.--coughing) own nickel. The legislature supported me.
Let me rephrase it, they didn't support me, they supported their
position. I had to hire an independent counsel to represent my
interests and that cost me $65,000 approximately out of my pocket.
By going to a cause-basis that becomes a very nebulous concept that
has no basis. This I don't think is simply my opinion in terms of
where we need to go. I've said that the Governor has a strangle
hold on this commission previously. I'd like to read to you a
letter that the Governor sent to the commission with regard to
personnel."
CHAIRMAN HUDSON asked Mr. Cook whether the letter is long.
MR. COOK said: "No sir, I'm only going to read one sentence--two
sentences. It says, 'Therefore, I am appointing Commissioner Clark
as commissions hearing officer--that's the Governor speaking--and
I do not recognize the validity of the discharge of Robert Lohr.
Further, any other appointments or removals from exempt or
partially exempt provisions--positions at the commission will be
subject to approval by me or my chief of staff.' In essence, the
Governor owns the executive director's office."
MR. COOK further said: "As far as the chairmanship of the
commission, I'd just like to read a very short quote from
Commissioner Hanley at our last public meeting. She said that, 'I
think we have a situation right now where decisions are made by the
chairman and the executive director and board commissioners know
nothing about them.' That's the position that Commissioner Hanley
has. As far as the--the ability to remove commissioners, the
entire trust of giving that to--a requirement has to (indisc.--door
closing and coughing) the legislature to remove the ability of the
Governor to manipulate politically the decisions of the commission.
At this point, we're in a situation where the Governor has
completely eviscerated that provision as well. The chairman of the
organization's term expired March the first. He serves under
provision of 42.05.030 that states, 'the commissioners term
expiration of the term shall continue to hold office until a
successor is appointed'. In effect what's happened is Sam Cotten
is serving at the pleasure of the Governor. And, I believe that
Commissioner Cotten will continue to serve in this state of
suspended animation as long as he pleases the Governor. And, at
the point that he displeases the Governor, the Governor will name
a successor and Sam Cotten will be removed immediately from the
commission. Mr. Chairman and members of the commission, make no
mistake, this Governor and this Chairman have high political
aspirations and they also have the keen ability for retaliation.
This is not simply within the commission, but there is a fear, I
believe, of the utilities throughout the state to say anything
critical of the public utilities commission for fear of
retaliation. In fact, we've already had a situation occur that put
a very chilling effect on communications from the public utilities
to the legislative auditor..."
CHAIRMAN HUDSON asked Mr. Cook to conclude his comments and to fax
any letters or anything else that he would like the committee to
consider.
MR. COOK said: "Yes, sir I was trying to wind up right there. I
guess, the bottom line of my position is, at this point, I believe
the public utilities commission needs to either have fundamental
structural change or we need to sunset it and start over again."
Number 1338
REPRESENTATIVE ROKEBERG asked Mr. Cook to provide the committee
members with a list of recommendations on what needs to be done to
restructure the APUC and to refer to the National Regulatory
Research Institute's (NRRI) report, if it is part of the
recommendations.
Number 1383
DAVID FAUSKE, General Manager, Arctic Slope Telephone Cooperative;
President, Alaska Telephone Association (ATA), testified in Juneau.
The committee members have two letters from the ATA in their
packets. The ATA certainly advocates the reinstatement of the
APUC, and is very concerned with a wind down, lame duck or holding
situation. The last time that happened, the consumer, the industry
and the general public interest suffered. At that time, there were
numerous issues and dockets before the commission. At this point,
there has been a five-fold increase in the issues heard and
considered before the APUC. The types and kinds of issues have
broadened due to the fallout of the Federal Communications Act of
1996. Therefore, a wind down situation would be even more
exacerbated by the public and very costly. Those costs eventually
wind up hitting the pocketbooks of the consumers in one way or
another. The ATA urges the reinstatement of the APUC under the
sunset provisions as a specific Act, and the restructuring or
redefining of the APUC as another piece of legislation.
CHAIRMAN HUDSON called on Ms. Rodman to address any of the concerns
heard today.
MS. RODMAN asked Chairman Hudson for a brief at-ease.
Number 1648
CHAIRMAN HUDSON called for an at-ease at 9:30 a.m. and called the
meeting back to order at 9:32 a.m.
CHAIRMAN HUDSON asked staff of the prime sponsor to prepare final
comments for the committee to consider next week. He doesn't want
the bill to become a Christmas tree and he doesn't want it to dally
around too much longer. He knows how much it takes to get a bill
through both bodies. It is important not to let it sunset because
there isn't anything to substitute its place.
CHAIRMAN HUDSON indicated that the bill will be held over for
further consideration.
ADJOURNMENT
Number 1738
CHAIRMAN HUDSON adjourned the House Special Committee on Utility
Restructuring meeting at 9:34 a.m.
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