Legislature(2017 - 2018)BUTROVICH 205
03/27/2018 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): Alaska Police Standards Council, Alaska Public Office Commission | |
| HB44 | |
| SB186 | |
| HB138 | |
| SB210 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | HB 138 | TELECONFERENCED | |
| *+ | SB 210 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 44 | TELECONFERENCED | |
| += | SB 186 | TELECONFERENCED | |
HB 44-LEGISLATURE: ETHICS, CONFLICTS, PER DIEM
3:50:42 PM
CHAIR MEYER announced the consideration of House Bill 44 (HB
44). He noted that the bill was heard on February 22 and there
was a Senate committee substitute (CS) for consideration.
3:51:07 PM
SENATOR GIESSEL moved to adopt the Senate CS (SCS) for CSSSHB
44, version 30-LS0208\N as the working document.
CHAIR MEYER objected for discussion purposes.
3:51:45 PM
CHRISTINE MARASIGAN, Staff, Senator Meyer, Alaska State
Legislature, Juneau, Alaska, stated that the Senate CS makes
some substantive changes to the bill. She explained that it
takes the rest of an initiative called "The Alaska Government
Accountability Act," Petition ID: 17AKGA, and puts it squarely
into HB 44.
She specified that there were five ideas in the initiative:
• Declaration of conflict; specifically, if a legislator or
legislator's family has a financial interest of $10,000 or
more.
• Acceptance of de minimis food or non-alcoholic beverage for
immediate consumption.
• Banning foreign travel.
• Eliminating per diem after 121 days.
• Not allowing foreign corporation or agents.
MS. MARASIGAN provided the following sectional analysis,
pointing out where the "five ideas" are located:
In your CS, version: N, sections 1 and 2 are taken
from the initiative, it's basically Section 9; this
deals with the foreign corporation or national
language, and that's what is in those two sections.
Sections 3, 4 and 5, found on page 6 of version N, the
Section 3 addresses the issue of disallowing any
foreign travel to be funded unless a report is made.
Section 4 deals with no per diem after 120 days.
Section 5 deals with moving expenses.
Section 6, we have the mention of the nonalcoholic
beverage piece. The majority of the rest of the bill
was in your original version R that you heard
previously.
Section 7, that corresponds to Section 1 that you've
heard previously about conflict of interest.
Section 8 corresponds to Section 2.
Section 9 corresponds to Section 3.
Section 11 corresponds to section 4.
Section 10 addresses alcoholic beverages.
The other major addition is having a new effective
date, which is found in Section 17.
3:55:08 PM
She continued as follows:
Taking this initiative and putting it into statutory
language, it takes some time simply because each,
Department of Law, the Legislature, each organization
has their way of drafting materials in order to
conform with their material that they have with
statute or etcetera. So, there was an accompanying
legal memo that was produced from Legislative Legal
that points out that while this version N before you,
the CS you have adopted is not absolutely identical,
it is very similar in that both the initiative and the
bill also raise constitutional issues.
The memo also points out the differences between the
bill drafted before you and the initiative in that it
can be attributed to drafting styles that I mentioned
previously but it is still substantive; for example,
one of little changes is that in the initiative we
talk about a de minimis for food and drink where the
bill before you simply states what we've been abiding
by in our ethics language as $15. Also, the
applicability of the initiative's prohibition on
campaign contributions and expenditures by foreign
influenced corporations, that language did not meet up
very well in the bill and in the initiative, and
there's some issues with constitutionality that the
drafter then points out in the legal memo to the
committee. So, having said that, the memo is pretty
clear that while there are some substantive
differences between the bill, the real differences are
very few and they amount to different ways of
addressing identical issues. So, the drafters
themselves said therefore while you can't predict the
certainty of the outcome of potential litigation, if a
court were to apply the three-part test to this that
the bill would in fact displace the initiative from
the election ballet.
There were four areas of constitutionality that the
legal memo addressed. One was the salary and expenses
of legislators, second was federal preemption, the
third was freedom of speech and association, and the
fourth was equal protection.
I do have legislative attorney Dan Wayne online to
answer any specific questions. Committee members
should be aware that this bill has a further referral
to Senate Judiciary and has had an additional referral
to Senate Finance.
3:58:03 PM
CHAIR MEYER asked Ms. Marasigan to verify that foreign travel is
not prohibited, but it must be approved as a legislative purpose
and a report must be filed after a legislator returns.
MS. MARASIGAN answered correct. She noted that the foreign
travel stipulation is in both the bill and the initiative.
CHAIR MEYER commented on HB 44 and the initiative as follows:
I want to let the committee know HB 44 dealt with the
conflict issue which I thought did a good job of
defining what a conflict is, I believe it is $10,000;
and then we got thinking if that matches the
initiative, let's look at the other things on the
initiative and just see if we can combine everything
else into this one bill, and if so then the initiative
wouldn't need to go before the voters if we are close
or close enough to the initiative.
So, looking at the other four items in the five parts
of that initiative, they all seem to be, I think, a
good idea as far as I was concerned and I'm hoping
that the committee does as well, and I did talk to the
sponsor both of this bill, HB 44, and also I believe
he's one of the three cosponsors on the initiative,
that's Representative Grenn, I spoke to him on
Thursday and asked him if he was okay with this, and I
didn't get answer.
So, I guess I don't know if no news is good news or he
hadn't had a chance to talk to the other two yet; but,
this bill does have two more committees to go to and I
think the biggest question right now is the
constitutionality of the bill and the initiative and
so the bill goes to Judiciary next which I'm sure the
Judiciary chair will iron that all out.
He addressed Mr. Wayne from Legislative Legal and noted
that he wrote his opinion making himself clear that HB 44
may be unconstitutional; however, he noted that Mr. Wayne
also believed that the initiative was also
unconstitutional. He asked Mr. Wayne how the initiative got
approved if the initiative was unconstitutional.
4:00:51 PM
DAN WAYNE, Legislative Counsel, Division of Legal and Research
Services, Legislative Affairs Agency, Alaska State Legislature,
Juneau, Alaska, explained that the attorney general's opinion
that accompanied the initiative does not talk about the
constitutionality of the bill other than whether it meets the
single-subject requirement in the constitution. He added that
the same requirement that it applies to bills before the
Legislature was addressed in the document on page 4 that says,
"The bill is not clearly unconstitutional." He specified that
the document did not certify that there were no constitutional
problems with the bill and continued as follows:
They are not required to do that, they are just, I
think, required to say whether or not the bill is
clearly constitutional or not; they said it wasn't
clearly unconstitutional, that's not really the same
thing as saying that the bill is constitutional, and I
don't think that they would disagree that there may be
constitutional issues raised by the initiative.
One of the parts of the initiative that we think might
have constitutionality issues is the prohibiting of
payment of legislative per diem after 121 days.
There's Article 11, Section 7 that says that, "The
initiative shall not be used to dedicate revenues or
make or repeal appropriations." If the initiative
passed it could be interpreted as tantamount to
repealing an appropriation, so we think that that is
one constitutional issue; now, that issue isn't
presented by the bill because the bill is an act by
the Legislature, so it's not covered by Article 11,
Section 7 of the constitution, that issue wasn't
raised in my memo of March 21 because that is not an
issue with the bill.
4:04:44 PM
MR. WAYNE continued to address constitutional issues as follows:
The constitutional issues raised in the bill, there's
Article 2, Section 7 of the constitution, it says
that, "Legislators shall receive annual salaries and
they may receive a per diem allowance." If this bill
passed or the initiative passed, either one, and the
Legislature decided not to follow it, the court
probably wouldn't intervene, they would say the
payment of per diem is an internal legislative matter,
it's a legislative prerogative, it's "nonjusticiable."
I say that based on some past holdings of the court,
they cited one of them here on page 4 of my memo.
Another constitutional issue is federal preemption.
The initiative creates something called "foreign
influence corporation" and defines what that is and
says that, "Any foreign influence corporation can't
donate anything to a campaign or spend any money on a
campaign at all." Federal law already prohibits any
foreign national from contributing, donating or
spending funds in connection with federal, state or
local elections either directly or indirectly. A
contribution or expenditure by a foreign-influence
corporation which is defined as one that takes a
certain amount of money from a foreign national might
be the same thing as an indirect expenditure or
contribution by a foreign nationals, it's probably
already covered by federal law and so a state law that
does the same thing might be preempted by the federal
law, especially if it conflicts with the federal law
and that's probably one of the main substantive
differences between the bill, the draft in front of
you today, and the initiative. The initiative doesn't
limit the application of the restrictions on
expenditures and contributions by foreign-influence
corporations, the bill does, it says that in a state
election the prohibition on those expenditures and
contributions only applies if it's allowed by federal
law. So, it tries to reconcile that the state and
federal law says that if there isn't a conflict and
that's why when they drafted it, I added instead of
creating a new law section like the initiative does. I
added the language to existing law that already had
some of that reconciliation language in it to deal
with contributions by foreign nationals. So, it
addresses the same issue which is a concern about
campaign contributions or expenditures by foreign-
influenced corporations, but it addresses it in a
slightly different way and also in a way that takes
care of part of a concern about federal preemption.
4:08:49 PM
MR. WAYNE continued to address constitutional issues as follows:
Under "possible constitutional issues" are listed on
pages 6 and 7 of my memo. The first one was "freedom
of speech in association" because it is a fundamental
right to be able to speak out and to make
contributions and so forth. The court looks really
carefully whether or not the action taken goes too far
in addressing the government's concern. So, as I had
written on page 7, it says that the bill's sections 1
and 2 have to do with spending by foreign-influenced
corporations might go so far that a court would say
that they are not sufficiently narrowly tailored to
the state's interest in protecting its processes of
self-government because it limits all expenditures,
even a penny would be limited. There's also an equal
protection concern; again, the attorney general's
opinion as I've read it doesn't say there are no
constitutional concerns with the initiative, just that
the initiative is not clearly unconstitutional, it's
not a slam dunk in their opinion, so that's why they
recommended certification.
4:10:42 PM
CHAIR MEYER asked Mr. Wayne how a foreign corporation is
defined. He asked if Apple Computer would be considered a
foreign-controlled corporation if people outside of the U.S.
owned 10 percent of its stock. If so, Apple would be prohibited
from giving money to a political action committee (PAC).
MR. WAYNE replied that both HB 44 and the initiative define
"foreign corporations." He conceded that the definition for a
foreign-influenced corporation is long, but in summary, "Any
corporation would be foreign influenced if a foreign national or
foreign owner holds, owns, controls or has direct or indirect
beneficial ownership of equity or voting shares in an amount
equal to or greater than five percent of all corporate voting
shares outstanding or all corporate equity." He continued as
follows:
There are two other ways that something could be a
foreign-influenced corporation also could be, "Two or
more foreign nationals or foreign owners combined,
holds, owns, controls or have direct or indirect
beneficial ownership or equity or voting shares in an
amount equal to or greater than 20 percent of all
corporate voting shares outstanding or all corporate
equity, or a foreign national or foreign owner
participates directly or indirectly in decisions
relating to covered expenditures or contributions;" in
other words, directly or indirectly they are somehow
involved in the deciding whether to or how to spend
money on a campaign. So, it's really a super-broad
definition and one wonders how it could be enforced. I
suppose you could look at every single corporation to
see if they are on the date the contribution was made
if they fit into one of these three possible
categories, it might take some doing, but that's what
the initiative does, and we put it into the bill.
CHAIR MEYER concurred with Mr. Wayne that figuring out who owns
what shares that equated to more than 5 percent would be
difficult. He asked if it was his opinion that inserting the
initiative into HB 44 would be close enough to not need the
initiative on the ballot.
4:14:38 PM
MR. WAYNE answered yes. He explained as follows:
I looked at the three-part test, it was articulated in
Warren v. Boucher, that 1975 case cited in the memo,
and then it is was elaborated on 30 years later in a
2005 case, and it seemed to me like those cases make
it clear that the Legislature has some leeway in what
it can do as long as it stays within certain
boundaries that the court will consider a bill
substantially similar for the purposes of displacing
the initiative from the ballot if it meets that three-
part test and one of the parts that it addresses the
same general concerns that are addressed in the
initiative, and this bill certainly does that; but, it
doesn't have to be addressed in exactly the same way.
I think that a bill going even further afield than
this one does could probably still meet those tests,
this one sticks pretty close. A lot of the differences
are just in style; for example, combining some
language with a current statute instead of creating a
whole new statute, putting the substantive changes,
putting that limitation on how the foreign-influenced
corporation provision would work in order to address
the preemption issue is something that the court would
say, "Well this was, you know, done to address a
constitutional issue and not to frustrate the purpose
of the initiative makers," and that's another thing
that they look for, is the bill just some kind of a
sneak attack on the initiative and I don't think that
a court would say that this bill is a sneak attack on
the initiative, it addresses the same kind of
concerns, does it a little bit differently, I think in
some extent probably does it a little bit better and
so it is substantially the same.
SENATOR WILSON commented that he was not sure why the Department
of Law and the Office of the Lieutenant Governor did not raise
more questions after having Mr. Wayne's review regarding issues
and problems. He said he was concerned and questioned whether he
could provide his support due to the issues he noted.
CHAIR MEYER asked Assistant Attorney General Libby Bakalar to
address the committee's constitutional questions regarding HB 44
and the initiative.
4:18:07 PM
LIBBY BAKALAR, Assistant Attorney General, Civil Division, Labor
& State Affairs Section, Alaska Department of Law, Juneau,
Alaska, commented on HB 44 as follows:
I did author that attorney general opinion on
"17AKGA," the process to determine whether an
initiative is certified as to see whether the
initiative complies with Article 11, Section 7 of the
Alaska Constitution. That means there are four things
we are allowed to look at: whether a bill makes an
appropriation, whether the bill makes local or special
legislation, whether it creates rules of court, and
there is one other that I can't think of off of the
top of my head right now; but, there may very well be
constitutional infirmities with an initiative bill
down the line, the supreme court says we are not
supposed to look at that stuff in advance of
certification. The only things we are allowed to
consider when we certify or don't certify an
initiative is whether Article 11, Section 7 is
violated. So, this initiative bill did not violate any
of that. So, that's the basis of the lieutenant
governor's certification of the ballot measure. So,
it's not that these issues have not been identified or
looked at, it's just that we are not permitted under
case law to deny certification of a ballot measure
that does not present a "Section 7, Article 11"
problem.
4:19:21 PM
CHAIR MEYER asked if an initiative is legal until it is
challenged.
SENATOR COGHILL added that he was going to remind Ms. Bakalar
that she was referring to the single-subject rule.
MS. BAKALAR replied as follows:
That's the fifth one, actually. There's a fourth one
that I'm not thinking of, appropriations, local-
special, rules of court, one more that I can't think
of, and the single-subject rule which is the Croft v.
Parnell case, but in any event, it is extremely
limited. There are many initiative bills that raise
potential due process concerns, contract issues,
takings issues, equal protection problems, those are
not things that we are permitted to look at under the
case law when we certify a measure, that's not
appropriate for pre-election review.
CHAIR MEYER said he appreciated Ms. Bakalar's explanation.
4:20:08 PM
SENATOR WILSON commented as follows:
I guess that question would be on the single-subject
in an appropriation that Mr. Wayne has in his memo.
MS. BAKALAR replied as follows:
The single-subject issue was looked at specifically
related to Section 9 of that bill. I'm going from
memory here, Section 9 of the bill was the part that
dealt with campaign finance that was a little bit
divergent from the other sections of the bill. We
concluded that given the broad scope under which the
supreme court reviewed single-subject, that it met the
single-subject requirement. So, that's the one area in
the case law that is developed around what we look at
pre-election and that's the Croft v. Parnell case.
SENATOR GIESSEL asked if the constitutionality would only be
settled by "taking it to court."
MS. BAKALAR answered as follows:
Yes, other parts of the initiative's constitutionality
would have to be litigated in an as-applied challenge
or perhaps a facial challenge but some form of a
challenge that actually looked at constitutional
issues in the bill post-enactment. Initiatives don't
get the same vetting that legislation does because the
supreme court has said that prior to an election all
we are allowed to look at, all the lieutenant governor
or a municipal clerk, for example, is permitted to
look at is these four or five areas.
SENATOR GIESSEL asked her to address how the "salmon initiative"
is being challenged in court prior to passage.
MS. BAKALAR specified that "17FSH2" was denied certification by
the lieutenant governor as follows:
It is our position that that ballot measure
unconstitutionally violates the appropriations
restriction in Article 11, Section 7; so, it does
violate one of the four core restrictions of
enactments by initiative. The constitution says that
an initiative cannot make an appropriation, make or
repeal an appropriation, we think "17FSH2" does do
that. We recommended against certifying the measure,
that was litigated, a trial-court judge ruled in the
sponsor's favor and now the state appealed.
CHAIR MEYER noted that Senator Coghill may have a question. He
asked if he wanted to wait until the bill is heard in the
Senator Judiciary Committee.
SENATOR COGHILL answered yes.
CHAIR MEYER thanked Ms. Bakalar for her testimony. He stated
that he had learned a lot in the committee meeting. He asked Mr.
Johnston if he had any feedback from Representative Grenn
regarding combining the initiative into HB 44
4:23:12 PM
RYAN JOHNSTON, Staff, Representative Grenn, Alaska State
Legislature, Juneau, Alaska, replied as follows:
Representative Grenn has been trying to work to get
into communication with the other members, trying to
get a consensus. Again, he's been very busy, and he
apologizes for the delay. In my capacity to speak for
him, he thinks this is a good avenue to go forward
with since the chair brought the motion forward, but
he hasn't heard back from the initiative yet.
CHAIR MEYER asked who the other two sponsors of the initiative
are.
MR. JOHNSTON replied that he did not know.
CHAIR MEYER stated that he thought the other two sponsors are
Bonnie Jack and Representative Kreiss-Tompkins.
MR. JOHNSTON answered correct.
CHAIR MEYER summarized that the committee had taken public
testimony. He inquired if HB 44 had fiscal notes.
4:24:49 PM
At ease.
4:26:15 PM
CHAIR MEYER called the committee back to order and commented as
follows:
The fiscal notes will be forthcoming with the new CS,
but it's similar to the original HB 44 which had zero
fiscal notes. Since we have modified this bill
somewhat, there will also have to be a title change
resolution.
4:26:42 PM
SENATOR GIESSEL moved to report SCS CSSSHB 44(STA), version 30-
LS0208\N from committee with individual recommendations and
attached zero fiscal note.
She also made a motion to adopt the forthcoming title change
resolution. [Title change resolution SCR 19 was read the first
time on 3/29/18 and held on the Secretarys desk until it was
taken up on final passage on 5/8/18.]
CHAIR MEYER announced that without objection, SCS CSHB 44(STA)
and forthcoming title change resolution was reported from the
Senate State Affairs Standing Committee.