Legislature(2017 - 2018)ADAMS ROOM 519
04/07/2018 01:00 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB299 | |
| HB322 | |
| HB268 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 299 | TELECONFERENCED | |
| += | HB 322 | TELECONFERENCED | |
| += | HB 316 | TELECONFERENCED | |
| += | SB 158 | TELECONFERENCED | |
| += | HB 268 | TELECONFERENCED | |
HOUSE BILL NO. 299
"An Act extending the termination date of the
Alcoholic Beverage Control Board; and providing for an
effective date."
1:10:46 PM
Co-Chair Foster noted the bill had been heard the previous
day and three amendments had been passed. A letter of
intent had been drafted, which may not be needed because he
anticipated an amendment may be rescinded.
REPRESENTATIVE ADAM WOOL, SPONSOR, reviewed the committee
action from the previous day. Three amendments had been
adopted, after which the committee was interested in a
letter of intent. After more consideration he believed
Amendment 2, which gave the commissioner power to reverse
board decisions, may not be the best way to achieve his
intended goal. He provided a scenario where a licensee
objected to a ruling made by the board. He had been
searching for an expedited way for another set of eyes to
look at the issue through a Department of Commerce,
Community and Economic Development (DCCED) lens rather than
a Department of Public Safety or law enforcement lens. The
division had been moved to DCCED in the past, but he was
uncertain there had been a transformation in the way things
were viewed.
Representative Wool believed the attachment to DCCED should
have been more significant, which was one of the reasons he
had included the appeal process that could happen within 30
days. Additionally, if someone had a grievance or
disagreement with the board they could appeal - the board
met every three months and an administrative law judge
could get involved. He explained the process could take
many months and two or three board meeting cycles. The
timeframe could close a business down, especially if a
business was forced to close during the period due to a
board decision. When a small business operating on tight
margins closes for a few months, it could mean going out of
business. He hoped DCCED staff understood the issue as
well. He surmised it may not be the best process where the
commissioner was only able to see the records the board was
able to see and was not able to discuss the issues with the
director because they may be adjudicating the case.
1:14:22 PM
Co-Chair Foster MOVED to RESCIND the adoption of Amendment
2 [adopted on 4/6/18].
Representative Wilson OBJECTED for discussion.
MIKE NAVARRE, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, relayed that he had
not spoken with the Department of Law (DOL), but he had
spoken with Representative Wool and Alcohol and Marijuana
Control Office Director Erika McConnell since the previous
meeting to gain a better understanding of the current
process. He had also reviewed whether Amendment 2 would
help accommodate Representative Wool's goal of achieving
quicker decisions in the appeal process. Ms. McConnell had
communicated there was an informal appeal process (in
addition to the formal process) that could be made within
the division or by the board. He believed it may be a
better opportunity to truncate the conflict resolution
issues Representative Wool was trying to get to. He
believed the ability for an appeal to go to the
commissioner would compromise commissioner's ability to
participate in the process because he would not be able to
gather information in an informal process if he was
adjudicating an appeal.
Mr. Navarre had also spoken with Representative Wool about
the fact that it was an administrative issue; it had not
been something identified in the audit with respect to the
board and "this is an extension of the board." He was
disinclined to deal in a rushed manner in a process that
should be deliberative in terms of changes that could
manifest as unforeseen impacts within the division and for
individuals regulated by the division. He would work with
Ms. McConnell and the board to develop a better conflict
resolution process that would hopefully meet the needs of
individuals being regulated and the unique responsibilities
the division had for the protection of public safety.
1:17:14 PM
ERIKA MCCONNELL, DIRECTOR, ALCOHOL and MARIJUANA CONTROL
OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT (via teleconference), relayed that she had
spoken with the ABC Board chair and he did not support the
amendment. She shared that the chair had called an
emergency meeting for the following Tuesday with the board
to discuss the amendments. She also had concerns with the
amendments. She spoke to her concern about Amendment 2 with
prepared remarks:
Regarding Amendment 2, the five member ABC Board is
comprised of 2 industry members, a public safety
member, a rural member, and a general public member.
The members are vetted by the governor's Boards and
Commissions Office, appointed by the governor, and
confirmed by the legislature. These individuals are
familiar with the industry and with the statutes and
regulations that govern the manufacture, possession,
and sale of alcohol. They manage over 1,800 alcohol
licenses. As required by statute, the board meets at
least once per year in each judicial district in the
state "to study this title and to modify existing
board regulations in light of statewide and local
problems." The board may hold public hearings to
ascertain the reaction of the public or a local
governing body to a license application and where a
local government protest or public objection is
received, such a hearing is required.
As all of you are aware, alcohol has both significant
negative effects on communities in our state as well
as significant positive economic effects. Under the
current Title IV, the legislature has committed to the
five member board with expertise, knowledge base, and
sensitivity to the issues to appropriately ascertain
the public interest in controlling alcoholic beverages
within the state.
The amendment adopted yesterday could cede this
authority to the commissioner who has none of the same
requirements relating to the establishment of a
knowledge base, development of an understanding of
statewide and local problems relating to alcohol,
through travel and public meetings, and actions in the
public interest. To replace the judgement of five
individuals with the judgement of one is puzzling at
best.
There are additional sections of statute that
authorize the board to take particular licensing
actions that may be affected particularly by Amendment
2, which has the potential to create regulatory
confusion. Those sections are AS 04.06.090, AS
04.11.040, and AS 04.11.480. Yesterday's Amendment 2
in Section 3 would appear to muddy the appeal process
for applicants and licensees. AS 04.11.510(b)(1)
states that if an application is denied the applicant
is entitled to a formal hearing conducted by the
office of administrative hearings in accordance with
the Administrative Procedures Act, Section 44.62.330
through Section 44.62.630. AS 44.62.500 states that
the proposed decision of the administrative law judge
may be adopted by the agency, which would be the
board, and is considered the final decision for the
purposes of AS 04.11.560, which may then be appealed
to superior court. It is entirely unclear where the
appeal to the commissioner of Commerce would fit
within that process.
Another concern, having participated in several
administrative hearings in my tenure as director, is
who would be assisting the commissioner in his or her
review of the records and how the review of the record
would proceed. In some of these cases the record can
go to hundreds of pages and can require significant
time and resources to adequately review. Thank you for
the opportunity to speak on Amendment 2.
1:22:14 PM
Representative Wilson asked if the removal of Amendment 2
impacted the other two adopted amendments.
Ms. McConnell replied that based on Representative Wool's
testimony from the previous day, she believed Amendment 3
had been offered because of Amendment 2. She questioned the
purpose of Amendment 3 if Amendment 2 was repealed.
Representative Wool agreed that Amendment 3 followed
Amendment 2 since it was no longer only for administrative
purposes. He stated that to have something in a department
for administrative purposes only, it was possible to put
the ABC Office or the Alcohol and Marijuana Control Office
(AMCO) in any department (e.g. the Department of
Corrections) - he wondered what the difference was. He
stated, "they're moving them around from different
departments with intent." He did not have the legislative
intent on hand describing the reason the office had been
moved from DPS to DCCED. He believed the intent was to make
the division more sensitive to the needs of private
business.
Representative Wool referenced testimony by Ms. McConnell
that alcohol had a negative impact on society in Alaska and
a positive economic impact. He stressed alcohol also had a
positive impact on society - there were people who enjoyed
a glass of wine with dinner, which was not a negative
thing. He was in favor of Amendment 3 that would delete the
language specifying the ABC Board was under DCCED for
administrative purposes only. He supported a connection
between the AMCO and ABC Board with DCCED. He reiterated
there was economic value. He reviewed Ms. McConnell's
explanation of the appeal process the previous day, which
required going to the board, an administrative law judge,
and the state superior court. He stated the process took a
year on average. He stressed the average mom and pop
business owner should have access to a shorter recourse to
try to resolve issues. He was not claiming resolution did
not occur in an informal way, but he had read about cases
that were not resolved.
Representative Wool supported having eyes on the issue that
were more commerce friendly. He wanted to keep Amendment 3.
He understood the confusion that could be caused by
Amendment 2, but he did not believe the current process was
all that great. He specified that when someone had a
disagreement it could take months. He continued that if
someone's license was denied because they did not have a
set of finger prints and the operation of their business
was on hold, they may close. He did not believe it was
fair. He wanted to hear from someone else on the topic
besides the board and the director.
1:25:48 PM
Representative Wilson referenced Ms. McConnell's mention of
an ABC Board meeting the coming Tuesday. She asked if the
meeting would look at the impact of the amendment changes
during the meeting. She wondered if the agency planned to
weigh in on the bill's impact on the board after its
Tuesday meeting.
Ms. McConnell answered in the affirmative. The intent was
for the board to provide its opinion to the legislature on
whatever amendments remain in the bill.
Vice-Chair Gara stated that Amendment 2 was the guts of the
agency review. He asked for verification that
Representative Wool was comfortable that without Amendment
2, Amendment 3 still satisfied the goal of having a more
independent review.
Representative Wool answered in the negative. He understood
the concern that as written, Amendment 2 may hamper the
ability for someone in the commissioner's office to
interface with the division to resolve an issue in a timely
manner, while offering another set of eyes. He did not
really want to go through the administrative law judge
process - he noted he was not claiming there was not a
place for that. He wanted to resolve some of the issues in
a timelier manner. He was amenable to the elimination of
Amendment 2 if it could help the situation. He thought
perhaps there would be another solution down the road. He
noted there was a Title IV rewrite going through and
perhaps that was a more appropriate time.
1:27:57 PM
Commissioner Navarre commented on Ms. McConnell's testimony
that the board had five vetted members. He remarked that
the members were also lay members who came together at four
meetings per year (or more if called into special
meetings). He stated the individuals could not speak to
each other to make decisions prior to meetings. He added
the members all had lives they were leading. The
information that came to the board came in a truncated
period of time when meeting for board deliberations. He
explained that most of the board packet information was
provided by the division. He explained from his perspective
and he believed the frustration experienced by
Representative Wool, reflected a desire to find a better
way to do conflict resolution. He did not think usurping
the appeal process had that outcome. He believed the issue
had more to do with an administrative function. He would
try to have the discussion with the board and further
discussions with Ms. McConnell to determine something that
worked for everyone.
Representative Wool referenced Commissioner Navarre's
mention of an informal hearing process. He did not recall
Ms. McConnell mentioning the process in her testimony the
previous day. He asked to hear from Ms. McConnell that it
was part of the process. Additionally, he wondered if it
was something that someone from the department could be
notified of or asked for advice on. Alternatively, he
wondered if that was off limits.
Ms. McConnell replied that after the board denied a license
application, the applicant had the opportunity to request
an informal conference with either the director or the
board. She believed it would be up to the board to
determine whether or not other individuals within DCCED
could be included. She stated it was something that
Commissioner Navarre and the board could discuss.
1:30:34 PM
Representative Wilson WITHDREW her OBJECTION. There being
NO further OBJECTION, action on Amendment 2 was RESCINDED.
Co-Chair Seaton was unsure of the purpose of Amendment 3.
He stated it meant DCCED would have some regulatory and
intermediate function, without identifying what that
function was. He was uncertain it would help the situation.
He thought the interaction could be quite different than
what the legislature intended because it was not
identifying anything. He continued that the committee had
just eliminated the process discussed in Amendment 2 to
allow that normal interaction and control in a department
and one of its agencies. The amendment would have
dramatically changed the structure when the agency had been
placed under the department for administrative purposes. He
was uncertain how the legislature would be implementing the
desire by leaving some amorphous goal to have the
department control the board or interact with the board.
1:32:51 PM
Representative Wilson agreed. She no longer saw the
connection with Amendment 3. She understood there was a
rewrite of Title IV. She thought perhaps Title IV was the
more appropriate place to consider the issue. She reasoned
that the bill's purpose was to provide a board extension,
which was necessary. She asked how Amendment 3 could be
beneficial. She wondered what could happen by changing the
board to a regulatory and quasi-judicial agency. She
reiterated her belief there was no longer a connection for
Amendment 3.
Representative Wool thought taking away the language
[specifying that the board was under DCCED for]
administrative purposes only did not give the department
more power. He believed for example, if the commissioner
was called upon to advise or listen in on a case, suddenly
the board would no longer be under DCCED for administrative
purposes only. He did not believe that was a bad thing. He
reasoned that if there was a need for communication it
would not be forbidden [if the amendment was adopted]. He
liked the amendment even without Amendment 2.
Co-Chair Foster asked if Ms. McConnell had comments on
Amendment 3.
1:35:08 PM
Ms. McConnell shared the same uncertainty as Co-Chair
Seaton and Representative Wilson on Amendment 3.
Representative Wilson MOVED to RESCIND the adoption of
Amendment 3 [adopted on 4/6/18].
Vice-Chair Gara OBJECTED.
Representative Wool believed moving the board from DPS to
DCCED for administrative purposes only seemed like a waste.
He thought the move should have some meaning, otherwise he
believed it was for naught. He opined that removing the
language "for administrative purposes only" gave some
intent to the move between two departments. He added he
could look up the historical record to determine why the
move had taken place.
Vice-Chair Gara thought they were arguing over semantics.
He thought the semantics in Amendment 3 were more accurate.
Under DCCED, the ABC Board was allowed to issue
regulations. Part of the amendment specified the board was
regulatory because it issued regulations. He elaborated
that the board made decisions on licenses, penalties,
renewals, and revocations. Amendment 3 classified the board
as a quasi-judicial agency, which he believed was accurate.
He believed the amendment merely specified what the board
does. He did not see a problem with the amendment. He did
not see the amendment getting where Representative Wool
wanted in terms of giving the commissioner the ability to
make decisions, but he believed the amendment accurately
described what the board did.
1:37:24 PM
Co-Chair Seaton stated that normally departmental
regulations had to be approved by the commissioner. The
wording in Amendment 3 specified it would not be the way
the board would work. He elaborated that the commissioner
would not be able to override regulations. He believed
removing the language would mean the commissioner would be
in charge of and the final decision maker on regulations.
He speculated the language had originally been included
because the intent had been to move the board for
administration to get it out of DPS, but not for the final
approval of regulations made by the board to be made by the
commissioner. He thought the amendment muddied the question
of regulations and approval of regulations.
Co-Chair Foster listed individuals available for questions.
Vice-Chair Gara addressed a question to Legislative Legal
Services. He reviewed that the committee had rescinded its
action on Amendment 2, which would have given the [DCCED]
commissioner certain decision making authority. The
committee was currently considering a motion to rescind
Amendment 3. His understanding was the board proposed
regulations (confirmed by others) and made decisions on
licenses including revocations and penalties. Therefore, he
did not believe it seemed odd to classify the board as a
regulatory and quasi-judicial agency. He asked for comment
on Amendment 3.
1:41:00 PM
LINDA BRUCE, LEGISLATIVE COUNSEL, LEGISLATIVE LEGAL
SERVICES (via teleconference), stated her understanding of
the question. She questioned whether Vice-Chair Gara was
asking if the amendment would affect the board's regulatory
and quasi-judicial authority. Alternatively, she wondered
if he was asking what would happen if the "for
administrative purposes" language was removed.
Vice-Chair Gara clarified he wondered what the effect would
be of leaving Amendment 3 in the bill. He thought the
amendment seemed consistent with the board's activities.
Alternatively, he wondered what the removal of the
amendment would do.
Ms. Bruce responded that by removing the language "for
administrative purposes only," the department would have
the power to manage the ABC Board like any other board as
permitted within the statutory power of the department. The
department would have potentially oversight over operating
and administrative procedures of the board. However, within
Title IV there was no specification where duties and powers
were directed towards the department over the board. She
stated it was a little unclear. She noted she had not had a
chance to fully analyze the question and would be happy to
provide a written response with more detail.
1:42:32 PM
Co-Chair Seaton pointed out that the duties of the board
were listed in current statute. The only change Amendment 3
would make was the removal of "for administrative purposes
only" language. He stated that if the amendment did not
pass, current statute already contained the amendment's
language in lines 7 through 12.
Representative Wilson stated that normally when the
legislature changed the duties of a board, the process
involved seeking the board's input. She was uncomfortable
that the amendments had sparked an emergency board meeting.
Representative Guttenberg supported the motion to rescind
the amendment. He looked at AS 04.06.010 and relayed he had
been present when the board had been moved from DPS to
DCCED. He believed one of the reasons the move had taken
place was they wanted to deal with DCCED instead of being a
police board. He continued that under current statute the
board was a regulatory and quasi-judicial agency. He
recalled dialogue about the commissioner having discussion
with the board. He stated that if the amendment was
adopted, the commissioner would have no function remaining.
He believed there was a positive aspect of having the
commissioner serve an administrative role in the discussion
with the administrative function of the board. He stated if
the language was removed, the commissioner's role was
removed.
Representative Wool replied that the amendment would remove
the language "administrative purposes only," but would not
take away administrative purposes. He thought
Representative Guttenberg was saying the department would
lose all administrative purposes.
Representative Guttenberg believed the amendment would
remove the department's role for all administrative
purposes. He stated the situation had arisen before when
the board had specified it was independent from the
department and that the department had nothing to do with
how the board operated. He stated it had led to some
problematic situations in the past. He wanted to ensure the
commissioner had some role in oversight. He stated that the
board would have the regulatory, quasi-judicial agency
role, but the commissioner had some purpose as well.
1:46:41 PM
Representative Wool was confused with the interpretation.
He thought by removing the language "for administrative
purposes only" meant the department's role was not limited
to administrative purposes. He explained that it would
remove the commissioner from the process. He directed the
question to Legislative Legal Services and asked if the
marijuana board also had similar language.
Ms. Bruce asked for the question to be restated.
Representative Guttenberg complied. He asked about the
commissioner's role and what the language "for
administrative purposes only" meant in the statute.
Ms. Bruce answered that currently the department only had
oversight over the board for administrative purposes. The
deletion of the language "for administrative purposes only"
would still mean the department had oversight over the
board for administrative purposes. She confirmed that the
same language was used for the Marijuana Control Board
under AS 17.38.080, which provided the board was under
DCCED for administrative purposes only.
Representative Guttenberg asked what role the commissioner
would have in relationship to the board if the amendment
was maintained.
Ms. Bruce was uncertain. There would potentially be
operating and administrative oversight by the commissioner,
but it depended on the statutory authority given to the
department and commissioner, which she had not had time to
analyze.
1:49:50 PM
Representative Guttenberg asked if anyone had the
information.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, relayed that the Division of Legislative
Audit looked at numerous quasi-judicial entities including
the Commercial Fisheries Entry Commission and the Parole
Board. The entities were required to be independent in
their judicial function. She believed that the "for
administrative purposes only" language would almost always
appear associated with the various entities. She suggested
the language likely existed when the board had previously
been under DPS and the Department of Revenue (DOR).
Representative Pruitt believed the board had been moved
from DPS to DCCED because DPS had been too involved and
there was a feeling of punishment of license holders and
the desire to move the board to a more of a business
mindset. He reasoned the existing statutory language went
along with that line of thinking. He wondered about the
intent and thought the current language aligned with the
move from DPS to DCCED.
1:52:22 PM
Ms. McConnell answered that she had not worked in her
current position in 2012 when the board had been moved from
DPS to DCCED. She offered to research the legislative
history and provide a written response to the committee.
She added that under AS 04.06.070 "appointment and removal
of the director," the director was appointed by the
governor, but absent some malfeasance only the board could
remove the director. She worked for the board; if the
interpretation of the effects of the amendment was to give
the commissioner of DCCED the authority over the agency it
became very confusing in her role. She elaborated that she
answered to the board, yet under the amendment the
commissioner would have undefined authority. She believed
the intent needed clarification. She planned to ask the
board for its opinion on the amendment during its meeting
the coming Tuesday.
Representative Pruitt stated they were having to piece the
items together to fully understand. He referenced the
testimony by Ms. Curtis and testimony by Ms. McConnell
about trying to keep the independence of the board. Based
on the testimony he believed the current language should be
maintained. He did not believe the debate was merely over
semantics. He thought rescinding the amendment was the
appropriate action.
Co-Chair Seaton directed a question to Ms. Bruce with
Legislative Legal Services. He stated that normally agency
regulations were approved by the commissioner of the
department. He asked if the removal of the language "for
administrative purposes only" would call into question
whether the board could independently set regulations.
Alternatively, he wondered if the regulations would fall
under the commissioner.
Ms. Bruce answered that the commissioner would not have
final say on regulations adopted by the board.
Co-Chair Foster noted Representative Ortiz had joined the
meeting earlier via teleconference.
Vice-Chair Gara spoke to the Amendment 3 language. He
thought he had heard statements that the amendment would
make the department a regulatory and quasi-judicial agency.
However, he believed the amendment would make the board a
regulatory and quasi-judicial agency. He read from the
amendment. He asked if his understanding was accurate.
1:57:33 PM
Ms. Bruce responded that the board was the regulatory and
quasi-judicial agency under current statute and would
remain so under Amendment 3.
Commissioner Navarre relayed that the board had previously
been housed under DOR before moving to DPS and then DCCED.
He believed the transfers had occurred because there had
been some frustration about maintaining the independence of
the board and administering of a division or department. He
believed maintaining the board's independence was
important. He thought the head of the department should
have some ability to advise a division about how the laws
were administered, but he did not believe the amendment
language would fix the issue. He thought the language would
be inconsistent with the way independent boards were
administered throughout various departments.
Vice-Chair Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion to rescind the
adoption of Amendment 3.
IN FAVOR: Tilton, Wilson, Kawasaki, Pruitt, Thompson,
Seaton
OPPOSED: Gara, Grenn, Guttenberg, Ortiz, Foster
The MOTION PASSED (6/5). There being NO further OBJECTION,
the adoption of Amendment 3 was RESCINDED.
Vice-Chair Gara reviewed the fiscal note from DCCED. The
note reflected annual board operation costs of $1.66
million (through FY 23) to be paid for with fees.
Co-Chair Seaton MOVED to REPORT CSHB 299(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
CSHB 299(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal impact note
from the Department of Commerce, Community and Economic
Development.
2:02:05 PM
AT EASE
2:09:00 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 322 - Amendment packet.pdf |
HFIN 4/7/2018 1:00:00 PM |
HB 322 |
| HB 299 - Letter of Intent.pdf |
HFIN 4/7/2018 1:00:00 PM |
HB 299 |
| HB 316 Support 4-6-18.pdf |
HFIN 4/7/2018 1:00:00 PM |
HB 316 |
| HB 322 Support 4-6-18.pdf |
HFIN 4/7/2018 1:00:00 PM |
HB 322 |
| HB 322 - DEC Response to H FIN re HB322.pdf |
HFIN 4/7/2018 1:00:00 PM |
HB 322 |