03/11/2010 08:00 AM House STATE AFFAIRS

        HB 336-ELECTRIC & TELEPHONE COOPERATIVES' VOTING                                                                    
                                                                                                                                
8:22:29 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  announced that the  next order of business  was HOUSE                                                               
BILL NO.  336, "An Act  relating to electronic  voting procedures                                                               
for  electric and  telephone cooperatives;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
8:22:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG moved to adopt the proposed committee                                                                  
substitute (CS) for HB 336, Version 26-1458\R, as a work draft.                                                                 
There being no objection, Version R was before the committee.                                                                   
                                                                                                                                
8:23:05 AM                                                                                                                    
                                                                                                                                
NANCY  MANLY,  Staff,  Representative   Bob  Lynn,  Alaska  State                                                               
Legislature,  introduced HB  336 on  behalf of  the sponsor,  the                                                               
House  State  Affairs Standing  Committee,  which  is chaired  by                                                               
Representative Lynn.  She said HB  336 would put into statute the                                                               
ability for  telephone or electric cooperatives  to allow members                                                               
to  vote   by  electronic  transmission,  as   specified  by  the                                                               
cooperatives'   by-laws.     She   relayed   that  the   proposed                                                               
legislation was  filed at the  urging of cooperatives  around the                                                               
state.                                                                                                                          
                                                                                                                                
MS. MANLY explained that currently  cooperatives may vote only in                                                               
person or via the postal service,  a method which is outdated and                                                               
could  be having  a negative  impact on  member participation  in                                                               
elections  and other  important matters.   Passing  HB 336  would                                                               
permit  electronic transmission,  but  only if  approved by  each                                                               
cooperative's  by-laws.    The bill  would  not  make  electronic                                                               
transmission voting mandatory.                                                                                                  
                                                                                                                                
MS.  MANLY noted  that  Matanuska  Telephone Association  members                                                               
have  already  voted  to  adopt   a  by-law  allowing  electronic                                                               
transmission voting.   All it and other cooperatives  need now is                                                               
for the  legislature to amend the  statute to allow this  type of                                                               
voting.                                                                                                                         
                                                                                                                                
8:24:24 AM                                                                                                                    
                                                                                                                                
BILL    STEYER,   Director,    Government   Relations/Corporation                                                               
Communications, Chugach Electric  Association, Inc., related that                                                               
Chugach   Electric  Association   is   a  member-owned   electric                                                               
cooperative  whose  members  have  already  voted  to  amend  the                                                               
Chugach Electric Association by-laws  to allow electronic voting.                                                               
Mr.  Steyer said  the term  "electronic  transmission" is  broad,                                                           
which is  why the  phrase "as specified  by the  cooperative" was                                                           
added  in version  R.   The  intent, he  said, is  to allow  each                                                               
cooperative  to  set up  voting  procedures  that work  for  that                                                               
organization.  He said Chugach  Electric Association's plan is to                                                               
allow members  to vote via the  Internet, but not to  send a text                                                               
message vote  on the day of  the annual meeting.   In response to                                                               
Representative  Johnson,  Mr.  Steyer offered  his  understanding                                                               
that if  an organization wanted  to allow voting via  a facsimile                                                               
machine, it  could do so [under  HB 336]; although he  said he is                                                               
not sure that  would be a form that  Chugach Electric Association                                                               
would incorporate into its own election procedures.                                                                             
                                                                                                                                
8:29:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON expressed  his  support  of the  proposed                                                               
legislation, but said he is  concerned about security.  He stated                                                               
that as  a member of a  cooperative, he will monitor  this issue.                                                               
He emphasized the importance of getting genuine, member votes.                                                                  
                                                                                                                                
8:30:29 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN said he shares the same  concern.  He said he does not                                                               
want a member to be identified  as having voted for one candidate                                                               
over another.                                                                                                                   
                                                                                                                                
8:30:44 AM                                                                                                                    
                                                                                                                                
MR. STEYER responded that that  is a very legitimate concern that                                                               
needs  to be  addressed  as  soon as  the  cooperative chooses  a                                                               
vendor  for its  electronic voting  system.   He stated  that his                                                               
goal  every year  is  to "have  a process  that  can survive  any                                                               
challenge," which is instrumental  in adopting electronic voting.                                                               
He opined  that no organization  should pursue  electronic voting                                                               
unless it can ensure the elections are secure.                                                                                  
                                                                                                                                
8:31:57 AM                                                                                                                    
                                                                                                                                
MR. STEYER,  in response to  Representative Gatto, said  he knows                                                               
of  a couple  cooperatives  in the  Lower 48  that  issue both  a                                                               
member  number and  control  number  electronically; however,  he                                                               
said he does  not know if a member's vote  would be discounted if                                                               
he/she did not submit both numbers at the time of voting.                                                                       
                                                                                                                                
REPRESENTATIVE GATTO  expressed concern  that people will  find a                                                               
way to scam the  system.  He noted that one person  out of ten is                                                               
a victim of identity theft.                                                                                                     
                                                                                                                                
8:33:56 AM                                                                                                                    
                                                                                                                                
MR. STEYER said when Chugach  Electric Association began in 1948,                                                               
people  voted   in  person.     In   the  1980s,   people  could,                                                               
alternatively,  vote by  mail.   He said  he was  instrumental in                                                               
developing a three-step  process by which to  ensure the security                                                               
of the vote-by-mail system.   He said in order to  do that he had                                                               
to think about ways in which a  person could scam the system.  He                                                               
related that the vote-by-mail system  has been successful for the                                                               
last 20 years.  Now that  cooperatives are on the verge of taking                                                               
another step  to electronic  voting, it will  be important  to be                                                               
equally  diligent.    Mr.  Steyer said,  "I  can't  answer  every                                                               
question about  the 'what ifs' and  what might happen yet,  but I                                                               
would hope, certainly before we  would conduct this process, that                                                               
we would know those answers and be comfortable."                                                                                
                                                                                                                                
MR.  STEYER, in  response to  Representative Gatto,  talked about                                                               
the  outgoing process,  over which  he  said there  is not  total                                                               
control.   He  emphasized that  the control  lies in  the return,                                                               
when  the roster  is checked  against the  ballots returned.   He                                                               
said voting electronically would be  just one option.  Currently,                                                               
99  percent of  Chugach Electric  Association members  cast their                                                               
ballots by  mail.  He  offered further details related  to voting                                                               
accuracy.                                                                                                                       
                                                                                                                                
8:39:37 AM                                                                                                                    
                                                                                                                                
MR. STEYER,  in response to  Representative Gatto,  restated that                                                               
Chugach Electric Association allows each  of its members only one                                                               
vote; however, he said it is  true that sometimes people may cast                                                               
two  ballots.   He said  this  happens most  usually because  the                                                               
machine used  inadvertently stuffs two ballots  into an envelope.                                                               
He said this happens only a half  a dozen times each year, out of                                                               
the 70,000  packets mailed.   If  both ballots  are sent  in, the                                                               
election committee makes the decision  as to which one to choose.                                                               
Most of the  time the two ballots are identical.   In response to                                                               
a  follow-up  question from  Representative  Gatto,  he said  one                                                               
ballot  is given  to each  member.   A single  person can  have a                                                               
membership,  a married  couple  can have  a  membership, and  one                                                               
ballot will be  given to one of two people  who are cohabitating.                                                               
Commercial  customers  with more  than  one  location will  still                                                               
receive  only   one  membership.    Mr.   Steyer  said  different                                                               
committees have  had varying philosophies  regarding how  to deal                                                               
with multiple  ballots from  one member,  and they  set procedure                                                               
accordingly.  He reiterated that  only one ballot will be counted                                                               
from each member, and it is  up to the election committee whether                                                               
it is the first or last.                                                                                                        
                                                                                                                                
8:44:56 AM                                                                                                                    
                                                                                                                                
MR. STEYER, in response to  Representative Gruenberg, offered his                                                               
understanding  that   no  cooperative  in  Alaska   is  currently                                                               
utilizing electronic  voting, although  members of  the Matanuska                                                               
Telephone   Association,   Inc.   (MTA)  and   Chugach   Electric                                                               
Association have voted to change  their organizations' by-laws to                                                               
permit electronic voting if state statute is changed.                                                                           
                                                                                                                                
8:45:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  directed attention to language  on page                                                               
1, lines 9 and 10, which read as follows:                                                                                       
                                                                                                                                
       except that electronic transmission may not be the                                                                   
     only allowed option for voting.                                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG continued as follows:                                                                                  
                                                                                                                                
     In view  of your  testimony that  you already  have two                                                                    
     methods of voting  - by mail and in person  - the thing                                                                    
     that  I'm  concerned about  is  -  at least  under  the                                                                    
     wording  of  this  -  the two  methods  that  could  be                                                                    
     allowed  are  in person  and  electronic.   That  would                                                                    
     effectively  nullify the  intent of  this, which  is to                                                                    
     allow  a method  that people  do really  use to  be the                                                                    
     alternative for electronic voting.                                                                                         
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  he   is  prepared  to  offer  an                                                               
amendment that  would address that  problem, perhaps  by changing                                                               
language to  specify that one of  the options must be  to vote by                                                               
mail.   He pointed out  that many people  in his district  do not                                                               
own computers.                                                                                                                  
                                                                                                                                
8:46:35 AM                                                                                                                    
                                                                                                                                
MR.   STEYER  proffered   that   the   advantage  of   electronic                                                               
transmission is  not only  convenience, but  also the  money that                                                               
cooperatives would save for each ballot  that they do not have to                                                               
pay  to mail.    He  suggested that  there  may  be an  evolution                                                               
regarding ballots, such as occurred  with the application for the                                                               
permanent  fund  dividend, and  he  said  he  would not  want  to                                                               
support  an  amendment  that   may  precluded  cooperatives  from                                                               
cutting back on  the amount of mail  they send.  He  said he does                                                               
not foresee  Chugach Electric Association ever  putting itself in                                                               
the  position  of  not  accommodating  people  who  do  not  have                                                               
computers and cannot physically get to  a meeting, and he said he                                                               
is certain  Chugach Electric Association  would be  challenged by                                                               
its members if they do not like a choice that has been made.                                                                    
                                                                                                                                
8:50:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  said it is  not his intent  to preclude                                                               
Chugach  Electric Association  from going  through the  evolution                                                               
that  Mr.  Steyer is  describing.    He  echoed the  concerns  of                                                               
Representatives Johnson and Gatto  regarding security issues.  He                                                               
directed attention  to language  on the second  page of  a fiscal                                                               
note from  the from  the Regulatory  Commission of  Alaska (RCA),                                                               
which read as follows:                                                                                                          
                                                                                                                                
     The Regulatory  Commission of Alaska (RCA)  has limited                                                                    
     jurisdiction  that includes  regulating  the rates  and                                                                    
     services   of   non-exempt   electric   and   telephone                                                                    
     cooperatives.   See AS 42.05.141.   With  the exception                                                                    
     of  deregulation elections  governed  by AS  42.05.712,                                                                    
     RCA jurisdiction  does not extend to  membership voting                                                                    
     procedures.     Members   of  electric   and  telephone                                                                    
     cooperatives seeking  to enforce the  electronic voting                                                                    
     procedures proposed  by this legislation would  need to                                                                    
     pursue judicial recourse rather than RCA intervention.                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  that is  a cumbersome  method and                                                               
courts are not  as familiar with the way  cooperatives operate as                                                               
is the  RCA.  He  said he is prepared  to offer a  provision that                                                               
would put the jurisdiction over this issue in the RCA.                                                                          
                                                                                                                                
8:52:41 AM                                                                                                                    
                                                                                                                                
MR. STEYER responded  that currently the RCA today  does not have                                                               
jurisdiction  over Chugach  Electric Association's  elections and                                                               
if a  member has a problem  with an election, he/she  takes it to                                                               
the   court   system;   therefore,   Representative   Gruenberg's                                                               
suggestion would  be "a pretty  dramatic departure from  that and                                                               
one that we would need more deliberation on I'd have to say."                                                                   
                                                                                                                                
8:53:52 AM                                                                                                                    
                                                                                                                                
MR. STEYER,  in response  to Chair  Lynn, said  that in  the last                                                               
three  years' elections,  an  average of  21  percent of  Chugach                                                               
Electric Association's members  voted, which he said  is a higher                                                               
average than many  other cooperative elections.   He related that                                                               
his board  of directors  is interested in  this legislation  as a                                                               
means  by which  to  encourage more  people to  vote  and to  get                                                               
younger people  involved.   He said  he asked  the aforementioned                                                               
organizations in the Lower 48  whether they have increased member                                                               
voting  and  have  attracted  younger  members  as  a  result  of                                                               
electronic  transmission, and  whether this  means of  voting has                                                               
proved to be secure.  He  said the organizations reported no real                                                               
increase  in  voting and  have  not  done  a study  to  ascertain                                                               
whether   there  has   been  an   increase   in  younger   member                                                               
participation; however, the organizations  told him that they had                                                               
had no problems related to security.                                                                                            
                                                                                                                                
8:56:05 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN   suggested  that  if   an  organization                                                               
already offers a method of paying  bills on line, it would not be                                                               
too  big  of   a  jump  to  also  allow  those   people  to  vote                                                               
electronically.  He  talked about the savings from  not having to                                                               
mail out  statements, and compared  that to the savings  from not                                                               
having to mail out ballots.                                                                                                     
                                                                                                                                
MR. STEYER confirmed that  Chugach Electric Association currently                                                               
does  offer a  method of  paying bills  on line  and doing  other                                                               
business  transactions  on   line,  and  he  said   some  of  the                                                               
cooperative's members  have stated a preference  to do everything                                                               
electronically.     He  spoke   again  about  the   evolution  to                                                               
electronic transactions and the  need to secure such transactions                                                               
before offering them.                                                                                                           
                                                                                                                                
8:58:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN surmised that  electronic voting would be                                                               
even more  appreciated in  rural areas  where members  of smaller                                                               
cooperatives may be  spread out over a  larger geographical area.                                                               
He predicted [electronic transmission]  is something that will be                                                               
seen much more in the future.                                                                                                   
                                                                                                                                
9:00:07 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN,  after ascertaining  that there was  no one  else who                                                               
wished to testify, closed public testimony.                                                                                     
                                                                                                                                
9:00:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON expressed  interest  in  finding out  from                                                               
Legislative Legal  and Research Services whether  the penalty for                                                               
voter fraud in cooperative elections  is similar to that in other                                                               
elections.    In  response  to  Chair  Lynn,  he  indicated  that                                                               
although this  matter is  of interest to  him, it  probably would                                                               
not [be a matter for which he  would want the bill held longer in                                                               
committee].                                                                                                                     
                                                                                                                                
9:02:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON said she does  not want to hold  up the                                                               
bill, but  said she would  like to know if  there is any  kind of                                                               
penalty [proposed within the bill].                                                                                             
                                                                                                                                
9:03:12 AM                                                                                                                    
                                                                                                                                
MR.  STEYER   reiterated  that  cooperatives   are  member-owned,                                                               
private  organizations, and  he said  he is  unaware of  criminal                                                               
penalties for fraud  in a cooperative election.   Furthermore, he                                                               
said  he is  unaware of  what penalties  are in  place for  fraud                                                               
within a municipal or state election.                                                                                           
                                                                                                                                
9:04:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  emphasized that  cooperatives need  to                                                               
think about  what they would do  if fraud occurs through  the use                                                               
of electronic transmissions during an election.                                                                                 
                                                                                                                                
9:04:29 AM                                                                                                                    
                                                                                                                                
MR.  STEYER said  in  the last  24 years  of  his involvement  in                                                               
Chugach  Electric  Association's  election processes,  there  has                                                               
always been the prospect for fraud,  but there has not yet been a                                                               
case of fraud.                                                                                                                  
                                                                                                                                
REPRESENTATIVE P.  WILSON said  she thinks  the age  of computers                                                               
and electronic transmittal  brings with it the  chance for fraud,                                                               
and  she again  encouraged  cooperatives to  give  the matter  of                                                               
penalties consideration before they are necessary.                                                                              
                                                                                                                                
CHAIR LYNN  offered his  understanding that  Mr. Steyer  had said                                                               
cooperatives  have  no  clear avenue  regarding  penalties.    He                                                               
stated, "The issue  is there whether we pass this  bill or do not                                                               
pass this bill."                                                                                                                
                                                                                                                                
9:08:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said he thinks  having a  criminal penalty                                                               
alleviates the  chance that people  will do fraudulent acts  on a                                                               
lark.   He said he thinks  the cooperatives will be  stringent in                                                               
ensuring  their  systems are  set  up  well and  their  elections                                                               
remain valid.   He reiterated that  on this point, he  would like                                                               
to get more  information, but he said he is  comfortable with the                                                               
court  being there  as the  remedy for  voter fraud  in the  mean                                                               
time.                                                                                                                           
                                                                                                                                
9:09:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  said  as the  evolution  occurs,  issues                                                               
arise.   He said it  is not up  to the cooperatives  to determine                                                               
whether  fraud  is  a  criminal   offense;  that  is  up  to  the                                                               
legislature.   He said what  is at  stake today compared  to what                                                               
was at stake  years ago is incomparable; the  value of businesses                                                               
has increased  exponentially, which in turn  increases the desire                                                               
to  commit fraudulent  acts.   Representative  Johnson said  laws                                                               
serve two  purposes:  outlining what  can and cannot be  done and                                                               
serving as  a deterrent.   He said he  does not think  [fraud] is                                                               
the  issue  of the  proposed  legislation;  HB 336  is  proposing                                                               
another method of  voting.  He expressed support for  HB 336, and                                                               
encouraged  the legislature  to  keep  its eye  on  the issue  of                                                               
fraud.                                                                                                                          
                                                                                                                                
9:12:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN  said  there  is a  procedure  by  which                                                               
people  can  submit  an  electronic signature,  which  may  be  a                                                               
deterrent to someone committing fraud.                                                                                          
                                                                                                                                
9:13:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG noted that  AS 15.56.040 addresses voter                                                               
misconduct in the  first degree and AS  15.56.050 addresses voter                                                               
misconduct in the second degree.   He said both statutes apply to                                                               
governmental  elections,  but  not to  cooperative  or  corporate                                                               
elections.  He concurred that  [addressing the issue of fraud] is                                                               
a good idea, but is not part of the proposed bill.                                                                              
                                                                                                                                
9:14:43 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON moved  to  report  the proposed  committee                                                               
substitute  (CS),  Version  26-LS1458\R, out  of  committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no  objection, CSHB 336(STA) was reported  out of the                                                               
House State Affairs Standing Committee.