Legislature(2015 - 2016)BARNES 124
04/01/2016 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| HB274 | |
| HB266 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 274 | TELECONFERENCED | |
| *+ | HB 266 | TELECONFERENCED | |
| += | HB 213 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 125 | TELECONFERENCED | |
SB 125-LEGISLATIVE MEMBERS OF AGDC BOARD
2:07:33 PM
CO-CHAIR TALERICO announced that the first order of business
would be CS FOR SENATE BILL NO. 125(RES), "An Act adding
legislative nonvoting members to the board of directors of the
Alaska Gasline Development Corporation."
2:07:54 PM
CO-CHAIR NAGEAK moved to adopt the proposed House committee
substitute (HCS) for CSSB 125(RES), Version 29-LS1240\G, Nauman,
3/31/16, as the working document. There being no objection,
Version G was before the committee.
2:08:25 PM
TOM WRIGHT, Staff, Representative Mike Chenault, Alaska State
Legislature, referred to Version G, Section 2, page 2, beginning
line 4, and noted it adds the qualifications for board members.
A small change is found on page 2, line 31, he advised, in that
legislative members may not be appointed for a term longer than
two years and is at the discretion of the President of the
Senate and the Speaker of the House of Representatives. He
explained that SB 125 incorporates HB 282.
2:09:30 PM
CO-CHAIR TALERICO asked for the documentation he had requested
of Mr. Wright.
MR. WRIGHT responded that Co-Chair Talerico's staff is in
possession of the Concurrent Resolution that the House Resources
Standing Committee will have to introduce and serve as a title
change in the event the bill is reported from the committee.
MR. WRIGHT referred to the 3/30/16 legal memorandum to
Representative Mike Chenault from Emily Nauman that was attached
to the draft committee substitute. [Mr. Wright began reading
paragraph 3, on page 2, and when turning to the next page,
turned to the top of page 4 and continued reading. Page 3 was
not read.] He paraphrased as follows:
The department has fairly consistently opined that a
legislator sitting on the executive branch board
violates the separation of powers principle.
MR. WRIGHT explained the department is the Department of Law.
He continued paraphrasing, as follows:
In regard to the state bond committee, the department
found the State Bond Committee is within the executive
branch performing executive functions. Accordingly,
membership on the
MR. WRIGHT then turned to the top of page 4, [bypassing page 3]
and continued paraphrasing, as follows:
AGDC [Alaska Gasline Development Corporation],
however, is not an advisory council, as described
above. Whether or not AGDC would be deciding upon and
acting on a matter that is not debatable, there is no
question that the corporation will be applying the
law. However, it may be possible that a court could
take the logic in the abovementioned opinion and apply
it to sitting nonvoting legislative board members:
the violation of separation of powers doctrine may be
resolved in favor of the legislature because the
legislators are serving in a nonvoting, essentially
advisory capacity. And that position is supported in
the bill which in every possible statute reiterates
that decisions related to the execution of laws are
left only to the voting members of the board. ... It's
very possible that a court could find that a nonvoting
legislative board member does not exert any special
influence simply because of his or her position on the
board. ... The only sure resolution is a decision by
the Alaska Supreme Court.
MR. WRIGHT opined that Ms. Nauman certainly warns that there is
a risk involved in placing nonvoting legislative members on the
AGDC board, as the board is serving an executive branch
function. However, she does not believe the risk is great
enough that she'd advise removing the legislative board members
from the bill.
2:12:05 PM
REPRESENTATIVE JOSEPHSON referred to a legal memorandum from
Emily Nauman, dated 12/7/15, and noted that within her summary
paragraph there is mention that a separation of powers issue had
"likely" been raised, and now she writes it "may" violate
separation of powers issues. He questioned why Ms. Nauman
changed "likely" to "may."
MR. WRIGHT responded that Representative Josephson would have to
ask Ms. Nauman why it was changed. He advised that the legal
[memorandum] was not requested by Representative Chenault's
office and reiterated that it was attached to the draft
committee substitute. In most cases, he added, when there is a
question of legality in a bill, a legal memorandum is attached
and this is Ms. Nauman's latest iteration on this issue.
2:13:01 PM
REPRESENTATIVE JOHNSON asked the difference between the AGDC
board and the Alaska Seafood Marketing Institute (ASMI) board.
MR. WRIGHT answered the ASMI board has legislative members on
the board, and he is unaware whether they are non-voting.
Frankly, he continued, there is no statutory authority to put
them on the board.
REPRESENTATIVE JOHNSON noted that a former member of the other
body sits on that board, and he said that member brought the
issue up to the ASMI board. It was treated as perfectly normal
and acceptable and the board enjoys having the legislator there
for that perspective. He asked whether the ASMI board is
covered under a different body of law or there is some reason
why it should stand out over the ADGC board.
2:14:02 PM
MR. WRIGHT drew attention to Ms. Nauman's 3/30/16 legal
memorandum, page 4, footnote 14, which states in part [original
punctuation provided]:
There are two nonvoting legislative members on the
board of the Knick Arm Bridge and Toll Authority.
There are two members of the legislature serving as ex
officio nonvoting members of the board of directors of
the Alaska Aerospace Corporation. There are two
members from the legislature serving on the Alaska
Commission on Postsecondary Education. There are two
ex officio legislative members serving on the Alaska
Health Care Commission. There are two non-voting
members, serving ex officio, on the board of the
Alaska Criminal Justice Commission. There are two
legislators serving as ex officio non-voting members
on the Alaska Tourism Marketing Board (which has the
authority to "execute a destination tourism marketing
campaign.").
MR. WRIGHT related that this is not an isolated example.
REPRESENTATIVE OLSON quipped that that would probably apply to
the legislative alternate members on ASMI's board as well, and
so it looks like he is out of a job.
MR. WRIGHT said he has no response.
2:15:13 PM
REPRESENTATIVE JOSEPHSON asked whether the 3/30/16 memorandum
addresses the issue of whether an Alaskan could seek standing to
undo the work of a commission or board by alleging there were
improper members consistent with the opinion from Assistant
Attorney General Jerry Juday.
MR. WRIGHT opined that he could not see a reason why a person
could not file suit based upon this because anyone can file a
lawsuit on anything. As Ms. Nauman's memorandum states, it may
take a court decision to clarify this issue.
2:16:30 PM
REPRESENTATIVE SEATON referred to the issue of dual offices and
the Alaska State Constitutional Article II, Section 5, which
states that no legislator may hold any other office or position
of profit under the United States or the State.
REPRESENTATIVE SEATON noted the position has been that position
of profit is one term and office is another. With regard to the
constitutional prohibition against holding dual offices, the
committee would have to determine that a board member of an
executive committee is not an office and case law says that
those are offices. The common sense reading is that that is an
office, he posited, and legislators are in office, and the
constitution specifically prohibits legislators from holding
dual offices. Whether that is voting or non-voting, it is not
reliant on position of profit as profit modifies position not
office. He inquired whether Legislative Legal and Research
Services has provided any explanation on how a board member
would not be an office.
MR. WRIGHT replied no.
2:18:30 PM
REPRESENTATIVE TARR moved to adopt Amendment 1, labeled 29-
LS1250\P.1, Nauman, 4/1/16, which read:
Page 1, line 13:
Delete "and"
Page 2, line 2, following "senate":
Insert "; and
(5) one nonvoting member who is a
member of the minority caucus from either the senate
or the house of representatives appointed jointly by
the president of the senate and the speaker of the
house and who serves at the pleasure of the president
of the senate and the speaker of the house
REPRESENTATIVE OLSON objected.
2:19:08 PM
REPRESENTATIVE TARR explained Amendment 1. She pointed to the
unresolved issue of whether placing non-voting legislative
members would create a situation where they have undue influence
on the proceedings. She explained that the non-voting member
would be one member from the minority caucus and it could be
from either the House of Representatives or the Senate as it
would be a joint appointment. The way the bill is written, one
member from the House of Representatives would be appointed by
the House of Representatives and one member from the Senate
would be appointed by the Senate, and this third member would be
a joint appointment between the leaders in their respective
bodies. This is important, she pointed out, because since early
2014, Senate Bill 138 has been a work in progress and leadership
in the executive branch has changed, and the House of
Representatives has the potential to change leadership every two
years. Institutional knowledge on the legislative side builds
in more stability because there are three legislators there, and
it keeps both caucuses engaged which can be helpful in working
through the issues, such as during the legislative special
session last fall. There are varying opinions on how things
should move forward and to the extent the legislature can keep
as much communication happening throughout the process, the
legislature will be better situated to make decisions and feel
that everyone is in the know.
2:21:08 PM
REPRESENTATIVE SEATON referred to the Alaska State Constitution,
Article III, Section 26, which states [original punctuation
provided]:
When a board or commission is at the head of a
principal department or a regulatory or quasi-judicial
agency, its members shall be appointed by the
governor, subject to confirmation by a majority of the
members of the legislature in joint session, and may
be removed as provided by law. They shall be citizens
of the United States. The board or commission may
appoint a principal executive officer when authorized
by law, but the appointment shall be subject to the
approval of the governor.
REPRESENTATIVE SEATON pointed out that the constitution gives
appointment power to the governor, subject to confirmation,
which is exactly as has been done with the ADGC board. He said
his problem with this amendment is that now the committee is
interjecting two other people, and is making appointments other
than the governor that are not confirmed by the legislature to
these offices.
2:22:43 PM
REPRESENTATIVE TARR further explained that there is conflicting
information on whether these appointments can be considered
appropriate. The issue is unresolved yet, she said, and she
finds comfort that this practice has been in use for quite some
time and she has not seen it objected to in other areas. She
said she has attended almost every ASMI board meeting as a non-
voting member since joining the legislature and does not believe
she has had undue influence on the process or decisions it made.
After the special session she committed to try and attend as
many of the AGDC board meetings, which was a challenge among her
other responsibilities. The legislators stepping up acknowledge
they will make time in their schedule to be a full participant.
Also, she extended, there is value in keeping the legislature
engaged in the process of what could be the most important
capital project the state has ever seen.
2:24:26 PM
REPRESENTATIVE OLSON removed his objection to Amendment 1.
There being no further objection, Amendment 1 was adopted.
CO-CHAIR TALERICO opened public testimony.
2:25:19 PM
MERRICK PEIRCE testified that SB 125 is unconstitutional and in
the event it were constitutional the legislature's track record
on the gasline has been consistently wrong, and is in contempt
of the mandate Alaskans issued when they voted to create the
Alaska Natural Gas Development Authority (ANGDA). He remarked
that legal opinions on the separation of power issue are clear.
He referred to a March 20, Department of Law memorandum and
paraphrased as follows:
The appointment of two legislators to the board of
directors of a public corporation, the executive
branch of state government, is unlawful for two
separate reasons. First, the appointments would
contravene the prohibition against dual office holding
set out in Section 5, Article II, of the Alaska
Constitution. Second, the appointments would violate
the separation of powers doctrine. Of course the same
legal issue applies to House Bill 357, and legislators
serving on the Board of Regents.
MR. PEIRCE explained that in 1980, Alaska voters rejected a
constitutional amendment that would have allowed legislators
more authority over, and maybe even involvement with, the Alaska
Housing Finance Corporation Board. Several years ago, he
recalled, Gene Therriault and Nancy Dahlstrom left the
legislature to take jobs in the Parnell Administration, and
subsequently were both found to be in violation of Article II,
Section 5, and had to resign their jobs because they didn't sit
out the required one year. In the event a legislator has a
burning desire to serve on the ADGC board there is a legal path
such that the legislator must first resign his/her legislative
seat and after one year ask the governor to consider appointing
them to the ADGC board. Beyond the legal issues, he related, a
few years ago Governor Frank Murkowski and Harry Noah brought to
the public's attention how the legislature wasted over $1
billion in various pipeline schemes. He referred to Governor
Frank Murkowski's 9/20/13 written examples, and paraphrased as
follows:
$557 million has been expended in the last nine years
on consultant fees and reports. In the last session
the legislature authorized $355 million for the in-
state bullet line on top of the $72 million from
former years.
2:27:35 PM
MR. PEIRCE commented that, of course, it was a failure because
that project never made any economic sense.
MR. PEIRCE continued paraphrasing Governor Frank Murkowski's
9/20/13 written examples, as follows:
The legislature committed $332 million in grants and
loans to the North Slope gas to truck North Slope gas
to Fairbanks ... We still have the obligation to pay
$500 million to TransCanada of which $260 million has
been paid and an additional $240 million is still
owed.
MR. PEIRCE stated that by Governor Murkowski's tabulation the
legislature has spent over $1 billion and has nothing to show
for it.
2:28:06 PM
MR. PEIRCE related that the most recent significant gasline
involvement by the legislature was Senate Bill 138, and there
are two significant failures with that policy. The pipeline
routing has not proven to be constitutional because of the
routing to Nikiski that likely results in a reduced netback for
a more expensive project. It also violates federal law and
federal law does have supremacy, such that any gasline routing
not resulting in the maximum netback to Alaska violates Article
VIII. When considering that the proposed project to Nikiski is
a longer more expensive routing than the one to Valdez, the more
expensive the project, the less netback to Alaska. There are
potentially 200 trillion cubic feet (Tcf) of North Slope gas,
and if the project in Nikiski conservatively results in a $0.25
million British thermal unit (MMBtu) higher cost, the loss to
Alaska over the life of the project will result in tens of
billions of lost revenue to Alaska and that is unconstitutional,
he remarked. Further, he added, the route to Nikiski is also
not consistent with federal law under the National Environmental
Policy Act of 1969 (NEPA). Under previous gasline work and
environmental impact statement (EIS) work as completed by the
private sector, such as Yukon Pacific, the route to Valdez was
found to be superior after completing the federally required
alternative analysis. A fact that has been ignored by the
legislature, as well as significant harm that results to
Fairbanks from a pipeline routing that bypasses that community.
By comparison, Governor Bill Walker has been consistently
correct in advocating for a gasline to tidewater for liquefied
natural gas (LNG) export, and it does not help to have the
legislature to try to unconstitutionally inject itself into the
executive branch functions. He acknowledged the legislature has
a lot to deal with right now with issues clearly within the
legislative branch functions, such as a $4 billion deficit, and
the legislature has great difficulty adjourning within 90 days
as the voters asked.
2:30:03 PM
REPRESENTATIVE JOSEPHSON noted that Mr. Pierce mentioned a
3/20/16 opinion and asked whether he meant a 3/30/16 opinion.
MR. PEIRCE replied that it is a 3/20/16, Department of Law
memorandum addressed to Darwin Peterson, from Jerry Juday,
Assistant Attorney General of Labor and State Affairs Section.
REPRESENTATIVE JOSEPHSON advised he does have that opinion.
2:30:47 PM
CO-CHAIR TALERICO closed public testimony after ascertaining no
one further wished to testify.
2:31:00 PM
REPRESENTATIVE JOSEPHSON, relative to the Alaska Gasline
Development Corporation board, expressed that this is an
expression of legislative concern regarding the turnover on the
board, the direction of the board's work, and what it does vis a
vis the Department of Natural Resources, the Alaska LNG Project
team, and the legislature's "gas team." He related he shares
the concerns of a lack of expertise and lack of continuity;
however, he will oppose this bill because it raises oath
questions. Representative Josephson pointed to Ms. Nauman's
12/7/15 and 3/30/16 memorandums and noted they are decidedly
different. He paraphrased from page 3 of Ms. Nauman's original
memorandum, saying:
Effectively you haven't presented me with a question
of non-voting members that may result in a different
result.
REPRESENTATIVE JOSEPHSON then pointed to page 1 of the 12/7/15
memorandum and expressed concern that Ms. Nauman discusses
whether profit modifies position, and she appears to take a
different read on that. Representative Josephson paraphrased as
follows:
Service in any office is prohibited -- in any office
is prohibited regardless of whether the legislator
receives compensation for that service.
2:32:58 PM
REPRESENTATIVE JOSEPHSON surmised that Ms. Nauman reads it as
more of a prohibition. He offered concern with Ms. Nauman's
3/30/16 memorandum and paraphrased it as follows:
Legislative members are, however, allowed into ...
under the bill as amended, the committee substitute
Version P, would be allowed into executive sessions.
REPRESENTATIVE JOSEPHSON related that he tried to imagine being
in a House Finance Committee room with just legislators and
staff, and the legislators allowing executive branch officials
to sit in on an executive session.
REPRESENTATIVE JOSEPHSON noted that this happens in other
commissions and bodies. He said he reviewed Jerry Juday's
3/20/16 opinion together with Ms. Nauman's 12/7/15 opinion, and
observed Ms. Nauman's uncertainty within her 3/30/16 opinion.
He pointed out that he has particular concerns regarding the
comments made by Representative Seaton, and opined that even
though ADGC could benefit from the wisdom of members from both
bodies, he has concerns about whether this is proper.
2:34:52 PM
REPRESENTATIVE SEATON stated he opposes the bill due to the
issue of dual office holding precluded by the Alaska State
Constitution, and that the appointment powers are granted to the
governor and not to other entities to make those appointments to
executive bodies that have regulatory responsibility. He
related he has reviewed the information and in a common sense
manner concluded that this would create an unconstitutional
action. He further related that he took an oath of office to
support and defend the Alaska State Constitution, and as a
member of a separate branch of government he cannot pass that
off to have another branch of government to decide whether he is
correct or wrong because he has to make that decision on his
actions. That, he pointed out, would be saying he would have
this action [pass out of committee] even though he believes it
is unconstitutional and rather to have the courts decide whether
he was right or wrong, in which case he may as well have not
taken his oath. For those reasons he will vote against the bill
and the issue of executive sessions especially if one signed an
executive confidentiality form and was not able to share
information with other legislators.
2:37:09 PM
REPRESENTATIVE TARR clarified that she would not be comfortable
with doing something that was clearly described through the
legal opinions as being unconstitutional. The challenging issue
here is that they have given the committee more grey area than
definitive answers. Following this bill, she commented, she
will look into other examples. She noted a task force was
formed last year in an effort to pass "Erin's Law" and "Bree's
Law" that went through the same conversations with Legislative
Legal and Research Services regarding the separation of powers.
Similar to the two memorandums, the ex officio non-voting
members are a way it can be accomplished in a constitutional
fashion. She related that she takes her oath seriously and will
continue researching the issue, if she is wrong she will vote
accordingly. Although, at this time, given the information she
has, she will continue to move it through the process, she said.
2:38:33 PM
REPRESENTATIVE JOHNSON recalled conversations about local hire
being unconstitutional and yet the legislature decided that if
it is going to fight on constitutional grounds that is a good
place to fight. Therefore, the legislature picks its
constitutional fights sometimes with the grey areas. He said he
is comfortable with this, and that it is a constitutional ground
he would like to fight on because the legislature needs input
not only on this board but other boards previously mentioned.
He said he supports the bill.
2:39:13 PM
REPRESENTATIVE OLSON commented that at least one to four times a
year all of the bills that will either be a personal bill, House
Labor and Commerce Standing Committee bill, or before the House
Labor and Commerce Standing Committee, that has a legal opinion
that it may be unconstitutional. Going back 12 years, he could
not recall any of the bills going any farther than the first
letter out of Legislative Legal and Research Services, he said.
REPRESENTATIVE HERRON referred to Ms. Nauman's memorandum and a
footnote listing other authorities, corporations, commissions,
and boards wherein there are non-voting members, and opined that
it is either "we can or we can't." He remarked he would like
the bill to move forward due to these other authorities,
corporations, commissions, and boards, because the legislature
has been doing this for a long time. He commented that possibly
the legislature should not be doing it on those either.
2:40:44 PM
CO-CHAIR TALERICO stated he also took an oath of office and that
he has been in both voting and non-voting seats. He maintained
that non-voting members do not have horse power when decisions
are made because they will not be part of the record of
decision, which is a driver in these types of decisions because
the non-voting member does not have decision-making ability.
This, he said, makes him comfortable.
2:41:46 PM
REPRESENTATIVE CHENAULT pointed out that the bill may be
unconstitutional or constitutional, and each member has his/her
own opinion on that. He said the legislation stiffens up the
requirements for the ADGC board members which is as important as
any other part of the bill because the state and ADGC want the
smartest and brightest people as board members. He related that
that issue passed in Senate Bill 138, and that is what he would
like to continue. This legislation does put requirements on the
members of the board to have the smartest and brightest people
representing the State of Alaska on the ADGC board. He pointed
out that there is no disrespect to the folks currently on the
board who bring the right values to the board.
2:43:14 PM
CO-CHAIR NAGEAK moved to report HCS CSSB 125(RES), Version 29-
LS1250\G, Nauman, 3/31/16, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE SEATON objected.
2:43:50 PM
A roll call vote was taken. Representatives Chenault, Johnson,
Olson, Tarr, Herron, Talerico, and Nageak voted in favor of
reporting HCS CSSB 125(RES), Version 29-LS1250\G, Nauman,
3/31/16, as amended, out of committee with individual
recommendations and the accompanying fiscal notes.
Representatives Seaton and Josephson voted against it.
Therefore, HCS CSSB 125(RES) was reported from the House
Resources Standing Committee by a vote of 7-2.