Legislature(2005 - 2006)BELTZ 211
04/26/2005 03:30 PM STATE AFFAIRS
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SB 186-EXECUTIVE BRANCH ETHICS VICE-CHAIR THOMAS WAGONER, announced SB 186 to be up for consideration. 4:34:08 PM SENATOR RALPH SEEKINS, Sponsor, said the question of ethics legislation arose with the recent high profile case of the former attorney general (AG). It was determined that the state law regarding when someone may have a potential conflict of interest that might relate to the state ethics laws required clarification. Former U.S. Attorney Robert Bunde's investigation of the case pointed out that Alaska has no clear bright line regarding what is a significant interest in a company when the company may benefit or be harmed by a state employee. Governor Murkowski agreed and said to find a way to address the concern. As Judiciary Committee chair, he compared current Alaska law to laws in other states and the federal government. In an effort to find proper terminology that could be reduced to state law he examined the ethical standards of various professional associations and the generally accepted accounting principles (GAAP). Review of broad and narrow treatises indicated that with too much restriction on allowing government employees and officials to have investments qualified people are driven from meaningful government service. This is particularly true for those who enter government service as a capstone to their career, he said. Everyone agrees that high moral standards in public offices are essential to assure the trust, respect and confidence of the people. It's also agreed that a fair and open government requires that public officers conduct the public's business in a way that preserves the integrity of the process and avoids conflicts of interest. However, there isn't agreement on how to do that. 4:39:39 PM SENATOR SEEKINS said when he started with the recommendations that Mr. Bunde made, discussion immediately ensued regarding the meaning of "value" and "significant" when applied to different companies and individuals. He tried to reach a balance point for conducting the business of government while protecting public interest and not violating the public trust. 4:41:10 PM When a person has evidence of an ethics violation by a public employee, that person has a moral responsibility to report that behavior. No public law should discourage that action. He asserted that no proposed legislation encroaches on a citizen's constitutional right to speak openly about what they've heard or seen. SB 186 provides that anyone bringing or knowing of a formal complaint filed with the personnel board becomes a participant in the process and should be held to the same high standard of confidentiality as the members of the personnel board. Because ethics complaints must not be frivolous or filed with evil intent, there must be a stiff penalty for anyone who knowingly perverts the confidentiality process. This is common practice, he said. Even the proceedings of the personnel board or the investigatory process by the AG's office prior to a finding of probable cause would be held in high confidence. This is to protect the innocent from trial in the media. When there is probable cause the charge would be made public, but if the charge were found to have no basis in fact an individual's reputation would not be besmirched. 4:46:29 PM SB 186 is the starting point for legislators to work collectively to develop a proposal that prosecutes those who have violated ethics laws and maintains confidentiality throughout the process until probable cause is determined. 4:47:37 PM SENATOR CHARLIE HUGGINS asked what happens when probable cause is determined. SENATOR SEEKINS said he understands that when someone comes forward with an ethics complaint an investigation begins. All proceedings are confidential; they have the right of subpoena and the right for discovery. At some point a decision is made as to whether there is probable cause. If there is probable cause the matter becomes public; if there isn't probable cause the matter does not become public. 4:51:45 PM SENATOR KIM ELTON directed attention to Section 1, which provides for criminalization of releasing confidential information. Using the example of telling his wife that he had to hire and pay for legal services, he demonstrated how easy it would be to innocently violate the proposed confidentiality provision. If the bill were to become law, that exchange would create a class A misdemeanor. 4:53:39 PM SENATOR SEEKINS responded, "If you know that there is an investigation, keep your mouth shut." SENATOR ELTON questioned not being able to tell his wife. SENATOR SEEKINS acknowledged he might not get away with that. Nevertheless, the intention in SB 186 is to stop the gossip chain to protect the innocent. SENATOR ELTON changed topics and said it's clear that there are multiple interpretations for an appropriate bright line regarding equity interest. With that in mind he was curious how he arrived at the $10,000 figure. SENATOR SEEKINS answered Mr. Bunde proposed that amount. SENATOR ELTON directed attention to page 2, lines 7-10. He noted that (B) has a qualifier on the $10,000 and (C) does not have a qualifier. He asked if he was missing something. SENATOR SEEKINS replied you could own 100 percent of an equity position as long as it doesn't exceed $10,000. SENATOR ELTON raised a question about page 6, Sec. 16. SENATOR SEEKINS announced he would propose an amendment to that section, which could be considered in either this committee or in the Judiciary Committee. The intention is to define "family member" in reasonable terms to include only those who live in your household because you would have some knowledge of their investments. 5:01:33 PM SENATOR CHARLIE HUGGINS asked what sorts of things Mr. Bunde was trying to clarify. SENATOR SEEKINS responded he was trying to define what would constitute a substantial or significant interest. VICE-CHAIR WAGONER declared there's a serious problem associated with the attorney general, who is appointed by the governor, investigating an ethics complaint against the governor. SENATOR SEEKINS said he shares that concern and his proposed amendment would address that issue to some extent. If the governor suspected that the attorney general committed an ethics violation, the governor would ask the personnel board to select an investigator who would conduct an investigation with full subpoena powers If an ethics violation did occur, the governor would file a complaint with the personnel board and it would move forward with the regular process. He suggested that same process would take place if an ethics complaint were filed against the governor. 5:08:22 PM SENATOR ELTON used the example of former Attorney General Renkes and the reports in the Anchorage Daily News to point out what would be an unintended consequence in Section 1. At the point that the investigator contacted the reporter to ask about deleted emails and when it was that Attorney General Renkes had been interviewed, that reporter would have been precluded from talking about the investigation let alone reporting on it. SENATOR SEEKINS replied he didn't believe that successful prosecution of a member of the press would take place, but the governor could be prosecuted if he/she revealed a confidential matter as part of an investigation. SENATOR ELTON referenced AS 39.52.340(a) and said the AG wouldn't have been able to talk to the governor about the investigation under the provisions of Section 1. If he mentioned that an investigation had begun he would have committed a class A misdemeanor. SENATOR SEEKINS agreed that once the accused was told by the accuser that there is an investigation then the process would have to go forward before any further conversation could take place. There were no further questions or testimony. VICE-CHAIR WAGONER announced he would hold SB 186 in committee. SB 186-EXECUTIVE BRANCH ETHICS 8:16:11 PM CHAIR GENE THERRIAULT announced SB 186 to be up for consideration. He moved the \F version committee substitute (CS) as the working document. There being no objection, it was so ordered. 8:16:53 PM SENATOR SEEKINS reported the following: Sections 1 and 2 had no changes. Section 3 (f) talks about "immediate family" rather than "family" because is not with the extended family. CHAIR THERRIAULT noted that the word "entity" was struck from Section 2 in several instances. He asked if the drafters made the suggestion. SENATOR SEEKINS said that's correct. Business is defined as an entity so the term is redundant. In Section 3 "business associate" is used instead of any term that is closely related to person. The definition is located in Section 19. In Section 4 the terms, "or position" and "or a business associate" and "or by reason of the officer's position" were added to clarify that due to their position, someone may have access to information that should be confidential. In Sections 5, 6 and 7 the words "or a business associate" replaces "closely associated person." That change in combination with the definition of "immediate family" should take care of the universe of people we're interested in, he said. 8:20:11 PM SENATOR KIM ELTON questioned whether a "business associate" would encompass a smaller group because "a closely associated person" might include something in addition to a business associate. SENATOR SEEKINS replied the idea is that the next-door neighbor or your fishing friend would not be included. Family, professional associations, and business associations are all covered. In Section 8(b)(2)(A) the words " personal or" were deleted. The discussion is about financial interests only. In that same subparagraph "interest that gives" replaces "interests that give". 8:22:20 PM SENATOR CHARLIE HUGGINS asked for an example of personal or financial interests that might be a potential violation. SENATOR SEEKINS answered you could tell someone to sell their stock or withdraw from a partnership or sell a lodge. Divestiture is basically saying get rid of the conflicting interest. Section 8(b)(2)(B) deals with putting the financial interest that may be a conflict into a blind trust. CHAIR THERRIAULT noted that with the removal of the words "no direct" there would be no control at all. SENATOR SEEKINS responded there would be no management control over that financial interest. 8:24:29 PM SENATOR ELTON observed that the proposed language would have allowed former Attorney General Renkes to place his KFx stock in a blind trust or other financial structure over which he had no management authority. That would have satisfied the ethics law even though he didn't get rid of his conflict of interest. However, at some point he would have accrued benefit from that stock ownership. SENATOR SEEKINS drew attention to page 3, lines 24-31 where it says there is a written determination regarding whether there was a violation. If the supervisor determines that a violation exists or will occur he or she would have two options The supervisor could reassign the employee's duties or direct the employee to place the investment in a blind trust over which he or she had no control. CHAIR THERRIAULT added that there were two issues. One was the stock ownership and the other was the allegation that the former attorney general bought and sold the stock. Clearly buying and selling would no longer be an issue under the proposed language. SENATOR ELTON expressed concern that that subparagraph (B) causes something to happen but it doesn't remove the perception that the public officer could benefit. Putting the stock in a blind trust places the public official one step away from the investment, but it doesn't remove the potential incentive to benefit the company in question. 8:28:20 PM SENATOR SEEKINS restated his belief that leaving the decision to a supervisor is a legitimate option. SENATOR ELTON questioned whether there wouldn't have been an unintended consequence of no public record whatsoever if former Attorney General Renkes had moved his investment into a blind trust. In that instance there was at least a public file showing his holdings in KFx, he said. SENATOR SEEKINS pointed to the three options available to a supervisor in a similar circumstance: don't work on the particular project; sell the stock; put the stock into a management system over which the public employee has no control. He stressed that the supervisor would provide a written determination that would go in the file and to the attorney general. SENATOR ELTON said his understanding is that a personnel file isn't open to the public so under this proposal he wasn't sure that there would be a document that could be disclosed to the public. SENATOR SEEKINS clarified that the proposed language calls for the file to be released to the public employee and to the attorney general. CHAIR THERRIAULT asked the sponsor to continue. SENATOR SEEKINS directed attention to Section 9. It was discussed conceptually during the previous hearing and relates to an allegation of a violation by the governor, lieutenant governor, or attorney general. In the event of an allegation, the personnel board would appoint an independent counsel with full power to issue and enforce subpoenas. The investigator would prepare a written report outlining the findings and giving a conclusion. If an allegation were made against the governor or the lieutenant governor, then the attorney general would review the conclusion and make the final determination as to whether the complaint would go forward. Similarly, the governor would make the final determination for an allegation made against the attorney general. For the first time in our statutes, a procedure is set forth to address a complaint at that high level, he said. SENATOR ELTON asked for verification that nothing in Section 9 precludes anyone else from filing a complaint. 8:36:57 PM SENATOR SEEKINS said no; this isn't the process for filing a complaint it's the process for determining whether or not there was a violation that provided basis for a complaint. 8:37:42 PM Section 10 would amend AS 39.52.240(a). It states that Section 10 doesn't apply to allegations investigated in proposed Section 9. Section 11 would amend AS 39.52.310(a) to include AS 39.52.230(b). Section 12 would amend AS 39.52.335(a). In the event that a complaint was dismissed, the subject of the complaint would receive a copy of the summary of the matter. He noted that at any time the parties could stipulate that a complaint is public. Section 13 would amend AS 39.52.335(f). The personnel board may issue a confidential report on the complaint to the subject of the complaint, the complainant and the attorney general. SENATOR ELTON asked why the language about the superior court was stricken from Section 12. SENATOR SEEKINS answered the matter would no longer go there; he thought it applied to the appeal process. CHAIR THERRIAULT announced an at-ease from 8:40:23 PM to 8:42:29 PM to review the statute. SENATOR ELTON stated that the superior court would be precluded from making the matter public. SENATOR SEEKINS disagreed. Subsection (h) says that the court can order the matter be made public. Deleting paragraph (2) just precludes it at this particular section, he said. 8:43:46 PM Section 13 amends AS 39.52.335(f). It says that the confidential report may be issued to the attorney general, the subject of the complaint, and the complainant. The report remains confidential if it is dismissed. Section 14 amends AS 39.52.340(a). The information an independent counsel might discover would be confidential and the information about a filing or intention to file a complaint could not be disclosed. He clarified that documents from state agencies don't become secret just because they were requested in an investigation. Section 15 amends AS 39.52.380(a) to include four additional statutory references. It expands on the power given to the independent counsel. Section 16 amends AS 39.52.410(a) and relates to the length of time investments would remain in a blind trust. He noted that some language was inadvertently omitted. He suggested that it could be reinserted in the next committee of referral. Section 17 amends AS 39.52.960(9) by adding "an interest held by a public employee with a business associate" to the definition of "financial interest." Section 18 amends AS 39.52.960(11) to further clarify and narrow who is included as an immediate family member. 8:48:51 PM SENATOR ELTON suggested that removing grandparent, aunt or uncle might be going too far. SENATOR SEEKINS argued that given all the step permutations of the current American family the net would be cast too far. SENATOR ELTON said he wasn't suggesting expanding the number of people that are covered, but some previous legislature made a decision that it is appropriate to include grandparent, aunt, and uncle in the definition. Unless the existing language has caused a problem, he didn't believe the scope should be narrowed. Also, there's the provision in law that says you're not complicit in a conflict of interest if you didn't know about the financial arrangement. SENATOR SEEKINS responded you would have to prove that you didn't know. 8:53:00 PM Section 19 amends AS 39.52.960 by adding new paragraphs defining "business associate" and "household." Section 20 repeals AS 39.52.335(g) and AS 39.52.335(h). SENATOR ELTON directed attention to Section 12 and said the previous discussion included the assurance that AS 30.52.335(h) was deleted at that point because it was covered elsewhere. He noted that Section 20 repeals AS 30.52.335(h) so the net is that there would be no appeal to the superior court to make something public. SENATOR SEEKINS said he didn't notice that but it does take it out. It says that if the complaint is dismissed or resolved then it's the end of the line. CHAIR THERRIAULT asked if there was a particular reason to strike that subsection. Because (h) was permissive, a person could go to the court and ask for release of the information. SENATOR SEEKINS answered he didn't believe so. He said he had no problem if someone wanted to go to the court to get the information as long as it was clear that there was a substantial concern to the public interest. SENATOR ELTON observed that those protections would be supplied by the superior court just as they are now. SENATOR SEEKINS agreed to review the matter. The instructions to the drafter were that once the personnel board finds that there was no violation then the matter is closed. CHAIR THERRIAULT brought up the comparison between the personnel board and a grand jury proceeding. SENATOR SEEKINS interjected there is neither an appeal process for nor a public disclosure of a grand jury finding of no basis for an indictment. CHAIR THERRIAULT asked Senator Elton what might trigger the court to release the information if the matter had been found to have no basis. SENATOR ELTON responded that would presume fact situations that have not yet occurred, but it appears as though the proposal changes parts of law in a way that may not be necessary. It's perfectly appropriate for any Alaskan to be curious about the conduct of a public officer and it might be in the public's interest for a dismissal to be part of the public record. Given the nature of the repealer, he asked what the provision is in subsection (g). CHAIR THERRIAULT read the statute. Fire alarm at 9:00:27 PM 9:09:38 PM SENATOR SEEKINS read subsection (h) and stated that the proposed change would keep a matter confidential when a complaint has been dismissed. He argued that, "We're just getting rid of a paragraph that says that if it wasn't made public but the personnel board thought it should, then somebody could sue to make it public. " SENATOR WAGONER drew a parallel between a baseless complaint and a mistake on a credit report. SENATOR SEEKINS commented once information is on the Web it's there forever. SENATOR ELTON motioned to strike Section 20. He explained his reasoning is that under subsection (g) the personnel board is given the opportunity to use discretion in issuing a report that is scrubbed of identifying information. Repealing those two subsections is taking away opportunities that could benefit the subject of the complaint and other state employees who may want to know what decisions the board has made. SENATOR SEEKINS said he didn't object to striking (g) from proposed Section 20, but (h) has no reason for remaining in law. Once a person is found innocent of the charges, the matter is dismissed and the facts of the matter would be kept confidential. CHAIR THERRIAULT announced he would divide the question. Amendment 1a would ask whether AS 39.52.335(g) should be struck from Section 20. Amendment 1b would ask whether AS 39.52.335(h) should be struck from Section 20. SENATOR ELTON moved Amendment 1a. CHAIR THERRIAULT found there was no objection and Amendment 1a passed. SENATOR ELTON moved Amendment 1b. He stated that the discussion has centered on the assumption that the only disposition of a complaint is a dismissal and he couldn't see that. Subsection (h) would allow the personnel board to recommend that the matter be made public for a number of reasons. If a person is found innocent it might be helpful for the public to know that. Since it hasn't been demonstrated that the existing statutes are creating a problem, he said he wasn't comfortable making further change. SENATOR SEEKINS emphasized that if probable cause were found then it would become a public matter. SENATOR ELTON directed attention to (h)(1). It talks about dismissal or resolution of the complaint, but not dismissal alone. SENATOR SEEKINS responded if there was evidence that the dismissal was clearly contrary to the requirements of this chapter then a person would have a right to bring an action under the common law to retry the issue. But not for disclosure, he said CHAIR THERRIAULT found there was no further debate on Amendment 1b and asked for a roll call vote. Amendment 1(b) failed 1 to 3 with Senator Elton voting yea and Senators Wagoner, Huggins and Therriault voting nay. CHAIR THERRIAULT found there were no further questions or amendments on SB 186. He asked for the will of the committee. SENATOR WAGONER motioned to report CSSB 186 (STA), version F as amended, and attached fiscal notes from committee with individual recommendations. SENATOR ELTON objected. He stated that at the beginning the task was simply to establish a bright line to define a substantial interest. SB 186 goes far beyond that point. It repeals certain provisions and makes some information less public. He said he is more comfortable with a bill that sets a dollar amount to define substantial interest. He's uncomfortable going further if it hasn't been demonstrated that the existing statutes are creating a problem. 9:19:37 PM CHAIR THERRIAULT called for a roll call vote. The motion passed 3 to 1 with Senators Huggins, Wagoner and Chair Therriault voting yea and Senator Elton voting nay. CSSB 186(STA) moved to the next committee of referral.