HB 27 - BOARD OF FISH VOTING ETHICS Number 075 CHAIRMAN AUSTERMAN stated the committee would hear HB 27, "An Act relating to participation in matters before the Board of Fisheries by members of the board; and providing for an effective date." He explained HB 27 to be the liberalizing of the conflict of interest for the Board of Fisheries. He stated that presently the Attorney General, makes a ruling as to whether there is a substantial conflict interest and then the chairman of the Board of Fisheries makes a ruling as to whether that person should be conflicted out. Number 128 CHAIRMAN AUSTERMAN stated the way HB 27 is written is that a board member has to declare a conflict of interest to the rest of the board and then a majority vote from the board determines whether that person has a conflict of interest and cannot participate. He stated that when the bill was introduced last year, it stated that the person had to declare a conflict of interest but had to vote and there was no way for a member to be conflicted out. He stated that the reason for the requirement to vote, was because of the perceived problem with the board functioning, due to the ability to conflict more than three people off the board and of the potential of allowing the vote to be persuaded, depending on who the user group was. Number 274 STEVEN DAUGHERTY, Assistant Attorney General, Natural Resources Section, Civil Division, Department of Law, stated that in a February 28, 1996 letter he is cited as supporting a 20 percent limit on the level of interest, which is not his position. He stated that he may of said it may simplify things if there was a cut off of someone's income but the Department of law has not advocated such a percentage. Number 393 CHAIRMAN AUSTERMAN said he would make a note of it to correct the record. Number 401 MR. DAUGHERTY stated the Board of Fisheries current procedures on conflict of interest is; the chair reviews all the proposals, each member, at the beginning of each meeting, discloses all of their financial or business interests in any fisheries organization, the chair makes a ruling as to whether a member is conflicted out, any member can object to the ruling and if a member does so, the entire board votes on whether or not the member has a conflict. Number 456 MR. DAUGHERTY stated that there has never been a situation when the board has not been able to have a quorum, because of members being conflicted out. He stated that there was a fear that this would occur in the False Pass Area M Fishery, there were four members with a financial interest in the fishery, however, the chairman ruled that only two members had a significant financial interest in the fishery. He stated that the problems the public has seen with the board, stems from the fear that the board would not be able to act because of the conflict of interest rules, however, that has not happened thus far. Number 573 MR. DAUGHERTY stated that there are some situations that are in favor of exempting the board from the Ethics Act. He stated that it is time consuming to look at each of the proposals and determine what the effects are. He stated that sometimes it is difficult for board members to exclude another board member from a proposal, particularly when those board members have the most expertise on a fishery. He stated that with the current act there is a method to include the conflicted out person. Mr. Daugherty stated that if the person is conflicted out from the beginning, they can then submit public testimony, as any member of the public, can on the issue. He stated that if the conflict is not found out in the beginning of the meeting, this could not occur. Number 723 MR. DAUGHERTY stated that are reasons for leaving the Ethics Act as it is presently. He stated that other boards will see the Board of Fisheries being exempted and may want to follow suit. He stated that it may cause a reduction in public confidence with the impartiality of Board of Fisheries' decisions. He stated that the North Pacific Management Council is currently looking at the state of Alaska's ethics rules as a possibility for changing its rules. He stated that they have exempted their board members, all they have to do is declare their conflict of interest and then they are able to vote. He stated the public perceived this to be people voting to put money in their own pockets. Number 773 MR. DAUGHERTY stated that in the deliberation process, the Board of Fisheries' member has the last chance to change the boards mind on what action the is board is going to take, the public does not have the chance to counter information presented after the public testimony is heard, giving an unfair advantage to one user group. He stated that the Board of Fisheries is made up of seven people which is not enough to represent the viewpoints of every user group across the state. Number 885 CHAIRMAN AUSTERMAN asked when the Attorney General's Office gets involved in making a ruling on the conflict of interest. Number 898 MR. DAUGHERTY replied that the Attorney General's Office pursuant to the statute is required to respond to written requests from the chairman for advice on an issue. He stated that the Department of Law has not issued any opinions to the Board of Fisheries in the past two years. Number 939 CHAIRMAN AUSTERMAN asked if the conflict of interests are strictly financial conflicts. Number 945 MR. DAUGHERTY replied that there are both personal and financial interests that a member can conflict out on. He stated that the Department of Law has advised the chairman that a person who was a member of an organization, that helped draft proposals and put them before the board, would be conflicted out under the personal interest provision of the Ethics Act. He stated that there are situations where it has been advised that a personal interest is not significant, such as if a person has a sport fishing license and participates in the fishery, it is not seen as a significant conflict of interest, because sport fishing is open to the general public. Number 1005 REPRESENTATIVE MARK HODGINS asked how the Board of Fisheries is set up. Number 1057 MR. DAUGHERTY stated that there are two board members that may be appointed in the near future. He stated that the board is made up of people with both sport and commercial fishing interests. Trefon Angasan, drift net fisherman in Bristol Bay; Virgil Umphenour, fish processor in the Yukon River; John White, set net fisherman; Larry Engel, former fish and game biologist; Dan Coffey, recreational fisherman, drafter of the F.I.S.H Initiative; Dick Bower, University of Alaska Sea Grant Program and Grant Miller, commercial fisherman in Sitka. Number 1167 REPRESENTATIVE HODGINS asked which two board members are going to be reappointed. MR. DAUGHERTY, stated that the terms that expired were Larry Engel and Dick Bower but he did not know anything about the appointment schedule. Number 1195 REPRESENTATIVE HODGINS asked that in the context that any one can buy a fishing license, as with the sport fish license, how does the Board decide whether the commercial fisherman have a conflict of interest. Number 1216 MR. DAUGHERTY stated that it is a financial interest since it is a commercial fishing permit, and subject to limited entry. He stated that in these cases board members are frequently conflicted out in areas in which they fish. He stated that Trefon Angasan is conflicted out of 50 percent of the Bristol Bay proposals, not only because of his permit but because at least ten members of his immediate family hold permits in that fishery. He stated that Virgil Umphenour was conflicted out of 20 proposals regarding the Yukon River. He stated that there was an instance when the Yukon board members were not conflicted out on the False Pass Fishery proposal, despite the fact that Yukon River chums are taken in the False Pass Fishery because of little financial interest due to the low value of the catch. Number 1327 REPRESENTATIVE HODGINS asked if the commercial fisherman were conflicted out more than the sport fisherman and if that has a result on the Board of Fisheries. Number 1353 MR. DAUGHERTY stated that generally the sport fisherman are not conflicted out although Virgil Umphenour was also a member of the Yukon River Drainage Fisheries Association and was conflicted out due to his membership. He stated it is always possible to be conflicted out, if one is a member of sport fishing organizations, however most sport members quit any conflicting positions when they join the board, to prevent being conflicted out. Number 1407 CHAIRMAN AUSTERMAN asked if a sport fish member, would stand the chance of being conflicted out quite frequently, concerning Cook Inlet issues, if he ran a charter on the Kenai River. Number 1426 MR. DAUGHERTY replied "Yes." Number 1436 REPRESENTATIVE SCOTT OGAN stated that he would have to agree with Mr. Daugherty on the perception problem of partiality. He stated that in the past there was the perception that members of the Board of Fisheries were looking out for their own interest, as a result it would be somewhat advantageous to keep the Board of Fisheries the way it is. He asked if currently the person that is conflicted out can't deliberate. Number 1486 MR. DAUGHERTY stated "That is correct." Number 1491 REPRESENTATIVE OGAN stated that he wondered if it would be worth considering having a person deliberate on an issue but not be able to vote so at least that person can bring the perspective of that particular fisheries to the board as an expert because they participate in the fisheries. Number 1529 MR. DAUGHERTY stated that would address some of the public concern but the board member would still deliberate after the public has already testified and that could result in the perception that someone, with a conflict, who participated in deliberations was guiding the board. He stated a conflicted board member could still testify on an issue but they have to do it during the public session. Number 1574 REPRESENTATIVE IVAN IVAN asked wouldn't it be a conflict of interest if Dan Coffey, who drafted the F.I.S.H. Initiative, is asked to deliberate on a proposal that has the same purpose or effects that were in the F.I.S.H Initiative. Number 1665 MR. DAUGHERTY stated that Mr. Coffey was allowed to participate on all Cook Inlet issues despite the F.I.S.H. Initiative, because it did not relate to a particular fishery. He stated that it was not calling for a certain amount of fish in a certain fishery and there was not an objection from a board member to the chair's ruling that there was not a significant conflict of interest. Number 1637 REPRESENTATIVE IVAN asked if the question was put to the six board members to decide if the chairman's ruling was going to be followed. Number 1665 MR. DAUGHERTY stated that the chairman makes the ruling and then asks the board if there are any objections. Number 1689 NEIL SLOTNICK, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, testified via teleconference from Anchorage, that he was prepared to testify, if anyone would like, on the subject of other boards' experience with the Ethics Act. CHAIRMAN AUSTERMAN stated that seeing no desires from the committee, the committee was going to concentrate on the Board of Fisheries. Number 1689 NICK SZABO, former member and chairman, Board of Fisheries, testified via teleconference from Kodiak, that he was chairman of the board for five years. He stated that he preferred the original bill compared to the drafted committee substitute. He stated the drafted committee substitute does not change the current situation much. He stated that any kind of abstention starts halting the effectiveness of the board process. He stated that personal interests can prove to be more of a conflict than the financial interests. He stated that expectations from the user groups that a person might be deemed to represent, can outweigh any financial interest. He stated that the seven board members probably should not be representing user groups because their purpose is to lend a variety of expertise. He stated that people should not be thought of as a certain type of fisherman or as from a certain area, but as a person of expertise and knowledge. Mr. Szabo stated that if the right people are picked then no one should be conflicted out. He suggested that individual members should present personal findings on the way they voted, so that it would not be assumed they voted due to an association with a particular proposal. He stated that he would rather stay with HB 27 than the drafted committee substitute, because it allowed members to participate fully in the deliberations and in the voting, but with justification for their reasons of voting the way they did. Number 1887 REPRESENTATIVE OGAN stated that the drafted committee substitute had not been adopted so technically the committee is hearing the original HB 27 and asked if Chairman Austerman wished to entertain a motion to adopt the drafted committee substitute. CHAIRMAN AUSTERMAN stated he did not. Number 1933 CHAIRMAN AUSTERMAN asked Mr. Szabo if he ever ran into the problem of board members conflicting out and not having a quorum, as that perceived problem was the reason HB 27 was introduced. Number 1950 MR. SZABO stated that when he was on the board, the conflict of interest law was not interpreted as strictly as it is at present. He stated that during his time as chairman, twenty years ago, no one ever got conflicted out. He stated that people had to state what their interests were but they were not allowed to abstain. He stated that he heard what Mr. Daugherty said about always maintaining a quorum, but he stated that the quorum in recent years has been maintained because it has gotten very subjective, in that if a member did have some interest they could vote. He stated, "That is what the public is worried about, is that you may have four or five board members out of seven who all have some interest in the particular issue that the board is going to address, whether it is personal or financial. Maybe two of the five get conflicted out because they have what is viewed as perhaps significant financial interests but yet the other three may have interests just as compelling although not as financially significant such as peer pressure from user groups." He stated barely maintaining a quorum does not mean the system is working as well as it should be. Number 2043 LARRY ENGEL, Chairman, Board of Fisheries, testified via teleconference from Matsu, to answer any questions. Number 2060 CHAIRMAN AUSTERMAN asked if he felt that legislation is still needed. Number 2068 MR. ENGEL stated that the Ethics Act as it pertains to the Board of Fisheries had put an enormous stress on the system and the chairman. He stated that a lot of time and testimony is spent figuring out whether a person has a conflict of interest or not. Mr. Engel stated that having five members able to vote results in minority control, of the board and of the passage of the proposals. He stated the focal points now of the board and of the public is whether a person should or should not participate. Number 2153 CHAIRMAN AUSTERMAN stated that the drafted committee substitute that he has not introduced yet, allows the entire board to a vote on the whether a conflict of interest is present. He asked Mr. Engel felt this would be a better process. Number 2177 MR. ENGEL stated that it would take some of the pressure off of the chairman but would really just be the some set up because anybody could still object. He stated that he objected to language of "must participate" and "required to participate." He stated that currently if a member asks to be excused from a meeting it has always been allowed. Number 2231 REPRESENTATIVE HODGINS asked if the philosophy of the Board of Fisheries voting goals are user orientated. Number 2259 MR. ENGEL replied that it is not user orientated, although it can occur. He stated that board members should be found based on their interest in the fisheries, have good judgement and knowledge of the fisheries and provide a diversity of interest. Number 2294 REPRESENTATIVE HODGINS asked if Mr. Engel felt there was a need for the conflict of interest if members are just concerned with the resource. Number 2300 MR. ENGEL replied that it is a lay board that functions because the members participate in the various fisheries but this creates the conflict of interest. He stated that some board members will ask to be excused and others will not. He stated that he does think changes need to be made but he does not know if HB 27 is the answer. Number 2373 CHAIRMAN AUSTERMAN asked if Mr. Engel would present his ideas for a solution at a later date if HB 27 is not to be the answer. Number 2394 REPRESENTATIVE HODGINS asked, "what specifically would be of a benefit to the lay person with a specific knowledge, to help the resources of the state of Alaska, without crossing over ethical problems." Number 2434 MR. ENGEL stated that he does not have an answer, but the board is not functioning the way the public thinks it should be. TAPE 97-2, SIDE B Number 021 MR. ENGEL stated that at one time there were three board members who had permits in the Bristol Bay Fishery as well as one crew member in that fishery, that voted on a Bristol Bay issue, which was then challenged in court. He stated that there is a problem in the way we interpret the conflict of interest laws. Number 051 CHAIRMAN AUSTERMAN asked who Mr. Engel was referring to when he stated we have a problem in interpreting the conflict of interest laws. Number 062 MR. ENGEL stated that "we" includes everyone involved, the board, the Attorney General's Office and the public. Number 099 BRUCE SCHACTLER stated that he has spent many hours watching the board decide who should be able to deliberate and then once decided watching the process with a partial board. He stated that Alaska needs the expertise of the lay board and that it is frustrating when expert members are prevented from deliberating. He stated the members were put on the board because of their expertise and it is their expertise that is conflicting them out. He stated that the people doing the deliberating are not getting the information they need with the way the board is currently operating. Number 215 REPRESENTATIVE OGAN stated that the Title 16 requirements state that "The governor shall appoint each member on the basis of interest in public affairs, good judgement, knowledge, and ability in the field of action of the board." He stated that when he served on the hunting guide board there were strict qualifications and a cross section of references, a certain number of guides, outfitters, transporters, and public members. He stated it was designed so people with expertise could be represented but provided a balance for decision making. He stated that a cross representation of fisherman may be something to consider with the Board of Fisheries. He stated that the governor could be biased towards one group or another when he appoints members. Number 304 CHAIRMAN AUSTERMAN said, "Whether we could come up the new method of board appointments or not, is a issue that while it would have some direct bearing on the conflict of interest, unless we actually address the conflict of interest that same conflict of interest would have the same effect on whatever board you'd have." He stated that he does not necessarily want to discuss the way the board should be composed at this meeting. Number 346 REPRESENTATIVE OGAN stated, "I am probably out of order in bringing it up because it is a different subject but I think it does relate to the conflict of interest issue because if you had the board designed so there was a wide interest represented, then require everybody to vote...." Number 370 CHAIRMAN AUSTERMAN stated that he would dedicate a future meeting to the subject and hear proposals from the public and the departments on a different methods for composing the Board of Fisheries. Number 400 REPRESENTATIVE IVAN asked Mr. Daugherty what fears he had on HB 27. Number 424 MR. DAUGHERTY replied his worst fear was to have members required to vote on an issue that they know nothing about because they missed public testimony on the proposal. He stated that the Board meets for about 60 days a year, considering 600 proposals in that time, and members often miss part of a meeting due to other responsibilities and occurrences. He stated that the current board's practice is if a member misses the public testimony or the deliberations on the an issue, they are not allowed to vote on that issue. Number 470 REPRESENTATIVE IVAN stated that the HB 27 would not conflict out the members, they would be allowed to deliberate and hear the public testimony and vote. Number 486 MR. DAUGHERTY replied that HB 27 would require the members to vote regardless if they had heard all the testimony or deliberations. He stated that the conflict of interest issue is a public policy question for the legislature to decide rather then a legal question. He stated that the Department of Law's concern is the public's perception and he thinks there should be a provision that states, if a board member misses some of the deliberations, they would not be allowed to vote on that issue. Number 545 CHAIRMAN AUSTERMAN asked if the Department of Law sees a problem with HB 27 creating a problem with other boards around the state. Number 563 MR. DAUGHERTY stated it may result in a huge onslaught of other boards and commissions requesting exemption from the Ethics Act. He stated that the Ethics Act depends on board members to declare their conflict to the board, and relies on being applied rigorously by the chairman. He stated that HB 27 may cause a decreased incentive for other boards to comply. Number 607 CHAIRMAN AUSTERMAN asked if it was the Department of Law's position that the existing structure of the Board of Fisheries be left the way it is. Number 613 MR. DAUGHERTY responded that at this point the Department of Law believes the existing system is working and through wise appointments, it can continue to function. CHAIRMAN AUSTERMAN asked, "Even after Mr. Engel's statement, having just served two years as a chairman, that there is still a problem?" Number 627 MR. DAUGHERTY replied, "Yes." He stated that he recognized it is a burden on the chairman, although it is something that comes with the position. He stated, "The option is to exempt them and you run into the same type of public perception problems that the North Pacific Fisheries Management Council faces, when it takes action. At this point with the seven member board it seems like it needs to be applied fairly rigorously or else if there is a total exemption the same problems are going to be there as with the North Pacific Fisheries Council." Number 663 REPRESENTATIVE HODGINS asked if the Department of Law feels the public interest is best served by a strong chairman instead if a strong consensus of the board members, in conflict of interest matters. Number 680 MR. DAUGHERTY stated that he believed the board is best served by having the chairman initially reviewing the proposal and making the determination. He stated that many of the members would not be prepared at the start of the meeting to do so because they usually have not reviewed all the material prior to the meetings as the chairman is required to do. He stated that most members would not be able to make the decision until after the public testimony is given and if the member is conflicted out after the public testimony then they do not have the option to present their public testimony to the board. He stated that the board is in a better situation when members are conflicted out at the beginning of a meeting. Number 742 REPRESENTATIVE HODGINS stated he was trying to figure out if the board is better off with a strong chairman or a consensus of the members. Number 777 DUNCAN FIELDS stated that he would encourage the committee to defer to the chairmans' testimony that there is a problem that needs to be solved. He stated that the conflict of interest has added a new layer of process and time to the board meetings. He stated that the first two days of a seven day meeting is spent resolving conflict issues. He stated that the Board of Fisheries has a different character as to its diverse group of members, in contrast to other boards with a homogeneous group of members that could apply the conflict of interest law evenly throughout the members. He stated, "It is true that there has never been an instance where conflicts have eliminated a quorum of the board, it is also true and very important that when the board begins to function with six or five or even four members, the public has the sense that they are not getting a full hearing before the board." He stated that the current conflict of interest law spawns litigation and costs the state money. CHAIRMAN AUSTERMAN stated that he did plan to move HB 27 at this meeting, and it will be heard again at a later date.