HB 289-EXEC ETHICS: LEGAL FEES/FAMILY TRAVEL  8:50:06 AM CHAIR LYNN announced the final order of business was HOUSE BILL NO. 289, "An Act authorizing state agencies to pay private legal fees and costs incurred by persons exonerated of alleged Alaska Executive Branch Ethics Act violations; allowing certain public officers and former public officers to accept state payments to offset private legal fees and costs related to defending against an Alaska Executive Branch Ethics Act complaint; and creating certain exceptions to Alaska Executive Branch Ethics Act limitations on the use of state resources to provide or pay for transportation of spouses and children of the governor and the lieutenant governor." 8:50:25 AM REPRESENTATIVE P. WILSON moved to adopt the proposed committee substitute (CS) for HB 289, Version 26-LS1304\C, Wayne, 2/22/10, as a work draft. REPRESENTATIVE SEATON objected for discussion purposes. CHAIR LYNN stated his intent to work from Version C. 8:51:25 AM REPRESENTATIVE SEATON removed his objection. There being no further objection, Version C was before the committee. 8:51:39 AM REPRESENTATIVE GRUENBERG, in explanation of the function of the proposed legislation, paraphrased the first sentence of the sponsor statement, which read as follows [original punctuation provided]: HB 289 sets forth in statute the substance of the Attorney General's proposed regulations establishing standards for (1) reimbursement of legal fees and costs for any executive branch employees accused of ethical violations, and (2) payment of travel expenses for the families of only the governor and lieutenant governor. REPRESENTATIVE GRUENBERG said the reason he became involved with HB 289 is that he believes these issues should be dealt with by the legislative branch, not the executive branch - particularly the attorney general, who is appointed by the governor and determines whether the governor's family or people in his own department can get reimbursed by the state for costs and fees resulting from being charged with an ethics violation. 8:54:23 AM CHAIR LYNN said, "So, this is basically to prevent the appearance of conflict of interest." REPRESENTATIVE GRUENBERG responded yes. 8:55:58 AM REPRESENTATIVE GRUENBERG, regarding legal fees, said he was concerned that there is language that could be interpreted as allowing reimbursement even if a person was not exonerated, if he/she simply paid the money back. He said he does not think it is fair for someone who is guilty to get back his/her full attorney's fees and costs. In response to a question from Chair Lynn, Representative Gruenberg confirmed his intent is for only those who have been exonerated to be reimbursed. He said the term exonerated is defined on page 4, lines 12-18, of Version C. REPRESENTATIVE GRUENBERG pointed out that there is a recommendation for corrective action and one for preventative action. He explained that corrective action is something that would occur when a person has been found guilty, whereas preventative action would be taken in a situation in which a person was not found guilty, yet the situation should be avoided in the future. 8:59:28 AM REPRESENTATIVE GRUENBERG directed attention to page 4, line 4, of Version C, which includes "former public officer". He said he wanted to ensure that a former public officer cannot come back much later and get his/her costs and fees. He then directed attention to page 4, lines 26-28, of Version C, which read as follows: APPLICABILITY. AS 39.52.470, enacted by sec. 4 of this Act, applies only to complaints under AS 39.52.310 - 39.52.390 that are initiated or filed on or after the effective date of this Act. 9:00:40 AM REPRESENTATIVE GRUENBERG said a third change that was incorporated into Version C is in language on page 4, beginning on line [19], which read as follows: (2) "fees and costs of private legal representation" means reasonable fees and related costs of legal representation that are necessarily incurred in defense against the allegations in the complaint and may include fees for services customarily performed by an attorney but delegated to and performed by a person working under the supervision of an attorney licensed to practice in the state. REPRESENTATIVE GRUENBERG explained that that would preclude someone from attempting to get money for "a fishing expedition or all kinds of things that aren't related to it." Furthermore, the person would have to be reasonable from an attorney's point of view. 9:02:28 AM REPRESENTATIVE GRUENBERG said the fourth change incorporated into Version C would make the process of making claims less cumbersome. He said theoretically, a person could be paid money and then found guilty, or something equivalent, and then the agency would have to come back to recoup the money, and the person could be judgment proof. He indicated that the change in Version C would leave the application for costs and fees to the end, so that it is done once with no recouping "or anything like that." He explained that this change is the reason that Version C is much shorter in length than the original bill version. 9:04:08 AM REPRESENTATIVE P. WILSON asked for clarification regarding recommendations for preventative action. 9:04:55 AM JUDY BOCKMON, Assistant Attorney General/State Ethics Attorney, Opinions, Appeals, & Ethics, Civil Division (Anchorage), Department of Law, echoed Representative Gruenberg's previous statement that corrective action recognizes that there has been some sort of violation, while exoneration would include those situations where there has been no violation, even if it was decided that preventative action was necessary. She said an example of preventative action may be to distance the employee from "the situation," which would be done through the ethics supervisor of the agency involved. 9:07:00 AM REPRESENTATIVE SEATON asked if those actions that may have the appearance of impropriety would be a violation or would "flow under preventative action." 9:09:52 AM MS. BOCKMON explained that when the department reviews Ethics Act matters, it looks at the actual situation. She said there is a regulation that states that the appearance of impropriety is not a violation, so the department would not base a violation on appearances alone. A decision is made as to whether there is an actual violation or not. 9:11:39 AM REPRESENTATIVE SEATON offered his understanding that there is a statutory requirement not to have appearance of impropriety. He stated, "I'm just wanting to get clarified that what we're saying here is that if you are guilty of generating the appearance of impropriety, the appearance of a conflict by the executive officer's action, that that's going to be treated as an exoneration or it will be treated as a recommendation for preventative action." 9:12:35 AM MS. BOCKMON reiterated that judgments are not made by appearances. She said, "We encourage employees to step up and report situations in which they might potentially violate the Ethics Act." For example, someone might be assigned to review grant proposals and see that the name on one of the submittals is that of a family member. At that point, the reviewer should stop, report the problem, and be removed from the situation. If the reviewer continues his/her participation in the review of the application submitted by the family member, that would be a violation and there would be no exoneration. She concluded, "It's hard to envision a situation where the result of the investigation turns on just the appearance of the situation." 9:14:07 AM REPRESENTATIVE PETERSEN offered a hypothetical example of an executive who submits paperwork for reimbursement of travel expenses for a family member who was not required to be on the trip, but withdraws the submission when it is pointed out to him/her that this was not something for which there should be reimbursement. He asked if that is an example of preventative action. MS. BOCKMON indicated that the answer would depend upon whether or not there had been an ethics complaint. If there had been an ethics complaint, then the situation would involve corrective action. Prior to there being a complaint, if the officer submitted the request for reimbursement and then realized it was inappropriate and took action to withdraw the request, that would be viewed as a person "stepping up" to meet his/her obligations, having recognized there was a problem. She said that behavior should be encouraged. 9:17:38 AM REPRESENTATIVE PETERSEN asked Ms. Bockmon to confirm that if the aforementioned executive from the hypothetical example voluntarily withdrew the request for reimbursement, then there would be no violation. MS. BOCKMON replied that she is uncertain that that would be the ultimate conclusion. She explained, "We could say it's a violation, but the person took appropriate action to correct the situation and that addresses it absent there being a complaint to follow through on." REPRESENTATIVE SEATON requested a review of the sectional analysis [included in the committee packet]. 9:19:50 AM REPRESENTATIVE GRUENBERG paraphrased the first part of the sectional analysis, which read as follows [original punctuation provided]: Sec. 1. Deletes definition of "for partisan political purposes." This definition section is moved to section 3 on page 3, lines 22-27. REPRESENTATIVE GRUENBERG continued as follows: It's permitted if ... the person who is transported with the governor or lieutenant governor reimburses the state for the actual cost or if the cost is not reasonably calculable for the fair market value of the person's transportation. Alternatively, if they are not reimbursing the state, the standard is whether the person's attendance is a benefit to the state. And that is a ... general concept impossible to determine with just a facile definition. So, what we give here - and this is pretty much given from the regulations this time - ... it's presumed. In other words, the presumption is that it's okay, and the burden of proof would shift to the prosecution, to the people who were bringing the complaint, to show that it wasn't a benefit to the state. REPRESENTATIVE GRUENBERG said there are four situations in which a person's attendance is considered a benefit to the state, and they are listed in language on page 3, lines 12-21, of Version C, [Section 3(g)(2)(A)-(D)], which read as follows: (A) the person's attendance at the event is required for official action of the state; (B) the event is state-sponsored and the person's attendance is customary; (C) the person is attending as an official representative of the state; or (D) the person is invited by the event's sponsor before the transportation occurs, the invitation and the person's attendance are customary, the event is related to issues important to the state, and the governor or lieutenant governor attend. 9:23:19 AM REPRESENTATIVE SEATON asked Representative Gruenberg for an example of when a child or spouse would be required for official action of the state. REPRESENTATIVE GRUENBERG deferred to Ms. Bockmon. CHAIR LYNN asked if there is an age range for "child". REPRESENTATIVE GRUENBERG answered that it could be any child, including an adult child. He deferred to Ms. Bockmon for further comment. 9:24:17 AM MS. BOCKMON, regarding Representative Seaton's question, said there are a lot of situations in ethics that are not foreseen. She said she cannot offer a concrete example; however, she stated, "It seemed to us when we were drafting the regulations that we should allow for this." REPRESENTATIVE SEATON said he is not expressing opposition, but he just does not understand when the state would require a spouse or child of the governor for an official action of the state. 9:25:45 AM REPRESENTATIVE GRUENBERG said the language was included because it was in regulation and "seemed like a reasonable proposal." He recollected that when Lady Bird Johnson was in the White House, she was in charge of certain highway beautification projects. CHAIR LYNN said he thinks many First Ladies have taken on causes without being in an official capacity. 9:26:41 AM REPRESENTATIVE PETERSEN said in some instances the governor and lieutenant governor are invited to numerous ceremonial events, and if they are invited to more than one event happening simultaneously, they may need to assign a family member to go in their stead. 9:27:21 AM REPRESENTATIVE P. WILSON said it should be acceptable for the governor's spouse to join him/her on a trip to a community in Alaska, because that really pleases the public. REPRESENTATIVE SEATON reiterated that he is not opposing the language, but rather is trying to understand through example what subparagraph (A) means. He asked if the language in Section 3(g)(2)(A)-(C) [text provided previously] is addressing travel independent of the lieutenant governor or governor. REPRESENTATIVE GRUENBERG answered yes. He said subparagraph (D) requires the attendance of the governor or lieutenant governor, while subparagraphs (A)-(C) could include independent travel. 9:32:36 AM REPRESENTATIVE GRUENBERG, in response to Chair Lynn, said the bill language does not include parents, siblings, or in-laws of the executive. 9:33:24 AM REPRESENTATIVE SEATON asked Ms. Bockmon to address his previously stated question regarding the meaning of "as an official representative of the state," and he asked what it would take to designate someone as such. 9:34:02 AM MS. BOCKMON prefaced her answer by noting that trying to draft standards to address this issue was difficult. She said the desire was to draft language "that was narrow and related to circumstances where there was an identifiable benefit to the state to have the person there." She said the use of the word "official" [in Section 3(g)(2)(C)] refers to a situation in which the governor or lieutenant governor cannot attend a function and designates his/her spouse, for example, to attend. Furthermore, the term also applies to the context in which first ladies and first gentlemen take on causes, such as education, which are important to the state. 9:35:41 AM REPRESENTATIVE GRUENBERG noted that there were two U.S. Presidents - one a bachelor and the other a widower - who depended on young relatives to represent them. CHAIR LYNN asked if the proposed legislation would allow for a similar situation in which a governor of Alaska did not have a spouse and needed a relative to serve as a host. 9:37:29 AM REPRESENTATIVE GRUENBERG answered no. He asked Ms. Bockmon if she would have a problem with an amendment to include such a possibility. 9:37:50 AM MS. BOCKMON responded that that would be a policy choice for the legislature. She said she would have no objection, assuming there were no legal issues presented in the language of an amendment. She said, "There are situations in which we as a state and the citizens would expect there to be a host/hostess situation perhaps, and it wouldn't be necessarily inappropriate for the state to decide as a matter of policy that it would cover such a person." CHAIR LYNN suggested that that amendment could be considered in the next committee of referral. 9:39:17 AM REPRESENTATIVE SEATON asked if there would be some kind of public declaration that someone is acting in the official capacity [of the governor or lieutenant governor]. MS. BOCKMON said she does not believe that is what was contemplated under the regulation. She stated, "These situations are all so specific to the circumstances and ... every time you think that you know what the range is, there's something new." She said if someone is serving as an honorary chair of a committee, she expects there would have been some sort of declaration made, whereas in a situation where someone is going to fill in for a governor unable to attend a function, she assumes that would be the result of a decision made in the governor's office. 9:41:26 AM REPRESENTATIVE SEATON said he thinks the presumptions being made should be clarified. 9:42:41 AM REPRESENTATIVE GRUENBERG stated his intent as sponsor that "if somebody's an official representative, there must be something in the official records to do that." He asked Ms. Bockmon if his stated intent would be sufficient or if there needs to be an amendment. MS. BOCKMON answered that there is always a record kept of someone traveling; however, she recommended that the legislature would need to clarify if it wanted a record of any declaration that someone would be acting as an official representative. REPRESENTATIVE GRUENBERG emphasized that that is his intent. He opined that the best practice would be to put it in writing. 9:45:35 AM REPRESENTATIVE P. WILSON warned that the terms "spouse" and "child" have already been specified in subsection (g), so "we're going to have to adjust it there also." REPRESENTATIVE GRUENBERG responded that his intent is for an amendment to be made to address that issue in the next committee of referral. He asked Representative Seaton if he would be more comfortable with the addition of a definition of "official designation". REPRESENTATIVE SEATON answered yes. 9:46:34 AM REPRESENTATIVE P. WILSON reemphasized the need for clarity. REPRESENTATIVE GRUENBERG offered to work on amendments to bring back to the committee. CHAIR LYNN said he thinks "that might be better." He explained that he would like to amend the bill to be "as complete as possible" before moving it out of committee. He opined that HB 289 is an important bill. REPRESENTATIVE GRUENBERG said he would get input from the bill drafter and Ms. Bockmon when working on the amendments. CHAIR LYNN suggested that a memorandum could be required for certain "special cases." REPRESENTATIVE GRUENBERG said he thinks [appointments of official representatives of the state] should at least be in writing. 9:48:10 AM REPRESENTATIVE SEATON directed attention to subparagraph (B) in Section 3, which read: (B) the event is state-sponsored and the person's attendance is customary; REPRESENTATIVE SEATON asked if that means a certain event or would include a "similar" event. CHAIR LYNN offered his understanding that customary means something that has been done one or more times before. 9:49:36 AM REPRESENTATIVE GRUENBERG indicated he thinks the language would include similar events. He offered an example. 9:50:16 AM REPRESENTATIVE SEATON concurred, and he recommended adding "at similar events" to subparagraph (B). 9:50:33 AM REPRESENTATIVE GRUENBERG invited more input from the committee, and he said he could have the amendments ready by the next committee meeting. 9:50:55 AM CHAIR LYNN, after ascertaining there was no one else who wished to testify, closed public testimony. 9:51:06 AM CHAIR LYNN announced that HB 289 was held over.