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 MANLY explained that currently cooperatives may vote only in person or via the postal service, a method which is outdated and could be having a negative impact on member participation in elections and other important matters.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