SENATE RESOURCES COMMITTEE  April 14, 2000 3:25 p.m. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Robin Taylor, Vice Chairman Senator Jerry Mackie Senator Lyda Green Senator Sean Parnell Senator Georgianna Lincoln MEMBERS ABSENT Senator Pete Kelly COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 304(FIN) am "An Act relating to issuance and sale of revenue bonds to fund drinking water projects, to the Alaska clean water fund, to creation of an Alaska clean water administrative fund and an Alaska drinking water administrative fund, to fees to be charged in connection with loans made from the Alaska clean water fund and the Alaska drinking water fund, and to clarification of the character and permissible uses of the Alaska drinking water fund; amending Rule 3, Alaska Rules of Civil Procedure; and providing for an effective date." SCHEDULED BUT NOT HEARD HOUSE BILL NO. 194 "An Act correcting, in the Alaska Disaster Act, a reference to the former oil and hazardous substance release response fund to describe that fund by its correct name." -MOVED HB 194 OUT OF COMMITTEE CS FOR HOUSE BILL NO. 116(FIN) "An Act relating to the Board of Agriculture and Conservation, to the director of agriculture, to the agricultural revolving loan fund and to loans from the fund, to the disposal of interests in state agricultural land; and providing for an effective date." -HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 304 - See Resources minutes dated 4/10/00. HB 194 - No previous Senate action. HB 116 - See Resources Committee minutes dated 4/12/00. WITNESS REGISTER Ryan Colgan Staff to Representative Whitaker Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for sponsor of HB 194 Ms. Barbara Cotting Legislative Aide to Representative James Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for the sponsor of HB 116 Representative Jeanette James Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 116 Mr. Rob Wells, Director Division of Agriculture Department of Natural Resources 1800 Glenn Highway, Suite 12 Palmer, AK 99645 POSITION STATEMENT: Expressed concerns about HB 116 Ms. Elizabeth Hickerson Assistant Attorney General Department of Law 1031 W 4th Ave., Suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT:  Discussed conflict of interest problems with Version Q of HB 116 ACTION NARRATIVE TAPE 00-25, SIDE A Number 001 CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:25 p.m. Present were Senators Taylor, Parnell, Mackie, Lincoln and Chairman Halford. The first order of business to come before the committee was HB 194. HB 194-DISASTER ASSISTANCE  MR. RYAN COLGAN, staff to Representative Whitaker, sponsor of HB 194, gave the following overview of the measure. HB 194 is technical and does not change any components or affect the Oil and Hazardous Substance Release Prevention and Response Fund in any manner. When this title was changed in 1994, the drafters simply overlooked one reference made to this fund in statute therefore the original title remains in Title 26 and needs to be updated. He informed committee members that Mary Siroky, Information Officer for the Department of Environmental Conservation (DEC), was present to answer questions. SENATOR TAYLOR asked why this change was not included in the revisor's bill. MR. COLGAN said the reason is explained in detail in a memo from Mr. Crawford of the Division of Legal Services. He read the following from that memo. Ordinarily, this is the sort of problem that could easily be remedied in a revisor's bill and I initially thought to include such a correction in this year's bill. However in this case, when the fund was renamed, two different accounts within the fund were created, the first the Oil and Hazardous Substance Release Prevention Account and second, the Oil and Hazardous Substance Release Response Account. Although the titles of the accounts might provide some clue, there is no definitive way to tell whether the 1994 Legislature wanted recourse under AS 26.23.050(b), limited only to one particular account or alternatively whether recourse could be had with respect to both accounts, at least under some circumstance. SENATOR TAYLOR asked if this amendment will give recourse to both accounts. MR. COLGAN explained this amendment makes the name of the fund consistent in statute. CHAIRMAN HALFORD noted that Senator Taylor was asking which fund it applies to or whether it applies to both. MR. COLGAN said he understands it to apply specifically to the Oil and Hazardous Substance Release Response Fund. He added, "I think 'prevention and' is the phrase included in this bill. CHAIRMAN HALFORD asked if it is intended to apply to both funds. SENATOR TAYLOR noted that DEC staff gave an affirmative nod. There being no further questions or testimony, SENATOR TAYLOR moved HB 194 from committee with individual recommendations and its accompanying zero fiscal note. There being no objection, CHAIRMAN HALFORD announced it was so ordered. HB 116-BOARD OF AGRICULTURE AND CONSERVATION  CHAIRMAN HALFORD announced the committee would take up HB 116 and that a series of amendments had been prepared. The committee took a brief at-ease from 3:30 to 3:32 p.m. CHAIRMAN HALFORD informed committee members that the sponsor had prepared three amendments to HB 116. SENATOR MACKIE moved to adopt Amendment 1 for the purpose of discussion. There being no objection, Amendment 1 was adopted. BARBARA COTTING, staff to Representative Jeanette James, sponsor of HB 116, informed committee members that the three amendments are the result of a subcommittee meeting held yesterday. Amendment 1 deals with the ethics portion of the bill. It gives the Board authority to establish standards for loans but removes the Board's authority to make final decisions on granting those loans. The amendment will remove any conflict of interest and allow board members to have loans. CHAIRMAN HALFORD asked who will make the final determination of which applicants get a loan. MS. COTTING replied the loan officer will in conjunction with the director. CHAIRMAN HALFORD asked if the agricultural community is comfortable with that much power resting in the director. MS. COTTING replied yes, for that particular part of the function. SENATOR MACKIE asked if the subcommittee discussed the issue of finding people to serve on the board since most qualified people will have members of their families involved in agriculture. SENATOR GREEN stated this board was modeled after the Commercial Fishing and Agriculture Bank (CFAB). SENATOR TAYLOR asked if the board will establish the standards and criteria upon which a loan may be granted, rather than decide who will get a loan. SENATOR GREEN said that is correct. SENATOR LINCOLN asked if her concern about immediate family members was removed. She also asked to hear from the staff at the Department of Natural Resources (DNR) and asked whether they were advised of the changes. SENATOR GREEN said DNR staff were advised and given copies. CHAIRMAN HALFORD asked Mr. Wells to address the first of the three amendments. MR. ROB WELLS, Director of the Division of Agriculture, stated his understanding of the intent of this legislation was to invest more power in the board. He said he thinks the language on page 3 of the bill that says, "may employ staff as directed by the board as responsible for the daily operations of the Agriculture Revolving Loan Fund" could create a potential conflict. SENATOR LINCOLN asked Mr. Wells whether DNR supports Amendment 1 and, if not, what DNR's concerns are. MR. WELLS said he has not had a chance to confer with the Commissioner on the amendments. [His next statement was inaudible.] SENATOR MACKIE asked Mr. Wells what his concern is. He stated many questions regarding conflicts of interest were raised at the last hearing and that Amendment 1 takes the approval of loans out of the board's hands. MR. WELLS said the board will direct the director regarding the daily operations of the fund. The board is still responsible for the disposal of the assets of the Agricultural Revolving Loan Fund and will write regulations that address the loans and the disposal of assets. Therefore, just because the board is removed from the actual vote does not mean it is not directing the director. Number 864 CHAIRMAN HALFORD asked Ms. Hickerson to comment. MS. ELIZABETH HICKERSON, Assistant Attorney General, said the Department of Law still has concerns. The Legislature has the ability to totally exempt boards and commissions from the Executive Ethics Act. This amendment provides that the director will now make the loans. Therefore, a board member could get a loan yet the board member directs the director which creates the potential for abuse regarding the loan. She stated Section 16 is problematic because under that section, the board disposes of property. The board is not restricted from purchasing property. A board member could play a major role in determining which parcel will be disposed of and when and how it will be disposed. The board member could actively participate in drafting an RFP and then submit a proposal and be awarded the property and have the board approve it. She thought that to be one of the true forms of conflict of interest. SENATOR GREEN asked Ms. Hickerson which version of the bill she was working from. MS. HICKERSON said the version she received from Representative James' office this morning. SENATOR GREEN asked Ms. Hickerson if she was working from Version Q. MS. HICKERSON said she was. CHAIRMAN HALFORD announced that the committee would recess to the call of the Chair to allow Senators to attend the floor session and to allow time for more work to be done on the bill. He then recessed the meeting at 3:43 p.m.