Update: House OKs RCA compromise

But Taylor, other senators raising ethics issues

Posted: Tuesday, June 25, 2002

Sen. Robin Taylor honed in today on what he says is inappropriate conduct by

the Regulatory Commission of Alaska, even as the House voted 34-4 to extend

the agency for two more years.

On the second day of a special session called by lame duck Democratic Gov.

Tony Knowles, the Republican majority overturned the governor's veto of a

campaign finance bill.

And even though leaders of veterans organizations held a press conference

with Knowles to support his request for $2.6 million in increased funding

for the Pioneers' and Veterans' Homes, key House Republicans said it

probably wouldn't happen.

Taylor, chairman of the Senate Judiciary Committee, last month refused to

act on a bill extending the Regulatory Commission of Alaska, already passed

by the House with just one dissenting vote.

Knowles called the special session to avert a one-year "wind-down" of the

agency that would start Monday and lead to its expiration, if the

Legislature didn't act next year.

"The only difference between solving the RCA's problems today and solving

them during the next legislative session is that Tony Knowles won't be here

to protect a special interest group," Taylor told reporters.

Knowles has received campaign contributions from GCI executives, while

Taylor has been supported by ACS, its rival in the so-called "phone wars"

that have been the source of numerous RCA rulings.

Taylor says a pending telecommunications study should be completed before

the RCA is reauthorized.

But Knowles said an independent regulatory commission needs to protect

consumers without the distraction of preparing to go out of business.

"Don't forget it's the consumers that are going to pay the price for the

political manipulation that takes place here," Knowles said.

The House bill passed today includes detailed timelines for the commission

to make decisions, creation of a committee to study possible reforms and a

requirement for monthly meetings involving the RCA, regulated utilities and

the public to talk about the commission's procedures.

"I would accept this compromise," Knowles said in a news conference this

morning.

Meanwhile, Taylor's committee began today's hearing with testimony critical

of RCA, which the chairman called "one petty little agency."

The RCA has an "apparent reluctance to decide issues," said Bruce Davison,

board chair for Chugach Electric Association. That results in excessive

paperwork and cost for utilities, he said.

Generally, though, the battle is between ACS and GCI, now competing for

local telephone customers in Juneau.

"This commission is a good commission," Dana Tindall, senior vice president

for GCI, told the House Finance Committee Monday evening. "It is vastly

superior to the former Alaska Public Utilities Commission."

But ACS President Wes Carson said that more than 80 percent of RCA decisions

involving the two companies have gone GCI's way, indicating bias. ACS is

being forced to lease infrastructure to GCI below its actual cost, and thus

is subsidizing its competitor, he said.

"This non-compensatory rate gives GCI a cost of goods advantage over ACS,"

Carson said.

Tindall said today that the federal Telecommunications Act of 1996, as

interpreted by courts, means that regulatory bodies must err on the side of

competition.

"I think ACS has a problem," she said. "That problem is that they don't have

the law on their side."

Carson contends the RCA isn't applying the law, citing a federal circuit

court decision in the Lower 48 that said the incumbent telephone provider

shouldn't bear the burden of proving that it would be irreparably harmed by

competition.

The U.S. Supreme Court didn't review the ruling, making it "the law of the

land," he said. "Yet the RCA refused to comply with the law ... (in) a clear

case of the RCA ignoring a federal decision that did not comport with its

own policy to force competition in rural areas."

But Tindall said that court "stayed" its own decision and that there are now

no federal regulations on burden of proof only the decision of the Alaska

Supreme Court that the burden should fall on ACS. That court decision set

the stage for termination of the previous "rural exemption" from competition

that ACS enjoyed in Juneau, Fairbanks and North Pole.

Carson had called on RCA Chairwoman Nan Thompson not to partake in any

future decisions involving ACS, and he expressed concern that the commission

has retaliated against the company for its criticism of past decisions.

But Thompson said she relies solely on the law and the case record. "I don't

have an agenda. And I don't have biases for or against any particular

company. I'm not the only commissioner, and I don't make decisions on my

own. All of our decisions are the product of at least three of us."

"You don't own a large bloc of GCI stock?" Rep. Con Bunde, an Anchorage

Republican, asked her in jest.

"No, I don't," Thompson responded with a chuckle. "I don't own any utility

stock."

But Senate President Rick Halford, in an interview, said he was "genuinely

disturbed" that Thompson once was a guest at a private GCI lodge, where she

was to give a crash course in telecommunications to an aide to U.S. Sen. Ted

Stevens.

Although Thompson decided afterward to pick up the costs of her trip, having

arrived too late to participate in the briefing, she did so at just a

fraction of the market value, contends Halford, a Chugiak Republican.

"That was terrible judgment, and it affects the credibility of all those

decisions" of the RCA, Halford said.

Thompson said she paid the cost of the plane ticket and also what she was

told was the rate at the lodge. Pending RCA cases weren't discussed, she

said.

Taylor and other Republicans on the Senate Judiciary Committee today

peppered GCI's Tindall with questions about the lodge and who has visited

it, whether Thompson's $1,200 reimbursement check was ever cashed and why

the company considered Thompson's trip official business, when it turned out

that she didn't. Tindall also denied that any pending business before the

commission was discussed with Thompson at the lodge.

And GCI regulatory attorney Jimmy Jackson was asked several questions about

a draft of proposed compromise legislation that he recently circulated among

officials of various utility companies. According to testimony, the draft

eventually made its way to the office of House Finance Co-Chairman Eldon

Mulder, an Anchorage Republican who sponsored the RCA extension bill. Some

elements of the draft were in the bill passed by the House.

Taylor also complained to reporters that RCA commissioners "participated in

negotiating" the bill that passed in the House during the regular session.

That's "totally inappropriate" and "bizarre" for a quasi-judicial body, he

said. "Can you imagine judges coming in here and negotiating in a back room

with leadership in the House about which rules they should have to live by?"

Despite the aggressive tone, Sen. John Cowdery, an Anchorage Republican who

sits on Judiciary, said the committee "probably" will move out a bill that

extends the commission. While usually defiant, at one point Taylor noted

that he's only one of five votes on the committee.

The only final action today was a 41-16 on a party-line vote of the whole

Legislature to override Knowles' veto of a bill that would regulate

soft-money "issue advertisements" that explicitly target specific

candidates.

Although there have been no laws to require disclosure of contributors or

set limits for such ads, Knowles said the ambiguity was preferable to

locking in a very narrow definition of when issue ads go too far. Instead,

the ads should be judged "as a whole" on whether they support the election

or defeat of a specific candidate, he said.

Knowles and Democrats have been outraged by television ads from a Virginia

group called Americans for Job Security, which say the Knowles-Ulmer

administration is responsible for economic stagnation in Alaska. Lt. Gov.

Fran Ulmer is the leading Democratic candidate for governor this year.

"These ads are not subject to regulation under current law," emphasized Sen.

Sen. Robin Taylor honed in today on what he says is inappropriate conduct by

the Regulatory Commission of Alaska, even as the House voted 34-4 to extend

the agency for two more years.

On the second day of a special session called by lame duck Democratic Gov.

Tony Knowles, the Republican majority overturned the governor's veto of a

campaign finance bill.

And even though leaders of veterans organizations held a press conference

with Knowles to support his request for $2.6 million in increased funding

for the Pioneers' and Veterans' Homes, key House Republicans said it

probably wouldn't happen.

Taylor, chairman of the Senate Judiciary Committee, last month refused to

act on a bill extending the Regulatory Commission of Alaska, already passed

by the House with just one dissenting vote.

Knowles called the special session to avert a one-year "wind-down" of the

agency that would start Monday and lead to its expiration, if the

Legislature didn't act next year.

"The only difference between solving the RCA's problems today and solving

them during the next legislative session is that Tony Knowles won't be here

to protect a special interest group," Taylor told reporters.

Knowles has received campaign contributions from GCI executives, while

Taylor has been supported by ACS, its rival in the so-called "phone wars"

that have been the source of numerous RCA rulings.

Taylor says a pending telecommunications study should be completed before

the RCA is reauthorized.

But Knowles said an independent regulatory commission needs to protect

consumers without the distraction of preparing to go out of business.

"Don't forget it's the consumers that are going to pay the price for the

political manipulation that takes place here," Knowles said.

The House bill passed today includes detailed timelines for the commission

to make decisions, creation of a committee to study possible reforms and a

requirement for monthly meetings involving the RCA, regulated utilities and

the public to talk about the commission's procedures.

"I would accept this compromise," Knowles said in a news conference this

morning.

Meanwhile, Taylor's committee began today's hearing with testimony critical

of RCA, which the chairman called "one petty little agency."

The RCA has an "apparent reluctance to decide issues," said Bruce Davison,

board chair for Chugach Electric Association. That results in excessive

paperwork and cost for utilities, he said.

Generally, though, the battle is between ACS and GCI, now competing for

local telephone customers in Juneau.

"This commission is a good commission," Dana Tindall, senior vice president

for GCI, told the House Finance Committee Monday evening. "It is vastly

superior to the former Alaska Public Utilities Commission."

But ACS President Wes Carson said that more than 80 percent of RCA decisions

involving the two companies have gone GCI's way, indicating bias. ACS is

being forced to lease infrastructure to GCI below its actual cost, and thus

is subsidizing its competitor, he said.

"This non-compensatory rate gives GCI a cost of goods advantage over ACS,"

Carson said.

Tindall said today that the federal Telecommunications Act of 1996, as

interpreted by courts, means that regulatory bodies must err on the side of

competition.

"I think ACS has a problem," she said. "That problem is that they don't have

the law on their side."

Carson contends the RCA isn't applying the law, citing a federal circuit

court decision in the Lower 48 that said the incumbent telephone provider

shouldn't bear the burden of proving that it would be irreparably harmed by

competition.

The U.S. Supreme Court didn't review the ruling, making it "the law of the

land," he said. "Yet the RCA refused to comply with the law ... (in) a clear

case of the RCA ignoring a federal decision that did not comport with its

own policy to force competition in rural areas."

But Tindall said that court "stayed" its own decision and that there are now

no federal regulations on burden of proof only the decision of the Alaska

Supreme Court that the burden should fall on ACS. That court decision set

the stage for termination of the previous "rural exemption" from competition

that ACS enjoyed in Juneau, Fairbanks and North Pole.

Carson had called on RCA Chairwoman Nan Thompson not to partake in any

future decisions involving ACS, and he expressed concern that the commission

has retaliated against the company for its criticism of past decisions.

But Thompson said she relies solely on the law and the case record. "I don't

have an agenda. And I don't have biases for or against any particular

company. I'm not the only commissioner, and I don't make decisions on my

own. All of our decisions are the product of at least three of us."

"You don't own a large bloc of GCI stock?" Rep. Con Bunde, an Anchorage

Republican, asked her in jest.

"No, I don't," Thompson responded with a chuckle. "I don't own any utility

stock."

But Senate President Rick Halford, in an interview, said he was "genuinely

disturbed" that Thompson once was a guest at a private GCI lodge, where she

was to give a crash course in telecommunications to an aide to U.S. Sen. Ted

Stevens.

Although Thompson decided afterward to pick up the costs of her trip, having

arrived too late to participate in the briefing, she did so at just a

fraction of the market value, contends Halford, a Chugiak Republican.

"That was terrible judgment, and it affects the credibility of all those

decisions" of the RCA, Halford said.

Thompson said she paid the cost of the plane ticket and also what she was

told was the rate at the lodge. Pending RCA cases weren't discussed, she

said.

Taylor and other Republicans on the Senate Judiciary Committee today

peppered GCI's Tindall with questions about the lodge and who has visited

it, whether Thompson's $1,200 reimbursement check was ever cashed and why

the company considered Thompson's trip official business, when it turned out

that she didn't. Tindall also denied that any pending business before the

commission was discussed with Thompson at the lodge.

And GCI regulatory attorney Jimmy Jackson was asked several questions about

a draft of proposed compromise legislation that he recently circulated among

officials of various utility companies. According to testimony, the draft

eventually made its way to the office of House Finance Co-Chairman Eldon

Mulder, an Anchorage Republican who sponsored the RCA extension bill. Some

elements of the draft were in the bill passed by the House.

Taylor also complained to reporters that RCA commissioners "participated in

negotiating" the bill that passed in the House during the regular session.

That's "totally inappropriate" and "bizarre" for a quasi-judicial body, he

said. "Can you imagine judges coming in here and negotiating in a back room

with leadership in the House about which rules they should have to live by?"

Despite the aggressive tone, Sen. John Cowdery, an Anchorage Republican who

sits on Judiciary, said the committee "probably" will move out a bill that

extends the commission. While usually defiant, at one point Taylor noted

that he's only one of five votes on the committee.

The only final action today was a 41-16 on a party-line vote of the whole

Legislature to override Knowles' veto of a bill that would regulate

soft-money "issue advertisements" that explicitly target specific

candidates.

Although there have been no laws to require disclosure of contributors or

set limits for such ads, Knowles said the ambiguity was preferable to

locking in a very narrow definition of when issue ads go too far. Instead,

the ads should be judged "as a whole" on whether they support the election

or defeat of a specific candidate, he said.

Knowles and Democrats have been outraged by television ads from a Virginia

group called Americans for Job Security, which say the Knowles-Ulmer

administration is responsible for economic stagnation in Alaska. Lt. Gov.

Fran Ulmer is the leading Democratic candidate for governor this year.

"These ads are not subject to regulation under current law," emphasized Sen.

Gene Therriault, a North Pole Republican who worked on the bill.

Therriault said the bill is a reaction to court cases and is constructed

cautiously to avoid constitutional issues that courts might be looking at.

"We're talking about freedom of speech here. ... It's frustrating to me we

can't actually ban this, but you run up against the United States

Constitution."

But Rep. John Davies, a Fairbanks Democrat, said that groups can speak all

they want but should have to say whose money enabled them to do so.

Otherwise, the campaign money "becomes laundered, in effect," Davies said.

Knowles issued an angry statement following the override.

"This action comes as little surprise as the Republican-backed, mis-named

'Americans for Job Security' initiated its third round of negative attack

ads in the Alaska media," he said. "The Republican super-majority in the

Legislature predictably flexed its muscle to open wide the floodgates of

soft money."

Citizens will turn to the initiative and referendum process in response to

"this underhanded, mudslinging, machine politics," Knowles predicted.

Meanwhile, on funding for the Pioneers' and Veterans' Homes, the House

Republican caucus apparently doesn't plan to grant the governor's request

for $2.6 million. The money would be used to fill up to 100 vacant beds by

hiring additional staff.

No hearings have been held, and House Finance Co-Chairman Eldon Mulder, an

Anchorage Republican, and State Affairs Chairman John Coghill, a North Pole

Republican, said it's unlikely the money will be appropriated.

Coghill said there are too many unanswered questions concerning the

availability of qualified staff to provide high-quality care in the

assisted-living homes, about federal rules and funding regarding veterans,

and about possible changes in the overall mission of the homes.

Knowles and leaders of several veterans organizations held a press

conference today to restate their call for the Legislature to provide the

money. There are 180 people on an active waiting list to get into the homes,

said Jim Duncan, commissioner of administration.

"They will address the issue, as far as I'm concerned," Knowles said. He

declined to say whether that was a threat to call another special session if

legislators don't act. "This issue has been on the table for the Legislature

for two years."

Senate Minority Leader Johnny Ellis, an Anchorage Democrat, said he has

resisted making a "discharge motion" to force the vets bill on to the Senate

floor, but he encouraged Republicans, who were to have a closed-door caucus

tonight, to support the bill.

"I'm holding back because we're going to try to do this in a bipartisan,

cooperative manner," Ellis said.

Finally, a Senate subcommittee is looking this evening at park closures

implemented by the administration, which officials blamed on the

Legislature's cuts in operating funds.

Halford said there could be an agreement simply that the funds could be

included in a supplemental appropriations bill next year.

"The problem will be getting people to forget all the things they've thrown

at each other," he said.

King said he's not sure if such an agreement can be struck. "I guess we need

to hear more specifics from Halford's proposal. That's not the way they

usually do business."

Anchorage Democratic Rep. Eric Croft said that Republicans want to have it

both ways on budget cuts.

"I thought they wanted to cut government," he said. "I guess now we expect

cuts with no impact."

Rep. Scott Ogan, a Palmer Republican, was expected to show up at the hearing

with park closure signs he removed from a Matanuska-Susitna Borough

campground recently.

Senate Finance Co-Chairman Dave Donley, an Anchorage Republican, said he had

hoped to take a look at road maintenance cuts, as well, to see whether any

"accommodations" were possible. The proposed end of winter maintenance of

the Steese Highway from Mile 44 to Central has triggered a furious lobbying

campaign by residents of that northern community to keep the road open.

Donley said late this afternoon that there's no agreement yet and he didn't

think he would have a meeting on that issue tonight.

Bill McAllister can be reached at billm@juneauempire.com.



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