Legislators seek subpoena of agency heads on issue of TempleLive and PUA

An Arkansas joint legislative committee on Thursday (May 21) took the unusual step to subpoena Alcoholic Beverage Control Director Doralee Chandler and Arkansas Secretary of Commerce Mike Preston after the two agency heads refused to attend the committee’s meeting.

The Joint House and Senate Committees on State Agencies and Governmental Affairs were set to discuss during Thursday’s meeting details about the liquor license suspension at TempleLive in Fort Smith prior to the venue moving a concert date to meet a state directive. John Scott, a partner with the Connor and Winters law firm who represents TempleLive, and TempleLive employee Mike Brown did attend the committee meeting. Preston was to talk about issues with the state’s Pandemic Unemployment Assistance (PUA) system that was shut down after a security breach was detected.

The TempleLive saga began when the Fort Smith-based venue scheduled a May 15 Travis McCready concert, which was three days prior to the May 18 reopening date for large venues set by Gov. Asa Hutchinson. The concert was set prior to the governor’s May 18 directive.

Arkansas Secretary of Health Dr. Nate Smith sent a 4-page cease and desist order suggesting TempleLive owner Lance Beaty and others could face “administrative penalties, a civil or criminal fine or imprisonment if convicted, or all of the above.” A few hours prior to a 1 p.m., May 14 press conference announced by Beaty, officials with the Alcoholic Beverage Control arrived at TempleLive to seek “summary suspension” of Beaty’s liquor license. The printed order from ABC noted “that emergency action is required. The business is not operating in the public interest and poses a danger to the public’s health, safety, and welfare.”

Several committee members alleged the ABC actions were meant as “intimidation” and “retaliation” against TempleLive.

In a letter delivered to the committee at 11 a.m. Thursday, just a few hours prior to the 1:30 committee meeting, Arkansas Department of Finance & Administration Secretary Larry Walther said Chandler will not “participate in a hearing on an administrative violation outside the proper forum.” The ABC is a department of the DF&A. Sen. Alan Clark, R-Lonsdale, and several other legislators noted that the committee meeting was not a hearing, and legislators have the legal authority to ask agency heads about decisions they make.

Rep. Jimmy Gazaway, R-Paragould, said his issue with the ABC action was the perception of a heavy-handed government.

“The concern that I have is that you shouldn’t have to live in fear of the government because you tried to work with them and had a disagreement with them, or that they thought you weren’t going to do something that they wanted you to do,” he said.

PUA WEBSITE
It was learned May 15 the state’s website managing the PUA system had been breached. According to the Arkansas Times, the person who found a flaw in the state’s PUA website tried to contact two agencies about the problem before notifying an Arkansas Times reporter. The flaw allowed the person to see the Social Security number, bank account info and other details of a person’s application. It is estimated the breach impacts around 30,000 applications. The Democratic Party of Arkansas has called for an investigation into the breach.

On Thursday the system began processing claims, and 3,975 payments were sent out. Preston has previously estimated a minimum of 125,000 Arkansans will qualify for the expanded unemployment benefit.

As of May 19, 43 states had a working PUA system, which provides unemployment benefits to the self-employed, freelancers and others not typically qualifying for such benefits. The money comes from the Coronavirus Aid, Relief, and Economic Security (CARES) Act approved by Congress to provide aid to individuals, businesses and state and local governments in response to the pandemic.

Preston said he would not attend the meeting because the breach is under investigation by federal authorities. Sen. Trent Garner, R-El Dorado, said he suggested a compromise in which Preston could avoid answering questions related to the investigation but still respond to other questions about the agency’s COVID-19 response. Garner said Preston still refused to attend.

SUBPOENA, BUDGET THREAT
Sen. Bob Ballinger, R-Berryville, moved that Chandler and Preston be subpoenaed to testify before the committee on the issues. It was noted by committee staff that any subpoena would have to be signed by the House and Senate State Agency committee chairs, the Speaker of the House, and the Senate Pro Tem.

Ballinger added that if Chandler and Preston appear before a May 27 Arkansas Legislative Council and discuss the issues the subpoenas could be withdrawn. The motion was approved with a voice vote.

Sen. Jimmy Hickey Jr., R-Texarkana, and incoming Senate Pro Tem, was blunt in his frustration with the agency heads refusing to attend.

“I think this is a horrible, horrible precedent that these agencies are setting by not coming before this body. And I always try not to be arrogant, or try to say this, but in addition to that, I’m going to say it the way it is: We do control that money, and if these other agencies think that this body will allow this, I will speak for myself, but, I’m going to tell you right now there will be some bad times ahead,” he said.