ARIZONA STATE SENATE RESEARCH STAFF

TO: JOINT LEGISLATIVE AUDIT COMMITTEE LAURA BENITEZ LEGISLATIVE RESEARCH ANALYST DATE: January 15, 2021 COMMERCE COMMITTEE Telephone: (602) 926-3171 SUBJECT: Sunset Review of the Office of Sonora

Attached is the final report of the sunset review of the Office of Sonora, which was conducted by the Senate Commerce Committee of Reference.

This report has been distributed to the following individuals and agencies:

Governor of the State of The Honorable Douglas A. Ducey

President of the Senate Speaker of the House of Representatives Senator Representative

Senate Members Senator J.D. Mesnard, Chair Senator Senator Senator Senator David Livingston Senator Senator Senator Senator Michelle Ugenti-Rita

Office of Sonora Office of the Auditor General Arizona State Library, Archives and Public Records

Senate Resource Center Office of the Chief Clerk Senate Republican Staff House Republican Staff Senate Democratic Staff House Democratic Staff Senate Research Staff House Research Staff Senate Commerce Committee of Reference Final Report Office of Sonora

Background

Pursuant to A.R.S. § 41-2953, the Joint Legislative Audit Committee assigned the sunset review of the Office of Sonora to the Senate Commerce Committee of Reference and House State & International Affairs Committee of Reference.

In 1993, the Legislature established the Office of Sonora within the Governor's Office. The Office of Sonora is charged with facilitating the North American Free Trade Agreement, commercial relationships, educational and training exchange programs and the growth of tourism between Arizona and Sonora, Mexico. The Office of Sonora must: 1) assist the Arizona-Mexico Commission; 2) support state agencies in Sonora, Mexico; 3) formulate policies and programs; 4) advise the Governor and the Legislature; and 5) inform and advise, on request and within the scope of the Office, local, state and federal agencies and private citizens, business enterprises and community organizations (A.R.S. § 41-107).

The Office of Sonora is statutorily set to terminate on July 1, 2021, unless legislation is enacted for its continuation (A.R.S. § 41-3021.07).

Committee of Reference Sunset Review Activity

Pursuant to A.R.S. § 41-2954, the Senate Commerce Committee of Reference held a public meeting on Wednesday, January 13, 2021, to review and consider the Office of Sonora's responses to the statutorily-outlined sunset factors and receive public testimony.

Committee of Reference Recommendations

The Senate Commerce Committee of Reference recommended that the Office of Sonora be continued for eight years, until July 1, 2029.

Appendices

1. Meeting Notice 2. Minutes of the Senate Commerce Committee of Reference 3. Chairperson's letter requesting the Office of Sonora's response to sunset factors 4. Office of Sonora's response to sunset factors

REVISED REVISED REVISED

Interim agendas can be obtained via the Internet at http://www.azleg.gov/Interim-Committees ARIZONA STATE SENATE

INTERIM MEETING NOTICE OPEN TO THE PUBLIC

SENATE COMMERCE COMMITTEE OF REFERENCE FOR THE SUNSET REVIEW OF THE OFFICE OF SONORA

Date: Wednesday, January 13, 2021

Time: 2:30 P.M. or Upon Adj. of the Senate COM Committee

Place: SHR 1 for Members. This meeting will be held via teleconference software. Members of the public may access a livestream of the meeting here: https://www.azleg.gov/videoplayer/?eventID=2021011029

AGENDA

1. Call to Order 2. Roll Call 3. Sunset Review of the Office of Sonora a. Presentation by the Office of Sonora b. Public Testimony c. Discussion d. Recommendation by the Committee of Reference 4. Adjourn

Members:

Senator J.D. Mesnard, Chair Senator Sonny Borrelli Senator Sean Bowie Senator Senator David Livingston Senator Tony Navarrete Senator Tyler Pace Senator Jamescita Peshlakai Senator Michelle Ugenti-Rita

*In accordance with Senate Rule 26(A), any person desiring to be heard concerning legislation remotely shall email that request to ([email protected]) at least 24 hours, excluding weekends and holidays, in advance of committee. The request must state the bill the person desires to present arguments upon, and whom the person represents. Timely requests will receive a response that includes meeting access information to participate in the committee remotely. Sharing meeting access information with unauthorized users may result in being prohibited to participate remotely in future legislative hearings. The request to participate remotely via teleconference shall be in addition to requesting to speak via the RTS system (https://apps.azleg.gov/requesttospeak/topicsearch). Persons desiring to testify remotely shall indicate that the participation is remote within the comments of the RTS system.

Public testimony is limited to remote participation.

* Pending adoption of Senate Temporary Emergency Rule 32: Procedures During the COVID-19 Outbreak

01/07/2021 01/08/2021 sa

For questions regarding this agenda, please contact Senate Research Department. Persons with a disability may request a reasonable accommodation such as a sign language interpreter, by contacting the Senate Secretary’s Office: (602) 926-4231 (voice). Requests should be made as early as possible to allow time to arrange the accommodation. Page 1 of 1

ARIZONA STATE SENATE

SENATE COMMERCE COMMITTEE OF REFERENCE FOR THE SUNSET REVIEW OF THE OFFICE OF SONORA

Minutes of the Meeting January 13, 2021 2:30 P.M. SHR 1 This meeting will be held via teleconference software. Members of the public may access a livestream of the meeting here: https://www.azleg.gov/videoplayer/?eventID=2021011029

Members Present: Senator J.D. Mesnard, Chair Senator Sonny Borrelli, participated remotely via a teleconference platform Senator Sean Bowie, participated remotely via a teleconference platform Senator Rosanna Gabaldón, participated remotely via a teleconference platform Senator David Livingston Senator Tony Navarrete Senator Jamescita Peshlakai, participated remotely via a teleconference platform Senator Michelle Ugenti-Rita

Members Excused: Senator Tyler Pace

Staff: Laura Benitez, Senate Research Staff Maelinn Chow, Senate Research Intern

Chairman Mesnard called the meeting to order at 4:18 p.m. and attendance was noted.

SUNSET REVIEW OF THE OFFICE OF SONORA

Presentation by the Office of Sonora

Juan Ciscomani, Senior Advisor for Regional and International Affairs and Director of the Office of Sonora, Governor 's Office, provided a brief background on the Office of Sonora and explained the distributed handout entitled "Arizona-Mexico Commission: State of Arizona, Office in Sonora, Overview Fact Sheet, January 2021" (Attachment A). Mr. Ciscomani offered comments and answered questions posed by the Committee.

The Committee discussed and offered comments for the presentation mentioned above.

Public Testimony

Senator Mesnard noted that there was no public testimony.

Senate Commerce Committee of Reference January 13, 2021 Page 1 Discussion

No further discussion took place.

Recommendation by the Committee of Reference

Senator Mesnard requested a motion on the recommendation by the Committee of Reference.

Senator Ugenti-Rita moved that the Committee of Reference make the recommendation to continue the Office of Sonora for eight years until July 1, 2029. The motion CARRIED by voice vote.

There being no further business, the meeting was adjourned at 4:26 p.m.

Respectfully submitted,

Imee L. Andrew Committee Secretary

(Audio recordings and attachments are on file in the Secretary of the Senate’s Office/Resource Center, Room 115. Audio archives are available at http://www.azleg.gov)

Senate Commerce Committee of Reference January 13, 2021 Page 2

State of Arizona | Office in Sonora Overview Fact Sheet January 2021

General Information ● Pursuant to A.R.S. § 41-107, the Arizona State Office in Sonora was established in 1992 within the Office of the Arizona Governor, as a reciprocal office to the Sonora State Office in Arizona. ● Last reviewed in 2013.

Mission ● The Arizona State Office in Sonora objective and purpose is to assist with the flow of information; facilitate educational and training exchange programs; and promote tourism and cultural activities between Arizona and Sonora.

Structure ● The Arizona State Office in Sonora serves a diplomatic, and not regulatory, function. ● The unique structure of the Arizona State Office in Sonora sets it apart from all other states northern and southern border states ● The reciprocal offices are housed within the executive government buildings of Arizona and Sonora, allowing accessibility to the Office of the Governor in both states. ● Because of this adaptability, the office has evolved from addressing protocol issues to playing a significant role in positioning Arizona for economic vitality today.

Management ● The way in which the office was established allows each administration the flexibility to manage the office according to the administration’s priorities. ● The Arizona State Office in Sonora, under Governor Ducey’s administration, is supported by the Arizona-Mexico Commission (AMC).

Budget ● Due to the reciprocal nature of how the Arizona State Office and the State of Sonora Office were created, and given that the Arizona State Office in Sonora is supported by the AMC, it currently presents no additional cost.

Staffing ● The Arizona State Office in Sonora must have a Director appointed by the Governor and confirmed by the . ● The Director of the Arizona Office in Sonora is Governor’s Ducey Senior Advisor for Regional and International Affairs who also oversees the AMC from where the Arizona Office in Sonora receives its leadership and staffing support.

June 2, 2020 Director Juan Ciscomani Office of Sonora 100 N 7th Ave, Suite 400 Phoenix, Arizona 85007

Dear Director Ciscomani: The sunset review process prescribed in Title 41, Chapter 27, Arizona Revised Statutes, provides a system for the Legislature to evaluate the need to continue the existence of state agencies. During the sunset review process, an agency is reviewed by legislative committees of reference. On completion of the sunset review, the committees of reference recommend to continue, revise, consolidate or terminate the agency. The Joint Legislative Audit Committee (JLAC) has assigned the sunset review of the Office of Sonora to committees of reference comprised of members of the Senate Commerce Committee and the House of Representatives State & International Affairs Committee. Pursuant to A.R.S. § 41-2954, the committee of reference is required to consider certain sunset factors in deciding whether to recommend continuance, modification or termination of an agency. Please provide your agency's response to the factors listed below: 1. The objective and purpose in establishing the agency and the extent to which the objective and purpose are met by private enterprises in other states. 2. The extent to which the agency has met its statutory objective and purpose and the efficiency with which it has operated. 3. The extent to which the agency serves the entire state rather than specific interests. 4. The extent to which rules adopted by the agency are consistent with the legislative mandate. 5. The extent to which the agency has encouraged input from the public before adopting its rules and the extent to which it has informed the public as to its actions and their expected impact on the public. 6. The extent to which the agency has been able to investigate and resolve complaints that are within its jurisdiction. 7. The extent to which the attorney general or any other applicable agency of state government has the authority to prosecute actions under the enabling legislation. 8. The extent to which agencies have addressed deficiencies in their enabling statutes that prevent them from fulfilling their statutory mandate. 9. The extent to which changes are necessary in the laws of the agency to adequately comply with the factors listed in A.R.S. § 41-2954.

10. The extent to which the termination of the agency would significantly affect the public health, safety or welfare. 11. The extent to which the level of regulation exercised by the agency compares to other states and is appropriate and whether less or more stringent levels of regulation would be appropriate. 12. The extent to which the agency has used private contractors in the performance of its duties as compared to other states and how more effective use of private contractors could be accomplished. 13. The extent to which the agency potentially creates unexpected negative consequences that might require additional review by the committee of reference, including increasing the price of goods, affecting the availability of services, limiting the abilities of individuals and businesses to operate efficiently and increasing the cost of government. Additionally, please provide written responses to the following: 1. Identify the problem or the needs that the agency is intended to address. 2. State, to the extent practicable, in quantitative and qualitative terms, the objectives of the agency and its anticipated accomplishments. 3. Identify any other agencies having similar, conflicting or duplicative objectives, and an explanation of the manner in which the agency avoids duplication or conflict with other such agencies. 4. Assess the consequences of eliminating the agency or of consolidating it with another agency. Your response should be received by September 1, so we may proceed with the sunset review and schedule the required public hearing. Please submit the requested information to: Laura Benitez Arizona State Senate 1700 West Washington Phoenix, Arizona 85007 Thank you for your time and cooperation. If you have any questions, please feel free to contact me at 602-926-4480 or Laura Benitez, Senate Commerce Research Analyst, at 602-926-3171. Sincerely,

Senator Michelle Ugenti-Rita Senate Commerce, Chair cc: Representative , House State & International Affairs, Chair Jon Rudolph, House State & International Affairs, Analyst

CHAIR September 1, 2020 Doug Ducey Governor, State of Arizona

VICE CHAIR Juan Ciscomani Senior Advisor for Regional & International Affairs, Office of the Arizona Governor

Board of Directors Senator Michelle Ugenti-Rita

PRESIDENT Jessica Pacheco Senate Commerce, Chair Arizona Public Service Arizona State Senate VICE PRESIDENT Todd Sanders 1700 West Washington Street Greater Phoenix Chamber of Commerce

SECRETARY Phoenix, AZ 85007 Jaime Chamberlain J-C Distributing Inc.

TREASURER Victor Flores Dear Senator Ugenti-Rita: RESOURCE 13

David Adame Chicanos Por La Causa (CPLC) The Arizona-Mexico Commission (AMC) has over 61 years of promoting a close cross-

Kirk Adams Consilium Consulting border collaboration and engagement with Mexico, specifically with the state of

Erik Bakken Sonora. The Arizona State Office in Sonora has been instrumental in highlighting the Tucson Electric Power cross-border travel and trade relationship between Arizona and Sonora, and in Julie Engel Greater Yuma Economic Development Corporation representing the best interest of the State of Arizona. A continuation of the Arizona

Molly Greene State Office in Sonora is recommended, and expressed in the responses pertaining to Salt River Project the sunset review of the Arizona State Office in Sonora. Derrick Hall Arizona Diamondbacks

Glenn Hamer Arizona Chamber of Commerce As requested in your letter dated June 2, 2020, please find the responses pertaining

K. Michael Ingram to the sunset review for the Arizona State Office in Sonora. El Dorado Holdings, Inc.

Russell Jones R.L. Jones Customs Brokers 1. The objective and purpose of establishing the agency and the extent to Bill Lavidge Lavidge Company which the objective and purpose are met by private enterprises in other

Johnathan Lines Lines & Lundgren Roofing states.

Andres Martinez Arizona State University Pursuant to A.R.S. § 41-107, the Arizona State Office in Sonora was John Misner Arizona State University established in 1992 within the Office of the Arizona Governor, as a reciprocal Juan Francisco Moreno Gómez del Campo & Moreno LLP office to the Sonora State Office in Arizona, to promote a greater

Jerry Moyes Swift Transportation understanding of the USMCA trade agreement; facilitate the flow of

Daniel Palm information; facilitate educational and training exchange programs between Northern Arizona University Arizona and Sonora; and promote tourism and cultural activities between Julie Pastrick Greater Flagstaff Chamber of Commerce Arizona and Sonora. Joaquin Ruiz University of Arizona

Calline Sanchez The unique structure of the Arizona State Office in Sonora sets it apart from IBM Systems & Technologies

Melissa Sanderson all other states. The reciprocal offices are housed within the government Mel Sanderson Consulting buildings of Arizona and Sonora, allowing accessibility to the Office of the Luis Seldner III Tetakawi Governor in both states. The way in which the office was established allows

Carlos Sugich Snell & Wilmer, LLP each administration the flexibility to lead the office with the resources

Bruce Wright available to them. Because of this adaptability, the office has evolved from addressing protocol issues to playing a significant role in positioning Arizona for economic vitality today.

100 N. 7th Avenue, Suite 400 | Phoenix, Arizona 85007

602.542.1370 | www.azmc.org

The Arizona State Office in Sonora, established within the Office of the Arizona Governor, is managed by the Arizona-Mexico Commission (AMC). The AMC has worked to strengthen Arizona’s ties to Mexico, maintaining a relationship with the country of Mexico and the State of Sonora for more than six decades. The AMC brings together the public and private sectors to improve the economic prosperity and quality of life for all Arizonans through strong, public/private collaborations in advocacy, trade, networking and information.

2. The extent to which the agency has met its statutory objective and purpose and the efficiency with which it has operated.

The Arizona State Office in Sonora has met its statutory objective and purpose efficiently since its establishment, including:

• Forging the Arizona-Sonora relationship • Strengthening communication between the State of Arizona and the State of Sonora • Facilitating educational exchanges between Arizona and Sonora • Facilitating training programs that promote the smooth and efficient flow of goods and commerce • Promoting the region as a “two-nation” tourism destination • Assisting the Arizona-Mexico commission with the planning and execution of binational events, including the Summits of the Arizona- Mexico Commission and Comisión Sonora-Arizona; Arizona Trade Missions, led by the Governor to Mexico City to meet with Presidents Enrique Peña Nieto and Andrés López Obrador and Mexico’s Ambassador to the U.S., Martha Barcena • Promoting the -Mexico-Canada Agreement (USMCA)

Committee Accomplishments:

• Agribusiness & Wildlife Committee – Streamlined the process for the export of slaughter cattle from Arizona to Mexico. • Economic Development Committee - Collaborating with Sonora on initiatives aimed at improving the overall attractiveness and competitiveness of the region to potential businesses, resulting in the groundbreaking of Lucid Motors manufacturing facility in Arizona. • Education Committee – Collaborating with trans-border institutions in Sonora and Arizona to offer online professional development and educational exchanges for students and teachers. • Health Services Committee – Working with border communities to help them promote health messaging on mitigation efforts to slow the spread of COVID-19. • Transportation, Infrastructure & Ports Committee – Facilitated the groundbreaking of the SR 189 modernization project, a vital

connecting artery that facilitates trade and commerce between Arizona and Mexico

3. The extent to which the agency serves the entire state rather than specific interests.

The Arizona State Office in Sonora works closely with agencies and institutions of the state, local and federal governments, private sector entities, state legislators, business leaders, and individuals to facilitate cross- border coordination between both states.

4. The extent to which rules adopted by the agency are consistent with the legislative mandate.

The rules adopted by the Arizona State Office in Sonora are consistent with the A.R.S. § 41-107 to strengthen binational communication and engagement between Arizona and Sonora, facilitate trade, promote tourism and cultural activities.

5. The extent to which the agency has encouraged input from the public before adopting its rules and the extent to which it has informed the public as to its actions and their expected impact on the public.

The Arizona State Office in Sonora seeks input from individuals in the public and private sector, including the AMC Board of Directors for feedback on bylaws and Committee Co-Chairs for input on cross-border projects and initiatives.

6. The extent to which the agency has been able to investigate and resolve complaints that are within its jurisdiction.

The Arizona State Office in Sonora looks into all complaints received involving public and private sector entities and individuals within Arizona and Sonora and refers them to the proper authorities.

7. The extent to which the attorney general or any other applicable agency of state government has the authority to prosecute actions under the enabling legislation.

The Arizona State Office in Sonora does not create any prosecutable actions.

8. The extent which agencies have addressed deficiencies in their enabling statutes that prevent them from fulfilling their statutory mandate.

The Arizona State Office in Sonora is able to fulfill its objective and purpose under the current statute.

9. The extent to which changes are necessary in the laws of the agency to adequately comply with the factors listed in A.R.S. § 41-2954.

The laws of the Arizona State Office in Sonora adequately comply with the factors listed in A.R.S. § 41-2954; changes are not necessary.

10. The extent to which the termination of the agency would significantly affect the public health, safety or welfare.

The termination of the Arizona State Office in Sonora would significantly impact Arizona’s relationship with Sonora, resulting in a lack of information exchange and binational coordination with government officials in Sonora.

Through collaborative memorandums with Sonora, Arizona helped address public health threats such as SARS, the Avian Flu, H1N1, and most recently COVID-19. The relationship has served us today in sharing real time information to help the binational region fend off public health threats.

Arizona knows firsthand the value of strong international relationships in an increasingly connected global economy. Our shared border with Mexico offers Arizona the opportunity to work across international lines to achieve shared goals, and offer a unique region primed for international investment. The Arizona State Office in Sonora is imperative in this relationship, and its removal would be a detriment to the binational relationship.

11. The extent to which the level of regulation exercised by the agency compared to other states is appropriate and whether less or more stringent levels of regulation would be appropriate.

The Arizona State Office in Sonora serves a diplomatic, and not regulatory, function.

12. The extent to which the agency has used private contractors in the performance of its duties as compared to other states and how more effective use of private contractors could be accomplished.

The functions of the Arizona State Office in Sonora are diplomatic, and therefore cannot be performed by private contractors.

13. The extent to which the agency potentially creates unexpected negative consequences that might require additional review by the committee of reference, including increasing the price of goods, affecting the availability of services, limiting the abilities of individuals and businesses to operate efficiently and increasing the cost of government.

The Arizona State Office in Sonora facilitates trade, while promoting a greater understanding of the USMCA trade agreement.

Additionally, please provide written responses to the following: 1. Identify the problem or the needs that the agency is intended to address.

The Arizona State Office in Sonora facilitates binational collaboration and coordination, promotes trade, tourism and cultural activities between Arizona and Sonora.

2. State, to the extent practicable, in quantitative and qualitative terms, the objectives of the agency and its anticipated accomplishments.

The Arizona State Office in Sonora facilitates and promotes trade and tourism between Arizona and Mexico.

Arizona and Sonora share over 20 Memorandums of Understanding (MOU’s) representing a commitment to collaborate on binational initiatives and projects that mutually benefit our entire region.

Trade statistics: • Mexico is Arizona’s #1 trading partner with $8,188,846,476 exports to Mexico annually • Arizona’s ports of entry with Mexico process 23,538,901 people annually • Arizona’s ports of entry with Mexico process 416,604 commercial trucks annually • Arizona’s ports of entry with Mexico process 695 trains annually • In 2019, Mexican visitors to Arizona was 4 million • In 2019, Mexican visitors spent $2.9 billion in retail, restaurants, hotels, and businesses resulting in $3.5 billion to Arizona’s economy annually • Mexican visitor spending represents a staggering 67.1% of the total taxable sales in Santa Cruz County. Mexican visitor spending represents 17.7% of taxable sales in Yuma County, 15.0% in Cochise County, 0.7% in Pima County, and 0.3% in Maricopa County. The larger the county in terms of population and income and the further away the county is from the border, the smaller the share of total taxable sales attributable to Mexican visitor spending.

The Arizona State Office in Sonora operates efficiently and resourcefully. It has eliminated unnecessary government expenses and saved the State of Arizona by consolidating three positions into one position that advises the Governor of Arizona on international affairs; serves as the Executive Director of the Arizona-Mexico Commission; and serves as the Director of the Arizona State Office in Sonora.

3. Identify any other agencies having similar, conflicting or duplicative objectives, and an explanation of the manner in which the agency avoids duplication or conflict with other such agencies.

The Arizona State Office in Sonora coordinates with the Arizona-Mexico Commission to avoid any conflicting or duplicative objectives for the State of Arizona.

4. Assess the consequences of eliminating the agency or of consolidating it with another agency.

The elimination or consolidation of the Arizona State Office in Sonora would significantly affect the relationship between Arizona and Sonora, resulting in less communication and coordination with government officials in Mexico and reduced opportunities to promote trade, tourism, and cultural activities.

Should you have any questions please feel free to contact me at [email protected] or (602) 542-1370.

Sincerely,

Juan Ciscomani Senior Advisor for Regional & International Affairs, Office of Governor Doug Ducey Vice Chair, Arizona-Mexico Commission Director, Arizona State Office in Sonora cc: Laura Benitez, Senate Commerce Research, Analyst Representative Tony Rivero, House State & International Affairs, Chair Jon Rudolph, House State & International Affairs, Analyst