Legislature(1995 - 1996)

02/08/1996 01:12 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 391 - DISSOLVED MUNICIPALITIES/SUCCESSION                                
 Number 1118                                                                   
 CO-CHAIR IVAN noted that a committee substitute for HB 391 had been           
 submitted to committee members earlier in the week.                           
 REPRESENTATIVE KOTT moved that the committee substitute be adopted            
 for discussion purposes.  There being no objection, it was so                 
 Number 1143                                                                   
 CO-CHAIR IVAN explained that CS HB 391 was the result of work                 
 between the Department of Law, the Department of Natural Resources            
 (DNR) and the Legal Services Division of the legislature.  He noted           
 that on teleconference were DCRA representatives Pat Polland,                 
 Director, Division of Municipal and Regional Assistance, and Dan              
 Bockhorst of the Local Boundary Commission; Ron Swanson from DNR;             
 and John Baker from the Department of Law.                                    
 Number 1192                                                                   
 TOM WRIGHT, Legislative Assistant to Representative Ivan, sponsor             
 of HB 391, noted that the original hearing on HB 391 had been                 
 postponed until differences among the various departments had been            
 resolved.  The resolution of those differences, he said, were found           
 in CS HB 391.  He read the sponsor statement for HB 391:                      
 "The bill was introduced by request of the Department of Community            
 and Regional Affairs and the Local Boundary Commission.  Currently,           
 the state automatically becomes the successor to a dissolved                  
 municipality unless another municipal government assumes such                 
 responsibility.  In most cases, the state becomes the successor by            
 default.  This means the state takes over the responsibility and              
 liability of owning properties such as solid waste facilities, bulk           
 fuel storage facilities, power utilities, sewer systems and other             
 facilities that were previously owned by the municipality.                    
 "House Bill 391 allows the Local Boundary Commission to designate             
 a Native council or nonprofit corporation to be a direct successor            
 to a dissolved municipality.  The terms of the transfer of assets             
 and liabilities of the dissolved municipality must be approved by             
 the Department of Law.  The bill also specifies that any transfer             
 of assets or liabilities does not constitute recognition by the               
 state of that organization."                                                  
 Number 1268                                                                   
 MR. WRIGHT explained that the changes made in the committee                   
 substitute, draft LS 1371\C, were recommended by DCRA, the                    
 Department of Law and DNR.  Mr. Wright noted that the document                
 before him, entitled "Changes in Committee Substitute for HB 391              
 (CRA)," was presented to the committee members at the time the                
 committee substitute was distributed.  He read from the document              
 and added further comments:                                                   
 "The first change occurs in the title.  It adds `and to the                   
 administration and disposal of certain land dissolved                         
 municipalities.'  This reflects the various changes made throughout           
 the bill."                                                                    
 Number 1316                                                                   
 "The second change occurs in Section 1, line 6.  At the suggestion            
 of the Department of Natural Resources, before the Local Boundary             
 Commission and the Department of Law decide where a dissolved                 
 municipality's former state land assets will be transferred, DNR              
 must be consulted."                                                           
 Number 1330                                                                   
 "The third change occurs in Section 1, line 7.  Reference is made             
 to AS 38.05.825(d); this was suggested by DNR.  This statute                  
 requires that tide and submerged land conveyed revert to the state            
 upon dissolution of the municipality.  The reason for this, as                
 stated by DNR in their fiscal note, is to protect the public                  
 interest, as established through the public trust doctrine."                  
 Number 1350                                                                   
 "The fourth change is Section 1, line 13.  Moved the state as a               
 successor from the first option to the last option, and that is               
 noted in subsection (b), found on page 2, line 6, of the committee            
 substitute.  This addresses the Department of Law's concern that              
 the state succeed to the dissolved municipality's assets or                   
 liabilities only if there is no other successor, as another                   
 municipality, under current law.  This lessens the liability for              
 the state in the succession process."                                         
 Number 1380                                                                   
 "The fifth change occurs in Section 1, line 14."  Mr. Wright noted            
 this was still on the first page.  "Reference is changed from `a              
 Native council organized under federal law' to `a council formed              
 under 25 U.S.C. 473(a).'  This change was recommended by the                  
 Department of Law.  According to the department, a Native council             
 organized under federal law is generally considered to be a federal           
 IRA council.  This conflicts with current regulations and practice,           
 which allow traditional councils, as well as IRAs and nonprofit               
 corporations, to be deeded certain real properties from dissolved             
 municipalities.  Also, in the original bill, reference was made to            
 `within the entire area of the dissolved municipality', which may             
 have caused problems, since Indian county is not recognized in                
 Alaska, except in Metlakatla, and it could be that the area where             
 a Native council operates may be different from what were the                 
 boundaries of the former municipality."                                       
 Number 1429                                                                   
 "The sixth change occurs in Section 1, page 2, line 18.  The change           
 in subsection (c) (lines 18-19) is a change in drafting and                   
 technical in nature.  This change was recommended by the Department           
 of Community and Regional Affairs."                                           
 Number 1440                                                                   
 "The seventh change is in Section 2, page 3, line 4.  The original            
 bill would have deleted authority of the commissioner of DC&RA to             
 dispose of relevant trust lands to an appropriate village entity if           
 a municipality dissolves.  Current regulations allow the                      
 commissioner of DC&RA to transfer the lands of a dissolved                    
 municipality to an appropriate village entity.  Deletion of this              
 authority would make current regulations inapplicable to land asset           
 distribution in the event of a municipal dissolution.  Therefore,             
 the Department of Law recommended reinstating this authority."                
 Number 1464                                                                   
 "The eighth change is Section 3."  Mr. Wright noted this was a                
 whole new section, not found in the original bill.  He said, "This            
 is a recommendation by the Department of Law.  This requires that             
 the transfer of land by sale, lease, right of way, easement or                
 permit may be made by the commissioner only after the approval of             
 the appropriate village entity by resolution filed with the                   
 Number 1483                                                                   
 "The final change is found in a whole new section, Section 4.                 
 Language was added to AS 44.47.150(c).  This states that after one            
 complete fiscal year after incorporation of a municipality that               
 includes all or part of the area of a dissolved municipality, land            
 or interest in land acquired under (a)(3) of this section and                 
 retained by the state will be conveyed without cost to the newly              
 incorporated municipality."                                                   
 Number 1510                                                                   
 MR. WRIGHT concluded by saying Marjorie Vandor was present from the           
 Department of Law to answer questions.  He noted that John Baker,             
 who was well-versed in Native lands issues, was also present via              
 Number 1566                                                                   
 MARJORIE VANDOR, Assistant Attorney General, Governmental Affairs             
 Section, Civil Division (Juneau), Department of Law, said she                 
 believed the ANCSA land issues were not addressed in HB 391, which            
 dealt with municipal trust lands.  She indicated she would defer to           
 John Baker for clarification, but said the only lands that DCRA had           
 control over under HB 391 were municipal lands given to a city;               
 once it dissolved, those lands needed to revert to the state or be            
 moved into trust again with the new entity.  Ms. Vandor reiterated            
 that it did not address ANCSA trust lands at all.                             
 Number 1594                                                                   
 JOHN BAKER, Assistant Attorney General, Natural Resources Section,            
 Civil Division (Anchorage), Department of Law, testified via                  
 teleconference.  He said he was not too familiar with HB 391.  He             
 did not have an understanding one way or another whether HB 391               
 would allow the trust lands acquired from the village corporations            
 under 14(c) to then go to the village council; if they did,                   
 however, it would certainly be subject to a reversionary interest,            
 whether HB 391 accomplished it or not.  What the state could be a             
 party to, consistent with its trust responsibilities under Title              
 29, as well as under federal law under ANCSA, would be to make the            
 conveyance subject to a reversionary interest, so that it would               
 revert to the state in the event a municipality ever formed again.            
 Mr. Baker asked if that answered the question.                                
 Number 1640                                                                   
 CO-CHAIR IVAN expressed appreciation for the response and indicated           
 it answered his questions.  He noted they were dealing with land              
 that already had been conveyed or property of the municipal                   
 government at this point in time, not six months or a year from               
 Number 1668                                                                   
 REPRESENTATIVE KOTT referred to page 2, lines 8 - 11, and asked for           
 an explanation.  He said it left him with the impression that if an           
 entity went belly-up or into bankruptcy, the state would end up               
 taking over liabilities.                                                      
 Number 1686                                                                   
 MS. VANDOR replied that was if a municipality dissolved under the             
 statute right now, which required a petition process and going to             
 the Local Boundary Commission.  Depending on the type of petition             
 process that occurred, it either came directly to the legislature             
 with a recommendation to allow dissolution and/or it could involve            
 a vote of the people to allow dissolution.  Ms. Vandor noted that             
 several instances had occurred where there were inactive cities;              
 DCRA had, on their behalf, petitioned for them.  This was not                 
 dealing with bankruptcy, she emphasized.  If a municipality went              
 bankrupt, that was handled in the bankruptcy court, through a                 
 completely different proceeding.                                              
 Number 1717                                                                   
 MS. VANDOR explained what subsection (b) accomplished.  Under                 
 current law, the state was the successor to an asset if there was             
 no municipality to take over.  In most cases, she said, there was             
 not, because most of the dissolving entities were small, second-              
 class cities in the unorganized borough.  It was not as if they               
 were being absorbed into an organized borough, which would happen             
 by operation of law, she added.                                               
 Number 1741                                                                   
 MS. VANDOR explained that by arranging and setting out who could              
 succeed to the assets of a dissolving municipality, the Local                 
 Boundary Commission was given a directive, in subsection (b), to              
 grant a preference to any of the four listed entities before the              
 state could become the successor, by operation of law.  In other              
 words, they first looked at 1) another municipality; 2) an IRA                
 council, which was a corporation providing certain protections in             
 transferring title to land and assets; 3) a traditional council;              
 and 4) a nonprofit corporation, which was a community association,            
 such as Red Devil or Point Baker, able to accept state revenue                
 sharing money for unincorporated communities in order to provide              
 public services.  If none of those four existed or it was not                 
 feasible or practicable to have the assets go to them, then the               
 assets would revert to the state.  If that happened, the state                
 could then contract to provide those services or take over those              
 assets.  That had always been provided in law, Ms. Vandor added.              
 No one expected the state to really run it; they would probably               
 contract out for services.                                                    
 Number 1864                                                                   
 RON SWANSON, Director, Central Office, Division of Land, Department           
 of Natural Resources, testified via teleconference from Anchorage             
 that the committee substitute had addressed his concerns and that             
 he had no further comments.                                                   
 Number 1880                                                                   
 PATRICK K. POLAND, Director, Central Office, Division of Municipal            
 and Regional Assistance, Department of Community and Regional                 
 Affairs, testified via teleconference from Anchorage.  He referred            
 to written testimony he had submitted to the committee earlier that           
 day and stated support for CS HB 391.                                         
 Number 1920                                                                   
 ANTHONY CAOLE, Tribal Administrator, Native Village of Quinhagak,             
 testified via teleconference.  He mentioned that he had no copy of            
 the bill; however, he had a copy of the Local Boundary Commission's           
 policy concerning the transfer of municipal assets to IRA councils.           
 He voiced concern about 1) the disclaimer that the conveyance did             
 not constitute recognition of tribal status and 2)  the conveyance            
 containing a waiver of claims of Indian country.  Mr. Caole                   
 wondered, under HB 361, whether the IRA councils would still have             
 to sign a waiver stating the lands being received from the city               
 would not constitute Indian country.                                          
 Number 2003                                                                   
 MS. VANDOR replied yes, there would have to be a waiver of                    
 sovereign immunity in order to gain title to the assets, whether it           
 was land or personal assets of the dissolved municipality.  Also,             
 if there was land to be transferred, a statement would be a                   
 required that no assertion of Indian country would be made at a               
 future time.  That was in the agreement, she added.                           
 Number 1990                                                                   
 MR. CAOLE asked if there was a reason why the language could not be           
 neutral on the issue of Indian country.                                       
 Number 2003                                                                   
 MS. VANDOR said she believed at this point, based on the Venetie            
 case and the status of such lands in Alaska, it was the policy of             
 the Department of Law and the Local Boundary Commission to require            
 that such a statement be included.                                            
 Number 2020                                                                   
 MR. CAOLE responded that it was rather insulting for IRA councils             
 to accept land and then sign a waiver saying that land did not                
 constitute Indian country.  He asked again if it would be possible            
 to change the language so that it was neutral or so that the state            
 could say it was still subject to federal courts.                             
 Number 2037                                                                   
 MS. VANDOR pointed out that the land being transferred under HB 361           
 was municipal trust land.  It had a legal status already, existing            
 in state law.  In many cases, about which Ms. Vandor said she could           
 not speak for certain, some of the lands were transferred to the              
 state from the federal government.  She emphasized that the lands             
 had a legal status now.  It was only those lands, she said, that              
 were being addressed and transferred under the agreement.  Under              
 any quitclaim deed the state would give to an IRA council or tribal           
 village, the recipient would only receive as much interest in the             
 land as the municipality had or the state had.  It would always               
 have that municipal trust status, Ms. Vandor added.  She said she             
 could not understand why there was a problem on the assertion of              
 Indian country because it could not constitute that.  The question            
 was more "why would we have to litigate over this in the future."             
 The state would like assertions of Indian country to be waived so             
 the land would keep its legal status, avoiding problems.  The                 
 Venetie case, she said, did not concern municipal trust lands.              
 Number 2090                                                                   
 MR. CAOLE replied if he was not mistaken, some of the municipal               
 lands were originally tribal lands that were being transferred to             
 the cities and then, after dissolution, being transferred to an IRA           
 council.  He asserted it was a situation concerning lands that were           
 once tribal lands, potentially Indian country, being transferred to           
 the cities and obtaining a lesser status, then being transferred              
 back to the IRA councils, which could not assert any jurisdiction             
 on those lands.                                                               
 Number 2116                                                                   
 MR. BAKER expressed his understanding that these lands were the               
 former ANCSA Section 14(c)(3) lands.  The relationship between                
 those lands and the municipal trust under state law was part of the           
 design from ANCSA, which directed that lands in the core village              
 areas would be part of the village corporation entitlements, to               
 then be conveyed either to existing municipalities in those                   
 villages or to the state to hold in trust for future                          
 Number 2150                                                                   
 MR. BAKER explained that in the present situation, those                      
 conveyances had already been made, only now the formerly existing             
 municipalities were dissolved.  The problem was that no one knew              
 whether the cities might form again in the future.  Under existing            
 federal and state law, the state still had a responsibility to                
 protect the municipal trust status of those lands.  Whether there             
 might be a claim that those lands were at some time considered                
 tribal lands, he did not know.  However, the only legal status                
 extended by the federal government had been the progression of                
 being federal lands, then ANCSA village corporation lands, then               
 municipal lands subject to the state trust.                                   
 Number 2203                                                                   
 MR. CAOLE commented that it was frustrating for the IRA councils,             
 which were trying to govern the communities.  He expressed concern            
 over having to sign a waiver of jurisdiction on the land.  He cited           
 the possibility of a public safety officer not knowing what to do             
 about an intoxicated person because of lack of jurisdiction.  He              
 did not know why "the state is so afraid to allow the IRA councils            
 to have some jurisdiction."                                                   
 Number 2242                                                                   
 CO-CHAIR IVAN asked if there was any further testimony and thanked            
 Mr. Banker and Ms. Vandor for their contribution.                             
 Number 2258                                                                   
 REPRESENTATIVE NICHOLIA moved to pass CS HB 391 out of committee,             
 with individual recommendations.  There being no objection, it was            
 so ordered.                                                                   

Document Name Date/Time Subjects