Legislature(1995 - 1996)
02/08/1996 01:12 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 ordered. 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 department." 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 teleconference. 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 now. 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 municipalities. 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.