Legislature(1993 - 1994)
04/21/1993 08:40 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 269
"An Act making special appropriations for restoration
projects relating to the Exxon Valdez oil spill and for
oil spill response projects; and providing for an
effective date."
Representative Martin MOVED to report CSHB 269 (FIN) out of
Committee with individual recommendations. Representative
Brown OBJECTED. A roll call vote was taken on the motion.
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IN FAVOR: Grussendorf, Hanley, Martin, Parnell, MacLean,
Larson
OPPOSED: Brown, Hoffman
Representatives Foster, Navarre and Therriault were absent
for the vote.
The MOTION PASSED (6-2).
CSHB 269 (FIN) was reported out of Committee with "no
recommendation".
MENTAL HEALTH TRUST LAND DISCUSSION
BOB STYLES, PRESIDENT, D AND R VENTURES testified via
teleconference. He reviewed Chapter 66. He concluded that
Chapter 66 is hopelessly tangled in litigation. He
discussed business concerns regarding Chapter 66. He
asserted that holders of interest cannot develop new funding
sources. He stressed the inability to forecast economics.
He noted that title issues of affected lands are clouded.
He referred to amendments that will be offered. (Amendments
were not provided to the Committee.)
JEFF JESSE, ATTORNEY, ADVOCACY OF ALASKA discussed Chapter
66. He stressed the improbability of reconstituting lands
truly comparable to the lands removed from the trust. He
reviewed the land selection process. He emphasized that
there was an under estimation of the opposition to Chapter
66. He noted the volume of litigation pertaining to Chapter
66.
Mr. Jesse observed that in January 1993 the State of Alaska
sent a letter to the plaintiffs indicating that the State
would no longer comply with the terms of the settlement.
Mr. Jesse gave a brief history of the Mental Health Lands
Trust exchange and settlement litigation. He discussed
proposed amendments to Chapter 66. He promoted continued
state support at 6 percent in addition to a land
reconstitution.
Representative Martin noted that the University has been
involved in land management. Mr. Jesse noted that the
University has indicated that it is difficult to make money
on land development.
Representative Therriault asked if the offset is available
only to the extent of land sold. Land through municipal
entitlement is not included. Mr. Jesse stated that only
land sold without notice of trust inclusion would be offset.
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Mr. Jesse guessed that land sold would be valued at
approximately $100 million dollars.
Representative Brown asked if all parties must agree on the
settlement package prior to legislative action. Mr. Jesse
stressed the improbability of reaching a consensus. He
anticipated that additional amendments would be offered.
TOM WALDO, ATTORNEY, SIERRA CLUB DEFENSE FUND noted that he
represents a coalition of environmental and recreational
groups. He opposed the massive land exchange provisions
contained in Chapter 66. He noted three concerns:
* Replacement lands could exceed the size of the
original trust; land could be conveyed without
public process in violation of existing land use
plans;
* Large portions of the Haines State forest and the
Tanana Valley State forest would be conveyed;
* There would be no public process in regards to the
Trust Authority land management.
Mr. Waldo outlined claims raised by the environmental
coalition. He spoke in support of solutions contained in HB
201 and SB 67.
(Tape Change, HFC 93-114, Side 1)
Representative Navarre noted that the Trust would be
reconstituted and 6 percent of state general fund dollars
committed to mental health services. He asked if the
original land was reconstituted would the revenues from the
land equal $100 million dollars a year. Mr. Waldo did not
think that income from management of the original land would
generate $100 million dollars a year. Representative
Navarre noted the legislature's obligation to consider the
interests of all Alaskans.
Mr. Waldo asserted that the proposal (contained in HB 201)
does not commit the state to spend 6 percent on mental
health programs in perpetuity. He noted that the
Commissioner of the Department of Revenue is directed to
allocate 6 percent of the unrestricted general fund revenue
to the Mental Health Trust Income Account. The legislature
would have to make an appropriation before money could be
spent.
Representative Navarre asked if litigation would be an
option for the mental health community if the legislature
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appropriated less than 6 percent. Mr. Waldo agreed that
litigation would be an option. He did not think that the
courts would rule against the legislature's determination of
need.
Representative Navarre asked if Mr. Waldo would support
language prohibiting litigation if the legislature
determines that mental health needs are less than 6 percent.
Mr. Jesse stated that mental health beneficiaries would not
give up the right to seek redress through the courts.
Co-Chair Larson recounted the 1991 legislative action
regarding the Mental Health Trust Land Settlement. He noted
that a 6 percent state contribution to mental health
programs was rejected by plaintiffs in 1991. He observed
that litigation pursued the development of a land trust
under Chapter 66. He observed that the state is now being
asked to both capitalize mental health programs and
reconstitute a land trust. He asked what would happen to
the 500 million acres of land held in trust if the state
continues to capitalize programs at 6 percent. Mr. Jesse
maintained that the 6 percent will be reduced as state
revenues decrease.
Co-Chair Larson pointed out that the courts ruled that the
land trust be reconstituted. He asked what would prevent
the courts from rejecting a settlement based on 6 percent
funding by the state. Mr. Jesse pointed out that a Trust
Authority will be established to assist in proper management
of the Trust. Land will also be allocated to augment the
decline of revenues. He noted that the prior settlement was
not subject to "full, fair, open discussions." Mr. Waldo
added that the courts rejected the prior settlement as a
unilateral settlement not supported by the plaintiffs. He
asserted that the majority of plaintiffs will support the
settlement proposed by HB 201.
RICK JOHANNSEN, ATTORNEY, PERKINS COIE, ANCHORAGE noted that
he represents the Usibelli Coal Mine and D and R Ventures.
He observed that these companies propose to develop areas
within the original land trust. He stressed that his
clients wish to see the dispute resolved. He emphasized
that Chapter 66 will not withstand all of the legal
challenges. He asserted that HB 201 is the product of
deliberations by a coalition of the involved parties. He
spoke in support of HB 201.
Mr. Johannsen provided members with an explanation of CSHB
201 (RES) (Attachment 1). He reviewed attachment 1,
detailing HB 201's solution to problems within Chapter 66.
He asserted that HB 201 removes the "fuel for the fire that
has embroiled Chapter 66 in litigation." He stated that the
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"fuel" is the hypothecated and substitute land. He noted
that over 6 million acres are involved in the Chapter 66
settlement. He stated that there are no land exchanges in
HB 201. The Trust Authority proposed by HB 201 would
receive land that can be returned from the original trust.
The Trust will be compensated for land that cannot be
returned. He maintained that the Legislature will have the
power of appropriation.
Mr. Johannsen stated that HB 201 contains other refinements
to Chapter 66 designed to eliminate legal challenges. He
pointed out that the intent of CSHB 201 (RES) is to turn a
land based trust into a trust that receives both land and a
financial commitment. He alluded to additional amendments
that will be proposed. He asserted that the matter should
not be resolved through litigation.
CHARLES COLE, ATTORNEY GENERAL, DEPARTMENT OF LAW stressed
that the state represents the interests of the public. He
noted that all of the plaintiffs are not in agreement. He
maintained that the fiscal commitment must be fair and
reasonable. He asserted that there must be a relationship
to the income potential that would have been generated by
the original trust. He asserted that $150 million dollars
is more than the missing lands could have generated. The
state opposes HB 201.
Representative Brown stressed that the state is paying for
their failure to live up to the state's responsibility as
trustees. She asked if the Administration recommends that
no action be taken by the legislature. Attorney General
Cole recommended that no action be taken in regards to HB
201. He suggested that litigation continue until there is a
consensus.
Representative Navarre asked if the Administration was
involved in the drafting of HB 201. Attorney General Cole
responded that the Administration was not involved. He
clarified that the Administration's main objection is that
the state's fiscal support is for perpetuity.
Representative Navarre asked if the 6 percent appropriation
by the state would be considered an asset of the Trust.
TOM KOESTER, ATTORNEY, JUNEAU felt that the state's fiscal
commitment would be considered an asset of the Trust. He
suggested that the court would view the money as a trade for
lands not returned to the Trust. He asserted that there
will be litigation over the state's discretionary spending
for mental health programs.
Co-Chair Larson reiterated that the state has made critical
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errors concerning the original trust. He maintained that
the state has not made critical errors regarding the funding
of mental health programs. He asked if the legislature
should continue to uphold the settlement agreement.
Attorney General Cole stressed that the Governor has not
indicated that the settlement will be terminated. He
observed that the issue is in negotiation.
Co-Chair Larson asked if the land sold from the original
trust can be considered as an offset. Attorney General Cole
replied that the Administration does not believe that the
land sold would be considered as an offset.
Representative Martin asked if the current legislature can
bind future legislatures. Mr. Koester stated that any
settlement would be considered as a contractual agreement.
Future legislatures would be bound by a contractual
agreement.
Representative Hoffman noted that litigation will continue
unless there is a legislative settlement. Attorney General
Cole agreed that the litigation will continue. He
emphasized that the state has not benefited from quick and
easy settlements.
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