Legislature(1999 - 2000)
05/11/1999 08:08 AM House CRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
May 11, 1999
8:08 a.m.
MEMBERS PRESENT
Representative Andrew Halcro, Co-Chairman
Representative John Harris, Co-Chairman
Representative Carl Morgan
Representative Lisa Murkowski
Representative Fred Dyson
Representative Reggie Joule
Representative Albert Kookesh
MEMBERS ABSENT
All members present.
OTHERS PRESENT
Representative Eric Croft
COMMITTEE CALENDAR
SENATE BILL NO. 156
"An Act relating to municipal incorporation, to reclassification of
cities, to municipal boundary changes, and to dissolution of
municipalities."
- MOVED HCS SB 156(CRA) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 110(RLS) am
"An Act relating to liability for the release of hazardous
substances involving certain property acquired by a governmental
entity; relating to making a determination as to when a hazardous
substance release has occurred; relating to liability of a party
other than the party responsible for the initial release of a
hazardous substance; and providing for an effective date."
- MOVED CSSB 110(RLS) am OUT OF COMMITTEE
*HOUSE BILL NO. 24
"An Act relating to reimbursement to a municipality for certain
property tax revenues lost to it as a result of a tax exemption for
certain residences; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 156
SHORT TITLE: MUNICIPAL CLASSIFICATIONS AND BOUNDARIES
SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS BY REQUEST
Jrn-Date Jrn-Page Action
4/16/99 949 (S) READ THE FIRST TIME - REFERRAL(S)
4/16/99 950 (S) CRA, FIN
4/26/99 (S) CRA AT 1:30 PM FAHRENKAMP 203
4/26/99 (S) MINUTE(CRA)
4/27/99 1134 (S) CRA RPT 3DP
4/27/99 1134 (S) DP: TIM KELLY, PHILLIPS, MACKIE
4/27/99 1134 (S) ZERO FISCAL NOTE (DCRA)
5/04/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
5/04/99 (S) MOVED OUT OF COMMITTEE
5/04/99 (S) RLS AT 3:15 PM FAHRENKAMP 203
5/04/99 (S) MINUTE(FIN)
5/04/99 (S) MINUTE(RLS)
5/04/99 1220 (S) FIN RPT 7DP 1NR
5/04/99 1220 (S) DP: TORGERSON, PARNELL, PHILLIPS,
5/04/99 1220 (S) PETE KELLY, DONLEY, ADAMS, WILKEN;
5/04/99 1220 (S) NR: GREEN
5/04/99 1220 (S) PREVIOUS ZERO FN (DCRA)
5/06/99 1272 (S) RULES TO CALENDAR AND 1 OR 5/6/99
5/06/99 1272 (S) READ THE SECOND TIME
5/06/99 1273 (S) THIRD READING 5/7 CALENDAR
5/07/99 1304 (S) READ THE THIRD TIME SB 156
5/07/99 1304 (S) PASSED Y20 N-
5/07/99 1308 (S) TRANSMITTED TO (H)
5/08/99 1256 (H) READ THE FIRST TIME - REFERRAL(S)
5/08/99 1256 (H) CRA
5/11/99 (H) CRA AT 8:00 AM CAPITOL 124
BILL: SB 110
SHORT TITLE: HAZARDOUS SUBST. RELEASE: GOVT ENTITY
SPONSOR(S): SENATOR(S) WILKEN
Jrn-Date Jrn-Page Action
3/18/99 601 (S) READ THE FIRST TIME - REFERRAL(S)
3/18/99 601 (S) JUD
4/12/99 (S) JUD AT 1:30 PM BELTZ 211
4/12/99 (S) MINUTE(JUD)
4/23/99 (S) JUD AT 1:30 PM BELTZ 211
4/23/99 (S) MOVED CS(JUD) OUT OF COMMITTEE
4/23/99 (S) MINUTE(JUD)
4/29/99 (S) RLS AT 11:50 AM FAHRENKAMP 203
4/29/99 (S) MINUTE(RLS)
4/29/99 1169 (S) JUD RPT CS 1DP 2NR 1DNP NEW TITLE
4/29/99 1169 (S) DP: TAYLOR; NR: TORGERSON, DONLEY;
4/29/99 1169 (S) DNP: ELLIS
4/29/99 1169 (S) ZERO FISCAL NOTES (DOT, DEC)
5/04/99 (S) RLS AT 3:15 PM FAHRENKAMP 203
5/04/99 (S) MINUTE(RLS)
5/05/99 1249 (S) RLS TO CALENDAR W/CS 1 OR 5/5 SAME
TITLE
5/05/99 1249 (S) PREVIOUS ZERO FN (DEC, DOT)
5/05/99 1251 (S) READ THE SECOND TIME
5/05/99 1252 (S) RLS CS ADOPTED Y11 N9
5/05/99 1252 (S) ADVANCED TO THIRD READING UNAN
CONSENT
5/05/99 1252 (S) READ THE THIRD TIME CSSB 110(RLS)
5/05/99 1253 (S) PASSED Y17 N3
5/05/99 1253 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
5/05/99 1253 (S) TAYLOR NOTICE OF RECONSIDERATION
5/06/99 1277 (S) RECON TAKEN UP - IN THIRD READING
5/06/99 1277 (S) RETURN TO 2ND FOR RESCIND MOTION UC
5/06/99 1277 (S) MTN TO RESCIND ACTION IN ADPTNG RLS
CS
5/06/99 1278 (S) ACTION RESCINDED ADPTNG RLS CS Y11 N9
5/06/99 1279 (S) HELD IN 2ND W/QUESTION PENDNG TO 5/7
CAL
5/07/99 1299 (S) RLS CS ADOPTED UNAN CONSENT
5/07/99 1299 (S) AUTOMATICALLY IN THIRD READING
5/07/99 1300 (S) RETURN TO 2ND FOR AM 1 UNAN CONSENT
5/07/99 1300 (S) AM NO 1 OFFERED
5/07/99 1300 (S) AM TO AM 1 ADOPTED UNAN CONSENT
5/07/99 1300 (S) AM NO 1 AS AMENDED ADOPTED Y20 N-
5/07/99 1302 (S) AUTOMATICALLY IN THIRD READING
5/07/99 1302 (S) PASSED ON RECONSIDERATION Y20 N-
5/07/99 1303 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
5/07/99 1308 (S) TRANSMITTED TO (H)
5/08/99 1256 (H) READ THE FIRST TIME - REFERRAL(S)
5/08/99 1256 (H) CRA, JUD
5/11/99 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
DOUG SALIK, Researcher
for Senator Tim Kelly
Alaska State Legislature
Capitol Building, Room 101
Juneau, Alaska 99801
Telephone: (907) 465-3822
POSITION STATEMENT: Testified on behalf of the bill's sponsor.
KEVIN WARING, Chairman
Local Boundary Commission
333 4th Avenue
Anchorage, Alaska 99501
Telephone: (907) 269-4559
POSITION STATEMENT: Supported SB 156.
KEVIN RITCHIE
Alaska Municipal League
217 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-1325
POSITION STATEMENT: Supported SB 156.
DAN BOCKHORST, Local Boundary Commission
Division of Municipal & Regional Assistance
Department of Community & Regional Affairs
333 West 4th Avenue
Anchorage, Alaska 99501
Telephone: (907) 269-4580
POSITION STATEMENT: Answered questions.
SENATOR WILKEN
Alaska State Legislature
Capitol Building, Room 514
Juneau, Alaska 99801
Telephone: (907) 465-3709
POSITION STATEMENT: Testified as Sponsor of SB 110.
PAUL COSTELLO, Land Management Director
Fairbanks Northstar Borough
809 Pioneer Road
Fairbanks, Alaska 99701
Telephone: (907) 459-1318
POSITION STATEMENT: Testified on SB 110.
TIM ROGERS, Legislative Program Coordinator
Municipality of Anchorage
632 West 6th Avenue
Anchorage, alaska 99501
Telephone: (907) 343-4467
POSITION STATEMENT: Supported SB 110.
LARRY DIETRICK, Program Manager
Division of Spill Prevention & Response
Department of Environmental Conservation
410 Willoughby Avenue, Suite 105
Juneau, Alaska 99801-1795
POSITION STATEMENT: Discussed the department's concerns.
CRAIG TILLERY, Assistant Attorney General
Environmental Section
Civil Section
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
Telephone: (907) 269-5100
POSITION STATEMENT: Answered questions.
BETH HAGEVIG, Legislative Administrative Assistant
for Senator Wilken
Alaska State Legislature
Capitol Building, Room 514
Juneau, Alaska 99801
Telephone: (907) 465-3709
POSITION STATEMENT: Answered questions.
JONATHON LACK, Legislative Assistant
for Representative Halcro
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
Telephone: (907) 465-4939
POSITION STATEMENT: Offered information on SB 110.
VIRGIL NORTON
PO Box 141796
Anchorage, Alaska 99514
Telephone: (907) 776-5481
POSITION STATEMENT: Discussed concerns with SB 110.
ANNETTE KRIETZER, Legislative Assistant
for Senator Leman
Alaska State Legislature
Capitol Building, Room 115
Juneau, Alaska 99801
Telephone: (907) 465-2095
POSITION STATEMENT: Responded to concerns with SB 110.
ACTION NARRATIVE
TAPE 99-32, SIDE A
Number 0001
CO-CHAIRMAN HALCRO called the House Community and Regional Affairs
Standing Committee meeting to order at 8:08 a.m. Members present
at the call to order were Representatives Halcro, Harris, Morgan
and Dyson. Representatives Kookesh, Joule and Murkowski arrived at
8:09 a.m., 8:10 a.m., and 8:11 a.m. respectively.
SB 156-MUNICIPAL CLASSIFICATIONS AND BOUNDARIES
CO-CHAIRMAN HALCRO announced that the first order of business
before the committee would be SENATE BILL NO. 156, "An Act relating
to municipal incorporation, to reclassification of cities, to
municipal boundary changes, and to dissolution of municipalities."
Number 0081
DOUG SALIK, Researcher for Senator Tim Kelly, Alaska State
Legislature, informed the committee that SB 156 was requested by
the Local Boundary Commission. This legislation has been reviewed
by Legislative Legal and Research Services. The Local Boundary
Commission and the Alaska Municipal League (AML) support SB 156.
He explained that SB 156 makes some changes to Title 29. One
change is to the language pertaining to how the Local Boundary
Commission may amend, accept, or reject petitions. There is an
attempt to make the language consistent in order to reduce
confusion for petitioners. Secondly, SB 156 will statutorial
endorse the Local Boundary Commission's practice of amending
certain petitions. For example, if a second class city wanted to
dissolve, the Local Boundary Commission may want to amend its
petition which would require the city to deal with its debt before
being allowed to dissolve.
REPRESENTATIVE KOOKESH pointed out that most communities in rural
Alaska would dissolve because they cannot make it. Those
communities would not have wanted to dissolve if they had the money
to pay the bills.
MR. SALIK deferred to those on-line.
REPRESENTATIVE KOOKESH stressed that it does not make sense. He
predicted that most local municipalities in rural Alaska faced with
this would simply walk away from it.
Number 0365
CO-CHAIRMAN HALCRO referred to the Local Boundary Commission's
report to the legislature dated January 29, 1999. That report
requested some statutory changes allowing greater flexibility to
the commission as well as language to address legal challenges.
Under the requested language from the commission's report, there is
no reference to the retainment of debt nor is that language in the
proposed statute changes. "Is that the intent?"
MR. SALIK deferred to a member of the Local Boundary Commission.
Number 0532
KEVIN WARING, Chairman, Local Boundary Commission, testified via
teleconference from Anchorage. The Local Boundary Commission
supports SB 156 as drafted by the local affairs agency. This
legislation has no fiscal impact. Furthermore, the proposed
changes encompassed in SB 156 would close the door to potential
litigation and the related costs to the state. Mr. Waring stated
that SB 156 achieves the following two worthwhile purposes. First,
SB 156 would make the language of five separate statutory sections
uniform. This is language that allows the commission to amend and
approve petitions for reclassifications, incorporations,
annexations, detachments, mergers, and consolidations after
dissolution. Existing statute utilizes varying language in the
five separate sections which are subject to interpretation. Upon
research of this language, the variance in the language was by
chance and not purposeful. He noted that the proposed changes in
SB 156 do not change the original legislative intent of the
language, but merely make the language uniform and remove a
potential source of confusion and litigation.
MR. WARING continued with the second purpose of SB 156. The
legislation would adopt language that acknowledges the Local
Boundary Commission's authority to impose conditions on petitions
that it does not approve. The Local Boundary Commission already
has this power and in some sections of these statutes, specifically
the dissolution statute, the commission is already implicitly
authorized to impose conditions on dissolution petitions. He noted
that to date the Attorney General's office has supported the Local
Boundary Commission in its exercise of this power. In the last
five years, the commission has imposed, about 12 times, various
types of conditions on petitions. This power has been utilized to
protect the state's interest. He informed the committee that since
1994, there have been seven dissolutions of city governments. As
required by law, the commission has used conditions to ensure that
municipal assets were properly disposed of and debts paid.
"Dissolving municipalities are creatures of the state. Therefore,
the state has an interest in ensuring that public assets are
properly disposed of. Similarly in several incorporations, where
the petitioners propose to finance new local governments through
the imposition of sales taxes or bed taxes. We have conditioned
approval of incorporation on simultaneous approval after the local
incorporation election of an appropriate tax." The main purpose is
to close the door to possible litigation. Mr. Waring pointed out
that Title 29 currently requires as a part of dissolution, that the
municipality be free of debt or make appropriate arrangements to
satisfy creditors.
Number 0945
REPRESENTATIVE MURKOWSKI pointed out that Mr. Waring's letter and
testimony have stated that ambiguities will be clarified and
hopefully, eliminate legal challenges. Is this currently a problem
or is this in an attempt to prevent such suits?
MR. WARING noted that there was a past case which dealt with the
ambiguity that is trying to be clarified here. In controversial
cases, the commission's statute and regulations are closely
inspected for any ambiguities. Mr. Waring said that he did
anticipate that the commission would be challenged on both of these
matters sooner or later.
CO-CHAIRMAN HALCRO referred to the January 28, 1999 report from the
commission which discusses litigants, Yakutat, asserting that the
commission does or does not have certain authority. The ambiguity
of the language allows arguments to be tailored to the litigant's
needs. He asked if that was a safe assessment as to the need for
these clarifications.
MR. WARING replied yes. The commission would like to keep such
issues from going to court.
REPRESENTATIVE KOOKESH referred to the language on page 3,
subsection (a) of SB 156 which indicates that the commission grants
dissolutions, if in the best interest of the state. Most
communities contemplating dissolution would not be thinking of the
state, but rather what is in the best interest of the community.
Furthermore, the last sentence of SB 156 which states, "Otherwise
it [Local Boundary Commission] shall reject the petition." is not
realistic. If a community wants to dissolve, the community will do
so whether the commission rejects the petition or not. This is of
concern.
Number 1184
MR. WARING said that Representative Kookesh has a good point. This
legislation does not seek to change the intent of any existing
legislation. In fact, existing legislation already includes
language referring to the "best interest of the state".
REPRESENTATIVE DYSON inquired as to what SB 156 would accomplish
besides impacting those communities desiring to resolve their state
sponsored relationship.
MR. WARING reiterated that SB 156 would make uniform the Local
Boundary Commission's procedures governing how the commission
amends and accrues petitions for incorporation, boundary changes,
dissolutions, consolidations, et cetera. Currently, there is
different language describing how the commission shall make
amendments in five separate sections. The proposed revisions
encompassed in SB 156 make this uniform as well as clearly
authorizing the commission to place conditions on various
petitions. Mr. Waring reiterated that the commission desires this
to be validated in statute in order to preclude legal challenges.
Number 1365
KEVIN RITCHIE, Alaska Municipal League, noted that the committee
should have a letter in the packet from AML which supports SB 156.
CO-CHAIRMAN HALCRO inquired as to whether Mr. Ritchie had discussed
the situation surrounding dissolutions with rural communities.
MR. RITCHIE replied no.
REPRESENTATIVE KOOKESH commented that he has not had anyone contact
him regarding this legislation. He asked if there was any
discussion at all on this issue by the AML. He assumed if there
was not, that there is no problem with the legislation.
MR. RITCHIE stated that SB 156 is viewed as a technical change. He
recognized the validity of the issues brought forth by
Representative Kookesh, but indicated that there may be another
arena to discuss that issue.
REPRESENTATIVE DYSON pointed out that SB 156 will be heard next in
House Finance. He inquired as to what AML has done to notify
rural, local governments of this legislation.
MR. RITCHIE explained that the AML has a bulletin which lists all
the municipal bills and information regarding those bills is
published every two weeks. There has not been a particular effort
in the newsletter to respond to SB 156 because it is viewed as a
technical change. Such legislation is also referred to the Local
Government Subcommittee of the Legislative Committee. The
subcommittee did not have any flags regarding SB 156, however this
particular issue was not raised either.
Number 1558
REPRESENTATIVE JOULE inquired as to how many municipalities would
be faced with dissolution in the face of cuts to municipal
assistance and revenue sharing. If the legislature eliminates
revenue sharing over a three year period, how would SB 156 affect
a community's ability to dissolve. He asked if any discussion had
occurred regarding the future.
MR. RITCHIE informed the committee that many municipalities came
forward in the face of the full elimination of the municipal
assistance and revenue sharing. The full elimination would have
resulted in a 40 to 60 percent reduction of the total operating
budget for many municipalities. Even with a third of that
remaining, there would still be a 10 to 20 percent reduction of the
operating budget for many municipalities. Many of the small
municipalities are on the edge. Mr. Ritchie described most
municipalities as like a Rotary club with a small staff. Any
reduction makes a significant difference to small communities.
Approximately 10-15 municipalities testified that they would have
to dissolve if a full elimination occurred. He predicted that even
with a one-third cut, it would be likely that the dissolution rate
would increase significantly. Mr. Ritchie said that he was not
prepared to answer the question regarding how any change to the
language would affect that eventual dissolution.
CO-CHAIRMAN HALCRO noted that current statute reads, "If the local
boundary commission determines that a municipality fails to meet
the standards for dissolution, it shall reject the petition." He
inquired as to examples of the standards for dissolution.
MR. WARING deferred to Mr. Bockhorst.
Number 1818
DAN BOCKHORST, Local Boundary Commission, Division of Municipal &
Regional Assistance, Department of Community & Regional Affairs,
emphasized that the provisions of SB 156 do not raise the standard
with respect to dissolutions. Currently, state statute provides
that dissolution may occur only if in the best interest of the
state, AS 29.06.500, and if the municipality is free of debt or has
satisfied its creditors with a method of repayment, AS 29.06.470.
The commission has adopted regulations in 19AAC.10.280 which
provide for factors and criteria the commission considers when
acting on a petition for dissolution.
MR. WARING echoed Mr. Bockhorst's comments that the provisions in
SB 156 do not seek to change the ground rules, but only make the
language uniform and clarify that the commission impose conditions
on petitioners, as is already in law.
REPRESENTATIVE DYSON inquired as to what would happen to the
creditors of a local government that is insolvent when that
government dissolves.
MR. WARING said that he believed that such a local government
cannot dissolve unless satisfactory arrangements are made with the
creditors. Otherwise, the state does not legally dissolve that
local government.
REPRESENTATIVE DYSON assumed then that the creditor's remedy is to
go to civil court.
MR. WARING said, "I think whatever, you know, arrangements they
would need to go to be satisfied...."
REPRESENTATIVE DYSON asked if there would be a situation in which
those liabilities would accumulate to the state.
MR. WARING cited AS 29.06.520 which deals with succession to assets
and liabilities. That statute indicates that the assets and
liabilities would revert to the state. In further response to
Representative Dyson, Mr. Waring stated that such has not happened
to this point. He felt that such a situation had not occurred
because of the requirement for the proper disposal of the assets
and the liabilities met before the dissolution occurs. Mr. Waring
noted that the cases in Alaska are fairly modest financial cases.
Number 2075
REPRESENTATIVE MORGAN inquired as to what would happen if a city
council just walked away and closed the doors. He noted that he
was involved in the Municipality of Aniak for six years on a
volunteer basis.
MR. WARING pointed out that AS 29.06.450 addresses such a
situation. He said that the current law reads, "The department
shall investigate a municipality that it considers to be inactive,
it shall report to the local boundary commission on the status of
the municipality. The commission may submit its recommendation to
the legislature, that the municipality be dissolved in the manner
provided for submission of boundary changes in Article X, Section
12 of the state constitution."
REPRESENTATIVE MORGAN reiterated his question regarding what will
the state do if a local government does not want to run the
government.
MR. WARING said that the aforementioned statute addresses a
situation in which there is no local government. He indicated that
the thrust of this legislation is that the commission and the
legislature would take action to dissolve the municipality by an
action rather than default.
REPRESENTATIVE MORGAN commented that many of those running the
second-class cities do not do so for the glory which is not
received.
Number 2288
REPRESENTATIVE KOOKESH reiterated his discomfort with the language,
"in the best interest of the state". He was also uncomfortable
with the language, "it shall reject the petition". Those are two
open-ended areas that should be reviewed by the Local Boundary
Commission and the AML.
CO-CHAIRMAN HARRIS commented that this legislation merely clarifies
what is presently in statute.
REPRESENTATIVE KOOKESH recognized that, but noted that the change
in circumstances with regard to municipal aid places cities in a
different position than last year. He indicated that should be
reviewed.
CO-CHAIRMAN HARRIS said that he did not disagree with
Representative Kookesh. He believed that these issues would arise
more often through the process.
REPRESENTATIVE DYSON asked if there is a reason that SB 156 needs
to move forward quickly.
MR. SALIK clarified that if SB 156 does not go forward this
session, the Local Boundary Commission will continue to operate
along these lines.
REPRESENTATIVE DYSON inquired as to the reaction from Mr. Salik and
those from the commission to on page 2, line 21, after "," insert,
"local community in question,"
MR. SALIK said that he believed that would be acceptable.
Number 2440
MR. WARING pointed out that the commission's regulations list a
number of specific criteria regarding what constitutes "in the best
interest of the state". Much of the list deals with the local
interests such as if there are alternative means by which the
service needs by the local community could be served. Local
concerns are a central factor in the interpretation of "the best
interest of the state".
MR. WARING informed the committee that five of the seven
dissolutions were involuntary meaning that the local government
stopped functioning. In those cases, the commission had to review
the situation and make recommendations for dissolution. In each
case, matters were resolved satisfactorily with the local
communities.
MR. WARING said, in response to Representative Dyson's earlier
question, that the commission would prefer the existing
legislation, but would accept the amendment if the committee so
chose.
REPRESENTATIVE DYSON surmised then that the commission already does
this per regulation. Therefore, placing it in this law would not
be a disservice to the current practice. However, it would be a
slight constraint in the commission's ability to move away from
that perspective in regulation.
MR. WARING commented that the amendment might inhibit the
commission's ability to approve dissolutions due to the entrance of
another separate standard in law to be satisfied.
Number 2577
REPRESENTATIVE DYSON moved a conceptual amendment which would
include language referring "to the best interest of the affected
community" wherever there is reference to "in the best interest of
the state". There being no objection, the conceptual amendment was
adopted.
CO-CHAIRMAN HARRIS referred to Section 5 which relates to AS
29.06.500. Under that statute, subsection (b) allows for an appeal
which is not maintained in SB 156.
MR. WARING clarified that Section 5 of SB 156, only affects
subsection (a) of the statute.
CO-CHAIRMAN HARRIS referred to the last sentence of AS 29.06.500
(a) which reads, "The commission may amend the proposal and accept
the petition." He asked if that would address Representative
Dyson's aforementioned concerns.
MR. WARING replied yes, and noted that is how the commission works.
CO-CHAIRMAN HARRIS asked if that sentence was eliminated in the
bill due to legal reasons.
MR. WARING explained that the language was made uniform in these
sections and relocated at the beginning of those sections.
Number 2830
REPRESENTATIVE MURKOWSKI pointed out that the commission's report
to the legislature discusses the best interest of the state
utilizing the language "the balanced best interest" in regard to
annexations. That report defines "the balanced best interest" as
a proposal must serve the best interest of the whole when all
interests are considered. As previously mentioned, the "best
interest" is set forth in the commission's regulations. The report
refers only to annexation and may not relate to dissolutions.
Therefore, Representative Murkowski felt that the conceptual
amendment was bringing the intent closer.
MR. WARING informed the committee that in the 1980s there was
statutory language referring to "the balanced best interest of the
state and affected local governments". Therefore, the commission
was required to ensure that the best interest of the government
desiring detachment, the government from whom the territory would
be detached, and the state be considered separately. In 1985, the
legislature brought all those under the common umbrella, "the
balanced best interest of the state as a whole." The commission
would be required, per its regulations, to balance the best
interest of all parties concerned.
TAPE 99-32, SIDE B
CO-CHAIRMAN HALCRO noted that the committee should have just
received legislation that his office has been working on. He
indicated that this legislation was drafted after discovering that
municipalities do not have rights, if in a situation in which the
municipality could not pay its debts.
CO-CHAIRMAN HALCRO closed the public testimony and inquired as to
the wishes of the committee.
Number 2877
CO-CHAIRMAN HARRIS moved that the committee report HCS SB 156 out
of committee with individual recommendations and attached fiscal
notes. There being no objections, HCS SB 156(CRA) was reported out
of committee.
The committee stood at-ease from 8:48 a.m. to 9:00 a.m.
SB 110-HAZARDOUS SUBST. RELEASE: GOVT ENTITY
CO-CHAIRMAN HALCRO announced that the next order of business before
the committee would be CS FOR SENATE BILL NO. 110(RLS) am, "An Act
relating to liability for the release of hazardous substances
involving certain property acquired by a governmental entity;
relating to making a determination as to when a hazardous substance
release has occurred; relating to liability of a party other than
the party responsible for the initial release of a hazardous
substance; and providing for an effective date."
SENATOR WILKEN, Sponsor of SB 110, Alaska State Legislature,
provided the committee with the following example in order to put
into perspective the reasoning behind SB 110. The Fairbanks
Northstar Borough currently, has 14 properties with taxes in
arrears which total a little over $500,000 in past taxes. Those
taxes are not being paid because the property owners realize that
the borough cannot take over those properties due to the perceived
or actual contamination on the property. The borough is concerned
that if those properties are taken by the borough, the borough
would be immediately liable for the contamination. The borough
would not be liable under federal law and the borough would be able
to foreclose on past taxes and determine what should be done with
the property. This is not the case under state law. Senator
Wilken stated that SB 110 aligns state law with federal law.
SENATOR WILKEN read the following sponsor statement:
This bill will assist municipalities in performing their
statutory duty to enforce liens for delinquent real
property taxes. Tax foreclosure is a mandatory process
leading to the taking of a tax deed that places the title
to a tax delinquent property in the municipality's name.
Some properties with delinquent taxes are contaminated.
Municipalities are concerned that they may be held liable
for pre-existing contamination of foreclosed land with
significant environmental remediation costs.
The federal Comprehensive Environmental Response,
Compensation, And Liability Act (CERCLA) exempts by
definition state and local governments who acquire
property through "bankruptcy, foreclosure, tax
delinquency, abandonment, or similar means." However,
the state law which addresses liability for damage caused
by the release of hazardous substances, AS 46.03.822,
does not precisely mirror the federal law. SB 110 will
amend AS 46.03.822 to ensure that the federal and state
laws are similar in this respect. The municipality may
therefore have title to the contaminated property without
involuntary exposure to cleanup.
Changes in the Senate also recognized the need to extend
this courtesy to innocent third parties, which are not
directly responsible for contaminating the property they
have acquired. Subsection (m) clarifies state law to say
that "a party, other than the party responsible for the
initial release, who had no reason to know that a
hazardous substance was disposed of on, in, or at the
facility and who has acted responsibly upon discovering
contamination...may not be held liable for the spread or
migration of the hazardous substance except by an action
of intentional misconduct or gross negligence."
Number 2711
SENATOR WILKEN noted that the committee packet should contain
letters of support from Anchorage, Kenai, Ketchikan, and the
Fairbanks Northstar Borough. He said that it is helpful to review
CSSB 110(RLS) am in two distinct sections. The first section being
from page 1, line 7 to page 2, line 8 which addresses the personal
liability. The second section is page 2, line 9 through to the end
of the bill which addresses the municipal liability. The
legislation began with a zero fiscal note, but through the process
a large fiscal note was added. There were some language changes
which has resulted in an indeterminate fiscal note. Senator Wilken
expressed his desire to report the bill from committee with the
indeterminate fiscal note in order to refine the fiscal note.
CO-CHAIRMAN HALCRO noted that there are two proposed amendments,
one prepared by Co-Chairman Halcro and one prepared by the
Department of Environmental Conservation (DEC), which may address
subsection (m). He asked if Senator Wilken had an opinion on those
amendments.
SENATOR WILKEN said that he had not seen Co-Chairman Halcro's
proposed amendment. With regard to DEC's amendment, Senator Wilken
pointed out that DEC's amendment would require a title change.
Co-Chairman Halcro's amendment would delete subsection (m) entirely
returning the bill to its original form which would be difficult.
Therefore, Senator Wilken opposed both amendments.
CO-CHAIRMAN HARRIS asked if this legislation made anyone immune
from intentional contamination to property when that person
abandons that property.
SENATOR WILKEN replied no.
Number 2518
PAUL COSTELLO, Land Management Director, Fairbanks Northstar
Borough, testified via teleconference from Fairbanks. He informed
the committee that there is a mandatory process under state
statute. This legislation attempts to make state statute mirror
federal statute in order to take these contaminated properties and
proceed through the tax foreclosure process to sale if necessary to
recoup the taxes. He echoed Senator Wilken's estimate that the
Fairbanks Northstar Borough would be looking at approximately
$500,000 in past due taxes, penalties, and interest.
TIM ROGERS, Legislative Program Coordinator, Municipality of
Anchorage, testified via teleconference from Anchorage. He
informed the committee of the Municipality of Anchorage's support
of this legislation.
REPRESENTATIVE MURKOWSKI assumed that the support indicated by Mr.
Rogers was in reference to the CSSB 110(RLS) am.
MR. ROGERS stated, "We support the original bill that was
introduced." There is no desire to limit the municipality's
liability when it acquires property. The main concern is with the
mandatory tax foreclosures.
REPRESENTATIVE MURKOWSKI noted that the amendments before the
committee would eliminate subsection (m) or substantially change
subsection (m). She asked if Mr. Rogers had any comment on
subsection (m).
MR. ROGERS said that he had no objection to the elimination of
subsection (m).
CO-CHAIRMAN HARRIS noted that Anchorage is the largest municipality
in Alaska. He inquired as to how many situations of abandonment of
property with contamination the municipality faces.
MR. ROGERS estimated that at any given time there could be 10 to 12
such properties. He offered to provide the committee with
specifics. In further response to Co-Chairman Harris, Anchorage
bears the cost. For example, there has been a case which has been
going on for the last four or five years which has cost in excess
of $50 million. He agreed with Co-Chairman Harris that the local
tax payers basically bear the burden.
Number 2282
REPRESENTATIVE MURKOWSKI asked if the Municipality of Anchorage had
a problem with leaving subsection (m) in the legislation.
MR. ROGERS said, "No, I don't believe we do."
CO-CHAIRMAN HALCRO asked if there is a foreclosure on contaminated
property, would the cost of remediation be passed on to the owner
or does the city assume complete responsibility and liability.
MR. ROGERS stated that the municipality would attempt to collect
that cost from the previous owner of the property, but that is not
always possible which would result in the municipality acquiring
the total remediation bill.
Number 2183
LARRY DIETRICK, Program Manager, Division of Spill Prevention &
Response, Department of Environmental Conservation (DEC), informed
the committee that the department has worked with the sponsor on
this legislation. He said that the department is not opposed to
the innocent landowner provision, although he noted there is
currently such a provision in law. Mr. Dietrick emphasized,
"Language changes to this statute are, in our view, are very
important, are very critical because they have the effect of
shifting the underlying liability for costs of the cleanup and
damages from the spiller to the state." He explained that the
fiscal note is indeterminate because some of the ambiguous language
in subsection (m) which may change the fundamental scheme for the
spiller pays principle.
MR. DIETRICK stated that the language of concern is on page 3, line
5, subsection (m) which reads, "first introduced into the
environment." The other language of concern is on page 3, line 6,
subsection (m) which reads, "party responsible for the initial
release" . Both are undefined terms which determine who is liable
and who caused the spill. Frequently, there are underground spills
which leach into a water supply years after the initial spill. In
such a situation, the argument that such a situation is not an
initial release is utilized. Such an argument creates legal
difficulties. He informed the committee of the "Mylos Reefer"
(ph), a vessel which has been aground for about 10 years now. The
initial release containment, control, and cleanup was completed.
Yet, this past summer some of the washings from the fuel tanks were
released. He asked if that would be an "initial release", a "new
spill", or an "old spill." He asked if the owners of the "Mylos
Reefer" (ph) should be relieved of responding to this subsequent
release.
MR. DIETRICK stated that the goal is to achieve clarity in the
language in order to avoid the ambiguity for the spiller in
subsection (m).
REPRESENTATIVE MURKOWSKI agreed that the language, "first
introduced" is problematic. The proposed amendment does not
contain that language. Is there a definition for "initial release"
in existing statute?
MR. DIETRICK replied no. He reiterated that the language, "initial
release" and "first introduced" are both concerning.
CO-CHAIRMAN HALCRO clarified, in response to Representative
Murkowski, that the amendment with lines drawn through the text of
subsection (m) and new language is from DEC. That amendment
attempts to address the indeterminate fiscal note.
MR. DIETRICK confirmed that the department has worked with the
Department of Law on this amendment.
Number 1844
CRAIG TILLERY, Assistant Attorney General, Environmental Section,
Civil Section, Department of Law, testified via teleconference from
Anchorage. In response to Representative Murkowski, Mr. Tillery
explained that the language "initial release" is not liked due to
the lack of a definition. However in the context of the second
sentence, the language does not create the problem it does in the
first sentence which is essentially a definition of the term
"release." The language "first introduced into the environment"
appears to be a temporal definition for release which is utilized
for the purpose of determining liability. If one returns to
subsection (a), there is an argument that liability, which is only
for damages resulting from a release, could be defined as only
being liable for the first introduction into the environment.
Therefore, once introduced into the environment any subsequent
migration of a contaminant through forces of nature would not be
compensable. Mr. Tillery believed that to be a very serious
problem with the first sentence.
MR. TILLERY expressed concern with the word "responsible" which is
subject to at least two definitions. One definition refers to a
legal responsibility which would really mean liability, although
that is not specified. He indicated that it could be interpreted
as a fault-based word. If that interpretation is the case, the
liability would be limited to only an individual who was
responsible per the language of the second sentence. That is of
concern because a person may transport a contaminant, but is not
the owner of the contaminant. This would be the difference between
an oil company and a shipper. He posed the scenario of a major oil
spill in which the shipper has limited assets and the oil company
is not responsible. Therefore, that entity may be released from
any liability with this language. Mr. Tillery noted that the word
"party" is not defined and that the word "person" is utilized
everywhere else in statute. He said that "person" would be
preferable.
Number 1677
REPRESENTATIVE KOOKESH asked if there is a statutory definition of
"a governmental entity." The sponsor statement only speaks to
municipalities.
MR. DIETRICK stated that the statutory definition of "governmental
entity" is not included in AS 46.03.826.
MR. TILLERY noted that "governmental entity" is not defined in this
section. However, it is defined in AS 46.03.822 (c)(2).
CO-CHAIRMAN HALCRO referred to page 2, line 10, which reads, "A
unit of state or local government" that seems to be fairly broad.
REPRESENTATIVE KOOKESH commented that the language "governmental
entity" should be defined.
Number 1520
BETH HAGEVIG, Legislative Administrative Assistant for Senator
Wilken, Alaska State Legislature, said that she did not have the
definition for "governmental entity" either. As Senator Wilken
stated early, he intended to sponsor this legislation on behalf of
the Fairbanks Northstar Borough. The bill originally was intended
to cover municipalities as well as other agencies such as the
Department of Transportation.
CO-CHAIRMAN HARRIS asked if SB 110 received a House Judiciary
Committee referral.
MS. HAGEVIG informed the committee that there were two Senate
Judiciary Committee meetings. She also acknowledged that the bill
has received a House Judiciary Committee referral.
CO-CHAIRMAN HARRIS noted that the bill sponsor requested that there
be no House Judiciary Committee referral.
REPRESENTATIVE MURKOWSKI pointed out that the title of SB 110
utilizes the word "party" as does subsection (m), but the remainder
of the bill utilizes the word "person."
CO-CHAIRMAN HALCRO asked if Ms. Hagevig had reviewed the amendment
from DEC.
MS. HAGEVIG replied yes. In further response to Co-Chairman
Halcro, she said that she was not familiar enough with the law to
comment. The focus had been on the municipality side. She
indicated that Ms. Lynch, Attorney for the Municipality of
Anchorage, may be able to comment.
MR. DIETRICK expressed concern that these terms are ambiguous and
therefore, open to interpretation. This possibly insulates a
legitimate spiller who is liable to pay. The possible argument for
the spiller would shift the costs for the event to the state.
Therefore, he agreed with Co-Chairman Halcro that those concerns
were the reason for the indeterminate fiscal note. In any given
year, at least one such situation costs in the millions of dollars.
Mr. Dietrick explained that the state finances these costs from the
response account. If such a situation occurs and the burden is
shifted to the state, the response account would be lowered below
$50 million which triggers the two cent tax. Such a cycle would
continue for each such case.
REPRESENTATIVE MURKOWSKI inquired as to what the original bill
included.
MS. HAGEVIG specified that the language on page 2, line 9 through
page 3, line 2 would be the closest to the original bill.
CO-CHAIRMAN HALCRO inquired as to the reasoning behind inserting
subsection (m) in the Senate.
MS. HAGEVIG explained that there were concerns in the Senate
Judiciary Committee and the Senate floor. The concern was that the
legislation provided an exemption from liability to governmental
entities, without extending the same privilege to innocent
landowners under similar obligations.
REPRESENTATIVE KOOKESH reiterated his concern with the lack of a
definition for "governmental entity". He stressed, for the record,
that the language on page 2, line 10, "A unity of state or local
government" does not exclude tribal governments or associations.
Number 1050
JONATHON LACK, Legislative Assistant for Representative Halcro,
Alaska State Legislature, informed the committee that he discussed
the definition of a "governmental entity" on another matter with
Tam Cook, Director, Legal and Research Services. He explained that
Ms. Cook indicated that the language "governmental entity" is
usually utilized in titles for the legislation to be broad. The
language utilized in statute is "municipality" which is defined in
AS 01.10.060(4) as "'municipality' means a political subdivision
incorporated under the laws of the state that is a home rule or
general law city, a home rule or general law borough, or a unified
municipality."
REPRESENTATIVE KOOKESH reiterated his concerns regarding the lack
of a definition of "governmental entity." He also reiterated his
comment that a "governmental entity" does not exclude tribal
governments and associations.
REPRESENTATIVE MURKOWSKI referred to AS 46.03.822 which speaks to
remedial action regarding liability for the release of hazardous
substances. That statute refers to "the state, a municipality, or
a village" which seems to be used throughout this section of
statute which subsection (m) of SB 110 would fall under.
Representative Murkowski surmised then that "governmental entities"
are construed to be "the state, a municipality, or a village."
Number 0860
VIRGIL NORTON, testifying via teleconference from Kenai, informed
the committee that he was testifying as a citizen. He noted that
he is a project manager for a contaminated site on the Kenai
Peninsula. The remediation for this contaminated site was done by
the Environmental Protection Agency last year. The site is
expected to be closed this season.
MR. NORTON pointed out that he has had much experience with this
statute. He expressed concern with the innocent land owners. He
noted that he helped craft some of the language which was adopted
in the Senate Judiciary Committee. The idea with the Senate
Judiciary Committee's amendment was to always place liability on
the person who pollutes or contaminates land. Initially, Mr.
Norton was concerned with regard to who would ultimately bear the
costs of a contaminated property that was acquired by a borough or
municipality if the emphasis is not always placed on the person who
does the pollution. He was also concerned with the original
language which had a way of coloring the existing statute to deny
a person the innocent land owner defense. He believed that his
client was a test case for this statute. Mr. Norton did not object
to changing the language "party" to "person." The idea behind
subsection (m) is that the polluter should bear all the liability
and an innocent land owner, who acts responsibly, does not bear the
liability. He stressed the need to preserve the innocent land
owner defense in AS 46.03.822. He said that he accepted the
language referring to the due diligence of the land owner in
checking out the property.
REPRESENTATIVE MURKOWSKI asked how Mr. Norton would interpret the
term "responsibly" in reference to the innocent land owner defense.
MR. NORTON explained that "acting responsibly", per the existing
statute, is that land owner attempting to remediate, contain and
prevent leaching of contamination that the land owner has
discovered. An innocent land owner could incur an enormous
expense. For example, Mr. Norton's father-in-law incurred over $1
million in expenses. This is a liability issue; who will
ultimately pay.
REPRESENTATIVE MURKOWSKI indicated the possible need to clarify
what "acting responsibly" would mean through a list to be placed in
statute.
MR. NORTON noted that one using the innocent land owner defense
would have to obey all the current federal environmental
regulations encompassed in Title 46 and the DEC's regulations.
MS. HAGEVIG pointed out that "acting responsibly" is discussed in
AS 46.03.822(b)(2) which reads:
"in relation to (1)(B) or (C) of this subsection, that
the person, within a reasonable period of time after the
act occurred,
(A) discovered the release or threatened release of the
hazardous substance; and
(B) began operations to contain and clean up the
hazardous substance."
CO-CHAIRMAN HALCRO requested that Ms. Krietzer comment on some of
the concerns raised.
Number 0232
ANNETTE KRIETZER, Legislative Assistant for Senator Leman, Alaska
State Legislature, said that she did not doubt that Mr. Tillery had
concerns regarding, "first introduced into the environment." Ms.
Krietzer said, "I will quote from the state's attorney general's
opinion regarding CERCLA, 'Courts have complained about the in
artful, confusing, and ambiguous language and the absence of useful
legislative history in interpreting CERCLA. It is not a model of
legislative draftsmanship and the statute is riddled with
inconsistencies and redundancies.'" She assumed that Mr. Tillery
assisted in the development of the fiscal note and the language
explaining that note. The explanation of the fiscal note says that
the language is unclear, ambiguous and causes uncertainty which Ms.
Krietzer indicated was the case because state language parallels
CERCLA. With regard to Mr. Tillery's example of a ship on the
rocks, subsection (m) refers to a facility which per the statutory
definition would not include a marine vessel. She said that some
of DEC's arguments are "somewhat specious." Nothing in the statute
nor this bill relieves a party from "acting responsibly." It
merely extends the liability protection given to municipalities to
an innocent land owner which CERCLA allows. In statute the problem
is that the state...
TAPE 99-33, SIDE A
MS. KRIETZER explained that subsection (m) is trying to make it
very explicit as to what the innocent land owner defense is.
REPRESENTATIVE MURKOWSKI referred to subsection (m) which includes
language indicating that an unknowing party not responsible for an
initial release "may not be held liable for the spread or migration
of the hazardous substance except by an act or intentional
misconduct or gross negligence." She inquired as to how "acting
responsibly" would tie in with "intentional misconduct or gross
negligence."
Number 0136
MR. TILLERY expressed concern with the last phrase in subsection
(m). That phrase would imply that if a person were at fault that
person may not be held liable, which he understood earlier
testimony to indicate was not the intent. Furthermore, the last
phrase would seem to be exculpatory for all forms of liability not
just that liability in AS 46.03.822 which is different than the
municipality's bill. The municipality specifically limits the
nonliability phrase to under this section. Therefore, Mr. Tillery
felt that the last few lines of subsection (m) are too broad.
MR. TILLERY clarified that his earlier comment regarding liability
spoke to the first sentence which seems to be an independent
thought from the second sentence. The second sentence is limited
to a facility which does not include a vessel. The first sentence
does not have a limitation and would include a vessel.
MS. KRIETZER asked if the language on page 3, line 4 which reads,
"a release shall be considered to have occurred when a hazardous
substance is first introduced into the environment" relieved Mr.
Tillery's concerns.
MR. TILLERY indicated that it eliminates a few of his concerns. He
said, "It still leaves open the situation when you have a large
storage tank or any kind of a tank or any kind of a release, and
that release falls and hits the environment. At that point, there
is now a definition. That is a release. That is the event for
which someone is liable. When that contaminant now begins to
migrate, as a result of gravity, of ground water flow, as a result
of pressures or whatever it begins to migrate. Now there is an
argument that once it gets beyond that initial contact with the
environment, then no liability exists. So, it helps to get rid of
vessels, but it does not solve the problem. The problem is that in
that first sentence, you are essentially defining a fundamental
term of the statute which is the term release. When you do that,
it--there is a tendency for these things to have ramifications that
go far beyond the intent of the drafter. And I believe that is
what has happened in this case."
CO-CHAIRMAN HALCRO noted that SB 110 has a House Judiciary
Committee referral. He suggested that the committee report the
bill from committee. He asked if there was anyone wishing to
testify on SB 110. There being no one, the public testimony on
SB 110 was closed.
Number 0532
REPRESENTATIVE MURKOWSKI commented that she was not satisfied with
the legislation as it currently exists. Many issues have been
raised and many questions remain unanswered. She said, "I'm not
entirely certain if this is something that needs to move through
quickly, whether we have more time to consider it here. It
certainly needs work in the Judiciary Committee. ... If we had time
for another hearing on the matter it probably wouldn't hurt us
either."
CO-CHAIRMAN HALCRO noted that the bill sponsor expressed the desire
to move the bill forward. Co-Chairman Halcro expressed concern
with the indeterminate fiscal note. In the long run, Co-Chairman
Halcro was concerned with what the state would have to absorb
because of that. He noted that there is the argument that the
proposed amendments would require a title change which would be
suitable for the House Judiciary Committee to review.
REPRESENTATIVE DYSON suggested, "Maybe we pass this out, it's not
going to get through the process, I don't think, this year and if
we ask...Representative Murkowski, that if in the Judiciary
process, ..., things come up that are back to being a community
concern that you let this committee know and we can request to get
it back."
Number 0759
REPRESENTATIVE DYSON moved to report CSSB 110 (RLS) am out of
committee with individual recommendations and the accompanying
fiscal note.
CO-CHAIRMAN HALCRO objected for discussion purposes. He asked if
Representative Murkowski had any problems with that.
REPRESENTATIVE MURKOWSKI said that she would be happy to report
back to the committee and let the committee know if she felt it
appropriate for the bill to return to the House Community &
Regional Affairs Committee.
CO-CHAIRMAN HALCRO removed his objection.
There being no objection, CSSB 100(RLS) am was reported from
committee.
CO-CHAIRMAN HALCRO apologized to those present to testify on HB 24.
Due to time constraints it would have to be rescheduled.
ADJOURNMENT
There being no further business before the committee, the House
Community & Regional Affairs Standing Committee meeting was
adjourned at 9:55 a.m.
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