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
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 8, 1996 1:12 p.m. MEMBERS PRESENT Representative Ivan Ivan, Co-Chair Representative Alan Austerman, Co-Chair Representative Kim Elton Representative Pete Kott Representative Irene Nicholia MEMBERS ABSENT Representative Jerry Mackie Representative Al Vezey COMMITTEE CALENDAR EXECUTIVE ORDER 93 - TRANSFER ARDOR TO DEPT. OF COMMUNITY AND REGIONAL AFFAIRS - PASSED OUT OF COMMITTEE * HOUSE BILL NO. 391 "An Act relating to succession to assets and liabilities of dissolved municipalities." - PASSED CS HB 391(CRA) OUT OF COMMITTEE HOUSE BILL NO. 358 "An Act relating to dog mushers' contests." - PASSED CS HB 358(CRA) OUT OF COMMITTEE (* First Public Hearing) PREVIOUS ACTION BILL: HB 391 SHORT TITLE: DISSOLVED MUNICIPALITIES/SUCCESSION SPONSOR(S): REPRESENTATIVE(S) IVAN JRN-DATE JRN-DATE ACTION 01/05/96 2369 (H) PREFILE RELEASED 01/08/96 2369 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2369 (H) CRA, JUDICIARY, FINANCE 01/25/96 (H) CRA AT 01:00 PM CAPITOL 124 01/25/96 (H) MINUTE(CRA) 02/08/96 (H) CRA AT 01:00 PM CAPITOL 124 BILL: HB 358 SHORT TITLE: DOG MUSHING CONTESTS/GAMES OF CHANCE SPONSOR(S): REPRESENTATIVE(S) IVAN JRN-DATE JRN-DATE ACTION 12/29/95 2359 (H) PREFILE RELEASED 01/08/96 2359 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2360 (H) CRA, FINANCE 01/23/96 (H) CRA AT 01:00 PM CAPITOL 124 01/23/96 (H) MINUTE(CRA) 02/08/96 (H) CRA AT 01:00 PM CAPITOL 124 WITNESS REGISTER JEFF SMITH, Director Division of Community and Rural Development Department of Community and Regional Affairs 333 West Fourth Avenue, Suite 220 Anchorage, Alaska 99501 Telephone: (907) 269-4607 POSITION STATEMENT: Presented department's position and answered questions on EO 93. DONNA TOLLMAN, President ARDOR Association; and Executive Director, Copper Valley Economic Development Council P.O. Box 9 Glennallen, Alaska 99588 Telephone: (907) 822-5001 POSITION STATEMENT: Supported EO 93. KIMBERLY METCALFE-HELMAR, Special Assistant Office of the Commissioner Department of Community and Regional Affairs P.O. Box 112100 Juneau, Alaska 99811-2100 Telephone: (907) 465-4898 POSITION STATEMENT: Presented department's position and answered questions on EO 93. JOHN WALSH, Legislative Assistant to Representative Richard Foster Alaska State Legislature State Capitol Building, Room 410 Juneau, Alaska 99801 Telephone: (907) 465-3789 POSITION STATEMENT: Testified on EO 93. TOM WRIGHT, Legislative Assistant to Representative Ivan Ivan Alaska State Legislature State Capitol Building, Room 503 Juneau, Alaska 99801 Telephone: (907) 465-4942 POSITION STATEMENT: Presented sponsor statement and explained changes in the committee substitute for HB391. MARJORIE VANDOR, Assistant Attorney General Civil Division (Juneau) Governmental Affairs Section Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3600 POSITION STATEMENT: Answered questions on HB 391. JOHN BAKER, Assistant Attorney General Natural Resources Section Civil Division (Anchorage) Department of Law 1031 West Fourth Avenue, Suite 200 Anchorage, Alaska 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Answered questions on HB 391 RON SWANSON, Director Central Office Division of Land Department of Natural Resources 3601 C Street, Suite 1122 Anchorage, Alaska 99503-5947 Telephone: (907) 762-2692 POSITION STATEMENT: Presented department's position on HB 391. PATRICK K. POLAND, Director Central Office Division of Municipal and Regional Assistance Department of Community and Regional Affairs 333 West Fourth Avenue, Suite 319 Anchorage, Alaska 99501 Telephone: (907) 269-4578 POSITION STATEMENT: Presented department's position on HB 391. ANTHONY CAOLE, Tribal Administrator Village of Quinhagak General Delivery Quinhagak, Alaska 99655 Telephone: (907) 556-8167 POSITION STATEMENT: Testified on HB 391. DARIO NOTTI, Legislative Intern Office of Representative Ivan Ivan Alaska State Legislature State Capitol Building, Room 503 Juneau, Alaska 99801 Telephone: (907) 465-4942 POSITION STATEMENT: Presented committee substitute and discussed changes to HB 358. DENNIS POSHARD, Director Charitable Gaming Division Department of Revenue P.O. Box 110440 Juneau, Alaska 99811-0440 Telephone: (907) 465-2229 POSITION STATEMENT: Presented department's position and answered questions on HB 358. VINCENT USERA, Assistant Attorney General Commercial Section Civil Division (Juneau) Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3600 POSITION STATEMENT: Answered questions on HB 358. ACTION NARRATIVE TAPE 96-11, SIDE A Number 0001 CO-CHAIR IVAN IVAN called the House Community and Regional Affairs Committee meeting to order at 1:12 p.m. Members present at the call to order were Representatives Ivan, Austerman and Kott; Representative Elton joined the meeting shortly thereafter. Members absent were Representatives Mackie, Vezey and Nicholia. EO 93 - TRANSFER ARDOR TO DEPT. OF COMMUNITY AND REGIONAL AFFAIRS Number 0074 CO-CHAIR IVAN IVAN noted that committee packets for EO 93 contained a copy of the order; zero fiscal notes from the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; and the Governor's transmittal letter. Co- Chair Ivan informed the committee that any action opposing EO 93 must take place by March7, 1996; otherwise, the executive order would stand. Number 0153 JEFF SMITH, Director, Division of Community and Rural Development, Department of Community and Regional Affairs (DCRA), testified via teleconference from Anchorage in support of EO 93. The department believed that administering the ARDOR program would allow DCRA to better integrate the program, using DCRA's regional office staff to provide more specific technical assistance to individual ARDORs. The department also thought it could help new ARDORs start up in a more effective and efficient manner. Mr. Smith noted that DCRA would administer the program for approximately $60,000, down from $250,000, with the savings due to utilizing DCRA's existing resources and regional offices, which were already involved in economic development programs. Number 0286 CO-CHAIR AUSTERMAN referred to the budget being reduced to $60,000 and asked Mr. Smith if that was due to federal cutbacks. MR. SMITH replied that some was due to federal reductions but there were also reductions the Governor had included in the FY 97 budget. Number 0326 CO-CHAIR AUSTERMAN asked how much of the $60,000 was federal money. MR. SMITH believed none of it was. CO-CHAIR AUSTERMAN asked if the ARDOR program would receive no federal funding or whether that meant their budget was more than $60,000. Number 0358 MR. SMITH replied they did not anticipate any federal receipts for the program next year. CO-CHAIR IVAN asked Mr. Smith how many ARDORs currently existed in Alaska. Number 0374 MR. SMITH responded he was not sure. CO-CHAIR AUSTERMAN replied that he had just been signaled that there were 12. MR. SMITH agreed that sounded right. CO-CHAIR AUSTERMAN asked if they were talking about dividing $60,000 among the 12 ARDORs. Number 0420 MR. SMITH clarified that the $60,000 was for administration. The budget, including administration, was $650,000 for FY 97. He added that none of that was state general fund money. Instead, they would be working with the Alaska Industrial Development and Export Authority (AIDEA), which would be expanding their investments throughout Alaska. The DCRA would be utilizing those organizations and corporate receipts from AIDEA to curry the atmosphere in areas where economic development projects would be viable. Number 0536 DONNA TOLLMAN, President, ARDOR Association, and Executive Director, Copper Valley Economic Development Council, testified via teleconference from Glennallen in support of EO 93. Her organization's concern, she said, was that they be allowed to continue to serve the needs of the entire state of Alaska in economic development, in the manner they were currently doing it. Number 0599 CO-CHAIR AUSTERMAN asked Ms. Tollman how much of a cut most ARDORs would receive with the loss of federal funds. MS. TOLLMAN explained that the $250,000 which DCED had was a match with U.S. Department of Commerce, Economic Development Administration (EDA) grant funding. The loss of funds would eliminate the ARDORs' ability to meet with each other. Currently, their organization received parts of two salaries and two full salaries, for administration and technical assistance through the ARDOR program. Using EDA monies, they were also working on an infrastructure project; each year, they tried to tackle an issue such as that. The reduction in funds would affect their ability to accomplish such a major statewide task. In terms of funding to each individual organization, Ms. Tollman said, they had received a substantial cut the previous year and did not anticipate receiving much larger amounts this year. She said they were currently "at low maintenance level." She reiterated that they had to match all of those funds in order to receive them. That was done through a process using federal funds that were project- specific, as well as private sector contributions. Number 0717 CO-CHAIR IVAN noted for the record that Representative Irene Nicholia had joined the meeting. KIMBERLY METCALFE-HELMAR, Special Assistant, Office of the Commissioner, Department of Community and Regional Affairs, acknowledged that the committee had questions about the budget. Although she denied being an expert on that subject, she did know that of the $250,000 that DCED had in their budget, $125,000 came from a federal Economic Development Association (EDA) grant. She said DCED was in the sixth year of a three-year grant cycle. They had extended it three years beyond what they originally thought they could, she explained. That money would no longer be there after the transfer occurred. It was not expected, even if the program had remained in DCED this year. Number 0775 MS. METCALFE-HELMAR said she understood that the $125,000, a state match, had been reduced to $60,000. She explained that DCRA had asked to fund one grants administrator position. At DCED, she noted, they had run the program using two grants administrators; there had also been a $50,000 budget for travel that would no longer be there. From her understanding, each ARDOR received a yearly grant of approximately $50,000. CO-CHAIR AUSTERMAN asked if that was from the state. MS. METCALFE-HELMAR replied that it came from the ARDOR grant fund money, a total of $650,000. This year, she said, that money came from AIDEA corporate receipts. It would no longer be general fund money, as put into the Governor's budget this year, as she understood it. Number 0851 REPRESENTATIVE PETE KOTT asked who would pick up the moving costs for transferring the program from DCED to DCRA. MS. METCALFE-HELMAR responded there should be no moving costs; there might be files to be moved, but no positions were moving with the transfer. There would be no furniture or people moving. Number 0898 JOHN WALSH, Legislative Assistant to Representative Richard Foster, explained that Representative Foster was Co-Chairman for the House Finance Committee. Mr. Walsh stated that EO 93 was evidently an attempt by the Administration to streamline operations, in light of budget changes on the federal level and reorganization of plans internally. He acknowledged that DCRA had a rural perspective and outreach in their mission statement. Number 0945 MR. WALSH voiced concern about the risk of taking funds from AIDEA, based on the Governor's veto the previous year of the legislature's attempt to take funds from AIDEA. If the fund shift did not occur, he said, the program could be vulnerable. Whether or not it was a House Finance Committee issue, it was certainly an issue in the budget, Mr. Walsh said, and one that needed brought to the attention of the current committee. Number 1030 CO-CHAIR AUSTERMAN mentioned that one of the questions he had was how the Governor could use AIDEA corporate receipts, whereas the legislature had to allocate those funds on a yearly budget basis. He suggested that the House Finance Committee consider that question. Number 1087 CO-CHAIR AUSTERMAN moved that the committee pass EO 93 out of committee, with individual recommendations; Representative Kim Elton added that there were attached zero fiscal notes. There being no objection, EO 93 was moved from committee. 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. HB 358 - DOG MUSHING CONTESTS/GAMES OF CHANCE Number 2273 CO-CHAIR IVAN noted that some of the concerns expressed about HB 358 in a previous hearing had been worked on by his staff and the Division of Charitable Gaming. He said a committee substitute had been submitted to committee members. Number 2290 REPRESENTATIVE NICHOLIA moved to adopt CS HB 358 for discussion purposes. There being no objection, it was so ordered. Number 2309 DARIO NOTTI, Legislative Intern, Office of Representative Ivan Ivan, sponsor of the bill, presented the committee substitute for HB 358 and outlined the changes. He explained that the only changes were in Section 2. The first change was a specification that the games of chance must be operated by dog mushers' associations, to ensure that proceeds would go to the cause intended. The second change was a definition of the three elements of chance specifying that the first element was the primary determinant, with the second and third elements being tie-breakers. The third change was to drop the 200-mile minimum, amending it to include any race recognized by the Charitable Gaming Division. The purpose of this was to include the entire sport and to avoid an inference that it was special legislation. Number 2417 CO-CHAIR AUSTERMAN referred to page 2, section (B), lines 6 and 7, and asked if the "primary determinant of success" was the winner. MR. NOTTI affirmed that was correct. REPRESENTATIVE ELTON referred to "primary determinant of success," saying he read it in terms of the three different elements. One element would be primary, being the winning person or the winning time, for example; that would be how the prize would initially be awarded. However, if there were a tie, the second element would be used; if there were still a tie, the third element would be used. Representative Elton said he had not read it as necessarily being the winning musher, but rather that each race would have to specify the primary determinant of success, whether it be time of finish or another element. TAPE 96-11, SIDE B Number 0002 CO-CHAIR AUSTERMAN asked if the primary determinant of success was defined either in the bill or in statute. DENNIS POSHARD, Director, Charitable Gaming Division, Department of Revenue, replied no, he did not believe "success" was defined anywhere in statute. Neither was "winner." Certainly, he said, there would be other choices of words that may read better. He thought there were not many other ways to interpret the bill other than the interpretation provided by Representative Elton. Mr. Poshard felt that the "primary determinant of success" in the contest, meaning whether or not a person won, would be the first element; the second element would be the secondary determinant of success and so forth. He added that was how he himself read the bill and that was how the Charitable Gaming Division would interpret it. The division would certainly ensure that contests were structured in that manner, he added. Number 0056 REPRESENTATIVE NICHOLIA commented that CS HB 358 was a good committee substitute. She noted that it addressed all the problems people had testified about and that it was a good bill for the dog mushing associations. REPRESENTATIVE ELTON agreed with Representative Nicholia. He then brought up an issue for the purposes of discussion, saying he was not sure how he felt about it. He referred to the elimination of the 200-mile restriction; he expressed some discomfort with the notion that some junior mushing events might be the subject of gambling by adults. Number 0099 REPRESENTATIVE NICHOLIA responded that she had grown up around dog mushing and had been a junior dog musher herself. In all the races she had been to, she had never seen bets placed on junior races. CO-CHAIR IVAN commented that in looking at Iditarod-qualifying races of 200 miles and more, there were quite a few; they were looking for ways to assist in the fund-raising efforts. He said they had conceded to include, for example, the Fur Rendezvous races in Anchorage, which were a 25-mile, three-day event. The smaller races occurred in small communities, which did their own fund- raising. Number 0167 CO-CHAIR AUSTERMAN said he had the same question the last time around. He wondered, if there was an 18-year-old running in a dog race, or a 17-year-old, what the public perception would be if betting was allowed on that race. He also wondered if there were limits in the mushing association. He added that it was probably a public perception issue and that it made no difference to him one way or the other. Number 0189 REPRESENTATIVE ELTON said he assumed the Charitable Gaming Division would adopt regulations or a permit application. He explained his experience with dog mushing was more urban, including organized races for juniors in the Mat-Su Valley. He was more concerned about races organized for children and juniors than about an Iditarod race or Iditarod-qualifying race that might have juniors in it. He asked Mr. Poshard if it were possible, in the permit application, to specify no betting on races designed and organized for the benefit of junior mushers. Number 0237 MR. POSHARD responded that the division could adopt regulations, but he had concerns about the difficulty of doing that within the gaming industry. The more clearly it was spelled out in statute, he said, the better off they were. If the committee wished to set an age limit for betting or prohibit gambling on a junior mushing race, Mr. Poshard preferred that it be addressed in statute. However, the division certainly could adopt regulations. Number 0266 CO-CHAIR IVAN said before proceeding further, he wanted to have Vincent Usera from the Department of Law address that issue. VINCENT USERA, Assistant Attorney General, Commercial Section, Civil Division (Juneau), Department of Law, agreed with Mr. Poshard that if the committee wanted to set an age limit, it would be best done in statute. He explained that there was a question at times whether a particular regulation exceeded statutory authority. Statutory authority for adopting regulations in general was extremely broad for charitable gaming. However, there was still a question. It would be best to place any restrictions in the statute itself. Number 0308 CO-CHAIR AUSTERMAN asked Mr. Usera to expound on his feelings about the technicality of a 19-year-old or 17-year-old actually running in a race where there was betting going on. MR. USERA asked if the question was whether it was legal or not. CO-CHAIR AUSTERMAN clarified he wanted to know if the law precluded it. MR. USERA specified that the law did not say one way or the other. One might have moral objections, but the law itself did not address the issue. Number 0331 REPRESENTATIVE NICHOLIA asked whether the salmon classics were restricted by age. MR. USERA replied no, he did not believe so. REPRESENTATIVE NICHOLIA questioned why it should be done for dog mushing. MR. USERA continued, saying if a seven-year-old boy caught the biggest fish in the derby, he got the prize. Number 0357 MR. POSHARD explained that the only age limits in statute that dealt with charitable gaming activity were: 1) a person had to be 19 years old to play bingo and 2) a person had to be 21 years old to play pull tabs. Those were the only statutory or regulatory age limits that had been established. None of the other contests, including the Nenana Ice Classic, had any age limitations placed there by law. Number 0378 MR. USERA pointed out there was a distinction, which he thought important here, between the age of the person playing the game and the age of the person who was the subject of the game. REPRESENTATIVE ELTON asked Mr. Usera if "juvenile" was defined in statute elsewhere and, if so, what that definition was. Number 0400 MR. USERA replied no, not in the charitable gaming statutes. There was a definition of "minority," he said, which was the age of 18. REPRESENTATIVE ELTON mentioned again that he was not sure how he felt about the issue. However, he suggested that, for example, the committee could, on page 1, line 14, in Section 2, do something while defining contests. For example, the language could read, "contests, conducted by a dog mushers' association, except dog mushers' contests restricted to juveniles". That would preclude people from betting on the three-dog children's races, for example, without precluding them from betting on the Iditarod if there was a 17-year-old in that race. Number 0441 REPRESENTATIVE NICHOLIA said she had a problem with that because they were not putting restrictions on salmon and snow machine classics. She foresaw the possibility of a discrimination lawsuit from dog mushers. Number 0466 CO-CHAIR IVAN pointed out that HB 358 was trying to allow dog musher organizations to raise funds in order for the mushing contests to be held. Small, junior dog races were not at the site of the main event, he said. They were on the side and held one or two days prior to the main event. As far as he saw, those races would not be involved in the placing of bets. Number 0508 REPRESENTATIVE ELTON responded to Representative Nicholia that he was not trying to restrict the game of chance so that people under 21 years of age could not buy a chance. The notion that bothered him, he said, was adults betting on kids' races. He felt that put too much pressure on kids. He agreed that it might not be a problem. However, there was nothing in the bill to stop that, either. Number 0543 CO-CHAIR AUSTERMAN clarified that in no way was he trying to be discriminatory. That was the furthest thing from his mind, he added. While they might all be lumped together in the bill, there was a difference between catching a salmon and having two people vying against each other and trying to pick out who would be the winner of those two, be it dog mushers or boxers in a ring. Perhaps it was a moral feeling, he said, but he viewed them as different. Number 0603 REPRESENTATIVE KOTT agreed with Representative Nicholia that if they made a substantive change such as the one they were talking about, it would be discriminatory. He believed that in the snow machine classic, for example, people could now bet on a driver of 16 or 17 years of age. Perhaps they should look at changing the parameters, he said. He agreed that adults should not be betting on juveniles that participated in any one of the races. Fishing derbies were entirely different, he added. He agreed it would be discriminatory if they just carved out dog mushers. However, they had a broader perspective to consider, one they had already basically allowed to occur. Number 0647 MR. NOTTI said he thought for the top-of-the-line races, such as the Iditarod, the Yukon Quest, the North American and the Fur Rendezvous, participants had to be 18 years old. However, for other races, 17-year-olds were allowed. He envisioned that the betting would be on the bigger races, with tickets sold a month or six weeks prior to the race. He did not see it as being like at a horse race. For the junior races, he said, the kids signed up the day of the race or the day before. He did not envision having betting booths where a person could sign up right until the start of the race. He saw this more as buying tickets six weeks before the big race, with the big names drawing the ticket sales. He thought they would not go to the bother of printing up tickets for $100 worth of tickets. "I may be wrong," he added. Number 0740 REPRESENTATIVE ELTON responded he was not sure Mr. Notti was wrong. However, he wanted to present a scenario involving an organized children's racing group in Anchorage. He wondered about the possibility of parents wanting to fund the group and financing it by selling bets on the races. This would be a situation where a adults would be betting on kids, which he did not want to see happen. He added that he did not know that it would happen but nothing in HB 358 prevented it. Number 0797 CO-CHAIR AUSTERMAN referred to Representative Kott's comments and said he tended to agree that it would be discriminatory to only place the restriction on dog mushing. What they were really discussing was a much broader concept of law, he said. He stated he would favor moving CS HB 358 out as it was. If they wanted to address the overall issue of betting on minors, that should be brought back as a second bill addressing everything done in the state that was now considered betting, whether it involved minors or not. Number 0843 REPRESENTATIVE ELTON said he would not make an amendment. However, he was not sure he saw it being any more discriminatory, for example, than limiting betting to races longer than 200 miles. Number 0862 REPRESENTATIVE KOTT said he shared the concerns. He suggested that if a race held in Anchorage had betting opportunities on minors, there would be a public outcry. Number 0891 CO-CHAIR AUSTERMAN moved that CS HB 358 move out of committee, with individual recommendations and attached fiscal notes. There being no objection, CS HB 358 moved out of the House Community and Regional Affairs Committee. CO-CHAIR IVAN thanked the committee members and noted that the agenda for the meeting on Tuesday, February 13, included a briefing by the Local Boundary Commission and HB 409. Number 0923 ADJOURNMENT There being no further business to conduct, CO-CHAIR IVAN adjourned the House Community and Regional Affairs Committee meeting at 2:22 p.m.