Legislature(1999 - 2000)

05/11/1999 08:08 AM CRA

Audio Topic
* first hearing in first committee of referral
+ 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                                                                    
     - 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                                                                  
 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                                                                      
 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                                                                 
 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                                                                
 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                                                              
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                                                                     
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                                                                     
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                                                                 
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                                                                       
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                                                                 
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                                                             
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                                                             
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                                                                
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                                                                     
Number 1677                                                                                                                     
REPRESENTATIVE KOOKESH asked if there is a statutory definition of                                                              
"a governmental entity."  The sponsor statement only speaks to                                                                  
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                                                                  
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                                                              
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                                                             
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                                                                 
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                                                                  
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                                                                    
CO-CHAIRMAN HALCRO apologized to those present to testify on HB 24.                                                             
Due to time constraints it would have to be rescheduled.                                                                        
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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