Legislature(1993 - 1994)
02/22/1994 01:36 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 22, 1994
1:36 p.m.
TAPE HFC 94-37, Side 2, #000 - end.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 1:36 a.m.
PRESENT
Co-Chair Larson Representative Hoffman
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representative Grussendorf
ALSO PRESENT
James Baldwin, Assistant Attorney General, Department of
Law;
Richard Pegues, Director, Division of Administrative
Services, Department of Law; Carol Collins, Staff, House
Finance Committee; Nancy Letticoe, Valdez; Steve Borrell,
Alaska Miner's Association, Anchorage; Florian Sever, Sitka;
Don Muller, Sitka; Joel Kawahara, Sitka; Elmer Lindstrom,
Special Assistant, Department of Health and Social Services;
Russell Heath, Director, Alaska Environmental Lobby.
SUMMARY INFORMATION
HB 454 "An Act making a supplemental appropriation to the
Department of Law to pay costs of certain
continuing legal proceedings; and providing for an
effective date."
CSHB 454 (FIN) was reported out of Committee with
a "do pass" recommendation.
SB 54 "An Act relating to violations of laws by
juveniles; and providing for an effective date."
HCS CSSB 54 (FIN) and with five zero fiscal notes,
two by the Department of Administration, one by
the Department of Public Safety, one by the
Department of Law and one by the Department of
Health and Social Services; and with two fiscal
impact notes, one by the Department of
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Corrections, and one by the Alaska Court System.
SB 178 "An Act relating to civil nuisance actions; and
providing for an effective date."
HCS CSSB 178 (FIN) was HELD in Committee for
further discussion.
HOUSE BILL NO. 454
"An Act making a supplemental appropriation to the
Department of Law to pay costs of certain continuing
legal proceedings; and providing for an effective
date."
JIM BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
urged the Committee to support HB 454. He noted that the
Legislature has financed oil and gas litigation on a half
year basis so that activities can be reviewed at the
beginning of each legislative session. He stressed that oil
and gas litigation is a constantly shifting activity. He
observed that the Department of Law was funded for FY 94 at
the same level as FY 93. The Department had requested $25
million dollars for FY 94. He maintained that the pace of
the current litigation requires additional funds.
Mr. Baldwin advised that the amount requested in HB 454
needs to be increased by an additional $2.5 million dollars.
Co-Chair Larson stated that the Department's amended request
would be for $13,837.5 million general fund dollars and
$4,612.5 million dollars in Permanent Fund Corporation
receipts.
Co-Chair Larson MOVED to ADOPT the new total amount of
$18,450.0 million dollars, $13,837.5 million general fund
dollars and $4,612.5 million dollars in Permanent Fund
Corporation receipts. There being NO OBJECTION, it was so
ordered.
Mr. Baldwin noted that the matters funded in HB 454 are in
active litigation. He expounded that the amount of money
that the Department intends to expend for various aspects of
the litigation is subject to the attorney/client privilege.
Co-Chair Larson stressed that under AS 44.62.310 executive
sessions are allowed for matters of personnel, finances,
litigation, matters that may effect the operations of state
government or attorney/client privileges. He reiterated
that the matter before the Committee could effect
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attorney/client privileges.
EXECUTIVE SESSION
Co-Chair MacLean MOVED that the Committee meet in EXECUTIVE
SESSION for the purpose of discussing matters in CSHB 454
(FIN) that could effect finances of the State of Alaska and
attorney/client privileges. There being NO OBJECTION, the
House Finance Committee met in EXECUTIVE SESSION from 1:45
p.m. to 2:23 a.m.
REGULAR SESSION
Co-Chair Larson RECONVENED the Committee in REGULAR SESSION
at 2:23 a.m.
Co-Chair Larson reiterated that the total amount
appropriated by CSHB 454 (FIN) to the Department of Law is
$18,450.0 million dollars, $13,837.5 million general fund
dollars and $4,612.5 million dollars in Permanent Fund
Corporation receipts.
Representative Navarre MOVED to report CSHB 454 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CSHB 454 (FIN) was reported out of Committee with a "do
pass" recommendation.
sb54
SENATE BILL NO. 54
"An Act relating to violations of laws by juveniles;
and providing for an effective date."
Co-Chair Larson noted that HCS CSSB 54 (FIN) was adopted by
the House Finance Committee during the 2/11/94 meeting. He
explained that transmittal of the bill was held to allow
agencies an opportunity to revise their fiscal notes for
consideration by the Committee.
CAROL COLLINS, STAFF, HOUSE FINANCE COMMITTEE clarified that
HCS CSSB 54 (FIN) (version, 8-LS0384\G) was previously
adopted by the Committee. She observed that departments had
submitted the following revised fiscal notes; five zero
fiscal notes, two by the Department of Administration, one
by the Department of Public Safety, one by the Department of
Law and one by the Department of Health and Social Services;
and with four fiscal impact notes, two by the Department of
Health and Social Services, one by the Department of
Corrections, and one by the Alaska Court System. She added
that the Committee did not consider the letter of intents by
the Senate and the House Judiciary Committee during previous
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action.
Representative Parnell MOVED to RESCIND the Committee's
action in reporting from Committee HCS CSSB 54 (FIN). There
being NO OBJECTION, it was so ordered.
Ms. Collins clarified that a drafting error was made in
section 13 of the previous version of HCS CSSB 54 (FIN).
The error was corrected in the version before the Committee.
Representative Hanley noted that the Department of Health
and Social Services submitted a revised fiscal note for
$1,125.0 million dollars.
ELMER LINDSTROM, SPECIAL ASSISTANT, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES expresed the Department's concern that the
Department would be required to place juveniles in private
treatment facilities as defined on page 15. He observed
that in-state costs for a private treatment facility could
be as high as $18 thousand dollars a month. He emphasized
that the Department of Law has assured the Department of
Health and Social Services that the placement of juveniles
into a private facility would be optional. He stressed that
the option to use private treatment facilities would remain
but that the Department did not anticipate exercising the
option. If the Department exercised the options of a
private treatment facility the cost would be born by the
Division of Medical Assistance in the medicaid budget.
Mr. Lindstrom stated that the Department of Health and
Social Services was withdrawing their two fiscal impact
notes, for $1,125.0 million dollars and $0.2 hundred dollars
with the understanding that the Department would not be
compelled to make placements in private facilities.
Representative Hanley provided members with AMENDMENT 1
(copy on file). Amendment 1 would delete on page 15, lines
13 - 16, "treatment facilities' means a hospital, clinic,
institution, center, or other health care facility that has
been designated by the department for the treatment of
juveniles."
Representative Brown stressed that the language gives the
Department the option of placing juveniles in private
facilities. She observed that there are currently four
juveniles being held who are awaiting treatment beds. She
noted that construction of treatment beds would be
expensive. She suggested that it may be possible to meet
the needs for treatment through contract with private
facilities. She recommended that the language be kept in
the legislation.
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MARGOT KNUTH, CRIMINAL DIVISION, DEPARTMENT OF LAW clarified
that under AS 47.10.080(b)(i) placement in a private
treatment facility is discretionary. She acknowledged that
litigation could result from the language. She estimated
that there is a 85 percent chance that the court would rule
in favor of the state with regards to the state's failure to
make placements in private facilities.
Representative Hanley MOVED to ADOPT AMENDMENT 1.
Representative Brown OBJECTED.
In response to a question by Representative Grussendorf, Ms.
Knuth observed that juveniles awaiting placement in the
MacLaughlin correctional facility are held at the Johnson
detention facility. Ms. Knuth was not aware of any
litigation initiated by a juvenile awaiting placement in a
juvenile treatment facility.
A roll call vote was taken on the motion to adopt AMENDMENT
1.
IN FAVOR: Parnell, Hanley, Martin, Larson
OPPOSED: Brown, Foster, Grussendorf, Hoffman, Navarre,
MacLean
Representatives Therriault was not present for the vote.
The MOTION FAILED (4-6).
Representative Brown noted that the content of the
legislation has changed. She questioned the applicability
of the letter of intents. Members decided to address the
letter of intents when the legislation is before the House.
(Tape Change, HFC 94-38, Side 1)
Representative Foster MOVED to report HCS CSSB 54 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SENATE BILL NO. 178
"An Act relating to civil nuisance actions; and
providing for an effective date."
Representative Therriault provided members with Work Draft
the work draft substantially narrows the scope of the bill,
in order to address concerns expressed in previous hearings.
He summarized changes made by the work draft. He noted that
the legislation would be limited in effect to those under
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air, water or solid waste discharge permits. If a facility
has acquired a permit subject to continuing compliance
monitoring, periodic review by the issuing agency and
renewal on a periodic basis than a nuisance lawsuit would
not be allowed. The legislation contains an immediate
effective date. Section 3 would make the legislation
retroactive to any action currently under litigation that
has not come to a final judgement.
FLORIAN SEVER, SITKA testified against CSSB 178 (JUD) am(efd
fld), via the teleconference network from Sitka. He
asserted that the legislation works against the public's
interest. He maintained that the legislation infringes on
the public's right to due process and self protection. He
felt that the legislation would encourage pollution.
STEVE BORRELL, EXECUTIVE DIRECTOR, ALASKA MINER'S
ASSOCIATION testified in support of CSSB 178 (JUD) am(efd
fld), via the teleconference network from Anchorage. He
emphasized that individuals or companies conducting business
within the law should not be subject to nuisance lawsuits.
He stressed that Alaska mining activities are in competition
for investment dollars from countries around the world.
DON MULLER, SITKA testified against CSSB 178 (JUD) am(efd
fld), via the teleconference network from Sitka. He
asserted that the Alaska Pulp Company does not respect the
rights of the community in which it has operated.
JOEL KAWAHARA, SITKA testified against CSSB 178 (JUD) am(efd
fld), via teleconference network from Sitka. He referred to
the definition of "nuisance".
RON DICK, ASSOCIATE PROFESSOR, SHELDON JACKSON COLLEGE
testified in opposition to CSSB 178 (JUD) am(efd fld), via
the teleconference network from Sitka. He asserted that the
legislation is a direct response to a lawsuit against the
Alaska Pulp Corporation (APC). He maintained that the
legislation exempts any polluter from liability if they have
the permission of the government to pollute by virtue of
statute, regulation, license, or permit.
Mr. Dick observed that the APC had numerous private meetings
with the Department of Environmental Conservation to agree
upon acceptable pollution standards. He maintained that the
Environmental Protection Agency is contemplating a lawsuit
against the Department of Environmental Conservation (EPA)
for their failure to enforce air quality regulations. He
asserted that the Department of Environmental Conservation
has been too lenient with APC.
Mr. Dick alleged that CSSB 178 (JUD) am(efd fld) would
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disenfranchise the public "from seeking legal redress when
the state government and industry collude to circumvent the
laws and regulations of the state."
RAY JENNINGS, SITKA testified against CSSB 178 (JUD) am(efd
fld), via the teleconference network from Sitka. He
asserted that the right of an Alaskan to maintain a private
nuisance action to protect his property is fundamental.
NANCY LETTICOE, PRESIDENT, ALASKA WILDERNESS, RECREATION AND
TOURISM ASSOCIATION testified in opposition to CSSB 178
(JUD) am(efd fld), via the teleconference network from
Valdez. She asserted that the impact on the tourism
industry could be considerable. She gave examples of
instances of pollution by industry that could effect
tourism. She alleged that the legislation was introduced to
help APC fight specific court action. She stressed, that if
the right of business to bring civil action for damages
resulting from civil nuisance is withdrawn, the only
recourse will be to sue the State of Alaska.
Mr. Sever provided the Committee with an overview of the
litigation against the APC. He stated that discharge
monitoring reports by APC to EPA showed that levels of
solids being discharged in their waste stream were over the
amount allotted by their permit. He asserted that
discoloration and damage to the water and ecosystem of
Silver Bay resulted. He added that in 1991 and 1992
polluting sludge from APC's waste water treatment facility
was showing up in Silver Bay. The sludge was found to
contain significant amounts of toxins when tested by EPA.
In 1991, EPA found that APC had intentionally violated the
Clean Water Act. A fish advisory was issued by the
Department of Environmental Conservation advising local
processors not to wash fish caught in the waters of Silver
Bay due to the contamination of the water. He maintained
that beach front property values were effected by the
activities of APC.
Mr. Sever understood that the legislation would provide that
as long as a business is operating under a permit and is
covered by the terms of the permit they cannot be sued in
state court for any damage done from discharges covered by
the permit.
RUSSELL HEATH, DIRECTOR, ALASKA ENVIRONMENTAL LOBBY
testified in opposition to CSSB 178 (JUD) am(efd fld). He
stressed that Alaska does not have a problem with an
unacceptably large number of suits to abate nuisances. He
asserted that the legislation was introduced to kill a
specific nuisance suit against APC. He noted that CSSB 178
(JUD) am(efd fld) was introduced only days after the court
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ordered APC's Japanese parent corporation to disclose its
financial records. He maintained that APC has evaded
complying with air and water quality standards for years by
claiming that it was financially unable to do so. He
concluded that the record disclosure could destroy APC's
last defense to avoid compliance.
Mr. Heath observed that APC's air emissions contain sulfur
dioxide. He noted that sulfur dioxide turns into sulfuric
acid and can burn eyes and throats. He emphasized that
there were vociferous complaints against APC at public
hearings regarding their Department of Environmental
Conservation air quality permit. He added that the
Department of Environmental Conservation has also received
hundreds of written complaints. He asserted that public
concerns have been ignored. He alleged that permits are
negotiated behind closed doors. He noted that the
Department of Environmental Conservation's administrative
appeal hearing officer directed the Department to work more
closely with the public.
Mr. Heath emphasized that the permitting process does not
guarantee that private property rights will be protected.
He asserted that the State of Alaska has failed in its
administration of the permitting process. He alleged that
CSSB 178 (JUD) am(efd fld) "restricts the property rights of
600,000 Alaskans in order to shield a Japanese corporation
form an American Court."
In response to a question by Representative Brown, Mr. Heath
noted that APC has received variances on its permit
stipulations. He was uncertain how the proposed committee
substitute would effect the litigation against APC.
JIM CLARK, GENERAL COUNSEL, ALASKA FOREST ASSOCIATION
testified in favor of CSSB 178 (JUD) am(efd fld). He
stressed that nuisance laws were crafted to protect property
not otherwise regulated. He emphasized that permits take
several years to obtain. He maintained that regulations
intersect in terms of obtaining permits. He observed that
water permits are obtained from EPA. Air permits are issued
by the State of Alaska and overseen by EPA. Solid waste
permits are issued by the State of Alaska. He discussed the
permitting process. He added that permits are renewed every
five years. He emphasized that the public has the
opportunity to object during the permitting process and
permit renewal. He noted that permits are subject to
adjudicatory hearings by any aggrieved party. Those not
satisfied by the adjudicatory hearing can appeal to the
ninth circuit court of appeals.
Mr. Clark discussed the EPA water permit process. He noted
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that the permit process was developed over a number of years
with input from the public. He asserted that human health
risk factors, protection of private property, and the effect
on animal life and vegetation are taken into account. He
maintained that the permit process provides safety.
Mr. Clark stressed that permit conditions must be met at the
property line. Water requirements must be met at the edge
of the mixing zone. Air permit requirements must be met at
the border of the property line. Solid waste permit
requirements must be met at the boundary of the facility.
He asserted that these projections are built in to protect
unreasonable interference with property rights of other
property owners. He stressed that there are three
opportunities for lawsuits in addition to administrative
appeals during the permit process. He maintained that once
a permit holder has met the requirements of the issuance it
is reasonable to cut off litigation possibilities.
Representative Navarre asked why a retroactive clause was
added to the legislation. Mr. Clark stressed that the
retroactive clause is an effective date. Any case that has
not reached a final judgement loses the opportunity to bring
further action.
Representative Brown noted that the state's legal counsel
has advised that the legislation may be unconstitutional due
to the retroactive provision. Mr. Clark observed that the
state of California has similar provisions. He did not know
if the California provisions were enacted with a retroactive
date. He argued that the retroactive date is supportable.
Mr. Clark noted that legislation, sponsored by Senator
Kerttula, passed in 1986, cut off nuisance actions for those
that moved to the nuisance. He added that North Carolina
has similar provisions.
In response to a question by Representative Grussendorf, Mr.
Clark acknowledged that permit holders that do not fulfill
the terms of their permit will be subject to litigation.
Only permit holders meeting the requirements of their
permits are covered by the legislation. He observed that
violations would not be protected by the permit.
Representative Grussendorf observed that if the permit
holder was using a chemical or process not covered by the
permit they could be subject to a lawsuit. Mr. Clark added
that if an impact not anticipated by the permitting process
was the cause of injury it could be subject to litigation.
Mr. Clark concluded that the permit holder must be strictly
in accordance with the permit, the permit cannot have
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unanticipated consequences, and if there are violations of
the permit terms, the holder's legal protection would be
lost. He stressed that the legislation will provide an
incentive to meet the terms of the permit.
(Tape Change, HFC 94-38, Side 2)
Representative Therriault clarified that if the public feels
that they do not have an avenue to have input into the
permit process there are administrative appeals available.
Mr. Clark detailed administrative appeals available to the
public.
Representative Therriault MOVED to ADOPT Work Draft #8-
LS0903\D dated 2\22\94. There being NO OBJECTION, it was so
ordered.
HCS CSSB 178 (FIN) was HELD in Committee for further
discussion.
ADJOURNMENT
The meeting adjourned at 3:55 p.m.
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