Legislature(2015 - 2016)HOUSE FINANCE 519
03/23/2015 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB115 | |
| HB140 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 115 | TELECONFERENCED | |
| += | HB 140 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 23, 2015
1:34 p.m.
1:34:09 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 1:34 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Cathy Munoz
Representative Lance Pruitt
MEMBERS ABSENT
Representative Scott Kawasaki
Representative Tammie Wilson
ALSO PRESENT
Tom Wright, Staff, Representative Mike Chenault; Ed Fogels,
Deputy Commissioner, Department of Natural Resources;
Representative Mike Chenault, Sponsor; Jane Pierson, Staff,
Representative Steve Thompson.
PRESENT VIA TELECONFERENCE
Dick Coose, Self, Ketchikan; Lois Epstein, Arctic Program
Director, Wilderness Society, Anchorage; William O'Leary,
President and CEO, Alaska Railroad Corporation.
SUMMARY
HB 115 AK SOVEREIGNTY; US TRANSFER LAND TO ALASKA
CSHB 115(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one new
indeterminate fiscal note from the Department of
Natural Resources.
HB 140 LEG. APPROVAL: AK RAILROAD REVENUE BONDS
HB 140 was REPORTED out of committee with a "do
pass" recommendation and with one new zero fiscal
note from the Department of Commerce, Community
and Economic Development.
Co-Chair Thompson discussed the meeting agenda.
HOUSE BILL NO. 115
"An Act relating to the transfer of public land from
the federal government to the state and to the
disposal of that land; and providing for an effective
date."
1:35:06 PM
Co-Chair Thompson noted that the bill had a new fiscal
note. He asked for a motion on the Committee Substitute
(CS).
Co-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 115, Work Draft 29-LS0587\I (Bullard,
3/18/15). There being NO OBJECTION, it was so ordered.
TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, pointed to
the change in the bill on page 2, line 24. An exemption had
been added for land designated as a national park by
January 1, 2015. He noted that another exemption was for
land used for military or naval purposes (including a
military reservation). He relayed that the bill addressed
issues related to public lands including the transfer of
title of public lands to the state and asserting state
sovereignty under the 9th and 10th Amendments of the U.S.
Constitution.
Representative Gara did not support the bill. He remarked
that the State of Alaska and the federal government were
negotiating over 55 million acres of land owed to Alaska
under statehood [Note: this statement was corrected later
in the meeting to 5.5 million acres]. He discussed that the
bill took away 168 million acres, which was significantly
more than the state was owed. He referred to a Legislative
Legal Services memorandum addressed to House Speaker
Chenault specifying that the bill was unconstitutional
(copy on file). He had not found a provision of the U.S.
Constitution that would allow Alaska to take land from the
federal government. He asked how the bill was not clearly
unconstitutional.
Mr. Wright answered that it would be up to the courts to
decide the bill's constitutionality. He stated that if the
issue went to court it would be fought out there.
Co-Chair Thompson noted that Department of Natural
Resources (DNR) staff were available for questions by
teleconference.
Representative Gara stated that it was not necessary to go
to court to determine the bill's constitutionality. He
underscored that it was unconstitutional. He noted that it
would cost the State of Utah a down payment of $2 million
to fight the litigation [related to similar legislation].
He pointed out that Arizona's conservative governor had
vetoed similar legislation in order to avoid spending money
on defending an unconstitutional law. He wondered how the
legislation was not clearly unconstitutional.
Mr. Wright answered that he could not answer the question
from a legal standpoint. He cited a legal overview from the
Federalist Society (copy on file) on Utah's legislation. He
read from the overview's conclusion:
Utah's Transfer of Public Lands Act presents
fascinating issues for the areas of public lands,
natural resources, and constitutional law. There are
credible legal arguments supporting Utah's demand that
the federal government extinguish certain public lands
within the State. At the very least, it seems clear
that the law is not "clearly" unconstitutional as some
opponents contend.
Mr. Wright would provide the document to the committee.
1:39:55 PM
Co-Chair Thompson requested a copy of the document for the
committee. He noted that Vice-Chair Saddler and
Representative Pruitt had joined the committee meeting.
Representative Gara remarked that he had not seen the
document [written by the Federalist Society]. He asked if
it included a citation of any provision in the U.S.
Constitution allowing a state to take federal land. Mr.
Wright answered not that he was aware of.
Co-Chair Thompson noted that Representative Chenault had
joined the meeting.
Representative Guttenberg observed that the former fiscal
note and its replacement were the same, but the
explanations were different. He asked how DNR would
facilitate the land transfer. He wondered if similar action
had occurred in the past and if so, how the federal
government had reacted. He believed that unless the federal
government acquiesced the bill could result in ongoing
court cases.
ED FOGELS, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, replied that he could not readily answer the
question. He stated that if the bill passed and the federal
government decided to give the lands to the state, the
department would have additional lands to manage and
additional revenues generated from the lands. He stated
that the indeterminate fiscal note reflected that the
department could not specifically identify what the cost
would be. He did not believe speaking to any potential
litigation was in the department's realm of expertise.
1:43:30 PM
Representative Guttenberg asked what the department would
do to implement the change of ownership from federal to
state land. Mr. Fogels replied that DNR's response would
partly depend on which lands the state received. He noted
that the bill considered national forests, wildlife
refuges, and Bureau of Land Management (BLM) land. He noted
the importance of identifying and refusing land that the
state did not want (e.g. contaminated sites), which would
be a key component of DNR's action.
Representative Guttenberg remarked that the state, Native
entities, cities, municipalities, and boroughs had all
over-selected lands. He remarked that the entities did not
lose their ability for selection. He wondered how the
department would mitigate the issue. In the past the
department reflected that all of the entities wanted to
over-select and then went through a long-term process of
whittling down what each entity actually received. He
wondered how the relationship with the other entities with
land to select would play out.
Mr. Fogels responded that the Native corporations were
almost complete with their land entitlement. He guessed
that the state would not accept the lands that Native
corporations had selected (that were yet to be conveyed).
He relayed that municipalities received their lands from
the state; therefore, opportunities for municipalities to
get land could increase if the state's holdings increased.
1:46:29 PM
Co-Chair Neuman noted that under the Alaska Statehood Act
the federal government had granted the state 28 percent of
the total land within its borders with additional land
grants for schools, the University of Alaska, and the
Alaska Mental Health Trust Authority (AMHTA). According to
DNR, the state had received about 99.5 million acres and
awaited transfer of the remaining 5.5 million. He wondered
if the federal government had approached the state about
settling up.
Mr. Fogels replied that DNR was in constant communication
with the federal government regarding the remaining 5.4
million acres and what could be done to resolve the issue.
He detailed that the state needed to address some
significant issues before it picked which 5.4 million acres
it wanted. He elaborated that public land orders were at
the top of the list of items that needed resolution. The
department did not want to accelerate the remaining 5.4
million acres until the public land orders were lifted.
Co-Chair Neuman wondered if the federal government
recognized that the state depended on the development of
its resources. He noted that the state would like lands
that had economic value for resource development. He
wondered if it was the goal. Mr. Fogels replied in the
affirmative. He elaborated that the purpose of the
statehood land entitlement was to generate an economy for
the state; therefore, DNR looked for lands that would
maximize that potential in the future.
Co-Chair Neuman believed the state's only option would be
to do as directed in the bill and to sue the federal
government to enable the state to select lands it could use
for resource development. He wondered if there were other
options available.
Mr. Fogels replied that DNR would prefer to work amicably
with the federal government and have it relinquish the
public land orders in order to broaden the selection pool
for the state. The state was currently working on the issue
with the federal government; if all went well the
government would lift all or some of the public land orders
to provide the state access to the highest potential lands.
He added that if the method did not succeed DNR may have to
look at other options in the future, but it was working to
solve the issue without litigation.
1:50:20 PM
Co-Chair Neuman asked for verification that the other
option would be to sue the federal government over the
selection of lands. Mr. Fogels agreed that it would be one
option.
Co-Chair Thompson referred to a question from Vice-Chair
Saddler in a previous meeting regarding Section 2(b). The
question pertained to the value of the injuries caused from
the federal government. He asked Mr. Fogels to reiterate
the information.
Mr. Fogels answered that he had sent an email to Co-Chair
Thompson and Co-Chair Neuman regarding the question (copy
on file).
Co-Chair Thompson confirmed that he had the email. Mr.
Fogels relayed that DNR did not have a comprehensive list
of all the injuries it believed the federal government had
caused the state. There were many different ways to look at
the issue. He had cited two prominent examples in his email
including potential revenue the state would not receive if
Alaska National Wildlife Refuge (ANWR) continued to be off
limits and the loss of 5,000 timber jobs in Southeast due
to federal land management policies in the Tongass National
Forest.
Co-Chair Thompson referred to the Mr. Fogel's email stating
that the estimated loss of revenue to the state related to
ANWR was between $94.8 billion and $210 billion.
Additionally, 5,000 jobs in the timber sector had shrunk to
a few hundred jobs; 6 communities had seen schools close
due to low student enrollment, which in many cases was
directly or indirectly related to the health of the forest
product industry.
Representative Munoz wondered if the bill's purpose was to
expand the land selection pool or to obtain land beyond the
state's entitlement. Mr. Wright answered that the original
intent was to receive the remaining 5.5 million acres;
however, the state would gladly take additional lands.
Representative Munoz asked for verification that the bill
identified all federal land with the exception of land used
by the military and national parks. Mr. Wright answered in
the affirmative.
Representative Munoz asked for confirmation that the bill
also asked for the removal of land orders on 10.3 million
acres that were top-filed. Mr. Wright responded in the
affirmative.
1:53:58 PM
DICK COOSE, SELF, KETCHIKAN (via teleconference), testified
in support of the legislation. He discussed his
professional background in forestry management. He believed
the federal government no longer had the desire, direction,
or ability to manage the land to utilize the goods and
services needed by local residents, communities, or the
nation. He stated that federal land management was
currently driven by politics, false public information, and
excessive regulations and legal actions. He opined that the
cost was excessive. He had observed that land management by
the State of Alaska was much more cost-effective,
efficient, and provided for the needs of the people. He
reasoned that people needed the jobs and the state and
communities needed the economic benefits of the available
land resources (i.e. oil, minerals, fish, timber, wildlife,
recreation, tourism, and scenery). He believed if the state
was managing the lands, especially in Southeast Alaska, the
jobs related to the management would greatly increase.
Additionally, the communities would be economically healthy
and the state treasury would benefit. He communicated that
earlier in his career the national forest system lands had
contributed more to the treasury than its budget by several
billion dollars. He believed additional lands could have a
positive impact on the state's revenue. He noted that the
Alaska Statehood Act had limited the selection from the
Tongass to approximately 500,000 acres in order to ensure
that the pulp mills always had timber. He stated that the
reason for the limitation was no longer valid because the
federal government ran the pulp mills off. He believed the
issue should not be partisan; the issue was about Alaskans
determining their future as a resource-based state. He
believed many of the resources were renewable indefinitely
(fish, wildlife, timber, water, recreation, and tourism).
He encouraged the committee to pass the legislation.
1:57:51 PM
LOIS EPSTEIN, ARCTIC PROGRAM DIRECTOR, WILDERNESS SOCIETY,
ANCHORAGE (via teleconference), testified against the
legislation on constitutional grounds. She relayed that the
society had been following the issue in other states. She
communicated that the issue had been vetoed by the Arizona
Governor Jan Brewer due to its unconstitutionality. The
group was not opposed to the land selection process moving
forward. However, the most sensitive federal lands were
under federal protection for a reason, which went back to
statehood and the Alaska National Interest Lands
Conservation Act (ANILCA). The Wilderness Society was
working with the state and federal governments to ensure
appropriate protections for the lands. She reiterated
opposition to the bill.
Co-Chair Thompson CLOSED public testimony.
Vice-Chair Saddler asked if it was likely that revenue from
the development of resources on the land would be equal to
or greater than the costs managing the land. Mr. Fogels
referred to his email to the co-chairs and a recent
presentation in the House Resources Committee that
projecting revenues from ANWR would be between $90 billion
and $200 billion.
Representative Gara remarked that Legislative Legal
Services had deemed the bill unconstitutional. He asked if
the department had spoken to the administration to
determine whether the state's attorney general believed the
bill was unconstitutional. Mr. Fogels answered in the
negative.
Vice-Chair Saddler read from page 5 of legal overview from
the Federalist Society:
As Governor Herbert has noted, the legal case for H.B.
148 may not be a "slam dunk," but there are legitimate
arguments to support the law and certainly critics of
the law overstate their legal case against the law. At
the very least, there are open legal questions
involved in the TPLA that have never received
definitive resolution in the courts. As such, critics
cannot make a cut and dry case against the law. In
fact, if anything, opposition statements made so fare
regarding the law may reflect an over-confidence in
its unconstitutionality and an overstatement of the
strength of precedent.
2:02:14 PM
Representative Gara understood the sponsor's frustration.
He recognized there were many instances in Alaska where the
federal government had taken inappropriate actions. For
example, when the federal government had prevented
ConocoPhillips from building a bridge over the Colville
River to access oil field development in the National
Petroleum Reserve-Alaska (NPRA). He and others had
contacted federal agencies in opposition to the ruling;
subsequently, the bridge was eventually approved.
Additionally, he had fought and helped resolve federal
land-access rulings that prevented public fishing access
along the Kenai River. He remarked that there were many
places the legislature could discuss things the federal
government had done either to give the state money or to
take away rights that belonged to the state. However, he
reasoned, "if you're angry at your neighbor you can't just
bulldoze their house." He corrected his earlier statement
about the acreage owed to the state by the federal
government under statehood; it was owed 5.5 million acres.
He stated that the bottom line is "we are both Alaskans and
Americans. We can't violate the United States
Constitution." He reasoned that the U.S. Constitution
included no provision allowing the state to take land from
the federal government. He noted that legislators had an
oath to uphold both the state and federal constitutions.
Representative Gara continued that the bill would take 166
million acres of non-park land from the federal government
when the state was only owed 5 million. He stated that it
was not legal. He referred to the state's $3.5 billion
deficit. He elaborated that Utah estimated its litigation
would cost $2 million. He stressed that it was not the
responsible thing to do with limited state funding. He
discussed that Utah had a claim under its statehood compact
where it was promised that some of the federal lands would
only remain in federal hands temporarily. He noted that the
same did not apply to Alaska. He highlighted that under the
bill any state could take any federal land it wanted. He
reasoned that if that were the case the State of Kentucky
could take the U.S. Mint, which would be an economic
disaster. He believed it meant the State of New York could
take the U.S. Mint at West Point and Philadelphia could
take the liberty bell for sale to the highest bidder. He
agreed with Mr. Fogels that the state should harshly
negotiate for the lands it was owed under statehood. He
believed the state should either negotiate or litigate if
there was a valid legal claim on the 5.5 million acres. He
opined that taking another 163 million acres with no legal
authority would just cost the state money. He agreed that
in many areas the federal government had been very harsh on
Alaska's access to lands within the state. However, he
could not vote for something that was unconstitutional. He
stated that he could support the bill if it addressed the
5.5 million acres and offered something legal.
2:08:08 PM
Co-Chair Neuman believed that in the event of a dispute
anyone should have a right to go to court. He believed
there was a dispute between the state and the federal
government as to the lands that should be purveyed back to
the state. He stressed that under the Alaska Statehood Act
with the federal government, the state was owed another 5.5
million acres. He elaborated that the state wanted the
ability to specify the acreage it would like conveyed. He
continued that the federal government knew that Alaska was
a resource development state, which it needed to create
jobs. He reasoned that if the acreages were resource rich,
it would be prudent for the state to receive the lands for
development in order to help with its deficit. He referred
to revenue from potential royalty shares in addition to job
creation. He did not know how the issue could be resolved
without going to court. He surmised that attorneys had
varying opinions on the legality. He concluded that the
legislation directed the state to continue to move forward
to try to select lands for transfer from the federal
government. He supported the legislation and the benefits
it could provide to the state. He opined that benefits
would outweigh any litigation costs.
2:10:35 PM
Vice-Chair Saddler stated that he was not an attorney, but
cited Amendment 10 in the U.S. Constitution:
The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are
reserved to the States respectively, or to the people.
Vice-Chair Saddler remarked that the text was open to
interpretation. He stated that the U.S. Constitution meant
what the U.S. Supreme Court says it means. He supported the
bill. He reasoned that the courts would decide the matter
if there was a constitutional challenge.
Representative Guttenberg wondered if the legislature would
have intentionally negated its half of the statehood act if
the legislation was passed. He read from Section 4:
As a compact with the United States said State and its
people do agree and declare that they forever disclaim
all right and title to any lands or other property not
granted or confirmed to the State or its political
subdivisions by or under the authority of this Act.
Representative Guttenberg was concerned that if the state
went to court it would put everything on the table; the
state's right in addition to the federal government's claim
for whatever it may want back. He noted that the courts
could choose to "call it quits." He believed more
information about the liability was needed. He had respect
some of the bill's concepts, but he did not believe enough
thought had gone into the end process.
REPRESENTATIVE MIKE CHENAULT, SPONSOR, believed the issues
had all been discussed. He opined that it was important to
keep the type of issues out in front in terms of how the
legislature represented the people of Alaska. He was not
afraid of a fight or of doing what he believed was right.
He stated that there had been increased federal overreach
in regards to federal lands in Alaska. He spoke to the
concerns Alaskans had around not having a say in the
issues.
Co-Chair Neuman MOVED to REPORT CSHB 115(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
Representative Gara remarked that he would not object to
the bill moving out of the committee; he believed House
Speaker Chenault was entitled to have the bill move
forward.
There being NO OBJECTION, CSHB 115(FIN) was REPORTED out of
committee with a "do pass" recommendation and with one new
indeterminate fiscal note from the Department of Natural
Resources.
2:15:00 PM
HOUSE BILL NO. 140
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance a positive train
control rail transportation safety project that
qualifies for federal financial participation; and
providing for an effective date."
2:15:43 PM
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
communicated that the bill would authorize the Alaska
Railroad Corporation to issue up to $37 million in tax
exempt bonds backed by the federal transit administration
formula funds received annually by the corporation. She
detailed that bond proceeds would be used to finance
positive train control, a safety program mandated by
federal government without any correlating funding.
Co-Chair Neuman noted that the railroad needed
approximately $55 million to complete the program. He
referred to the bonding authority of $34.1 million provided
under the bill, which left $18 million. He asked if it was
the intent of the Alaska Railroad Corporation to ask the
legislature for the additional funds.
WILLIAM O'LEARY, PRESIDENT AND CEO, ALASKA RAILROAD
CORPORATION (via teleconference), replied that the railroad
had yet to determine where it would obtain the remaining
$18 million; $55 million would be addressed through the
legislation. He elaborated that $37 million would get the
railroad through approximately two years of activity on the
project, which would provide the railroad time to look at
options.
Co-Chair Neuman asked if the corporation had discussed the
$18 million with its board and the possibility the
legislature may need to provide additional funding in the
future. Mr. O'Leary in the affirmative. He detailed that
originally the plan had been to request the full $55
million over a three-year period from the legislature. The
corporation's had the ability to refinance existing debt,
which created headroom to bond for the $37 million. He
addressed the remaining $18 million and agreed that
everyone was considering where the funds would come from.
He stated that the corporation did not currently know where
the additional funds could come from.
2:19:44 PM
Co-Chair Neuman was concerned that the state did not have
capital funds to put towards the project. He wondered what
would happen in three years' time. He wondered what other
options the corporation had besides requesting the funds
from the legislature.
Mr. O'Leary replied that he did not know. He reasoned that
the issue would be dealt with as the project went forward.
He communicated that the corporation's primary objective
was to keep the project moving forward and to continue to
make a good faith effort as required by its regulators. He
believed that the legislation would hopefully provide time
to come up with a solution for the remainder of funds
needed to complete the project by 2018.
Co-Chair Neuman commented that he did not mind moving the
bill forward, but he wanted assurance from the railroad
that it did not intend to come forward with further capital
fund requests in the future.
Representative Gattis wanted assurance that the corporation
did not intend to come back to the state for funds. She
spoke to decisions businesses were required to make related
to financing; there were choices to sell assets, to re-
bond, or other.
Mr. O'Leary answered that he was not trying to be coy in
his response. The corporation did not know where the funds
would come from. He agreed that the corporation's major
focus was continuing to move forward with the unfunded
mandate. He mentioned options of state, federal, and
railroad funds. He underscored that the railroad understood
that it had to obtain the funds somewhere and that it was
necessary to keep moving forward on the project.
Representative Gattis asked if the corporation had the
assets it could utilize if push came to shove. Mr. O'Leary
answered that the railroad did not have the money or assets
currently. He noted that if it did have the money it would
most likely be moving forward with those funds. The goal
was to begin to determine what the corporation would need
to do to obtain the $18 million.
2:24:11 PM
Co-Chair Thompson believed the railroad had significant
assets that it may need to consider utilizing. He hoped the
committee had adequately conveyed that the state would
probably not have any money for three or four years.
Co-Chair Thompson CLOSED public testimony.
Co-Chair Neuman MOVED to REPORT HB 140 out of committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 140 was REPORTED out of committee with a "no
recommendation" recommendation and with one new zero fiscal
note from the Department of Commerce, Community and
Economic Development.
Co-Chair Thompson discussed the schedule for the following
day.
ADJOURNMENT
2:26:05 PM
The meeting was adjourned at 2:26 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 115 CS WorkDraft FIN I version.pdf |
HFIN 3/23/2015 1:30:00 PM |
HB 115 |
| HB 115 Opposition.pdf |
HFIN 3/23/2015 1:30:00 PM |
HB 115 |
| HB 140 Response Deven Mitchell.pdf |
HFIN 3/23/2015 1:30:00 PM STRA 4/7/2015 1:00:00 PM |
HB 140 |
| HB 115 NEW FN DNR.pdf |
HFIN 3/23/2015 1:30:00 PM |
HB 115 |
| HB 115 Response Ed Fogels.pdf |
HFIN 3/23/2015 1:30:00 PM |
HB 115 |
| HB 115 Federalist Society Legal Overview Utah Act.pdf |
HFIN 3/23/2015 1:30:00 PM |
HB 115 |