Legislature(2015 - 2016)HOUSE FINANCE 519

03/16/2015 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved HB 26 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 16, 2015                                                                                            
                         1:31 p.m.                                                                                              
1:31:45 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 1:31 p.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Bryce Edgmon                                                                                                     
ALSO PRESENT                                                                                                                  
Representative  Mike Chenault,  Sponsor; Tom  Wright, Staff,                                                                    
Representative    Mike   Chenault;    Ed   Fogels,    Deputy                                                                    
Commissioner,   Department  of   Natural  Resources;   Laura                                                                    
Stidolph, Staff,  Representative Kurt Olson;  Sara Chambers,                                                                    
Director,   Division    of   Corporations,    Business   and                                                                    
Professional  Licensing, Department  of Commerce,  Community                                                                    
and Economic Development.                                                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
Kris  Curtis,   Legislative  Auditor,  Alaska   Division  of                                                                    
Legislative Audit.                                                                                                              
HB 26     EXTEND CERT. DIRECT-ENTRY MIDWIVES BOARD                                                                              
          HB 26  was REPORTED  out of  committee with  a "no                                                                    
          recommendation"   recommendation   and  with   one                                                                    
          previously  published  fiscal   impact  note:  FN1                                                                    
HB 115    AK SOVEREIGNTY;US TRANSFER LAND TO ALASKA                                                                             
          HB 115 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
1:32:33 PM                                                                                                                    
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                                                                    
1:32:50 PM                                                                                                                    
REPRESENTATIVE MIKE CHENAULT, SPONSOR, read the sponsor                                                                         
statement (copy on file):                                                                                                       
     Committee Substitute  for House  Bill 115  (RES) enacts                                                                    
     the Alaska  Sovereignty and Transfer of  Federal Public                                                                    
     Lands to Alaska Act. The  bill requires that the United                                                                    
     States to transfer  title to public lands  to Alaska on                                                                    
     or  before  January  1, 2017.  The  bill  also  affirms                                                                    
     Alaska's state  sovereignty under  the Ninth  and Tenth                                                                    
     Amendments to the U.S. Constitution.                                                                                       
     Although  there  are  a number  of  state  and  federal                                                                    
     constitutional   issues    regarding   the   provisions                                                                    
     contained  within the  bill, this  bill was  introduced                                                                    
     since  the 35-year  deadline from  the time  Alaska was                                                                    
     admitted  into   the  Union  as  provided   within  the                                                                    
     Statehood  Act,  PL 85-508,  is  long  past. I  believe                                                                    
     there  is a  breach of  good faith  since the  state is                                                                    
     still  entitled to  and awaiting  the  transfer of  the                                                                    
     remaining  5.5 million  acres. Thus  far the  state has                                                                    
     received patent to about 99.5 million acres.                                                                               
     Currently,  the   state  has  10.9  million   acres  of                                                                    
     selections from which to receive  its 5.5 million acres                                                                    
     of entitlement  as well as  10.2 million acres  of top-                                                                    
     filings  that may  eventually become  selections should                                                                    
     applicable  withdrawals  be lifted.  These  withdrawals                                                                    
     come  in  numerous  varieties  of  federal  action  and                                                                    
     processes.  Two common  executive  branch actions  that                                                                    
     create  withdrawals  are   Public  Land  Orders  (PLOs,                                                                    
     issued  by   the  Department   of  the   Interior)  and                                                                    
     Executive Orders issued by the President.                                                                                  
     The  committee  substitute  for House  Bill  115  (RES)                                                                    
     requires the federal government  to turn over all lands                                                                    
     held by the federal government  to the state subject to                                                                    
     acceptance  by the  state with  the exception  of lands                                                                    
     used   for   military   purposes   including   military                                                                    
     At  this time  according to  the Department  of Natural                                                                    
     Resources,  there are  approximately 222  million acres                                                                    
     within Alaska under federal ownership.                                                                                     
1:36:12 PM                                                                                                                    
Representative  Chenault   relayed  that  he  was   open  to                                                                    
Co-Chair Thompson  pointed to the Legislative  Legal opinion                                                                    
that the bill would be unconstitutional.                                                                                        
Representative  Chenault  agreed  that  the  bill  might  be                                                                    
unconstitutional, but  that the court  system would  need to                                                                    
make the final  determination, not the legal  opinion of one                                                                    
Representative  Gara felt  that  the  legal opinion  clearly                                                                    
stated  that  the  bill  was  unconstitutional.  He  queried                                                                    
whether  the  sponsor knew  of  any  provision in  the  U.S.                                                                    
Constitution that allowed a state  to take federal land from                                                                    
the federal government.                                                                                                         
TOM WRIGHT, STAFF, REPRESENTATIVE  MIKE CHENAULT, replied in                                                                    
the negative.                                                                                                                   
Representative  Gara  noted  that   similar  laws  had  been                                                                    
enacted;  a  1982  initiative that  had  demanded  that  the                                                                    
federal government return all  federal land within the state                                                                    
was deemed  unconstitutional by  the U.S.  Attorney General,                                                                    
no  movement had  occurred on  the  issue for  32 years.  He                                                                    
furthered  that in  Utah  a similar  bill  had been  passed,                                                                    
which  had forced  that state  to set  aside $2  million for                                                                    
litigation purposes.  He feared  that the bill  would result                                                                    
in future litigation cost to Alaska.                                                                                            
Mr. Wright  answered that  the path  to litigation  would be                                                                    
determined by the courts system  and the governor. He shared                                                                    
that  the  "Tundra  Rebellion",  passed  in  1983,  was  not                                                                    
enacted because  the U.S. Attorney  General took  issue with                                                                    
the law.  He argued that the  state had been waiting  for 35                                                                    
years  to receive  approximately  5.5  million acres,  which                                                                    
required that a strong message be sent to Congress.                                                                             
Representative  Gara  wondered  whether the  bill  could  be                                                                    
limited to the  transfer of lands that had  been promised to                                                                    
the state upon statehood.                                                                                                       
Mr. Wright  replied that it would  be up to the  will of the                                                                    
Co-Chair Thompson  noted that  department staff  were online                                                                    
for questions.                                                                                                                  
Vice-Chair Saddler spoke  to the zero fiscal  note. He asked                                                                    
where anticipated  legal expenses to defend  the legislation                                                                    
would come from.                                                                                                                
Mr.   Wright  pointed   out  that   the   fiscal  note   was                                                                    
indeterminate, not  zero, because  the legal costs  were yet                                                                    
Vice-Chair  Saddler  asked  about the  Legislative  Research                                                                    
Services  Brief  that  discussed land  outside  of  wildlife                                                                    
refuges and monuments.  He wondered about the  timing of the                                                                    
Mr. Wright replied  that the bill was related  to timing due                                                                    
to  the president's  orders to  set aside  more of  Alaska's                                                                    
land for conservation.                                                                                                          
1:42:23 PM                                                                                                                    
Representative  Guttenberg wondered  whether  the state  was                                                                    
behind in the survey work  necessary to transfer most of the                                                                    
land and, if  so, should the state be working  on that issue                                                                    
while simultaneously pushing the legislation.                                                                                   
Representative  Chenault   deferred  the  question   to  the                                                                    
Department of  Natural Resources. He added  that there could                                                                    
be reasons to  hold back on certain  land selections because                                                                    
other selections could become available.                                                                                        
Representative Guttenberg asked whether  the ninth and tenth                                                                    
amendments  had ever  been  used  successfully when  arguing                                                                    
similar cases on court.                                                                                                         
Mr. Wright replied that the  amendments had been included in                                                                    
the  backup documents  for the  bill in  order to  highlight                                                                    
state sovereignty over certain issues.                                                                                          
Representative Guttenberg restated his question.                                                                                
Mr.  Wright believed  that Utah  was  currently using  those                                                                    
amendments to argue a similar court case.                                                                                       
1:44:38 PM                                                                                                                    
ED  FOGELS,  DEPUTY   COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES,  added that  of  the 100  million  acres of  land                                                                    
received   by  the   state   through   the  Statehood   Land                                                                    
Entitlement, 65  million had been  surveyed and  patented to                                                                    
the state; approximately  35 million had yet  to be surveyed                                                                    
and  were considered  "tentatively  approved." He  furthered                                                                    
that  the  35  million  acres essentially  belonged  to  the                                                                    
state, to manage  as it wished, and that  the survey backlog                                                                    
was  not currently  limiting the  state's  ability to  fully                                                                    
utilize its lands.                                                                                                              
Representative Guttenberg spoke to  the conflict of property                                                                    
transfers  among  land  owners sharing  property  lines.  He                                                                    
wondered how  far along the state  was concerning resolution                                                                    
on native allotment and over-selection issues.                                                                                  
Mr. Fogels  thought that  the question  was broad  and would                                                                    
require  and extended  amount  of time  for  a response.  He                                                                    
explained  that  the  issues   were  ongoing  and  that  the                                                                    
department  was  mandated  by   law  to  transfer  lands  to                                                                    
municipalities;  some  municipalities  had  completed  their                                                                    
entitlements,  some had  not. He  continued that  there were                                                                    
many issues related  to native allotments and  the Bureau of                                                                    
Land Management (BLM) had  conveyed many allotments to-date.                                                                    
He opined that the world of land management was complex.                                                                        
Representative Guttenberg asked how  quickly the state could                                                                    
take the  transfer of land,  were the issues to  be settled,                                                                    
and the legislation were to pass.                                                                                               
Mr. Fogels  felt he could  not answer the question.  He said                                                                    
that  if  the courts  determined  the  additional 200  acres                                                                    
would  be  awarded  to  the   states  then  it  would  be  a                                                                    
significant  task to  identify which  lands, in  addition to                                                                    
the Statehood Land Entitlement lands,  would be given to the                                                                    
1:48:49 PM                                                                                                                    
Representative Wilson  felt that  the fiscal note  should be                                                                    
zero,  and  not indeterminate,  because  there  would be  no                                                                    
fiscal  impact until  a decision  was made  to litigate  the                                                                    
Mr. Fogels  responded that the department's  fiscal note was                                                                    
based on  the assumption  the bill  would be  successful. He                                                                    
said  that  the  note  accounted for  the  process  and  the                                                                    
additional land management by DNR.  He added that additional                                                                    
revenues to  the state could  be expected. He  stressed that                                                                    
the fiscal  note was purely  related to land  management and                                                                    
did not consider litigation expenses.                                                                                           
Representative  Wilson felt  that the  fiscal impact  of the                                                                    
bill should  be viewed  as a  budget issue  for the  sake of                                                                    
Mr. Fogels  replied that  the department  had been  asked to                                                                    
provide a fiscal note for  potential costs due to additional                                                                    
land management.                                                                                                                
Representative  Wilson  hoped   that  the  department  would                                                                    
further scrutinize the fiscal note.                                                                                             
Co-Chair Neuman wondered whether  the federal government, or                                                                    
the state, would decide which lands would be returned.                                                                          
1:52:11 PM                                                                                                                    
Mr. Wright  replied that approximately 5.4  million acres of                                                                    
land had  been allotted to  the state through  the statehood                                                                    
act,  10.9  million  acres  of  selections  to  receive  the                                                                    
allotment, and  10.2 million additional  acres of  land that                                                                    
was  considered "top  filed", a  contingent selection  where                                                                    
the  land  would  be  subject  to  federal  restrictions  or                                                                    
withdrawals; the  state could  not take  these lands  but by                                                                    
executive order on the federal  level. He gave an example of                                                                    
land that was rich  with mineral deposits along Trans-Alaska                                                                    
Pipeline System  (TAPS) that was currently  under top filing                                                                    
status and  was unavailable to  the state. He noted  that no                                                                    
wilderness  refuges  had  been  included  in  the  bill.  He                                                                    
thought  that it  would be  financially  prudent to  exclude                                                                    
national parks from the bill  because the state would not be                                                                    
able to afford to maintain them.                                                                                                
Co-Chair  Neuman surmised  that  the  legislation asked  the                                                                    
federal government to turn requested  lands back over to the                                                                    
state for resource development.                                                                                                 
Mr.  Wright believed  there was  wide  national support  for                                                                    
western states  to win the  transfer of federal  public land                                                                    
back to states, mainly to  open up utilization of the public                                                                    
Co-Chair  Neuman repeated  the  question as  to whether  the                                                                    
bill  would allow  the state  to select  lands that  it felt                                                                    
would be beneficial to the state.                                                                                               
1:55:54 PM                                                                                                                    
Mr. Fogels  responded that the  state had 5.4  million acres                                                                    
left  to go  in  its  entitlements and  that  the state  had                                                                    
selections  on  approximately  10.1 million  acres,  and  an                                                                    
additional 10.3  top filed.  He said that  the state  had to                                                                    
complete the  statehood land entitlement process.  He stated                                                                    
that the  bill offered  a strong recommendation  that public                                                                    
land orders  be lifted  by the  federal government  to allow                                                                    
the state to  broaden its selection pool of  land. He shared                                                                    
that  valuable  lands had  been  identified  that the  state                                                                    
would like to  control. He said that the  bill would require                                                                    
the  federal  government  to   give  additional  lands;  not                                                                    
specified, and lands  could be rejected that  were deemed to                                                                    
not be in the state's best interest.                                                                                            
Co-Chair Neuman surmised  that the state needed  the land in                                                                    
order to  diversify the economy.  He believed that  the bill                                                                    
would create jobs for the state.                                                                                                
1:58:10 PM                                                                                                                    
Representative  Kawasaki asked  about the  acreage of  state                                                                    
park land managed by the  state. Mr. Fogels replied that the                                                                    
state  currently had  approximately 3  million acres  in the                                                                    
state park system.                                                                                                              
Representative  Kawasaki wondered  whether  the fiscal  note                                                                    
for the  bill would be  increased by the state  adopting the                                                                    
entire 54  million acres  of park  land currently  under the                                                                    
federal government.                                                                                                             
Mr.  Fogels  replied that  there  was  the possibility  that                                                                    
revenue  could  be  generated by  acquiring  the  additional                                                                    
lands, but  that a way to  zero out the fiscal  note had yet                                                                    
to be determined.                                                                                                               
Representative Kawasaki  thought that  if the state  were to                                                                    
assume the 54 acres of federal  park land it would be a cost                                                                    
to the  state. He  opined clean water  responsibilities that                                                                    
the state took over in  2008, as well as wetlands permitting                                                                    
in 2013,  both of which had  been of additional cost  to the                                                                    
state,  and  wondered  if   the  legislation  would  produce                                                                    
similar results.                                                                                                                
2:01:25 PM                                                                                                                    
Mr. Wright replied  that the sponsor intended to  ask one of                                                                    
the  finance committee  members  to  introduce an  amendment                                                                    
that would exclude national parks.                                                                                              
Vice-Chair Saddler pointed to page 2, lines 5 through 6:                                                                        
     (b) The affirmation, reservation, and assertion in (a)                                                                     
     of this section include the reservation of the rights                                                                      
     of the state to claim a credit or setoff for any                                                                           
     amount or injury inequitably or unlawfully caused or                                                                       
     claimed by the federal government.                                                                                         
Vice-Chair Saddler asked whether there  was a listing of the                                                                    
possible  amounts identified  in  the  section, and  whether                                                                    
there  was  an estimate  of  the  potential value  of  those                                                                    
Mr. Fogels  answered that he  would provide  the information                                                                    
to the committee at a later date.                                                                                               
Representative  Gara asked  whether  the  5.4 million  acres                                                                    
left to  transfer to the  state from the  federal government                                                                    
were in dispute.                                                                                                                
Mr.  Fogels  replied no,  the  5.4  million acres  were  the                                                                    
remaining land  entitlement. He  reiterated that  there were                                                                    
10.1 million acres  of land in "selection  status", of which                                                                    
selections had  been prioritized,  and that the  state could                                                                    
ask for  conveyance of  those lands at  any time.  He shared                                                                    
that the  "choicest" lands to  the state were in  the second                                                                    
group of top filed lands  and amounted to an additional 10.3                                                                    
million acres. Those choice  lands were currently off-limits                                                                    
to the  department because of the  federal land withdrawals.                                                                    
He stressed  that it  was important  that the  Department of                                                                    
the Interior list  the public land orders so  that the state                                                                    
could broaden  the selection pool  to the full  20.4 million                                                                    
acres to choose from. He  argued that the public land orders                                                                    
no  longer served  a purpose  and  should be  lifted by  the                                                                    
Department of the Interior.                                                                                                     
2:05:08 PM                                                                                                                    
Vice-Chair   Saddler  wondered   if  there   had  been   any                                                                    
indication  of willingness,  or  resistance, by  the BLM  to                                                                    
comply with the goals of  the bill. Mr. Fogels believed that                                                                    
the BLM  and Department  of the  Interior were  reluctant to                                                                    
lift  the  public  land orders.  He  relayed  that  Governor                                                                    
Walker  had met  with Department  of the  Interior Secretary                                                                    
Sally Jewell  to discuss  the issue. He  state that  the BLM                                                                    
would  convey the  state  anything that  was  a valid  state                                                                    
selection fairly  expeditiously. He  reiterated that  he was                                                                    
speaking only  to the statehood  land entitlement;  he could                                                                    
not answer  how the  federal government  would react  to the                                                                    
bill in regard to additional lands.                                                                                             
Vice-Chair Saddler  asked whether passage of  the bill would                                                                    
encourage  federal authorities  to  move more  expeditiously                                                                    
with the  conveyance of state  lands or other  federal lands                                                                    
to the state.                                                                                                                   
Mr.  Fogels thought  that the  bill would  help to  lift the                                                                    
public land orders.                                                                                                             
Representative  Gara reiterated  concern that  the bill  was                                                                    
unconstitutional. He hypothesized that  if Alaska could take                                                                    
whatever  federal  land it  wanted,  what  would stop  other                                                                    
states  from  acting  similarly,  to the  detriment  of  the                                                                    
Mr.  Wright   thought  that  decisions  pertaining   to  the                                                                    
hypothetical situation  would be  determined on  a state-by-                                                                    
state basis.                                                                                                                    
Representative  Gara offered  the  example of  the state  of                                                                    
Kentucky   taking   over   the  United   States   Mint   and                                                                    
subsequently destroying the economy on the federal level.                                                                       
Mr.  Wright  responded  that  he  could  not  speak  to  the                                                                    
Representative Gara  added that Pennsylvania could  take and                                                                    
sell the Liberty Bell.                                                                                                          
Mr.  Wright  rebutted  that  he   could  not  speak  to  the                                                                    
intentions of other state, nor answer rhetorical questions.                                                                     
Co-Chair  Thompson  deduced  that  Representative  Gara  was                                                                    
speaking  to material  things,  whereas  the bill  discussed                                                                    
land and  the states  right to  the land  after 50  years of                                                                    
Representative Gara stated that  his concern was for passing                                                                    
a  bill that  was  unconstitutional. He  requested a  fiscal                                                                    
note and an opinion from the Department of Law.                                                                                 
Co-Chair Thompson argued  that the committee was  not at the                                                                    
point of  appropriating money, but  bringing the  subject to                                                                    
the forefront  by alerting the  federal government  that the                                                                    
state was ready to take back the land.                                                                                          
Representative  Gara  shared  that  the State  of  Utah  had                                                                    
passed a  similar bill, which  had garnered  little response                                                                    
from  the  federal  government. He  said  that  nothing  had                                                                    
happened  in  Utah  for  two  years  because  the  bill  was                                                                    
unenforceable.  He  stated  no  litigation  had  been  filed                                                                    
because the  bill was unconstitutional. He  wondered whether                                                                    
the  bill  was  the  appropriate  vehicle  for  gaining  the                                                                    
attention of the federal government.                                                                                            
Co-Chair Thompson  contended that if more  states filed bill                                                                    
of a similar type, the  federal government might revisit the                                                                    
issue of  conveyance of  lands to  states. He  believed that                                                                    
the bill was a good start in a possible national movement.                                                                      
Vice-Chair Saddler requested an  overview of the development                                                                    
of  public  land  ownership in  the  Eastern  United  States                                                                    
verses the Western United States.                                                                                               
2:11:58 PM                                                                                                                    
Representative Chenault replied that  he could not provide a                                                                    
history. He  said that  as states  became states,  more land                                                                    
from each  wound up under  federal control. He  related that                                                                    
the biggest  problem that Congress faced  when Alaska became                                                                    
a  state was  the state's  small population  and large  land                                                                    
mass;  there  was  fear that  Alaska  would  become  another                                                                    
colony, leaving the  federal government to take  care of the                                                                    
state's  needs.  He  felt  that,  because  approximately  62                                                                    
percent  of the  Alaska's land  was currently  under federal                                                                    
authority,  the  state had  not  been  able to  develop  its                                                                    
resources  to sustain  its economy.  He  suggested that  the                                                                    
state might not have to  rely on federal dollars for certain                                                                    
programs  if  it was  allowed  to  develop  its lands  in  a                                                                    
responsible manner.  He remarked  that that initial  fear of                                                                    
Congress  was what  had occurred,  not  because of  Alaska's                                                                    
lack of  ingenuity, but because  the federal  government had                                                                    
not allowed the state to  develop its land. He believed that                                                                    
the legality of the bill should be decided in court.                                                                            
Representative Munoz  understood that  lands that  were top-                                                                    
filed  related to  new  land  designations on  preliminarily                                                                    
selected lands.  She asked  whether the  top-filing happened                                                                    
before or after the lands had been identified by the state.                                                                     
Mr. Wright deferred the question to the department.                                                                             
Mr. Fogels answered  that top-filed meant that  the land was                                                                    
wanted by the  state, but that the land could  not become an                                                                    
officially selected parcel  because of federal action.    He                                                                    
said that clean federal land,  managed by the Bureau of Land                                                                    
Management would  be a valid  selection; top-filings  were a                                                                    
selection  on  top  of  a  federal  withdrawal  and  not  an                                                                    
official  selection  allowed  by  Alaska  National  Interest                                                                    
Lands Conservation Act (ANILCA).                                                                                                
2:16:08 PM                                                                                                                    
Representative Munoz surmised  that top-filing could include                                                                    
designations for refuges, parks, and national forest land.                                                                      
Mr. Fogels  replied in the  negative. He explained  that all                                                                    
of  the  selections  and  top-filings   were  on  BLM  land,                                                                    
multiple use federal lands, and  the state had no selections                                                                    
on  refuges. He  shared that  national forests  were handled                                                                    
differently, the state had a  special "flavor" of selection,                                                                    
particularly in Southeast Alaska.  He provided an example of                                                                    
the pipeline corridor;  when TAPS was first built  BLM put a                                                                    
withdrawal called  Public Land  Order 5150 from  Prudhoe Bay                                                                    
to Valdez.  He explained  that any  BLM within  the corridor                                                                    
was withdrawn  from state selection,  resulting in  a narrow                                                                    
right-of-way. He  furthered that  the selections  within the                                                                    
corridor  were   not  valid  selections,   but  top-filings,                                                                    
meaning that  as soon as  the federal government  lifted the                                                                    
public  land order  the top-filings  would  turn into  valid                                                                    
Representative Munoz  asked why the state  was not selecting                                                                    
land within  the 10.1  million acres  that were  still valid                                                                    
for selection.  Mr. Fogels replied  there was  valuable land                                                                    
in the 10.1  million acres of selected lands,  the issue was                                                                    
that there was  also valuable and in the  other 10.3 million                                                                    
acres  of  top-filed  land,  some of  which  was  even  more                                                                    
Representative Munoz  surmised that  the 10.1  million acres                                                                    
was unencumbered  with top-filing and the  legislation would                                                                    
lift  the top-file  designation on  the 10.3  million acres,                                                                    
further  expanding  the  pool   of  land  that  state  could                                                                    
Mr. Fogels replied in the affirmative.                                                                                          
Vice-Chair  Saddler asked  for  verification  that the  bill                                                                    
would  not  require  the transfer  of  military  bases.  Mr.                                                                    
Wright replied in the affirmative.                                                                                              
2:19:56 PM                                                                                                                    
Representative   Guttenberg  understood   that  asking   the                                                                    
federal government  remove its restrictions would  allow the                                                                    
state to expand its selection criteria.                                                                                         
Mr. Fogels  reiterated that  the state  was entitled  to 5.4                                                                    
million acres  under the  Statehood Land  Entitlement, where                                                                    
those 5.4 million  acres were chosen from  was the question.                                                                    
The state  wished to  grow the pool  to choose  that acreage                                                                    
from to 20.4 million acres.                                                                                                     
Representative  Guttenberg wondered  how  many employees  in                                                                    
the department  interacted with  federal land  managers. Mr.                                                                    
Fogels replied  that the department interacted  with federal                                                                    
employees on many issues, on a  daily basis. He said that he                                                                    
could not provide a number related to the issue.                                                                                
2:22:30 PM                                                                                                                    
Representative Guttenberg  asked whether the  department was                                                                    
actively pursuing lands that were rich in heavy metals.                                                                         
Mr. Fogels replied that most  of the lands currently managed                                                                    
by  the state  were  open  to mineral  entry;  there were  a                                                                    
number  of mineral  prospects  begin  worked throughout  the                                                                    
state. He  said that  the state  encouraged and  increase in                                                                    
the mining  industry and recognized that  responsible mining                                                                    
practices  contributes  greatly   to  Alaska's  economy.  He                                                                    
assured the  committee that  the department  was encouraging                                                                    
additional responsible mining in the state.                                                                                     
HB  115  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair  Thompson  requested  to  be a  co-sponsor  of  the                                                                    
HOUSE BILL NO. 26                                                                                                             
     "An Act extending the termination date of the Board of                                                                     
     Certified Direct-Entry Midwives; and providing for an                                                                      
     effective date."                                                                                                           
2:24:35 PM                                                                                                                    
LAURA  STIDOLPH, STAFF,  REPRESENTATIVE KURT  OLSON, relayed                                                                    
that  the bill  would extend  the sunset  date of  certified                                                                    
direct  entry   midwives  to  June  30,   2017;  a  two-year                                                                    
extension.  She noted  that the  board's  deficit and  audit                                                                    
issues  had been  discussed during  a  previous hearing  and                                                                    
that there  were people on  hand to speak to  those specific                                                                    
2:25:59 PM                                                                                                                    
Co-Chair  Thompson relayed  that the  fiscal note  reflected                                                                    
$5,500 of  expenditures for board travel  and advertising of                                                                    
meetings.  He related  that  in FY  14  the board's  revenue                                                                    
total  was  $3,990,  while   expenditures  were  $55,795;  a                                                                    
deficit of  $51,805. He  said that the  board had  a current                                                                    
operating deficit of over $115,000,  and had been in deficit                                                                    
spending  since  2008. He  shared  that  licensing fees  had                                                                    
increased,  and  were due  for  another  increase in  spring                                                                    
2014, but with the limited  number of midwives in the state,                                                                    
how  the  board   would  catch  up  with   the  deficit  was                                                                    
Ms.  Stidolph  answered  that with  the  board  bearing  the                                                                    
burden  of  the  large  cost   of  investigations,  even  an                                                                    
increase in  the board's fees  would not cover  the deficit.                                                                    
She  deferred the  question to  the  department for  further                                                                    
Co-Chair  Thompson understood  that  Legislative Budget  and                                                                    
Audit (LB&A)  had been tasked  with reviewing the  board and                                                                    
would be coming forward with recommendations.                                                                                   
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT, stated that  the fiscal                                                                    
note  spoke to  the  expenses that  were  particular to  the                                                                    
board;  if  the board  were  to  sunset the  division  would                                                                    
continue to license midwives and  would relieve licensees of                                                                    
the expense of  board travel, which was  the only isolatable                                                                    
expense in regard  to the board itself. She  agreed that the                                                                    
board had  been in a  deficit position and had  been working                                                                    
toward  an  assertive  and meaningful  to  the  budget.  She                                                                    
relayed that fees  had been increased for  both midwives and                                                                    
apprentices;  midwives now  paid the  highest licensing  fee                                                                    
charges by the  division: $1,750 every two  years. She added                                                                    
that the  apprentice fees had  risen from over $100  to over                                                                    
$900  in 2013.  She noted  that it  would take  several more                                                                    
increases  and continued  attempts to  rein in  spending and                                                                    
get  out of  the  deficit  positon, but  with  a very  small                                                                    
number  of  licensees  that  could  take  several  licensing                                                                    
Co-Chair Thompson observed that most  of the deficit was due                                                                    
to investigations. Ms. Chambers  replied in the affirmative.                                                                    
She  added that  investigations figured  prominently in  the                                                                    
legislative audit findings.                                                                                                     
Co-Chair  Thompson highlighted  the  LB&A  criticism of  the                                                                    
department for not pursuing 4 different midwifery cases.                                                                        
Ms. Chambers  responded that there  were several  cases that                                                                    
had  been referred  to  the Department  of  Law's Office  of                                                                    
Special Prosecutions and Appeals  that had not been followed                                                                    
up on and  had been deemed a low priority.  She said that at                                                                    
the  time the  agency  had  not done  its  due diligence  to                                                                    
follow up  on the  cases, but that  since had  corrected the                                                                    
issue  putting new  safeguards into  place  to double  check                                                                    
files sent over  to sister agencies; in  addition, an expert                                                                    
witness had been  retained to review the  cases to determine                                                                    
which of  the agencies was  most appropriate for  each case.                                                                    
She explained  that the licensees  involved in the  cases in                                                                    
question  had  refused  to sign  a  consent  agreement.  She                                                                    
assured  the  committee  that   the  division  was  actively                                                                    
pursuing remedies to the problems.                                                                                              
Co-Chair  Thompson   asked  if  there  was   any  chance  of                                                                    
recouping the investigation expenditures.                                                                                       
2:32:14 PM                                                                                                                    
Ms.  Chambers  answered no.  She  shared  that there  was  a                                                                    
proposal in  the budget  that would give  the board  and the                                                                    
division the opportunity recoup  fines to help mitigate some                                                                    
of the expenses.                                                                                                                
Co-Chair Thompson observed terminating  the board would cost                                                                    
the state more money than renewing the sunset date.                                                                             
Ms.  Chambers replied  that she  was not  familiar with  the                                                                    
Representative   Wilson  queried   the  difference   between                                                                    
retaining  the  board,  and  allowing  the  licenses  to  be                                                                    
handled by the department.                                                                                                      
Ms.  Chambers  replied  that the  board  currently  had  the                                                                    
ability to  review and approve licenses,  which would revert                                                                    
back to the  division. She said that the  board handled most                                                                    
of  the  administrative elements,  including  investigative,                                                                    
which  allowed for  public deliberation  that  would not  be                                                                    
allowed under the department.                                                                                                   
Representative  Wilson  expressed  concern that  the  fiscal                                                                    
note did  not reflect  the $115,000  deficit. She  asked who                                                                    
paid the $115,000 when it was not being paid by the board.                                                                      
Ms. Chambers  answered that  the division  had appropriation                                                                    
authority. She added  that board was in  a deficit position,                                                                    
which department  was working actively  to correct,  and the                                                                    
appropriation  authority was  being covered  by boards  that                                                                    
were  in  a surplus  position.  She  stated that  that  this                                                                    
happened on an annual basis  by nature because there was one                                                                    
time, every  two years that  a board would bring  in revenue                                                                    
that was  meaningful during their renewal  period and offset                                                                    
the  programs that  had opposing  biennial revenue  periods.                                                                    
She stated that  the funds were not mixed in  the sense that                                                                    
the operations  were being  paid for  by another  because of                                                                    
the  carry forward,  but at  the higher  appropriation level                                                                    
all of  the licensing  programs were able  to be  solvent to                                                                    
stay in the black.                                                                                                              
2:36:24 PM                                                                                                                    
Representative  Wilson wondered  if another  audit when  the                                                                    
bill would be up again for sunset in two years.                                                                                 
Ms.  Chambers  deferred  the question  to  the  Division  of                                                                    
Legislative Audit.                                                                                                              
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT  (via  teleconference),  replied  if  the                                                                    
board received an extension, another  sunset review would be                                                                    
triggered  by   statute.  She  said  that   given  the  sort                                                                    
timeframe since the  last audit she expected  the field work                                                                    
would take less time, but another audit would be conducted.                                                                     
Co-Chair Thompson  understood that  LB&A planned  to examine                                                                    
the board and make a recommendation.                                                                                            
Ms.  Curtis  answered  that  the   current  review  by  that                                                                    
committee had not factored into the suggested sunset date.                                                                      
Representative Wilson  asked how much the  most recent audit                                                                    
had  cost. Ms.  Curtis  replied that  the  division did  not                                                                    
track the cost of audits. She  shared that an hourly rate of                                                                    
approximately  $67 per  hour had  been  calculated, so  that                                                                    
could be  multiplied by the  1,100 hours it took  to conduct                                                                    
the audit. She explained  that a typical sunset occupational                                                                    
board  audit   took  approximately  500  to   600  hours  to                                                                    
complete. She relayed that this  particular board audit took                                                                    
longer  because of  the  nature of  the  problems that  were                                                                    
found and because it had been done by a new auditor.                                                                            
2:39:30 PM                                                                                                                    
Representative Gattis  felt that not hearing  from the board                                                                    
was limiting  the conversation. She  queried the  purpose of                                                                    
the board.  She asserted that  she was pro-midwife,  but she                                                                    
believed the board had struggled.  She relayed that she took                                                                    
issue with extending the board another two years.                                                                               
Ms.  Chambers  noted that  the  department  had invited  the                                                                    
board to  address the  committee. She  believed it  would be                                                                    
appropriate for the board to  provide input during committee                                                                    
Co-Chair Thompson  asked whether the increase  in fees would                                                                    
affect  the number  of midwives  paying  into the  licensing                                                                    
Ms. Chambers  replied that  it was  a possibility.  She said                                                                    
that it  was always  a concern,  not specific  to midwifery,                                                                    
that  a rise  in  fees would  cause people  to  drop out  of                                                                    
2:41:55 PM                                                                                                                    
Representative Guttenberg  pointed out that the  audit cited                                                                    
a  division  failure for  some  of  the board's  issues.  He                                                                    
wondered how  much of  the financial  problems of  the board                                                                    
could be attributed to the department.                                                                                          
Ms. Curtis  answered that 100  percent of the cause  for the                                                                    
reduced  extension  was due  to  the  division and  not  the                                                                    
board. She  related that areas for  improvement would always                                                                    
be found;  but in regards  to the severity of  the problems,                                                                    
the majority were at the division level.                                                                                        
Representative  Gara  surmised  that   the  board  had  done                                                                    
nothing  wrong,  and  queried   the  logic  of  the  limited                                                                    
Ms. Curtis did not view  the recommendation as a punishment.                                                                    
She  asserted that  legislative audit  was the  legislatures                                                                    
monitoring  mechanism;  the  two-year  extension  was  given                                                                    
because the issues  were so important and worth  the cost to                                                                    
come  back  to  the  table   to  ensure  that  the  problems                                                                    
recognized in the audit were handled.                                                                                           
2:45:14 PM                                                                                                                    
Representative  Gara  argued  that the  audit  punished  the                                                                    
board  by  creating  uncertainty.  He  did  not  think  that                                                                    
threatening  the  board  was  the  proper  way  to  get  the                                                                    
department to do its job.                                                                                                       
Ms.  Curtis relied  that  it was  difficult  to explain  the                                                                    
reasoning  pertaining   to  board  action   versus  division                                                                    
action,  and  how  that  factored  into  an  extension.  She                                                                    
reminded the  committee that it  was only  a recommendation;                                                                    
she would present the report  and provide information but it                                                                    
would be up to policy makers to make the final decision.                                                                        
Representative Gara  recommended that  the board be  given a                                                                    
full extension. He asked if  fee increases were the only way                                                                    
that the board could maintain its finances.                                                                                     
Ms.  Chambers  answered that  the  department  was fully  in                                                                    
compliance  with  legislative  audit's  recommendations  and                                                                    
took  full responsibility  in the  areas of  deficiency. She                                                                    
stated that the division would  set fees with the advice and                                                                    
input  of  the   board.  She  believed  that   some  of  the                                                                    
responsibility  lay with  the board  continuing  to rein  in                                                                    
spending and  refining decision  making processes  to reduce                                                                    
2:49:19 PM                                                                                                                    
Representative Pruitt  read from  the letter from  the Board                                                                    
of  Direct-Entry  Midwives  chair, Cheryl  Corrick,  located                                                                    
within the audit:                                                                                                               
     "Recommendation No. 2:                                                                                                     
     I concur  with this recommendation,  with reservations.                                                                    
     The  Board  has  requested  that, in  addition  to  the                                                                    
     proposed  increases in  licensing  fees  for CDMs,  the                                                                    
    Division also increase apprentice licensing fees to                                                                         
     50% of CDM fees. The Board sees this as a potential                                                                        
     way to help meet the shortfall. So far, the Board's                                                                        
     request has been denied over the past two years."                                                                          
Representative  Pruitt wondered  why the  board's suggestion                                                                    
had not been considered.                                                                                                        
Ms.   Chambers  answered   that   the   increase  had   been                                                                    
implemented  but   that  it  affected  a   small  number  of                                                                    
midwives.  She said  that fees  would need  to be  increased                                                                    
again  in order  to  keep  up with  rate  of spending  while                                                                    
trying to chip away at the negative carry forward.                                                                              
Representative Pruitt wondered whether  the division had the                                                                    
ability  to   recoup  costs   of  the   investigations  from                                                                    
individuals  found to  be  at fault.  He  asked whether  the                                                                    
department had, or should have,  the ability to recoup costs                                                                    
of investigations involving unlicensed individuals.                                                                             
Ms. Chambers  answered that the  division did  not currently                                                                    
have  the   ability  to  recoup   costs  from   licensed  or                                                                    
unlicensed  individuals;   it  would  require   a  statutory                                                                    
Representative Pruitt asked whether  the challenges found by                                                                    
the audit were related to the board or the department.                                                                          
Ms. Curtis  replied that most  of the problems  stemmed from                                                                    
the department.                                                                                                                 
Representative Pruitt asked  whether similar challenges were                                                                    
faced  by  other  boards.   He  requested  suggestions  from                                                                    
legislative audit on how to fix the problem.                                                                                    
Ms. Curtis  replied that the  extension reduction  was being                                                                    
driven by  the investigative  problems, which  were specific                                                                    
to the  midwife cases  and were not  found in  other boards;                                                                    
this  was not  a  division-wide problem.  She  spoke to  fee                                                                    
setting. She relayed that if  a board was significantly in a                                                                    
deficit, legislative audit would  make a recommendation that                                                                    
the board work with the  division to set fees appropriately.                                                                    
She pointed out  to the committee that a  fee schedule could                                                                    
be found  in the  audit. She said  that deficits  could vary                                                                    
widely and that  the situation could be  tricky when setting                                                                    
fees  as  a  response  to   a  spike  in  expenditures.  She                                                                    
furthered that the  audit performed in FY 06,  had an annual                                                                    
licensing fee  of over $2,000 biannually.  She stressed that                                                                    
this was not a new problem for the board.                                                                                       
2:55:27 PM                                                                                                                    
Representative Wilson pointed to page  2 of the fiscal note.                                                                    
She wondered what the licenses  would cost if the board were                                                                    
to dissolve.                                                                                                                    
Ms. Chambers  answered that the  numbers in the  fiscal note                                                                    
would  be  different if  the  division  were to  manage  the                                                                    
licensing program differently.                                                                                                  
Representative  Wilson  wondered  who   would  pay  for  the                                                                    
investigations if the board were dissolved.                                                                                     
Ms.  Chambers replied  that  licensees  always recouped  the                                                                    
costs of  investigations, the existence  of the  board would                                                                    
not change the licensing structure.                                                                                             
Representative  Wilson surmised  that  no  matter what,  the                                                                    
licensees  would have  to  pay  the fee  if  they wanted  to                                                                    
remain legally licensed.                                                                                                        
Ms. Chambers replied in the affirmative.                                                                                        
Representative   Wilson  expressed   unhappiness  with   the                                                                    
problems faced  by the midwives.  She worried  that midwives                                                                    
would  end  up  with  licensing fees  that  they  could  not                                                                    
Representative Pruitt  clarified that licensing  would still                                                                    
exist  even  if  the  board  disbanded.  He  felt  that  the                                                                    
midwives would be  penalized if the bill did  not go forward                                                                    
in the process. He  thought that the legislation highlighted                                                                    
that  something was  broken within  the  department and  not                                                                    
with the board or the midwives.                                                                                                 
2:59:30 PM                                                                                                                    
Representative  Gattis  reiterated   her  concern  that  the                                                                    
committee  had  not  heard  from  the  board.  She  strongly                                                                    
believed input from the board was needed.                                                                                       
Ms. Stidolph  agreed that  a board  member's input  would be                                                                    
Co-Chair  Thompson believed  the board  needed to  exist. He                                                                    
expressed concern at the cost of  the audit for a board that                                                                    
oversaw few  licensees. He felt  that the problem  should be                                                                    
reexamined  in  2 years  after  the  legislature received  a                                                                    
recommendation  from   Legislative  Budget  and   Audit.  He                                                                    
thought that  passing the legislation would  allow the board                                                                    
to  continue to  be involved  in the  ongoing education  and                                                                    
certification of midwives.                                                                                                      
Representative  Wilson  reiterated  concern  of  what  could                                                                    
happen if the committee immediately did nothing.                                                                                
Representative Gara  requested clarification on the  cost of                                                                    
the audit.                                                                                                                      
Co-Chair  Thompson  explained  that  the  audit  took  1,100                                                                    
hours,   billed  out   at  $67   per   hour,  resulting   in                                                                    
approximately $74,000 total.                                                                                                    
Representative Gara  moved a conceptual amendment  to extend                                                                    
the termination date to 3-years.                                                                                                
Co-Chair Thompson said  that the problem was  that the costs                                                                    
of investigations were being placed  on boards that were not                                                                    
responsible   for  the   problems  being   investigated.  He                                                                    
reiterated  that  it  would  be  prudent  to  wait  for  the                                                                    
recommendations that LB&A would provide in 2 years.                                                                             
3:04:57 PM                                                                                                                    
Representative Gara withdrew the conceptual amendment.                                                                          
Co-Chair Neuman MOVED to REPORT  HB 26 out of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB   26  was   REPORTED  out   of  committee   with  a   "no                                                                    
recommendation"  recommendation  and   with  one  previously                                                                    
published fiscal impact note: FN1 (CED).                                                                                        
Co-Chair  Thompson discussed  the agenda  for the  following                                                                    
3:06:23 PM                                                                                                                    
The meeting was adjourned at 3:06 p.m.                                                                                          

Document Name Date/Time Subjects
AS 38.05.125.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
BLM-Alaska Conveys 729,000 Acres to State of Alaska.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Draft A Legal Memo-HB 115.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Leg Research-State Lands.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
MyliusPresentationonLands-2013.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
South Carolina Resolution.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
State asks feds for transfer of 19,322 disputed acres on North Slope.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
PL85-508.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
US Constitution-9th and 10th Amendments.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
USCODE-2011-title43-chap33A-sec1635.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Utah HB148.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
CSHB 115 (RES)-Sponsor Statement.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
HB 115 AK Miners Assoc Support.pdf HFIN 3/16/2015 1:30:00 PM
HB 115