Legislature(1993 - 1994)
03/29/1993 08:00 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE March 29, 1993 8:00 a.m. MEMBERS PRESENT Representative Bill Williams, Chairman Representative Bill Hudson, Vice Chairman Representative Con Bunde Representative Pat Carney Representative John Davies Representative Jeannette James Representative David Finkelstein MEMBERS ABSENT Representative Joe Green Representative Eldon Mulder OTHER LEGISLATORS PRESENT Representative Gail Phillips Representative Tom Brice Representative Cliff Davidson Representative Carl Moses COMMITTEE CALENDAR HB 76: "An Act making a special appropriation to the Department of Natural Resources for the purchase of the inholdings of the Seldovia Native Association and the Cook Inlet Region, Inc., and the timber rights of the Timber Trading Company, within the Kachemak Bay State Park; and providing for an effective date." PASSED FROM COMMITTEE WITH A DO PASS RECOMMENDATION HB 132: "An Act extending the time period of all permits issued by the state relating to the extraction or removal of resources if the holder of the permits is involved in litigation concerning the issuance or validity of any permit related to the extraction or removal." ADOPTED CS (RES) AND PASSED FROM COMMITTEE WITH A DO PASS RECOMMENDATION HB 201: "An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust, the management of trust assets, and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date." ADOPTED CS (RES) AND PASSED FROM COMMITTEE WITH NO RECOMMENDATIONS AND ATTACHED POSITION STATEMENT BY REPRESENTATIVE JAMES WITNESS REGISTER Representative Gail Phillips Alaska State Legislature State Capitol, Room 216 Juneau, Alaska 99801-1182 Phone: 465-2685 Position Statement: Prime Sponsor, HB 76 Rick Johanssen Attorney for Usibelli Mines, Coalition Member Coalition for Alternative Settlement 1029 W. Third Ave., Suite 300 Anchorage, Alaska 99501 Phone: 279-8561 Position Statement: Described the coalition's proposed CS to HB 201 Brian Bjorkquist Assistant Attorney General Alaska Department of Law 1031 W. 4th, Suite 200 Anchorage, Alaska 99501-1994 Phone: 269-5100 Position Statement: Advised that the state did not endorse or support HB 201 David Walker Attorney for Settling Plaintiffs 417 Harris Juneau, Alaska 99801 Phone: 586-3537 Position Statement: Testified in opposition to the proposed committee substitute to HB 201 Pam Finley, Assistant Revisor of Statutes Legislative Affairs Agency Legal Services Division 130 Seward Street, Suite 405 Juneau, Alaska 99801-1219 Phone: 465-2450 Position Statement: Proposed a change to HB 201 Representative Jeannette James Alaska State Legislature State Capitol, Room 501 Juneau, Alaska 99801-1182 Phone: 465-3743 Position Statement: Presented a position statement on HB 201 Bruce Phelps Department of Natural Resources Division of Land, Title Section P.O. Box 107005 Anchorage, Alaska 99510-7005 Phone: 762-2239 Position Statement: Recommended amendments to HB 201 proposed CS Representative Tom Brice Alaska State Legislature Court Building, Room 605 Juneau, Alaska 99801-1182 Phone: 465-3466 Position Statement: Prime Sponsor of HB 132 Raga Elim Special Assistant to the Commissioner Department of Natural Resources 400 Willoughby Ave. Juneau, Alaska 99801-1724 Phone: 465-2400 Position Statement: Responded to questions on proposed CS HB 132 PREVIOUS ACTION BILL: HB 76 SHORT TITLE: APPROP: KACHEMAK BAY ST. PK.TIMBER RIGHTS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) PHILLIPS TITLE: "An Act making a special appropriation to the Department of Natural Resources for the purchase of the inholdings of the Seldovia Native Association and the Cook Inlet Region, Inc., and the timber rights of the Timber Trading Company, within the Kachemak Bay State Park; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/22/93 129 (H) READ THE FIRST TIME/REFERRAL(S) 01/22/93 129 (H) CRA, RESOURCES, FINANCE 03/23/93 (H) CRA AT 01:00 PM CAPITOL 124 03/23/93 (H) MINUTE(CRA) 03/24/93 755 (H) CRA RPT 3DP 3NR 03/24/93 755 (H) DP: DAVIES, OLBERG, TOOHEY 03/24/93 756 (H) NR: SANDERS, BUNDE, WILLIAMS 03/24/93 756 (H) -ZERO FISCAL NOTE (F&G) 3/24/93 03/29/93 819 (H) RES RPT 6DP 1NR 03/29/93 819 (H) DP: HUDSON, CARNEY, JAMES, FINKELSTEIN 03/29/93 819 (H) DP: DAVIES, BUNDE 03/29/93 819 (H) NR: WILLIAMS 03/29/93 819 (H) -PREVIOUS ZERO FN (F&G) 3/24/93 03/29/93 (H) RES AT 08:00 AM CAPITOL 124 BILL: HB 132 SHORT TITLE: EXTEND RESOURCE EXTRACTION PERMIT/LEASE BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) BRICE,Kott,James TITLE: "An Act extending the time period of all permits issued by the state relating to the extraction or removal of resources if the holder of the permit is involved in litigation concerning the issuance or validity of any permit related to the extraction or removal." JRN-DATE JRN-PG ACTION 02/05/93 236 (H) READ THE FIRST TIME/REFERRAL(S) 02/05/93 236 (H) RESOURCES, JUDICIARY, FINANCE 03/22/93 739 (H) COSPONSOR(S): KOTT 03/29/93 (H) RES AT 08:00 AM CAPITOL 124 03/29/93 838 (H) COSPONSOR(S): JAMES BILL: HB 201 SHORT TITLE: MENTAL HEALTH TRUST AMENDMENTS BILL VERSION: SPONSOR(S): RESOURCES TITLE: "An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust, the management of trust assets, and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date." JRN-DATE JRN-PG ACTION 03/05/93 552 (H) READ THE FIRST TIME/REFERRAL(S) 03/05/93 552 (H) RESOURCES, JUDICIARY, FINANCE 03/12/93 (H) RES AT 08:00 AM CAPITOL 124 03/12/93 (H) MINUTE(RES) 03/12/93 (H) MINUTE(RES) 03/19/93 (H) RES AT 08:00 AM CAPITOL 124 03/19/93 (H) MINUTE(RES) 03/29/93 (H) RES AT 08:00 AM CAPITOL 124 03/29/93 826 (H) JUD REFERRAL WAIVED Y22 N17 E1 ACTION NARRATIVE TAPE 93-38, SIDE A Number 000 The House Resources Committee was called to order by Chairman Bill Williams at 8:16 a.m. Members present at the call to order were Representatives Williams, Hudson, Bunde, Carney, Davies, James and Finkelstein. Members absent were Representatives Green and Mulder. CHAIRMAN BILL WILLIAMS announced the bills for consideration at this meeting would be HB 76, HB 201 and HB 132, in that order, and he noted that the meeting was being held by teleconference with sites in Anchorage and Fairbanks. He introduced the prime sponsor of HB 76, Representative Gail Phillips. HB 76: APPROP: KACHEMAK BAY ST. PK.TIMBER RIGHTS Number 044 REPRESENTATIVE GAIL PHILLIPS, PRIME SPONSOR OF HB 76, briefly described the background of the Kachemak Bay State Park timber rights purchase, which she said had been an issue in Alaska for almost twenty years. Lands were set aside for Kachemak Bay State Park but private lands within the park became an issue when they were granted to the Seldovia Native Corporation as part of the Alaska Native Interests Lands Claim Act (ANILCA). Attempts at land trades and sales have not been successful, she said. The state now has the means to make a settlement, she explained, without any money coming from the general fund. REPRESENTATIVE PHILLIPS noted the events that have occurred relating to financing the timber rights purchase. She alleged $20.5 million was deposited in the Alyeska Settlement Fund for an agreement and consent decree in a civil settlement entered into on November 20, 1992. This, she said, included an allotment of $7.5 million for the purchase of the inholdings of Kachemak Bay State Park. Additionally, the Exxon Oil Spill trust Council approved $7.5 million from the Exxon Settlement Fund for Kachemak Bay. REPRESENTATIVE PHILLIPS said the purpose of the $7 million appropriation requested in HB 76 will come out of the Exxon criminal settlement fund that was not appropriated and not spent in 1992. On March 4, 1993, she explained, Governor Hickel formally announced an agreement between all parties concerned to buy back the private inholdings in Kachemak Bay State Park. She said the agreement was formally signed by Seldovia Native Association, Cook Inlet Region, Timber Trading Company, and the state of Alaska. Number 097 REPRESENTATIVE PAT CARNEY asked Representative Phillips to clarify whether the governor had already signed that agreement. REPRESENTATIVE PHILLIPS explained that a copy of the purchase agreement was in committee members' packets, and constituted an agreement toward which the money would come from the three components she described. (A copy of the purchase agreement may be found in the House Resources Committee Room, Capitol Room 124, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) CHAIRMAN WILLIAMS noted for the record that Representative Cliff Davidson was present, as well as Representative Tom Brice. Number 110 VICE CHAIRMAN HUDSON asked whether a previously raised question regarding subsurface rights had been resolved. REPRESENTATIVE PHILLIPS answered that the issue had been resolved and was included in the agreement, signed for and agreed upon by Cook Inlet Region. REPRESENTATIVE JOHN DAVIES noted that he intended to sign "do pass" on the bill. REPRESENTATIVE CON BUNDE MOVED to pass HB 76 from the committee with individual recommendations. He asked unanimous consent. CHAIRMAN WILLIAMS asked whether anyone else wished to testify on HB 76. Hearing none, he asked whether there were any objections to the motion. Hearing none, the MOTION PASSED. HB 201: MENTAL HEALTH TRUST AMENDMENTS Number 142 CHAIRMAN WILLIAMS told the committee the next bill for consideration would be HB 201, the Mental Health Lands Trust Settlement amendment bill introduced by the House Resources Committee. At the bill's last hearing, he explained, several amendments had been proposed by a coalition of groups involved in the issue. He said the committee had asked for comments on the amendments from the Attorney General and from the attorneys for the settling plaintiffs. The coalition's recommendations had since been developed into a proposed committee substitute, he said, with input from the Department of Natural Resources (DNR). Number 178 CHAIRMAN WILLIAMS said the work of the coalition had concentrated on the lands-related issue, with work on fiscal issues to be left to the finance committee. In addition to the draft committee substitute, he explained there was an additional amendment proposed by Rick Johanssen on behalf of the coalition. Number 197 VICE CHAIRMAN HUDSON asked for clarification on whether the work draft dated 3/27/93 was the document under discussion, and whether it incorporated the major amendments proposed in the previous hearing. CHAIRMAN WILLIAMS confirmed this was the case. RICK JOHANSSEN, ATTORNEY FOR COALITION MEMBER USIBELLI MINES, explained that the coalition includes members of industry; the Resources Development Council; two of the Weiss litigation plaintiffs; all of the public interest interveners; and the two intervening oil companies. He explained that the coalition had worked closely with the Department of Law and the DNR on the recommendations in the committee substitute (CS). MR. JOHANSSEN noted that the amendments marked K.1 were typographical items that resulted from hasty drafting of the CS. He clarified that the CS with the page of amendments reflected a combination of the original bill, the three amendments discussed at the previous meeting, and further refinements developed with the departments of Law and Natural Resources. The coalition, he said, felt the bill was ready for action. MR. JOHANSSEN remarked on the substantive changes that had been incorporated into the CS. A detailed explanation of those changes, he said, was contained in members' packets, in a document titled "Explanation of Differences between the Previously Proposed Amendments and the Committee Substitute (work draft 3/27/93)." (A copy of this document may be found in the House Resources Committee Room, Capitol Room 124, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) MR. JOHANSSEN advised that those changes included first, a change in the land management provision, and second, a clarification in the way title is conveyed to the reconstituted trust. Third, the CS included a mechanism for funding the DNR's Mental Health Trust land management duties from the Mental Health Trust income account. MR. JOHANSSEN then described those three substantive changes in greater detail. Regarding the changes to land management provisions, he explained that under the amendments presented at the previous hearing on HB 201, original mental health trust lands currently subject to a third party interest, such as a coal or surface lease, would be managed in total by the DNR under the DNR's current land management standards. Under the 3/27/93 CS, he said that only preexisting third party interests would be managed under current DNR rules. Subsequent property rights, he said, would be issued and managed by the trust authority or the DNR as its contractor, in a fiduciary manner like other trust lands. MR. JOHANSSEN commented that there was a potential for conflict among the various users of a parcel of land in having the DNR manage the preexisting interests while the trust authority manages the subsequent interests. He said this is not unusual in property law where the mineral estate is often severed from the surface estate. The CS includes a provision, he explained, that requires the trust authority to honor the various legal principles developed to handle the potential conflicts between concurrent users of real property. MR. JOHANSSEN addressed the subject of preexisting coal leases. Those on original mental health trust lands, he said, will have rent and royalty adjustments made by the DNR under the DNR's existing standards. That allows for pricing stability and consistency the coal industry needs to continue marketing and development. Other resource interests are also protected by the provisions, he added. MR. JOHANSSEN addressed the second substantive provision of the CS, which would require the DNR to convey title to the trust authority for lands that are being returned to the reconstituted trust, by giving a patent without a survey. The purpose of the provision, he explained, is to satisfy the Weiss plaintiffs' desire for a patent to reconstituted trust land, while saving millions of dollars by not requiring a survey of the lands until there is a reason to do so. He said the bill accomplishes that by exempting those conveyances that would go from the DNR to the trust authority from the existing Alaska statute which requires a survey. MR. JOHANSSEN described the third substantive provision of the CS. This provided a mechanism for funding the DNR's land management duties for original mental health trust lands. He said the DNR's position was that because the mental health trust income account would receive all of the proceeds of the DNR's land management efforts, the legislature should have the ability to fund those efforts from the income account. Number 360 REPRESENTATIVE DAVIES asked Mr. Johanssen what time frame would be used to determine whether land interests were "preexisting." MR. JOHANSSEN replied that it would be the date when Chapter 66 becomes effective, which would be when it is approved by the courts. Number 370 REPRESENTATIVE DAVIES asked whether new leases entered into now would be considered preexisting by the time Chapter 66 becomes effective. Number 377 MR. JOHANSSEN answered that that would be the case, technically, but that the DNR was subject to a court injunction which prevents them from issuing any interests without court approval. As a practical matter, he explained, that means that if anyone desired to obtain an interest in original mental health land, they would first have to go to the plaintiffs in the Weiss litigation and negotiate a deal. The deal would then have to be brought to the court, he said. Number 385 BRIAN BJORKQUIST, ASSISTANT ATTORNEY GENERAL, testified from Anchorage by teleconference. He told the committee that the state does not endorse or support HB 201 as a whole, but added that he had worked with the coalition on the statutory language relating to the land portion of the bill. He said the attorney general (AG) found that portion acceptable. He noted a suggestion made by the AG's office that had not been incorporated into the CS: On page 6, line 6, referring to AS 38.05.800 (a)(1.C), Mr. Bjorkquist recommended that this should include any municipal selection that has been either approved or disapproved rather than just any selection that has been approved. Number 412 MR. BJORKQUIST said that selections that were disapproved should be retained in state ownership instead of being returned to trust status. The reason he cited was that under the municipal selection process, the selection may be disapproved only upon a finding that the public interest in retaining state ownership of the lands outweighs the municipalities' interest in obtaining the land. If a selection has already been disapproved, he said, there would have already been a finding of the public interest in retaining the parcel in state ownership. Chapter 66, he explained, protected that determination; HB 201 should also, he added. MR. BJORKQUIST referred to the amendments to HB 201 and said those before the committee do not address amendments suggested by the Department of Revenue in a memorandum dated March 15, 1993. The coalition, he explained, had requested those amendments be addressed by the House Finance Committee. The state had no objection to the temporary delay in addressing those amendments, but believed those amendments should be dealt with at some point in the process. Number 431 MR. BJORKQUIST addressed the state's position on the multiple use mandate on management of trust lands, stating that this would be detrimental to the trust and would cause management difficulties in the DNR. He said he would defer discussion on that issue to Bruce Phelps of the DNR who would provide greater detail. MR. BJORKQUIST noted that the state had concerns about HB 201 and the fact that the environmental interveners had not publicly explained whether they believe the proposed amendments remove all the constitutional challenges they have raised regarding Chapter 66 as the settlement of the mental health trust litigation. He noted that HB 201 was being presented by the coalition as an alternative settlement, and is being portrayed as a means to avoid the constitutional and legal challenges that have been raised in opposition to Chapter 66. Number 453 MR. BJORKQUIST remarked that litigation over the constitutionality of Chapter 66 had progressed at considerable expense to the state, to the point, he added, that the constitutional issues were pending before the trial court. He did not believe it was in the state's best interest to enter into an alternative settlement such as that proposed by HB 201, which would be subject to the same or similar constitutional challenges already litigated and pending before the trial court. Litigation over challenges to HB 201 would have to begin anew, he cautioned, and would result in additional delays and expense to the state. Number 460 MR. BJORKQUIST declared if HB 201 has constitutional problems with respect to the public interest safeguards, those problems should be fixed or HB 201 should not be passed by the legislature. MR. BJORKQUIST remarked that the AG believes the environmental interveners should stipulate in writing whether they believe there are any constitutional problems with HB 201. He noted that HB 201 is the environmental interveners' own bill. He said that if they do not believe their bill passes constitutional mandates, the AG's office believes the environmental interveners have an obligation to the legislature to explain what portions of their bill they believe are unconstitutional. Only by disclosing possible problems, he said, would the legislature have full opportunity to correct the problems. Number 478 MR. BJORKQUIST commented that as a rule, the legislature has a right to rely on the presumption that anyone who proposes legislation believes it to be constitutional. He suggested that to do otherwise would be to perpetrate a fraud. Number 485 REPRESENTATIVE DAVIES asked about Mr. Bjorkquist's proposed amendment on page 6, line 6, and asked if adding the words, "or disapproved" would meet the intent. MR. BJORKQUIST replied that it would. Number 492 VICE CHAIRMAN HUDSON asked Mr. Bjorkquist about the issue of default of the foreclosed lands and minerals pledged for security, on page 4 of the CS. He asked what would trigger that action. MR. BJORKQUIST replied that the provision referred to, regarding collateral of the Legislatively Designated Areas (LDAs), secure the allocation under subsection (c) of AS 37.14.036. The provision for foreclosure would only arise if the legislature or the DNR's commissioner did not allocate the percentage due the mental health income fund on the annual basis as required under that section of AS 37.14. Number 520 VICE CHAIRMAN HUDSON asked whether the funds would flow to the mental health trust within the general fund holdings, then be appropriated out by the legislature. MR. BJORKQUIST replied that this was correct. The provision for foreclosure, he said, would only arise if the allocation did not occur to the mental health trust. VICE CHAIRMAN HUDSON asked if it were accurate to say that it had nothing to do with the appropriation, but rather with the annual allocation and maintenance of the trust account. MR. BJORKQUIST confirmed that. Number 525 REPRESENTATIVE DAVID FINKELSTEIN asked why it appeared that the views of the environmental interveners were more important regarding the constitutionality of HB 201 than the views of the other parties to the settlement and legislation. MR. BJORKQUIST explained that the concern was focussed on the environmental interveners because of implications raised in testimony before the Senate Judiciary committee on the senate equivalent of HB 201. A representative of the coalition, he said, had implied that the environmental interveners are "convinced that the Alaska Supreme Court would impose more restrictions on trust management or safeguards of the public interest on trust management than is contained in HB 201." MR. BJORKQUIST suggested the implication that can be derived from that statement, is that the environmental interveners believe that HB 201 with its provisions for trust management do not meet constitutional minimum requirements under Article VIII, Section 10 of the constitution. If that is the case, he stated, the environmental interveners should come forward and explain what additional safeguards, in their view, should be added to make the bill constitutional. He noted that he had heard no comments from other parties that would indicate potential problems related to the constitutionality of the legislation. Number 560 DAVID WALKER, COUNSEL FOR SETTLING PLAINTIFFS, addressed the proposed committee substitute to HB 201. The purpose of the bill and the CS, he summarized, is to amend the settlement that had been entered into by the plaintiffs and the state which is before the court for approval. The purpose for passing a bill that amends the settlement, he explained, would be to diminish the litigation and resolve the controversy. He noted that he had suggested that to do that, it would be necessary for the state to negotiate alternative settlements and discuss those with counsel and with the plaintiffs. MR. WALKER expressed his concern with the process and suggested any settlement of the litigation could be challenged. Any settlement involving large amounts of land, he said, would cause conflicts among the parties having interests in those lands. Number 575 MR. WALKER referred to letters in members' packets as well as to the previous testimony of the Attorney General before the Resources Committee, that the AG had requested the settling plaintiffs to meet with him to discuss relief to third parties, among other matters. Mr. Walker said those meetings were scheduled for later in the week of March 29, 1993. Number 598 REPRESENTATIVE PAT CARNEY commented that he had been under the impression some agreement had been reached between the plaintiffs and the state regarding relief to the third parties, and that the agreement had been turned down by the court. He asked Mr. Walker if that was a true assessment. MR. WALKER replied that it was accurate. Under the terms of the settlement agreement, he said the parties were to submit a stipulation to the court providing a release while the litigation was pending to the private third parties who received trust land. The court, he explained, refused to grant the stipulation. The state asked the Supreme Court to review the decision, and the Supreme Court said it would not review it. Following that, he noted, the AG provided Mr. Walker with notice that under the terms of the settlement, the timetable of 60 days would be implemented to find a way to provide that relief. If not, the state would withdraw from the settlement. Number 614 MR. WALKER explained that as a consequence of that, the plaintiffs had asked to meet with the AG, and the settling plaintiffs independently filed a motion with the court asking the court to reconsider the decision. The judge, he said, held that it would be appropriate to approve the stipulation if it became more likely that the settlement before her would be approved, and not appropriate if the settlement were not to be approved. He said the plaintiffs, in asking her to readdress that issue, pointed out that were the state to follow through on withdrawing from the settlement, unless the judge readdresses the issue, she would never get to the equity issue. Number 634 VICE CHAIRMAN HUDSON asked Mr. Walker who he represented. MR. WALKER replied that he represented the original plaintiffs in the litigation, Carl Weiss and Vern Weiss, and other plaintiffs similarly situated. VICE CHAIRMAN HUDSON asked Mr. Walker whether he supported existing law, and holding off on making changes to existing law until the results of the court are known. MR. WALKER answered that the parties who signed the settlement and still support the settlement on the plaintiffs' side include his own clients and the Alaska Mental Health Association, represented by Jim Gottstein. VICE CHAIRMAN HUDSON asked Mr. Walker if he still supported Chapter 66. MR. WALKER said yes, he did. He added that Chapter 66 is awaiting preliminary approval as the settlement of the litigation. Number 645 REPRESENTATIVE FINKELSTEIN commented that he shared the feeling of the plaintiffs on the importance of negotiation, but added that the legislature faces the dilemma that the legislative process is slow and to consider an issue the process needs to begin only. By taking action, he said the legislature is not trying to slight the importance of the negotiations. Number 658 VICE CHAIRMAN HUDSON asked whether there was anything in HB 201 that might enhance Chapter 66. MR. WALKER replied that he had not focussed on the amendments, but said he did have one concern. That was regarding the naming of parts in one amendment, which contained a definition of an unrestricted earnings deferment fund. He called it an improvement to define that. Number 675 PAM FINLEY, ASSISTANT REVISOR OF STATUTES, LEGISLATIVE LEGAL SERVICE DIVISION, proposed one suggested change to HB 201. She referred to page 5, line 17, and recommended the language regarding survey requirements be amended to read, "the requirements of this section do not apply to the conveyance of land to the Alaska Mental Health Authority" (striking "to be conveyed"). She said the reason for the change was so no one would think that land that was originally conveyed to the authority does not have to be surveyed. TAPE 93-38, SIDE B Number 000 REPRESENTATIVE JEANNETTE JAMES read a position statement she had authored, which was included in members' bill packets. She noted that she did support moving the bill. She requested that the position statement be passed with HB 201 to the next committee of referral. Number 062 BRUCE PHELPS, DEPARTMENT OF NATURAL RESOURCES, DIVISION OF LANDS, addressed the portion of HB 201 that dealt with multiple use. He said the concerns that the DNR had have to do with the section of HB 201 dealing with multiple use and requirements for fiduciary responsibility. He said the DNR's reading of that section indicates that when there is a conflict between multiple use standards and fiduciary responsibilities, the department would always have to side with the fiduciary responsibilities. This would create confusion and ambiguity, he said, when the DNR needs clear objectives in terms of development. This could cause a reduction in development possibilities of trust lands, he said. Number 113 VICE CHAIRMAN HUDSON asked Mr. Phelps where this language was contained in the committee substitute work draft. MR. PHELPS told the committee he had referred to the section located on page 2, lines 30 and 31, and on page 3, line 2 and line 5. MR. JOHANSSEN responded to Mr. Phelps' comments. He said the way the CS is drafted, the trust authority will promulgate its land management program by regulation through the administrative procedures act. The trust authority would contract with the DNR. He understood Mr. Phelps' concerns about the statutory language, but noted that this was not uncommon in legislation. MR. JOHANSSEN said the coalition was in support of the amendment requested by Mr. Bjorkquist to page 6, line 6. With respect to the change proposed by Pam Finley of Legal Services, he said it was a good change that was consistent with the intent of the coalition. REPRESENTATIVE DAVIES asked Mr. Johanssen to respond to the concerns of the attorney general's office regarding the constitutionality of HB 201. Number 174 MR. JOHANSSEN saw those concerns as litigation posturing. He said the coalition was here to solve a problem, and this involves legislation which required compromise. The court case, he said, involves litigation that requires the parties to state their positions, and which often involves parties taking shots at each other to use information in court to their advantage. He said the coalition's primary goal was resolution of the issue. Number 182 REPRESENTATIVE DAVIES asked Mr. Johanssen whether he saw any constitutional problems with HB 201. MR. JOHANSSEN replied that only the court can finally decide what is constitutional and what is not, but he did believe the bill was constitutional. Article VIII, Section 10 of the constitution says the state shall dispose of state lands, consistent with public interest safeguards established by the legislature. He said HB 201 was an attempt to do that, and he felt the courts would find the bill constitutional. Number 199 REPRESENTATIVE CARNEY asked whether Mr. Johanssen was convinced there would be no litigation resulting from HB 201. MR. JOHANSSEN commented that no one could make that assurance because there is always a risk of litigation. In his view, he said, the risk of litigation over HB 201 is no worse than the risk of litigation that exists each time the DNR makes a land management decision. He suggested the committee recognize that the provision included in HB 201 is an existing state statute, in Title 38.05. Under Chapter 66, he explained, the trust authority is exempt from 38.04 and 38.05. House Bill 201 just takes one section of 38.05 and puts it back in the bill so the trust authority must comply with it. Number 216 REPRESENTATIVE JAMES made a MOTION to adopt the 3/27/93 committee substitute. CHAIRMAN WILLIAMS asked if there were any objections to the motion. Hearing none, CS HB 201 (RES) was ADOPTED. REPRESENTATIVE JAMES made a MOTION to adopt amendment K.1, plus the proposed amendment to page 6, line 6 inserting "disapproved," and the proposed amendment to page 5, line 17 replacing "to be conveyed" with "conveyance." CHAIRMAN WILLIAMS asked if there were any objections to the amendments. Hearing none, the AMENDMENTS were ADOPTED. Number 242 REPRESENTATIVE FINKELSTEIN OFFERED one additional amendment, to page 3, line 17, changing the percentage from three to 4.5%. He said his primary concern was what amount would go to mental health programs. He felt the higher amount would better meet the actual needs of those programs. He MOVED that the percentage be changed to 4.5%. VICE CHAIRMAN HUDSON OBJECTED and stated the percentage should be a Finance Committee decision. REPRESENTATIVE CARNEY, addressing the motion, stated that he did not see that changing the percentage in the Resource Committee would cause any problems. He agreed with Representative Finkelstein that the programs are costing more than the three percent called for in HB 201. He felt 4.5% was a good compromise. Number 289 REPRESENTATIVE JAMES commented that the percentage did not make any difference; that the legislature would always make a sufficient appropriation to mental health programs. Number 292 REPRESENTATIVE DAVIES expressed concern with leaving the number as low as 3% in the Resources CS, because it could end up actually being that low in the bill's final version. He suggested 4.5% would be a good compromise. REPRESENTATIVE BUNDE remarked that if the number is being changed from the proposed 6% as a negotiating strategy, it would be best to start low and work up, rather than start in the middle and work higher. VICE CHAIRMAN HUDSON explained that one reason for making the number less than 6% was that there had been substantial contributions over the years into the mental health programs by the state, and he was convinced the legislature would in future years guarantee those programs would be appropriately funded. The question, he said, was how much of the income stream in the future should be put into the trust account. He recommended the decision regarding the percentage take into consideration funds that have in the past been put into the mental health programs. The Finance Committee would be the appropriate place for those decisions to be made, he commented. Number 337 REPRESENTATIVE FINKELSTEIN noted that he actually supported 6% but in the spirit of compromise had offered the 4.5%. His reason, he said, is that the interpretation of how we define mental health programs has been very broad, and that we are already spending more than 3%. He said he saw many unmet needs in the state in those areas and that a higher percentage would be appropriate. CHAIRMAN WILLIAMS called for a roll call vote on Representative Finkelstein's amendment. Voting YEA were Representatives Carney, Davies and Finkelstein. Voting NAY were Representatives Hudson, Bunde, James, and Williams. The MOTION FAILED. VICE CHAIRMAN HUDSON made a MOTION to move CSHB 201 (RES) as amended with a revised fiscal note from committee with individual recommendations. He asked unanimous consent. REPRESENTATIVE JAMES requested that her position statement be conveyed with the bill and fiscal note. VICE CHAIRMAN HUDSON AMENDED his MOTION to ask that Representative James' statement be included with CSHB 201 (RES) and the fiscal note. Number 372 CHAIRMAN WILLIAMS asked if there were any objections to the motion. Hearing none, the MOTION PASSED. CHAIRMAN WILLIAMS announced the committee would next take up HB 132. HB 132: EXTEND RESOURCE EXTRACTION PERMIT/LEASE Number 380 REPRESENTATIVE TOM BRICE, PRIME SPONSOR of HB 132, explained that the bill helps the so-called moms and pops with timber interests where the title is unclear. He said the bill would allow permits enjoined in court and found to be issued properly, to have time elapsed in the court case not be taken from the permit time period. He saw it as a question of equity, if the developer had been working within the letter of the law. The bill was initiated by concerns by the Alaska Minerals Commission, he explained. The Governor's Task Force on Regulations came up with the same proposal, he added. Number 415 REPRESENTATIVE BUNDE asked Representative Brice to address the position paper by the Department of Commerce and Economic Development (DCED) in members' packets, and specifically, the improvements proposed there. REPRESENTATIVE BRICE replied that he had amendments drawn up to address the first and second of those recommendations. Number 425 CHAIRMAN WILLIAMS noted that Representative Carl Moses had joined the meeting. REPRESENTATIVE DAVIES asked to see copies of the amendments. REPRESENTATIVE BRICE distributed copies of one amendment to HB 132, which defines the permit, and said that the second one was being drawn up, which relates to expansion of the application beyond resource extraction and removal. He noted that the language was being clarified with the DCED. Number 454 REPRESENTATIVE BRICE described the amendment to page 2, following line 17, adding a new subsection, "in this section, permit means the permit, lease, authorization, license, or any other determination necessary for or related to resource extraction or removal for the expansion of a permit." On page 2, line 18, following "applicability," insert (a). On page 2, following line 21, he said a new subsection would be inserted, to read, "(b) in this section permit has meaning given in AS 46.35.300(D), added by section 1 in this act." Number 473 REPRESENTATIVE JAMES asked whether the sponsor would prepare a committee substitute reflecting the amendments. REPRESENTATIVE BRICE said he had a CS drawn up, which included recommendations of the Alaska Miners Association, which would include language relating to when an agency has a suit brought against it, and when permittees are not able to use a permit. Number 488 REPRESENTATIVE CARNEY suggested that if a CS had been prepared, the committee should work off that. Number 500 REPRESENTATIVE FINKELSTEIN commented that he had a hard time understanding HB 132 because of the complexity of the situation and the variety of permits it appeared to apply to. He suggested it could invite abuse of the provisions, if a permittee intentionally enlisted someone to file a suit against him for the purpose of prolonging the permit period. Number 523 REPRESENTATIVE BRICE replied that there was nothing in law to prevent that now. RAGA ELIM, SPECIAL ASSISTANT TO THE COMMISSIONER OF NATURAL RESOURCES, interjected that a lawsuit would be dismissed if the court deemed it frivolous. Number 534 REPRESENTATIVE FINKELSTEIN suggested that it was conceivable the parties could make the case so factually complex that it would not be dismissed as frivolous. CHAIRMAN WILLIAMS agreed that frivolous lawsuits are wasteful and commented that he saw HB 132 as helping to alleviate the harm they cause. REPRESENTATIVE FINKELSTEIN said that loopholes in the law could be used for the advantage of the permittee, with the company getting into a lawsuit as a delaying tactic. He referred to section 2 at the top of page 2, addressing activity being prevented from occurring. He asked what degree of activity would have to be impaired if there is a big operation and one small portion is the subject of the suit. He wanted to know if the entire operation would be subject to the provisions of HB 132. REPRESENTATIVE BRICE asked whether the committee had suggestions to resolve that potential problem. Number 562 MR. ELIM suggested that HB 132 could be fashioned so the permittee's activities on the larger portion (not subject to a suit), could continue while the smaller portion would be on hold. The extension of rights with respect to the permit would be extended only in connection with that smaller percent, he explained. That activity would be held in abeyance pending the outcome of the litigation, and they would then have that period of time extended after the litigation was settled to complete the permitted activity. MR. ELIM noted that this could change the whole economics of the project because the company would have its infrastructure in place to complete a project as a whole, and it might not be economical to complete that small percentage when the rest has been completed. MR. ELIM added that in that scenario, the parcel that was frozen for the period of litigation would be extended. Number 583 REPRESENTATIVE FINKELSTEIN suggested that HB 132 was not written to allow that. Another problem, he added, was that in the permitting process, there could be several issues within one permit, and the language in the bill needs to address that. Number 593 VICE CHAIRMAN HUDSON raised an issue which he said could present a bigger challenge. He explained that currently, if a party applied for a permit to do resource extraction or other activity, they could be sued by a person other than the state and they could be prevented from going ahead with whatever the project was. Meanwhile, the time clock has been running on the permit period. He said this presents a policy question of whether the permit time should be stopped by the suit. If a suit is filed, he said, the clock is stopped. If the suit is not successful, the clock starts running again. VICE CHAIRMAN HUDSON suggested this was a question of fairness, as to which way it should apply. The legislature had to make a policy call on this matter, he stated. Number 622 REPRESENTATIVE DAVIES commented that at first the issue seems simple, but that it opens arcane issues of resource extraction. He also noted ambiguity in the distinction between the applicant for a permit and the holder of a permit. He recommended that a distinction be made in HB 132. Number 630 REPRESENTATIVE CARNEY commented that HB 132 was trying to correct a potential problem, and that it would be preferable to take care of the honest people through this bill, and to worry about the crooks later. REPRESENTATIVE FINKELSTEIN agreed with the intent of HB 132, but thought it was possible to find a solution to the questions raised. He discussed the permitting process, and said when someone applies for a permit, and then someone sues, there would be a temporary restraining order on the issuance of the permit. MR. ELIM clarified that usually there would be an injunction on the activity itself if the permit had been issued. REPRESENTATIVE FINKELSTEIN asked if the case of the temporary restraining order would not apply if the permit had not begun. So, he added, the permit would have had to be issued for the activity to begin, and if a suit is then filed, it seemed to him that HB 132 was trying to get at a suit that tries to undo the purposes of the permit. REPRESENTATIVE FINKELSTEIN suggested an amendment to deal with that situation where an insignificant portion of an activity is all that is stopped, allowing the rest of the permitted activity to go on. This would be on page 2, line 2, adding language to say "completely prevented" or "substantially prevented." This, he explained, would address the potential for a small portion of an operation holding up the whole project. REPRESENTATIVE CARNEY suggested that since a committee substitute had not been adopted, perhaps the suggestions could be considered in a work session. Number 680 REPRESENTATIVE JAMES addressed the suggestion made by the Alaska Miners Association, on page 2, line 24 of the proposed committee substitute to HB 132, to include "that related to resource extraction are removable as defined by AS 46.35.204." TAPE 93-39, SIDE A Number 000 REPRESENTATIVE BRICE noted that he was looking into the questions regarding conflicting permits. He believed the miners' suggestions were intended to address that, but he was concerned that their suggested language referred to an old section of law that had not been updated since 1977. This was something he said he planned to look into. He suggested HB 132 be moved on with the commitment to make sure the questions were addressed in the next committee. Number 026 VICE CHAIRMAN HUDSON made a MOTION to adopt the committee substitute for HB 132. CHAIRMAN WILLIAMS asked for objections to the motion and, hearing none, CSHB 132 (RES) was ADOPTED. Number 033 REPRESENTATIVE FINKELSTEIN MOVED to make a conceptual amendment to page 2, line 2, relating to the degree of work. He recommended inserting the word "substantially." REPRESENTATIVE BRICE said he was amenable to the change. REPRESENTATIVE BUNDE agreed that "substantially prevented" would address the problem. CHAIRMAN WILLIAMS asked if there were any objections to the motion. Hearing none, the AMENDMENT was ADOPTED. REPRESENTATIVE JAMES MOVED to amend page 2, line 24, to add the language suggested by the Miner's Association, "as defined by AS 46.35.204." CHAIRMAN WILLIAMS asked if there were objections. Hearing none, the AMENDMENT was ADOPTED. VICE CHAIRMAN HUDSON MOVED to pass CSHB 132 (RES) as amended with zero fiscal note with individual recommendations. He asked unanimous consent. Number 119 CHAIRMAN WILLIAMS asked if there were any objections to the motion. Hearing none, the MOTION PASSED. ANNOUNCEMENTS CHAIRMAN WILLIAMS noted that he was distributing to the members a legal opinion from the Department of Law addressing the governor's point of view on the appointees to the Board of Game. He asked that members review the opinion for the next meeting on the Board of Game appointments. He reminded members that the next meeting of the Resources Committee would be on Wednesday, March 31, 1993, at 8:00 a.m. to hear HB 197 and HB 239. ADJOURNMENT There being no further business to come before the House Resources Committee, Chairman Williams adjourned the meeting at 9:57 a.m.