Legislature(2003 - 2004)

05/06/2004 08:40 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                          May 6, 2004                                                                                           
                           8:40 a.m.                                                                                            
TAPE (S) 04-14&15                                                                                                             
MEMBERS PRESENT                                                                                                               
Senator Bert Stedman, Chair                                                                                                     
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Gary Stevens                                                                                                            
Senator Kim Elton                                                                                                               
MEMBERS ABSENT                                                                                                                
Senator Georgianna Lincoln                                                                                                      
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 396                                                                                                             
"An Act relating to the establishment of the Interior Rivers                                                                    
Port Authority; and providing for an effective date."                                                                           
     MOVED CSSB 396(CRA) OUT OF COMMITTEE                                                                                       
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 396                                                                                                                  
SHORT TITLE: INTERIOR RIVERS PORT AUTHORITY                                                                                     
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
05/02/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
05/02/04       (S)       CRA                                                                                                    
05/03/04       (S)       CRA AT 1:30 PM FAHRENKAMP 203                                                                          
05/03/04       (S)       Heard & Held                                                                                           
05/03/04       (S)       MINUTE(CRA)                                                                                            
05/06/04       (S)       CRA AT 8:30 AM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
Representative Carl Morgan                                                                                                      
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor of SB 396                                                                                        
Paul Fuhs                                                                                                                       
No address provided                                                                                                             
POSITION STATEMENT:  Testified on SB 396                                                                                      
George Utermohle                                                                                                                
Legislative Legal and Research Services Division                                                                                
Legislative Affairs Agency                                                                                                      
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Commented on SB 396                                                                                      
ACTION NARRATIVE                                                                                                              
TAPE 04-14, SIDE A                                                                                                            
CHAIR  BERT  STEDMAN called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 8:40 a.m. Present                                                               
were Senators Gary Stevens, Wagoner, Elton and Chair Stedman.                                                                   
             SB 396-INTERIOR RIVERS PORT AUTHORITY                                                                          
CHAIR BERT  STEDMAN announced SB  396 to be up  for consideration                                                               
and asked for a motion to adopt the committee substitute (CS).                                                                  
SENATOR  THOMAS  WAGONER made  a  motion  to  adopt CSSB  396  \I                                                               
SENATOR KIM ELTON objected for discussion purposes.                                                                             
CHAIR STEDMAN asked the sponsor to explain the modifications.                                                                   
REPRESENTATIVE CARL MORGAN, sponsor,  told members that the board                                                               
still consists  of nine members. Five  are from the area  and the                                                               
other  four are  public. In  addition, the  two ex-officio,  non-                                                               
voting members were changed to  voting members. Specifically, the                                                               
commissioners of DOT  and DCED would be voting  members, he said.                                                               
He  then  said he  would  like  Mr.  Fuhs  to explain  the  other                                                               
PAUL   FUHS  introduced   himself  as   a  technical   helper  to                                                               
Representative  Morgan who  asked him  to participate  because he                                                               
has worked on a lot of the port authorities.                                                                                    
REPRESENTATIVE  MORGAN  noted  that  he  misspoke  and  that  six                                                               
members are from the area.                                                                                                      
MR. FUHS  agreed that there  are six area members.  The reasoning                                                               
behind having  the commissioners on  the board is that  "if there                                                               
is any  question about if  you do something under  eminent domain                                                               
is  it for  a public  purpose. And  if you've  got actual  public                                                               
state representatives on there it  confirms that right. So that's                                                               
one of the reasons."                                                                                                            
CHAIR STEDMAN  asked him if  he was  going to go  through several                                                               
MR. FUHS said  that was his intent  and one of the  items was the                                                               
board. He continued to say:                                                                                                     
     The board  now contains 11  voting members and  this is                                                                    
     laid out here  where they come from.  The governor does                                                                    
     appoint  them. The  biggest difference  is that  before                                                                    
     the  commissioners were  ex-officio non-voting  and now                                                                    
     they vote. So you do have direct state representation.                                                                     
SENATOR  GARY  STEVENS  questioned  whether  the  term  "physical                                                               
presence" means  that they live in  the area or that  the company                                                               
that they represent does business in the area.                                                                                  
MR. FUHS  replied it's  that the company  they represent  must do                                                               
business in the area. The member could be from anywhere.                                                                        
CHAIR STEDMAN  asked if that  means a retired person  wouldn't be                                                               
MR.  FUHS said  a retired  person  would be  eligible. "They  can                                                               
appoint  any  person  of  any race,  really  any  location."  The                                                               
requirement  is in  recognition of  the major  landowners in  the                                                               
area and organizations that operate there.                                                                                      
CHAIR STEDMAN referred to page 2, lines 28-30 and read, " Six of                                                                
the appointed members of the board shall be officers, directors,                                                                
or employees of private entities that have a physical presence                                                                  
within the area of operation of the authority." With a board of                                                                 
nine, he said, that leaves three.                                                                                               
MR. FUHS clarified that after adding the two commissioners, the                                                                 
board consists of 11 voting members.                                                                                            
SENATOR  GARY  STEVENS  followed  up saying  that  six  would  be                                                               
involved with  the corporations, but  he wasn't sure  whether the                                                               
other three would be from the corporations as well.                                                                             
MR. FUHS shook his head and said no, they're public members.                                                                    
SENATOR  GARY STEVENS  reread  lines 24-26  and  agreed with  Mr.                                                               
Fuhs'   interpretation  regarding   the  three   remaining  board                                                               
SENATOR KIM ELTON noted that  board members serve at the pleasure                                                               
of  the  governor   and  it  would  seem  that   in  an  economic                                                               
development  entity,  you'd  want more  potential  stability.  In                                                               
light  of that,  he  asked how  service at  the  pleasure of  the                                                               
governor became a criterion.                                                                                                    
MR. FUHS  told him that  stability comes  from the fact  that the                                                               
seats are  for three years.  This is  an unorganized part  of the                                                               
state so  it has to  be set up  this way and  it must be  a state                                                               
corporation. He  added, "I guess  there's potential  for mischief                                                               
there. Just  as a practical  matter, I  just really don't  see it                                                               
happening.  This  is one  of  the  poorest  areas of  the  state.                                                               
Everybody is looking for a way to help them lift themselves up."                                                                
CHAIR STEDMAN said  the issue Senator Elton  raised is important.                                                               
"There  are different  philosophies  that come  and  go with  the                                                               
third floor and  I think it's critical that we  have stability or                                                               
long  term planning  and completion  of  projects." He  preferred                                                               
direct citizen participation for board  control and he didn't see                                                               
that  in the  legislation.  "With  the location  of  it it'll  be                                                               
rather difficult for  the general populous to have  much input in                                                               
it."  Perhaps  it'd  be  beneficial   to  have  some  legislative                                                               
oversight over the appointments, he said.                                                                                       
SENATOR WAGONER  read, "A member  of the  board may not  serve as                                                               
chair for  two consecutive  terms. The position  of the  chair of                                                               
the  board  shall  rotate  among the  appointed  members  of  the                                                               
board." He  then remarked that  rotating the chair  that quickly,                                                               
if the  chair is  doing a  good job and  is willing  to continue,                                                               
would be a  mistake. "There's no guarantee that  anybody else can                                                               
go into a  chairmanship and give the same  leadership as somebody                                                               
that's already been there for two years."                                                                                       
REPRESENTATIVE  MORGAN responded  they discussed  that at  length                                                               
and  although he  agreed with  the Senator,  he said  this was  a                                                               
SENATOR GARY  STEVENS commented that two  consecutive terms means                                                               
four years in this case.                                                                                                        
SENATOR WAGONER noted that a board  member may not serve as chair                                                               
for  two consecutive  terms so  as  written a  chairman may  only                                                               
serve for  two years. He  said, "To me  that is not  allowing for                                                               
consistency." He asked  if someone was insisting that  it be done                                                               
that way.                                                                                                                       
REPRESENTATIVE MORGAN  stated it  should be up  to the  board and                                                               
there shouldn't be a term limit on the chair.                                                                                   
CHAIR  STEDMAN agreed  with Senator  Wagoner that  consistency on                                                               
the  board and  the chairman  in particular  is critical  because                                                               
some projects may take years to develop.                                                                                        
SENATOR WAGONER announced that he was working on an amendment.                                                                  
SENATOR ELTON  said he'd be  curious to hear from  the Department                                                               
of  Community and  Economic  Development  (DCED) regarding  their                                                               
experience  with regional  resource  development authorities.  He                                                               
     These  are  resource  development  authorities  in  the                                                                    
     Unorganized  Borough and  the members  of those  boards                                                                    
     are elected  to the  Regional Resource  Authority Board                                                                    
     and  the  election  is conducted  by  the  Division  of                                                                    
     Elections under  rule so  they may  want to  respond to                                                                    
     that question.                                                                                                             
CHAIR STEDMAN said he'd like to  hear why the people in this area                                                               
don't have the opportunity to vote.                                                                                             
MR. FUHS explained  that they don't have enough  resources in the                                                               
area to carry a local government structure.                                                                                     
CHAIR STEDMAN  asked if  the residents vote  for the  governor or                                                               
the President of the United States.                                                                                             
MR. FUHS said they do.                                                                                                          
CHAIR STEDMAN  asked why they  couldn't vote for a  board because                                                               
it would have a huge economic impact on their area.                                                                             
MR. FUHS replied that someone  from the attorney general's office                                                               
or legislative legal could answer  the question. He asked Senator                                                               
Elton if he was referring to ARDORs.                                                                                            
SENATOR ELTON said it's a different program.                                                                                    
MR.  FUHS  they  said  he  thought  it  was  the  Rural  Resource                                                               
Development Council.                                                                                                            
SENATOR  ELTON said  these  are  organizations established  under                                                               
state statute.                                                                                                                  
MR. FUHS admitted he wasn't aware  of those, but in that case you                                                               
could put it up to a vote.                                                                                                      
     The  most important  thing here  is that  you give  the                                                                    
     people the authority of the rest  of this to do it. The                                                                    
     other  economic  development  organizations  that  have                                                                    
     been set up - they  really didn't have the authority to                                                                    
     manage and do projects.  .... In Alaska's Constitution,                                                                    
     the  Legislature  is  the   borough  assembly  for  the                                                                    
     Unorganized Borough. It's just  never met as that. What                                                                    
     you're doing  here today is you're  breaking historical                                                                    
     ground as you look at this.                                                                                                
This determines  how the people  in the Unorganized  Borough will                                                               
be empowered  to stand up for  themselves and do the  things that                                                               
municipalities normally do, he said.                                                                                            
He said he was unaware of  any mechanism that allows these people                                                               
to vote  for direct representation  other than for  statewide and                                                               
national offices.                                                                                                               
SENATOR  ELTON stated  that he  passed the  statute book  to DCED                                                               
representatives and they might be able to clarify.                                                                              
CHAIR STEDMAN admitted that he  still couldn't understand why the                                                               
people couldn't control their own  destiny. Area residents should                                                               
decide who sits on those boards, he said.                                                                                       
MR. FUHS agreed philosophically, but:                                                                                           
     As a practical  matter I'm not aware that  this is done                                                                    
     anywhere and  I've worked  all throughout  rural Alaska                                                                    
     for  many many  years and  used to  be Commissioner  of                                                                    
     Commerce.  Maybe   there's  some  mechanism   that  I'm                                                                    
     unaware of, but I practically  don't see how you can do                                                                    
     It is similar to if  you were a municipality and formed                                                                    
     a  port  authority, which  people  have.  You know  the                                                                    
     Prince  of  Wales  Port Authority;  those  members  are                                                                    
     appointed by the  mayors of those areas  there. I'm not                                                                    
     sure if  they're confirmed by the  assembly. That would                                                                    
     be  the other  thing that  Senator Wagoner  brought up.                                                                    
     You can put  in here that the  Legislature confirms it,                                                                    
     but  this administration  has taken  the position  that                                                                    
     unless  it's  a  quasi  judicial  board  that  controls                                                                    
     actual resources  like fish and  game, that even  if it                                                                    
     says so in the statute, that you do not confirm them.                                                                      
     For instance,  the law on  the Natural  Gas Development                                                                    
     Authority specifically  states that  the board  will be                                                                    
     confirmed  by  the  Legislature.  However,  it  is  the                                                                    
     administration's position  that they  don't have  to do                                                                    
     that  and they're  not going  to send  the names  down.                                                                    
     They  also pulled  the names  on the  Agriculture Board                                                                    
     because they don't consider that quasi judicial.                                                                           
     So this is a separation  of powers issue that you might                                                                    
     want to  check out. I  don't know which way  it's going                                                                    
     to shake out  or which way you think is  correct, but I                                                                    
     want you to  be aware that there is an  issue that even                                                                    
     if  you  put  it  in   the  law  here,  at  least  this                                                                    
     administration  does  not  believe that  you  have  the                                                                    
     power to confirm them.                                                                                                     
SENATOR GARY STEVENS remarked that this  issue of how you have an                                                               
election in  an area that  doesn't have municipalities  is almost                                                               
unsolvable. That  being said, he  turned to  page 2, line  26 and                                                               
asked if the listed Native  corporations weren't private entities                                                               
rather than public.                                                                                                             
MR.  FUHS said  they're  all registered  in Alaska,  private-for-                                                               
profit or non-profit entities.                                                                                                  
SENATOR GARY STEVENS asked if some are public and some private.                                                                 
MR. FUHS replied they're all private.                                                                                           
SENATOR GARY STEVENS then asked  about "private person' and asked                                                               
if  the six  people specifically  come from  the corporations  or                                                               
could  the   corporations  appoint  private  people   beyond  the                                                               
corporations. The next question he  asked was whether everyone in                                                               
the  area would  be represented  by  one of  the corporations  or                                                               
would some people be excluded.                                                                                                  
MR. FUHS advised  that no one would be excluded,  but some people                                                               
would be  members of  several organizations. He  said line  25 is                                                               
important because it  makes it clear that the  governor makes the                                                               
final selection.                                                                                                                
SENATOR  GARY  STEVENS asked  if  "private  persons" means  those                                                               
outside the six organizations.                                                                                                  
MR. FUHS  admitted that the  language is awkward, but  he thought                                                               
it was a legal term that also means corporations.                                                                               
CHAIR STEDMAN asked why they  didn't use language indicating that                                                               
the governor would solicit names  from persons that reside in the                                                               
MR.  FUHS  replied  it's because  these  organizations  all  have                                                               
elected boards and they represent  everybody. It's the closed you                                                               
can get to direct representation, he said.                                                                                      
CHAIR STEDMAN  said that he's  concerned that people  moving into                                                               
the area  as a result  of the  economic development might  not be                                                               
equally represented.  He pointed  out that these  aren't publicly                                                               
traded companies.                                                                                                               
MR.  FUHS agreed  then said,  "they will  nominate; the  governor                                                               
will  still make  the final  decision and  three other  seats are                                                               
just  indicated as  public seats  that  could also  be just  from                                                               
anyone in the region."                                                                                                          
CHAIR STEDMAN  said he'd like  to talk about reducing  the number                                                               
from  six to  three  to  give the  governor  more flexibility  to                                                               
select anybody from closely held corporations or not.                                                                           
SENATOR WAGONER said he wasn't hung  up on that point, but he did                                                               
question  the  punctuation  and wondered  whether  six  or  seven                                                               
entities were listed.                                                                                                           
MR. FUHS said  Mr. Utermohle was on line if  there were technical                                                               
questions, but  the governor  would pick six  members out  of the                                                               
seven groups.                                                                                                                   
SENATOR WAGONER wanted to clarify  that there are seven different                                                               
Native organizations  throughout the  district, which  means that                                                               
one might  potentially be  excluded. He  asked who  decides which                                                               
one would get excluded.                                                                                                         
REPRESENTATIVE  MORGAN  explained  how and  where  the  different                                                               
Native   organizations  overlap   in  territory   and  in   their                                                               
representation of the people.                                                                                                   
SENATOR  WAGONER said  that answered  his  question because  even                                                               
though one  entity might not  have a representative per  se, they                                                               
would be represented by another overlapping organization.                                                                       
CHAIR STEDMAN  noted Senator Wagoner  offered amendment  1, which                                                               
     The board  shall elect  a chair  and a  vice-chair from                                                                    
     among its members. A member  of the board may serve two                                                                    
     consecutive  terms  as  chairman of  the  board.  After                                                                    
     serving two  consecutive terms, a  member of  the board                                                                    
     may not serve as chairman for a period of three years.                                                                     
SENATOR WAGONER  said he didn't  think they could take  action on                                                               
the amendment because there was  an objection to the introduction                                                               
of the committee substitute.                                                                                                    
SENATOR ELTON pointed  out that, "The way it is,  you can't serve                                                               
more than two consecutive terms and  then you have to sit out for                                                               
three years.  Since the terms  are two years,  you're essentially                                                               
asking that the former chair....                                                                                                
SENATOR WAGONER interrupted to say,  "I changed the term to three                                                               
MR. FUHS commented that it doesn't say that.                                                                                    
SENATOR ELTON suggested that it might  be necessary to add to the                                                               
SENATOR WAGONER  said he thought he  did that then said,  "we can                                                               
just put that behind the last statement."                                                                                       
SENATOR ELTON asked if the terms would be for three year.                                                                       
SENATOR  WAGONER said  they  would and  that  coincides with  the                                                               
three year appointments. "I think it's  kind of awkward to have a                                                               
two  year term  as  chairman. You  have  everybody serving  three                                                               
years on the board."                                                                                                            
SENATOR  ELTON said  he didn't  want to  make the  discussion too                                                               
difficult but because  the terms are staggered, you  could end up                                                               
with a situation  in which the chair serves for  three years, but                                                               
has just two years left on his or her term.                                                                                     
SENATOR  WAGONER  pointed  out  that  you  could  run  into  that                                                               
situation anyway.                                                                                                               
SENATOR GARY  STEVENS stated that he  would just as soon  have it                                                               
say,  "The board  shall  select  a chair  and  a vice-chair  from                                                               
amongst its members." then leave it  up to the board to determine                                                               
how they  want to  do their business.  It's already  difficult to                                                               
find good  chairs and if you've  found a good one  you might want                                                               
to keep them for a while.                                                                                                       
CHAIR STEDMAN agreed with that.                                                                                                 
SENATOR WAGONER  said that was fine  with him. He was  willing to                                                               
go along  with Senator Gary Stevens  and if it becomes  a problem                                                               
then the board could fix the problem themselves.                                                                                
CHAIR STEDMAN asked Senator Elton for his thoughts.                                                                             
SENATOR ELTON  said he liked  the idea  of allowing the  board to                                                               
make the  determination. Leaving  the first  sentence on  page 3,                                                               
line 17 and then striking the  rest through line 21 would get you                                                               
to where the board could set its own terms.                                                                                     
SENATOR WAGONER said  that's fine, he just  offered the amendment                                                               
to point out  that something needed to be changed  because it was                                                               
too limiting.                                                                                                                   
CHAIR  STEDMAN asked  whether  the committee  was  ready to  move                                                               
beyond the  board of  directors then asked  Mr. Fuhs  explain the                                                               
next issue                                                                                                                      
MR.  FUHS  pointed   to  page  3,  line  10,   which  relates  to                                                               
compensation. Originally  a board member  would be paid  $300 per                                                               
day for participation  and that was taken out.  Now board members                                                               
would be reimbursed for travel expenses for attending a meeting.                                                                
SENATOR WAGONER  remarked that  the fiscal  note relates  more to                                                               
the construction  of the  facility than to  the operation  of the                                                               
board so there are two different budgets.                                                                                       
MR. FUHS agreed with his analysis.                                                                                              
SENATOR ELTON  said he appreciated  the distinction, but  at some                                                               
point  a  discussion  is needed  regarding  where  the  operating                                                               
expenses come from.  The fiscal note is zero and  even though the                                                               
issue  of $300  per meeting  was  removed, there  will be  travel                                                               
expenses in an area of the  state that can be very expensive. "at                                                               
some  point we  need  to  visit the  issue  that Senator  Wagoner                                                               
brought up," he said.                                                                                                           
MR. FUHS agreed that they should  look at that and suggested that                                                               
the Legislature should  be sure to give it  receipt authority. He                                                               
continued to say:                                                                                                               
     So that LB&A  can come in. And there's a  lot of people                                                                    
     who  want to  look  at regional  landfills, the  Denali                                                                    
     Commission is  very interested, other people  that have                                                                    
     been trying  to do things in  the area that had  no way                                                                    
     to  approach  them  on a  regional  level  because  you                                                                    
     didn't have the legal framework  to do that. So I think                                                                    
     there's going to  be quite a few people  that are going                                                                    
     to be  interested in putting  some money into  this. So                                                                    
     hopefully  that  holds  down  the  state  general  fund                                                                    
     expenditure as far as possible.                                                                                            
     So  receipt authority  is important  to give  them, but                                                                    
     the way  it's set  up under  the Executive  Budget Act,                                                                    
     they have to come back to LB&A to spend the money.                                                                         
CHAIR STEDMAN  said a way  to handle that is  to point it  out to                                                               
the  Finance  Committee so  it  could  have  a referral  to  that                                                               
committee. He asked  if that was agreeable and  received nods and                                                               
affirmative murmurs.                                                                                                            
MR.  FUHS pointed  to  page 4,  line 5  that  makes the  attorney                                                               
general the  legal counsel for  the authority, and said  that the                                                               
administration wanted  to make sure that  the state has a  say in                                                               
the legal matters of the corporation.                                                                                           
Page 5  line 21 makes it  clear that the power  of eminent domain                                                               
is only for projects in the operating area of the authority.                                                                    
SENATOR ELTON apologized  for interrupting, but he had  a 9:15 am                                                               
caucus and  he wanted  to make several  points and  raise several                                                               
questions before leaving.                                                                                                       
   · It might be beneficial to have a discussion on what                                                                        
     obligations the state may have on debt incurred on the                                                                     
   · He was curious about the department's discussion on how                                                                    
     they   conduct   elections    for   other   rural   regional                                                               
   · Page 7, line 3. He was interested in how the authority                                                                     
     makes decisions on behalf of the state and whether or not                                                                  
     they're required to interact with DNR and DOT/PF as they                                                                   
     make those decisions and who has the preeminent decision-                                                                  
     making authority for exercising that particular power.                                                                     
9:10 am                                                                                                                       
MR. FUHS told the Chair he would get to those issues.                                                                           
CHAIR STEDMAN  announced it  was his intention  to move  the bill                                                               
that day, but they would try to get the answers.                                                                                
SENATOR ELTON advised that his meeting  was changed to 9:30 so he                                                               
had another 15 minutes.                                                                                                         
MR.  FUHS said  he  might be  able to  address  the issues  while                                                               
Senator Elton was present.                                                                                                      
The  bottom  of  page  6  relates  to  acquisition  of  land  and                                                               
easements and  it allows  the authority to  control land  for the                                                               
purposes of projects.                                                                                                           
Eminent domain  is addressed  on page  7 and  it was  pointed out                                                               
that  the  original language  probably  wouldn't  pass the  legal                                                               
test. The  land needs to be  taken for a specific  public purpose                                                               
and not for a land trade.  To deal with that, they eliminated the                                                               
section  about  acquisition  of   property  for  the  purpose  of                                                               
exchange. Remaining is the provision  that they may take land for                                                               
a  specific  purpose.  The  language   was  taken  directly  from                                                               
language that  the Department of Transportation  uses for eminent                                                               
domain authority.                                                                                                               
The  difference, he  said, is  that DOT  tells the  governor what                                                               
they're  doing and  page  7,  line 20  makes  it  clear that  the                                                               
governor  would give  prior  approval to  the  authority for  the                                                               
exercise of the power of eminent domain.                                                                                        
SENATOR ELTON noted that the state  has been in court recently to                                                               
try to get to the issue  of whether moving land from state status                                                               
to another  status is  an appropriation.  He asked  whether there                                                               
had been discussion about....                                                                                                   
SIDE B                                                                                                                        
9:15 am                                                                                                                       
... whether  exercising the  power of  eminent domain  would take                                                               
legislative authority.                                                                                                          
MR. FUHS ask whether George Utermohle was still on line.                                                                        
GEORGE  UTERMOHLE,  legislative   counsel  with  the  Legislative                                                               
Affairs Agency,  clarified regarding eminent  domain constituting                                                               
an  appropriation  and  an  appropriation  requiring  legislative                                                               
action by saying:                                                                                                               
      In the most recent case in issue, the Alaska Supreme                                                                      
     Court determined that an appropriation for purposes of                                                                     
     acts  by Legislature  is appropriation  only of  money,                                                                    
     not of  land or  assets or other  items. In  this case,                                                                    
     eminent  domain  would  not be  an  appropriation  that                                                                    
     requires legislative action.                                                                                               
SENATOR  GARY  STEVENS  admitted  he  didn't  understand  eminent                                                               
domain,  but the  powers  are  great and  it's  a scary  thought.                                                               
Referring to  page 7, (c)  lines 16-19, he asked  whether shallow                                                               
natural gas oil development would be included.                                                                                  
MR. FUHS advised that it isn't  limited in any way. It's whatever                                                               
might be needed for the purposes of a particular project.                                                                       
SENATOR GARY STEVENS questioned  whether it could include shallow                                                               
natural gas.                                                                                                                    
MR. FUHS told him that it could.                                                                                                
SENATOR GARY STEVENS said, "Interesting."                                                                                       
SENATOR ELTON pointed  out that when the state  transfers land to                                                               
the  railroad or  other  entities, just  the  surface rights  are                                                               
transferred  and  the state  retains  the  subsurface rights.  He                                                               
continued to  say that, "This  element of the bill  transfers not                                                               
just surface rights, but subsurface  rights also." Looking at the                                                               
Department of Law representative,  he questioned whether that had                                                               
been done before.                                                                                                               
MR. FUHS said in another version  of the bill there was a section                                                               
that  talked  about  public  lands and  the  potential  power  of                                                               
eminent domain, surface and subsurface  rights and it was decided                                                               
that it  was inappropriate for  the bill.  "So the only  way that                                                               
they can  be done is if  that agency comes forward  and says 'Yes                                                               
it's a  best interest  finding of  the state  under the  land use                                                               
management  provisions  of  the  state  to  transfer  it  to  the                                                               
authority.' It  can only  be done with  the acquiescence  of that                                                               
agency. Eminent domain can only be exercised on private lands."                                                                 
CHAIR STEDMAN  asked if  it is correct  that eminent  domain only                                                               
goes to  private lands and,  except for some Native  holdings and                                                               
property pre-statehood, most private  lands don't have subsurface                                                               
MR. FUHS replied  that some do and some don't.  In most cases you                                                               
don't need the subsurface, he  said. Because gravel is considered                                                               
a subsurface mineral, you would need subsurface rights.                                                                         
CHAIR  STEDMAN said  if  one the  these  corporations found  that                                                               
they're  sitting  on  a  valuable  subsurface  resource  and  the                                                               
proposed entity  wanted to secure  that resource, he  was unclear                                                               
about the protection the corporation  might have to keep the port                                                               
authority from preempting them.                                                                                                 
MR.  FUHS replied  they'd have  the same  protection that  anyone                                                               
has.  Full  market value  compensation  is  required for  eminent                                                               
domain  and there's  a  special  court set  up  to challenge  the                                                               
compensation amount if you don't  think it's enough. You can also                                                               
challenge whether it's  a true public purpose. Those  are the two                                                               
challenge  options but  other than  that, the  legal recourse  is                                                               
fairly  limited.  If it  weren't,  eminent  domain couldn't  work                                                               
because it'd  be tied up  in court forever and  projects couldn't                                                               
move forward.                                                                                                                   
SENATOR  GARY   STEVENS  asked  if   it's  correct   that  Native                                                               
corporations own both surface and subsurface lands.                                                                             
MR.  FUHS  said that  village  corporations  usually own  surface                                                               
rights and  the regional corporations own  the subsurface rights.                                                               
However, the regional corporations also  own some surface land in                                                               
the area under discussion.                                                                                                      
CHAIR  STEDMAN there  could be  a situation  in which  a regional                                                               
corporation  doesn't want  to develop  subsurface rights  and the                                                               
port  authority  does. If  that  were  the  case could  the  port                                                               
authority exercise the power of  eminent domain and argue that it                                                               
is in  the public interest  and secure the subsurface  rights, he                                                               
MR. FUHS replied, "Yes sir."                                                                                                    
CHAIR STEDMAN  commented that he didn't  think it was such  a hot                                                               
SENATOR WAGONER referred  to page 7, line 17 and  asked what "for                                                               
the operation of  the authority" means because  eminent domain is                                                               
typically used  to establish rights  of way and the  bill doesn't                                                               
say that.  He questioned  whether it is  for the  construction of                                                               
projects, but  "operation of  the authority"  makes him  think of                                                               
overall operation costs  that go toward funding  the authority in                                                               
its annual operations budget.                                                                                                   
MR.  FUHS said  he might  have  caught something  because it  was                                                               
meant to be for projects of the authority.                                                                                      
SENATOR WAGONER said  he'd be more comfortable  changing the word                                                               
"operation" to "projects" on page 7, line 17.                                                                                   
SENATOR ELTON remarked  that that's one way to get  a zero fiscal                                                               
SENATOR WAGONER laughed  and said he though it was  an odd use of                                                               
the word operation.                                                                                                             
MR. FUHS  asked Mr.  Utermohle if  he saw  any problem  with that                                                               
change since the intention was for projects.                                                                                    
MR. UTERMOHLE said he saw no problem with that change.                                                                          
CHAIR STEDMAN  repeated strike "operation" and  insert "projects"                                                               
in its place.                                                                                                                   
He returned  to the  issue of friction  between a  port authority                                                               
and  a  regional  corporation  and  opined  that  it  sets  up  a                                                               
potential conflict  if a  regional corporation  wanted to  hold a                                                               
particular  area of  mineral wealth  for future  generations when                                                               
the port authority wanted to develop it immediately.                                                                            
SENATOR ELTON  said it struck him  as an anomaly that  on page 7,                                                               
line 20  exercising the  power of  eminent domain  requires prior                                                               
approval  of  the  governor.  It's  understandable  if  you  were                                                               
talking about public lands, but  it's odd that the governor would                                                               
be able to approve use of the power on private lands.                                                                           
MR. FUHS  said it's meant  as a check  then pointed out  that all                                                               
the corporations had  already written letters of  support so they                                                               
had already voluntarily  given up some control  because they want                                                               
the authority  to be  effective and successful.  They want  it to                                                               
have the powers  needed to operate on a regional  basis. He said,                                                               
"That's the  whole philosophy behind  this and I just  think that                                                               
it's tremendous that  an area like this would  actually do that."                                                               
It'll move all the people in the area ahead.                                                                                    
CHAIR STEDMAN  noted that  Senator Elton  was leaving  then asked                                                               
Mr. Fuhs to go on.                                                                                                              
MR.  FUHS said  they removed  part  of the  capital reserve  fund                                                               
section  because  even  though  it  says that  the  debt  of  the                                                               
authority  is  not  the  state  it  might  be  seen  as  a  moral                                                               
obligation of the state.                                                                                                        
He assured members that in  drafting the bill they did everything                                                               
they could  to make sure that  any debt of the  authority was not                                                               
the  debt of  the  State of  Alaska. He  asked  Mr. Utermohle  to                                                               
MR. UTERMOHLE  agreed saying  that the bill  makes it  clear that                                                               
the debts  and obligations of  the authority are solely  those of                                                               
the  authority and  not  of  the state.  "The  language that  was                                                               
removed provided an  argument that some could use to  say that in                                                               
spite of that language, the state  had an obligation to make sure                                                               
that the authority  had the ability to pay off  its debt and thus                                                               
in some way  bore a moral obligation to make  sure that the debts                                                               
of the corporation were honored."                                                                                               
SENATOR WAGONER  opined that it  was really  a leap of  faith. If                                                               
the state  allows the authority  to move  ahead and if  bonds are                                                               
sold  and then  if  the corporations  involved  in the  authority                                                               
aren't  able  to  pay  their  bills,  he  questioned  whether  it                                                               
wouldn't  be the  moral responsibility  of the  state to  pay the                                                               
MR. UTERMOHLE replied:                                                                                                          
     It's clear the  intent of this act and of  the state at                                                                    
     this time in  the enactment of this  legislation to say                                                                    
     that the debts  of this authority are  solely the debts                                                                    
     of the authority  and that the state is not  to be held                                                                    
     liable for  them. It's the  duty of the  bondholders to                                                                    
     make sure  that they're  investing their  money wisely.                                                                    
     That,  nonetheless, would  not  necessarily preclude  a                                                                    
     court  from finding  that, based  on  the existence  of                                                                    
     certain  facts,  that perhaps  the  state  does bear  a                                                                    
     moral obligation  to make  sure that  the debts  of the                                                                    
     corporation  are  paid.  But generally  that  would  be                                                                    
     under extraordinary circumstances.                                                                                         
CHAIR  STEDMAN remarked  that is  another issue  to flag  for the                                                               
Finance Committee.                                                                                                              
SENATOR  WAGONER agreed  because  if a  municipality defaults  on                                                               
bonds, according to  Title 29, the State of Alaska  is liable for                                                               
those bonds to be paid off.                                                                                                     
MR. FUHS disagreed  absolutely. He said that under  Title 29 it's                                                               
the  responsibility of  the municipalities,  and the  people that                                                               
buy the  bonds are aware  of that.  Believe me he  said, "Anybody                                                               
who buys  bonds under this and  invests in them will  come in and                                                               
we'll go through this with a  fine tooth comb. And they will tell                                                               
people this is  based on the revenues of that  project. It is not                                                               
based  on the  moral  obligation  or the  full  faith and  credit                                                               
general obligation bonding capability of the state."                                                                            
CHAIR  STEDMAN asked  if he  was just  talking about  issuance of                                                               
revenue  bonds  versus  general obligation  bonds  for  the  port                                                               
MR. FUHS said they are revenue bonds.                                                                                           
SENATOR  WAGONER said  he thought  they  were general  obligation                                                               
MR. FUHS repeated they are totally revenue bonds.                                                                               
SENATOR WAGONER said, "Buyer beware."                                                                                           
MR. FUHS said that's correct.                                                                                                   
Turning to  page 17, he  pointed to application of  existing laws                                                               
and said this is a new  section. It makes sure that the authority                                                               
is  subject  to AS  40.25,  the  public  records  act and  to  AS                                                               
44.62.310 to  312, the  State Open Meetings  Act. It  applies the                                                               
section of the Executive Budget  Act to the operating and capital                                                               
budgets of  the authority  but is  specifically doesn't  apply to                                                               
the authority borrowing money. That  is to create the firewall in                                                               
terms of the  moral and full faith and credit  of the state. "The                                                               
borrowing of money is not subject to the Executive Budget Act."                                                                 
The CS inserted the issue of  regional waste disposal on page 23,                                                               
line 31.                                                                                                                        
TAPE 04-15                                                                                                                    
SIDE A                                                                                                                        
He said  that DEC has been  looking at a variety  of efficiencies                                                               
for  doing regional  landfills or  waste disposal,  which is  why                                                               
that was inserted.                                                                                                              
There were no more changes.                                                                                                     
CHAIR STEDMAN  announced that  they didn't have  a quorum  and he                                                               
wanted to move  the bill so he  would recess for a  brief time to                                                               
get hold  of Senator Gary  Stevens otherwise the  committee would                                                               
meet later in the day.                                                                                                          
CHAIR STEDMAN came back on the  record saying, "We'll vote on the                                                               
SENATOR WAGONER said they should  vote on the introduction of the                                                               
CS. He recalled  that he moved the CS and  Senator Elton objected                                                               
for discussion purposes.                                                                                                        
CHAIR STEDMAN  asked for a roll  call and stated that  a yes vote                                                               
would be to  not accept the CS  and a no vote would  be to accept                                                               
the CS.  Senators Gary Stevens,  Wagoner and Chair  Stedman voted                                                               
CHAIR STEDMAN announced  that the CS was  adopted unanimously and                                                               
he was  ready to  take action  on the  two amendments  before the                                                               
SENATOR  WAGONER  moved  amendment  1. On  page  3,  lines  18-21                                                               
strike: "A  member of the  board may not  serve as chair  for two                                                               
consecutive terms. The  position of the chair of  the board shall                                                               
rotate among  the appointed members  of the board. The  chair and                                                               
vice-chair serve for terms of two years."                                                                                       
There being no objection, Amendment 1 was adopted.                                                                              
SENATOR WAGONER  moved amendment  2. On page  7, line  17, delete                                                               
"operation" and insert "projects".                                                                                              
There being no objection, Amendment 2 was adopted.                                                                              
CHAIR STEDMAN noted that there was no further testimony.                                                                        
SENATOR  WAGONER  stated  that  the amended  CS  was  before  the                                                               
CHAIR STEDMAN agreed.                                                                                                           
SENATOR  WAGONER moved  CSSB 396(CRA)  Utermohle  \I version  [as                                                               
amended] from  committee with individual recommendations  and the                                                               
attached  fiscal  note.  There  being no  objection,  it  was  so                                                               
CHAIR STEDMAN adjourned the meeting at 9:50 am.                                                                                 

Document Name Date/Time Subjects