Legislature(2011 - 2012)BELTZ 105 (TSBldg)


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Moved SB 204 Out of Committee
Heard & Held
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 13, 2012                                                                                         
                           4:05 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Donald Olson, Chair                                                                                                     
Senator Thomas Wagoner                                                                                                          
Senator Albert Kookesh                                                                                                          
Senator Linda Menard                                                                                                            
Senator Johnny Ellis                                                                                                            
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 204                                                                                                             
"An  Act relating  to loans  for  the purchase  of fishing  quota                                                               
shares by certain community quota  entities; and providing for an                                                               
effective date."                                                                                                                
     - MOVED SB 204 OUT OF COMMITTEE                                                                                            
SENATE BILL NO. 152                                                                                                             
"An Act requiring legislative approval  before the issuance of an                                                               
authorization,  license,  permit,  or   approval  of  a  plan  of                                                               
operation  for a  large-scale metallic  sulfide mining  operation                                                               
that could  affect water in or  flowing into or over  the Bristol                                                               
Bay Fisheries Reserve."                                                                                                         
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 157                                                                                                             
"An  Act allowing  an insurer  to cancel  an insurance  policy if                                                               
property becomes unoccupied and  the vacancy increases the hazard                                                               
insured against."                                                                                                               
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 204                                                                                                                  
SHORT TITLE: LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS                                                                          
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
02/21/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/12       (S)       CRA, FIN                                                                                               
03/01/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/01/12       (S)       Heard & Held                                                                                           
03/01/12       (S)       MINUTE(CRA)                                                                                            
03/13/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 157                                                                                                                  
SHORT TITLE: CANCEL INSUR. ON CERTAIN VACANT PROPERTY                                                                           
SPONSOR(s): LABOR & COMMERCE                                                                                                    
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       L&C, CRA                                                                                               
01/26/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
01/26/12       (S)       Heard & Held                                                                                           
01/26/12       (S)       MINUTE(L&C)                                                                                            
02/23/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/23/12       (S)       <Bill Hearing Postponed>                                                                               
02/28/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/12       (S)       Moved CSSB 157(L&C) Out of Committee                                                                   
02/28/12       (S)       MINUTE(L&C)                                                                                            
02/29/12       (S)       L&C RPT CS  5DP      NEW TITLE                                                                         
02/29/12       (S)       DP: EGAN, GIESSEL, DAVIS, PASKVAN,                                                                     
03/05/12       (S)       CORRECTED L&C CS RECEIVED NEW TITLE                                                                    
03/05/12       (S)       BILL REPRINTED 3/5/12                                                                                  
03/06/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/06/12       (S)       -- MEETING CANCELED --                                                                                 
03/13/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 152                                                                                                                  
SHORT TITLE: LEG. APPROVAL OF BRISTOL BAY SULFIDE MINE                                                                          
SPONSOR(s): FRENCH                                                                                                              
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       CRA, RES                                                                                               
02/28/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/12       (S)       Heard & Held                                                                                           
02/28/12       (S)       MINUTE(CRA)                                                                                            
03/01/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/01/12       (S)       Heard & Held                                                                                           
03/01/12       (S)       MINUTE(CRA)                                                                                            
03/13/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
DAVID SCOTT, Staff                                                                                                              
Senator Donald Olson and                                                                                                        
Community and Regional Affairs Committee aide                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SB 204 on behalf of the Senate                                                                 
Community and Regional Affairs Committee.                                                                                       
WANETTA AYERS, Director                                                                                                         
Division of Economic Development                                                                                                
Department of Commerce, Community and Economic Development,                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Did not state a position on SB 204.                                                                       
DUNCAN FIELDS, Council Member                                                                                                   
North Pacific Fishery Management Council                                                                                        
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 204.                                                                           
DONALD M. BULLOCK JR., Legislative Counsel                                                                                      
Division of Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
Juneau, Alaska,                                                                                                                 
POSITION STATEMENT: Addressed the legislative legal review for                                                                
SB 152.                                                                                                                         
SENATOR HOLLIS FRENCH                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 152.                                                                                        
KRISTEN PETERSON, Staff                                                                                                         
Senator French                                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided information on letters of support                                                                
for SB 152.                                                                                                                     
DANA OWEN, Staff                                                                                                                
Senator Dennis Egan and                                                                                                         
Aide, Senate Labor and Commerce Committee                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SB 157 on behalf of the Senate                                                                 
Labor and Commerce Committee.                                                                                                   
SHELDON WINTERS, Lobbyist                                                                                                       
State Farm Insurance                                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 157.                                                                           
ACTION NARRATIVE                                                                                                              
4:05:37 PM                                                                                                                    
CHAIR  DONALD  OLSON called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 4:05 p.m. Present                                                               
at the  call to order  were Senators Wagoner, Kookesh,  Ellis and                                                               
Chair Olson.                                                                                                                    
        SB 204-LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS                                                                    
4:06:01 PM                                                                                                                    
CHAIR OLSON announced the consideration  of SB 204 and noted that                                                               
the committee heard it once before.                                                                                             
4:06:12 PM                                                                                                                    
DAVID  SCOTT, Staff,  Senator Donald  Olson and  Aide to  the CRA                                                               
committee,  sponsor of  the legislation,  reminded the  committee                                                               
that during the previous hearing  he described how the bill would                                                               
change  current  law. He  noted  that  Wanetta Ayers  and  Duncan                                                               
Fields  were available  for questions.  Responding to  a question                                                               
from the Chair, he confirmed that  there had been no phone calls,                                                               
in support or opposition to the bill.                                                                                           
SENATOR  WAGONER  referenced  the side-by-side  document  in  the                                                               
packets that  compared current law  to the provisions in  SB 204.                                                               
He asked if there was a  specific reason for reducing the maximum                                                               
loan   amount  from   $2  million   to  $1   million.  It   seems                                                               
4:08:54 PM                                                                                                                    
WANETTA  AYERS,  Director,   Division  of  Economic  Development,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), asked  if he  was referring to  the comparison  with the                                                               
quota financing currently available for commercial fisheries.                                                                   
CHAIR OLSON said  the current law has a loan  limit of $2 million                                                               
and SB 204 reduces the maximum to $1 million.                                                                                   
MS. AYERS  explained that under the  commercial fishing revolving                                                               
loan fund, which is for  individuals operating in the open access                                                               
halibut fishery  for quota share,  the loan limit is  $2 million.                                                               
She acknowledged that proponents of  the bill were concerned that                                                               
the  $1 million  loan limit  may preclude  some of  the nonprofit                                                               
organizations that  would be financed  under the  Community Quota                                                               
Entity  (CQE)  revolving loan  fund  from  achieving that  50,000                                                               
pound  limit,  but  the  decision when  the  bill  was  initially                                                               
drafted was that a $1 million loan limit would be sufficient.                                                                   
SENATOR WAGONER  asked if each entity  has the ability to  buy up                                                               
to 50,000 pounds.                                                                                                               
4:09:32 PM                                                                                                                    
SENATOR MENARD joined the committee.                                                                                            
MS.  AYERS  answered  that  was correct.  She  added  that  DCCED                                                               
believes  that   the  structure  of  the   fisheries  enhancement                                                               
revolving  loan fund  was more  appropriate  for these  nonprofit                                                               
4:12:53 PM                                                                                                                    
DUNCAN FIELDS,  Council Member, North Pacific  Fishery Management                                                               
Council,   reviewed  the   comparative  relationship   between  a                                                               
nonprofit  community organization  like a  CQE and  an individual                                                               
that  has an  individual load  limit. He  then explained  that 45                                                               
communities were  qualified to  form a  nonprofit CQE  to acquire                                                               
IFQ shares and the thinking was  that with a $1 million limit the                                                               
program could  be funded with  $45 million.  If the limit  was $2                                                               
million,  it  would be  a  substantially  larger amount.  In  the                                                               
balance  was funding  a  program that  all  45 communities  could                                                               
participate   in  versus   the  $2   million  limit   offered  to                                                               
individuals in the commercial loan program.                                                                                     
SENATOR MENARD commented  that this would help  commerce in those                                                               
Gulf of Alaska communities.                                                                                                     
MR. SCOTT echoed the comments of Senator Menard.                                                                                
SENATOR WAGONER asked where the quota came from.                                                                                
4:15:43 PM                                                                                                                    
MR. SCOTT said  his understanding was that  the communities would                                                               
purchase IFQ shares from the current bank.                                                                                      
SENATOR  WAGONER  asked if  the  communities  could purchase  his                                                               
MR. SCOTT said yes.                                                                                                             
SENATOR WAGONER said the math does  not work; his IFQ shares were                                                               
worth $37.50 per  pound so either he'd get just  $20 per pound or                                                               
the $1 million would buy approximately half the quota.                                                                          
SENATOR  KOOKESH pointed  out that  the lower  limit provides  an                                                               
opportunity for more communities to get a foot in the door.                                                                     
MS. AYERS  confirmed that  was correct. She  added that  as funds                                                               
revolve through  the loan fund and  entities are able to  go back                                                               
and  obtain  subsequent  loans,  DCCED  believes  it  will  be  a                                                               
successful program.                                                                                                             
CHAIR OLSON thanked Ms. Ayers and Mr. Fields.                                                                                   
4:18:22 PM                                                                                                                    
SENATOR  WAGONER  moved to  report  SB  204 from  committee  with                                                               
individual recommendations and attached fiscal note(s).                                                                         
CHAIR OLSON announced  that without objection, SB  204 moved from                                                               
the Senate Community and Regional Affairs Standing Committee.                                                                   
At ease from 4:18 p.m. to 4:20 p.m.                                                                                             
        SB 152-LEG. APPROVAL OF BRISTOL BAY SULFIDE MINE                                                                    
4:20:32 PM                                                                                                                    
CHAIR OLSON announced the consideration of SB 152.                                                                              
4:21:23 PM                                                                                                                    
DONALD  M.   BULLOCK,  Legislative  Counsel,   Legislative  Legal                                                               
Services, Legislative  Affairs Agency, said he  looked at whether                                                               
SB 152 conflicted  with either Article I, sec. 15  or Article II,                                                               
sec. 19 of the Constitution of the State of Alaska.                                                                             
Article I,  sec. 15 has  to do  with prohibited state  action. In                                                               
part, it says:                                                                                                                  
      No law impairing the obligation of contracts, and no                                                                      
     law making any irrevocable grant of special privileges                                                                     
     or immunities shall be passed.                                                                                             
The issue is that there is  no information on whether there would                                                               
be any  contracts in place that  would be voided or  could not be                                                               
carried out as a result of this legislation.                                                                                    
Article II,  sec. 19  has to  do with local  or special  acts. In                                                               
part, it says:                                                                                                                  
     The legislature shall pass no local or special act if                                                                      
     a general act can be made applicable.                                                                                      
Although  the bill  only identifies  the  specific headwaters  of                                                               
Bristol  Bay, it  would probably  survive a  challenge under  the                                                               
local and  special prohibition because of  the statewide interest                                                               
in the Bristol Bay fishery.                                                                                                     
MR.  BULLOCK  said the  requirement  of  legislative approval  is                                                               
probably  the most  significant provision  in the  bill. It  is a                                                               
separation of powers issue. The  legislature has enacted laws and                                                               
same with the federal government  that relate to permits and what                                                               
has to  be done to  receive a permit, license,  authorization, or                                                               
the  approval  of  a  plan of  operation.  The  executive  branch                                                               
carries out  that function, and  the bill would  effectively give                                                               
the  legislature  the opportunity  to  veto  an executive  branch                                                               
decision that  presumably was made within  the authority received                                                               
from the legislature. Article II, sec.  1 and Article III, sec. 1                                                               
describes  the powers  that the  legislature has  and the  powers                                                               
that the executive has.                                                                                                         
4:23:57 PM                                                                                                                    
SENATOR  MENARD   questioned  whether   he  was   cautioning  the                                                               
committee about going forward with the bill.                                                                                    
MR. BULLOCK  said he  couldn't talk about  the outcome;  he could                                                               
talk about the constitutional issues.                                                                                           
The other  issue raised by  the bill relates  to the risk  to the                                                               
state if there  was legislation or a  regulation that effectively                                                               
prohibited the  development of vested  mineral rights. This  is a                                                               
property interest that  is protected by the  takings clause under                                                               
both the  Alaska and U.S. Constitution.  If there is a  taking by                                                               
the government, there may be a  risk that the state would have to                                                               
compensate the company or person  that can no longer economically                                                               
develop their claim.                                                                                                            
If SB 152 were to pass  and the legislature vetoed something that                                                               
DNR had  approved, a  challenge from  the mineral  interest owner                                                               
could be  expected under the  separation of powers.  Even without                                                               
this legislation,  if there was  a change in the  regulation that                                                               
related to  a vested mining  interest, there  is a risk  that the                                                               
state may  have to compensate  the owner of the  mineral interest                                                               
if  the  economic value  has  been  effectively taken.  It  would                                                               
probably be  a question  for a  jury or other  fact finder  as to                                                               
what the value would be.                                                                                                        
4:27:57 PM                                                                                                                    
CHAIR OLSON asked  if other states have  similar legislation with                                                               
regard to legislative approval.                                                                                                 
MR. BULLOCK answered that virtually  every state has a separation                                                               
of  powers  issue,  and  the   legislature  can  deal  with  this                                                               
situation in other ways, such  as appropriation. He explained the                                                               
administrative process  for classifying land  that is and  is not                                                               
open to mining. If an area is  open to mining, a company can come                                                               
in and discover  the mineral, locate and set  the boundaries, and                                                               
record it.  That company has acquired  a right to mine,  and that                                                               
is similar to the federal mining  laws that date back to the 19th                                                               
century. He said the concept of  regulatory taking has come up in                                                               
other  states  so there  would  be  that  issue  as well  as  the                                                               
separation  of powers  regarding  who makes  the  decision as  to                                                               
whether something can go forward.                                                                                               
He noted  that a bill currently  in the legislature would  in the                                                               
future close some  land in the Alyeska area to  mining. That does                                                               
not present  a problem when it's  done ahead of time;  it's after                                                               
the rights have been vested that the risks and problems arise.                                                                  
CHAIR OLSON asked if the  bill would conflict with either federal                                                               
law or the U.S. Constitution.                                                                                                   
MR. BULLOCK said this would  probably be limited to state action;                                                               
the state  does not have  any power  over any agency  decision of                                                               
the federal government.                                                                                                         
4:30:29 PM                                                                                                                    
SENATOR MENARD  asked what  mine project  since the  19th century                                                               
was held up the longest due to regulatory requirements.                                                                         
MR.  BULLOCK said  the Kennecott  project in  Juneau was  delayed                                                               
because  of environmental  concerns about  the drainage  from the                                                               
mine tailings. The matter went  to the U.S. Supreme Court because                                                               
there was a  conflict in the interpretation  of laws administered                                                               
by the  Corps of  Engineers and  the Department  of Environmental                                                               
Conservation. He  noted that environmental  litigation has  to be                                                               
anticipated in any mining project.                                                                                              
4:33:19 PM                                                                                                                    
SENATOR  HOLLIS   FRENCH,  sponsor   of  SB  152,   Alaska  State                                                               
Legislature, said  he would first  like to address the  idea that                                                               
the legislature's  action could constitute  a taking of  a vested                                                               
right. He said  he would like Mr. Bullock to  explain further how                                                               
the agency's action  is any different from  the legislature's. He                                                               
asked if it  would be a taking if DNR  ultimately denies a permit                                                               
to Pebble because  the legislature's action would  be exactly the                                                               
He said it is possible that  the action is an encroachment on the                                                               
executive function,  but the legislature already  exercises power                                                               
in   many   blended   areas.  The   governor's   nominations   of                                                               
commissioners and  attorney general is  a blended area  where the                                                               
legislature exercises a check on  his authority. The governor has                                                               
some  blended legislative  authority  as well.  He  can veto  the                                                               
legislature's capital appropriations.                                                                                           
CHAIR OLSON opined that those  were different than the separation                                                               
of powers in the specific action that Mr. Bullock addressed.                                                                    
SENATOR  FRENCH pointed  out that  there has  been a  law on  the                                                               
books since  the mid-70s on  the same  topic with respect  to oil                                                               
and gas  in Bristol Bay.  Although the constitutionality  of that                                                               
statute has not been challenged, it has some precedential value.                                                                
4:35:35 PM                                                                                                                    
SENATOR WAGONER asked who provided the maps.                                                                                    
SENATOR FRENCH answered he got them from Rick Halford.                                                                          
SENATOR  WAGONER said  the exploration  license area  depicted on                                                               
the maps  was between 125  and 150  miles away from  the proposed                                                               
site of the Pebble Mine.                                                                                                        
SENATOR FRENCH reviewed  the map and thanked  Senator Wagoner for                                                               
the correction; he agreed completely.                                                                                           
CHAIR OLSON asked  for a corrected map and  Senator French agreed                                                               
to provide one accurate map to all committee members.                                                                           
CHAIR OLSON asked what kind of support the bill had elicited.                                                                   
4:38:15 PM                                                                                                                    
KRISTEN PETERSON, Staff  for Senator French, said  the office had                                                               
received a fair number of letters  of support from members of the                                                               
Renewable Resources Coalition.                                                                                                  
CHAIR OLSON held SB 152 in committee.                                                                                           
        SB 157-CANCEL INSUR. ON CERTAIN VACANT PROPERTY                                                                     
4:38:55 PM                                                                                                                    
CHAIR OLSON announced the consideration of SB 157.                                                                              
4:39:19 PM                                                                                                                    
DANA OWEN, Aide, Senate Labor  and Commerce Committee, sponsor of                                                               
SB 157,  explained that the  purpose of  the bill was  to correct                                                               
what some  insurance companies  believe is  a shortcoming  in the                                                               
statute. This  amendment would clarify that  an insurance company                                                               
is  able to  cancel  an  insurance policy  if  the  risk that  is                                                               
insured against increases.                                                                                                      
The  Labor  and  Commerce  Committee  deleted  the  reference  to                                                               
"unoccupied"  property  because  so  many  Alaskans  leave  their                                                               
dwellings for long periods. The new  language on page 2, lines 6-                                                               
9, [which amends AS 21.36.210(f)]  adds the following reason that                                                               
an insurer may cancel a policy of personal insurance:                                                                           
          (6) vacancy of the insured property that                                                                              
     increases a hazard insured  against; in this paragraph,                                                                    
     "vacancy" means  entire abandonment of the  property by                                                                    
     the insured and the  property does not contain contents                                                                    
     of substantial utility.                                                                                                    
CHAIR OLSON questioned the urgency of the bill.                                                                                 
MR. OWEN responded that insurance  companies saw the ambiguity in                                                               
the statutes and wanted clarification.                                                                                          
SENATOR WAGONER commented  on the downturn in  the Alaska economy                                                               
in 1980s  when people  dropped their  keys at  the bank  and left                                                               
their homes  full of items  that were of substantial  utility. He                                                               
said  he understood  the  concern,  but had  a  problem with  the                                                               
4:46:22 PM                                                                                                                    
SHELDON WINTERS,  Lobbyist, State  Farm Insurance, said  he would                                                               
address previous  questions. He agreed with  Senator Wagoner that                                                               
the language  in the CS was  very restrictive, but it  was better                                                               
than  the current  statute.  With regard  to  the question  about                                                               
urgency,  he said  this is  an  effort to  keep rates  as low  as                                                               
possible. All other states have  adopted a similar provision with                                                               
no opposition.                                                                                                                  
SENATOR MENARD  confirmed that the  Labor and  Commerce Committee                                                               
deliberated on the language.                                                                                                    
CHAIR OLSON announced he would hold SB 157 in committee.                                                                        
4:50:06 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Olson  adjourned the Senate Community  and Regional Affairs                                                               
Standing Committee at 4:50 p.m.                                                                                                 

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