Legislature(1993 - 1994)

04/16/1993 09:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
TELECONFERENCE
CONTINUATION FOLLOWING CONFERENCE COMMITTEE
* SB 50
SB 165
<TELECONFERENCE ON ABOVE BILL>
SB 183 APPRO: EXXON VALDEZ RESTORATION PROJECTS
<TELECONFERENCE ON ABOVE BILL>
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 16, 1993                                        
                            9:30 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-93, #61, Side 1 (000-end)                                                
  SFC-93, #61, Side 2 (575-end)                                                
  SFC-93, #63, Side 1 (000-124)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 9:30 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition   to  Co-chairs  Pearce   and  Frank,  Senators                 
  Kerttula, Kelly, and Sharp were present.  Senators Jacko and                 
  Rieger arrived as the meeting was in progress.                               
                                                                               
  ALSO ATTENDING:  Attorney General Charlie Cole; John Sandor,                 
  Commissioner,  Dept.  of  Environmental Conservation;  Bruce                 
  Campbell, Commissioner,  Dept. of Transportation  and Public                 
  Facilities; Craig Tillery, Assistant Attorney General, Dept.                 
  of Law; Shelby  Stastny, Director, Office of  Management and                 
  Budget; Ron  Lind, Director, Administrative  Services, Dept.                 
  of  Transportation  and  Public   Facilities;  Dugan  Petty,                 
  Director,   Division   of   General   Services,   Dept.   of                 
  Administration; Ron Sommerville, Special Assistant, Dept. of                 
  Fish  and   Game;  David   Teal,  Director,   Administrative                 
  Services,  Dept. of  Labor;  Karen Rehfeld,  fiscal analyst,                 
  Legislative Finance Division; and aides to committee members                 
  and other members of the legislature.                                        
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB  50 -  FY 94 CAPITAL BUDGET                                               
                                                                               
            Discussion  was  had with  representatives  of the                 
            following agencies regarding additional amendments                 
            to the Governor's capital budget:                                  
                                                                               
                      Office of Management and Budget                          
                      Dept. of Fish & Game                                     
                      Dept. of Labor                                           
                      Dept. of Administration                                  
                      Dept.   of   Transportation   &   Public                 
  Facilities                                                                   
                                                                               
  SB  87 -  EXTEND ALASKA PUBLIC UTILITIES COMMISSION                          
                                                                               
            The bill was REPORTED OUT of committee with a zero                 
            fiscal  note  from  the   Dept.  of  Commerce  and                 
                                                                               
                                                                               
            Economic Development.                                              
                                                                               
  SB 165 -  APPROP: ALYESKA SETTLEMENT/FY 93 SUPPLMNT                          
                                                                               
            Teleconferenced discussion was had  on both SB 165                 
            and SB 183.  Both  bills were subsequently HELD in                 
            committee for further review.                                      
                                                                               
  SB 183 -  APPRO: EXXON VALDEZ,CAPITAL BUDGET FY 94                           
                                                                               
            Teleconferenced discussion was had on both SB  183                 
            and SB 165.  Both bills were HELD in committee for                 
            further discussion.                                                
                                                                               
                                                                               
  SENATE BILL NO. 50                                                           
                                                                               
       An Act making appropriations  for capital projects; and                 
       providing for an effective date.                                        
                                                                               
                                                                               
  (Cross reference to HCS CSSB  183 (Finance) which ultimately                 
  became the FY 94 Capital Budget.)                                            
                                                                               
  Upon convening the  meeting, Co-chair Pearce  announced that                 
  the  committee  would  first  deal with  additional  capital                 
  budget amendments proposed  by the Governor.   She explained                 
  that  the amendments  represent  additional agency  requests                 
  that have not before had public hearings.                                    
                                                                               
  SHELBY STASTNY,  Director, Office of Management  and Budget,                 
  first came before  committee.   He pointed to  a listing  of                 
  proposed  amendments  and  noted  that  representatives   of                 
  impacted departments were present to  speak to the requests.                 
                                                                               
                                                                               
  DEPT. OF FISH AND GAME                                                       
                                                                               
  RON SOMMERVILLE, Special Assistant, Dept.  of Fish and Game,                 
  came  before  committee.    He  explained  that  the  $870.0                 
  addition  represents  two  years  of  funding  for  critical                 
  reauthorization  of  major  legislation  in  Congress   (the                 
  Magunson Fishery Conservation and Management Act, The Marine                 
  Mammal Protection Act, and the Endangered Species Act).  Co-                 
  chair Pearce voiced her understanding  that the annual total                 
  for the appropriation is $435.0.  Mr. Sommerville concurred.                 
                                                                               
  DEPT. OF LABOR                                                               
                                                                               
  Mr.  Stastny  directed  attention  to  the  Dept.  of  Labor                 
  proposal to move $83.8 from the Worker' Compensation records                 
  automation program  into claims handling system  support and                 
                                                                               
                                                                               
  imaging  consultant services.   Co-chair  Pearce  called for                 
  questions.  None were raised.                                                
                                                                               
  DEPT. OF ADMINISTRATION                                                      
                                                                               
  Referencing   amendments   relating    to   the   Dept.   of                 
  Administration, Mr. Stastny said that he  would speak to the                 
  Mt.   Roberts   Marina   while   DUGAN   PETTY,    Director,                 
  Administrative  Services,  Dept.  of  Administration,  would                 
  discuss purchase of  the Court Plaza building  and expansion                 
  of office space at Sitka.                                                    
                                                                               
  Mr. Stastny explained that the Mt. Roberts Marina was  added                 
  to the capital  budget following  meetings with Juneau  city                 
  officials  and  the  local legislative  delegation.    It is                 
  intended to provide an  economic boost to the city  in light                 
  of recent closure of the Greens Creek Mine.  Local officials                 
  favored   the   marina  while   legislative  representatives                 
  proposed expansion of the University.  The marina was chosen                 
  for its potential for future  economic activity via expanded                 
  ability  to  provide  for  larger  commercial vessels.    In                 
  response  to  a question  from  Co-chair Frank,  Mr. Stastny                 
  advised that the match would be significant.                                 
                                                                               
  Co-chair Frank asked  if the proposed  marina fits with  the                 
  remainder of the capital budget.   Are there other grants to                 
  municipalities for  projects  throughout  the  state?    Mr.                 
  Stastny responded negatively  aside from  water, sewer,  and                 
  school projects.   Co-chair  Frank voiced his  understanding                 
  that  the marina is  an exception to  the Governor's general                 
  policy.  Mr. Stastny concurred.                                              
                                                                               
  Dugan Petty next  came before committee.   He explained that                 
  the  proposed  purchase  of  the  Court Plaza  Building  and                 
  expansion of  office space at  Sitka seeks  to reduce  lease                 
  costs.    The  Court Plaza  request  is  for  $5 million  to                 
  purchase  the  ten-year-old,  36,000   square-foot  building                 
  located  adjacent  to state  properties.   The  $5.4 million                 
  purchase price is  supported by appraisals.   The department                 
  also  seeks  to   make  $612.0   in  code  compliance,   ADA                 
  compliance, and other recommended  maintenance improvements.                 
  An additional $317.0  will be needed for  moving, build-out,                 
  and office furniture.  The department  believes it will save                 
  $600.0  and  $700.0  annually  in  what would  otherwise  be                 
  outgoing lease expenses.                                                     
                                                                               
  The Sitka office  space purchase seeks to  buy a condominium                 
  interest in 1,914 square  feet of office space now  owned by                 
  the City of Sitka.   Portions of the Dept. of  Fish and Game                 
  and  Dept. of  Labor would  be moved  into the  space.   The                 
  purchase price is $275.0.  The  project would pay for itself                 
  within ten years.   In response to a question  from Co-chair                 
  Frank, Mr.  Petty explained that  both departments presently                 
  occupy space in the  building.  Staff is overcrowded  and in                 
                                                                               
                                                                               
  desperate need of additional space.                                          
                                                                               
  Discussion  followed between  Mr. Petty  and Co-chair  Frank                 
  concerning the background of the office building at Sitka.                   
                                                                               
  Discussion ensued  between  Mr.  Petty  and  Senator  Rieger                 
  regarding space in the Court Plaza  Building now occupied by                 
  the  Division of Elections and Ombudsman.   Mr. Petty voiced                 
  his intent to  leave the  Alaska State Credit  Union as  the                 
  only  non-state tenant in the  building.  The building would                 
  be filled  by offices of the  Dept. of Law (6,175  sq. ft.),                 
  Dept. of Corrections (10,000 sq. ft.), and Dept. of Military                 
  and Veterans' Affairs (2,440 sq. ft.).                                       
                                                                               
  Responding  to  questions  regarding code  upgrades  for the                 
  Court Plaza,  Mr. Petty  advised of  a 1992  multidiscipline                 
  architectural/engineering   inspection   recommending   that                 
  mechanical and  electrical deficiencies be  corrected.   The                 
  study also identified some required maintenance.                             
                                                                               
  Discussion  followed  between Co-chair  Frank and  Mr. Petty                 
  regarding code compliance.                                                   
                                                                               
  Senator  Rieger referenced  the  Sitka  Office Building  and                 
  raised questions concerning the cost of the purchase and the                 
  remaining useful life of the  twenty-year-old building.  Mr.                 
  Petty voiced his  expectation that the useful life  would be                 
  "30 more years."                                                             
                                                                               
  DEPT. OF TRANSPORTATION AND PUBLIC FACILITIES                                
                                                                               
  Co-chair   Pearce   inquired   concerning  newly   appointed                 
  Commissioner Campbell's plans for ISTEA borough allocations.                 
                                                                               
                                                                               
  RON  LIND,  Director,   Administrative  Services,  Dept.  of                 
  Transportation and Public Facilities, said  he could not say                 
  exactly what  those plans  might be.   The  new Commissioner                 
  looked at  the program  and feels  implementation should  be                 
  delayed  because of  many unanswered  questions relating  to                 
  engineering  and   the  financial  relationship   with  each                 
  borough.    At this  point,  the Greater  Anchorage Borough,                 
  because  of  its engineering  capability  and administrative                 
  activities plus  the fact that it  is an MPO under  the Act,                 
  has the closest  relationship to the borough  plan described                 
  at previous meetings.  For other boroughs, it is likely that                 
  engineering for FY 94 would have to be done by DOTPF.                        
                                                                               
  The new Commissioner  is concerned that the  department does                 
  not  appear  able  to  proceed  with  the  earlier-described                 
  program by October 1, the start  of the federal fiscal year.                 
  The department seeks to have all projects identified through                 
  the amendment process,  the regular budget process,  and the                 
  capital budget process left in place.  Rather than providing                 
                                                                               
                                                                               
  separate  appropriations for  core and  borough  programs in                 
  each  region,  the  department  requests  a central  highway                 
  program  for  each region.    That  is the  manner  in which                 
  federal funds have been appropriated since 1987.                             
                                                                               
  Senator  Kerttula  voiced  his discomfort  with  centralized                 
  funding for  the Central  Region, advising  that the  Mat-Su                 
  Borough  is often left wanting in  light of funding provided                 
  to Anchorage and Fairbanks. Co-chair  Frank noted that while                 
  Anchorage  has  AMATS  in place,  the  Fairbanks  North Star                 
  Borough  has  no   road  powers  nor  planning   and  design                 
  capability.  He attested to  concern regarding plans by  the                 
  former Commissioner for  "a major diversion of  funding away                 
  from the Northern Regions."  The Norther Region covers areas                 
  from Valdez to  the North Slope  as well as Nome,  Kotzebue,                 
  and  Cordova.   Co-chair  Frank voiced  relief that  the new                 
  Commissioner intends to further review the plan.                             
                                                                               
  Senator Rieger  directed attention to core  highway programs                 
  and noted  that the  Governor's amendments  evidence a  6.5%                 
  reduction  in Central Region.   Southeast shows  a wash, but                 
  the Northern Region shows a 10%  increase.  He then inquired                 
  concerning the  logic behind  cutting the  core program  for                 
  Central  while  increasing  it   for  the  Northern  Region.                 
  Senator Rieger noted that the  proposed ISTEA allocation was                 
  promoted as regionally  equitable. It  now appears that  LBA                 
  approval of a  $6 million  RPL is causing  a shift in  total                 
  highway  funds  statewide.    Mr.  Lind explained  that  the                 
  increase in Northern Region (preliminary engineering,  right                 
  of way,  and utilities) has nothing to  do with the fact the                 
  capital budget  "went down because the  Nome/Council project                 
  was removed."   Review of available balances  indicated that                 
  if the department is to have alternate projects available in                 
  the  future,  there must  be  authorization for  preliminary                 
  engineering expenditures.    Senator  Rieger  stressed  that                 
  numerous  Central Region  projects could  have  utilized the                 
  $3.5 million from  the Kenai Spur Road. Instead, the funding                 
  appears to have gone to other parts of the state.                            
                                                                               
  Co-chair  Frank pointed  to  confusion  over the  difference                 
  between  appropriation   of  money   and  authorization   of                 
  expenditures.  The legislature authorizes  projects, and the                 
  department then shifts the funding to where it can be spent.                 
  In past  allocations,  the Central  Region has  historically                 
  received  45%, the Northern  Region (with 62%  of the roads)                 
  has received 38%, Southeast 9.5%,  the Marine Highway System                 
  6%,  and  headquarters  1%.   The  legislature  focuses upon                 
  authorization,   and   the  department   allocates  approved                 
  funding. The legislature  should instead focus on  the issue                 
  of allocation to ensure that it is equitable.                                
                                                                               
  Discussion followed between members regarding authorizations                 
  versus allocations.                                                          
                                                                               
                                                                               
  Co-chair Pearce noted the  arrival of Commissioner  Campbell                 
  and  inquired  concerning  the  department  plan  for  ISTEA                 
  funding.      BRUCE   CAMPBELL,   Commissioner,   Dept.   of                 
  Transportation and Public Facilities, came before committee.                 
  He said he had chosen "to let this thing rest and get a hold                 
  of  it  later on  and  then  be  prepared  next year."    He                 
  acknowledged discussion of regional  boundaries and boroughs                 
  and said that  his oath as  commissioner is to "look  at the                 
  entire  state transportation system."   He acknowledged need                 
  for equity statewide but  added that the driving force  of a                 
  good  transportation system  is  not confined  by  political                 
  boundaries.  The commissioner referenced his tenure with the                 
  department in the 1960s and 70s  and voiced his believe that                 
  he "did an excellent job of distributing the money and doing                 
  a good job statewide."   He then voiced his intention  to do                 
  the same during his present tenure.                                          
                                                                               
  Commissioner Campbell termed the department proposal for the                 
  borough transportation system "a  disaster ready to happen."                 
  With rare  exception, boroughs are  not ready to  accept the                 
  funding, and the department is  not ready to administer  the                 
  project.     The  plan   was  thus   stopped  and   proposed                 
  distribution delayed  for  a year.    Commissioner  Campbell                 
  advised that he had received no phone calls disagreeing with                 
  that decision.   Funding  for FY  94 will  flow through  the                 
  department's normal program.                                                 
                                                                               
  End, SFC-93, #61, Side 1                                                     
  Begin, SFC-93, #61, Side 2                                                   
                                                                               
  The  Commissioner  said  that  he   could  not  say  whether                 
  individual boroughs would receive the  same funding as under                 
  the proposed ISTEA plan.  The department will distribute the                 
  funding as fairly as possible, bearing  in mind entire state                 
  transportation needs.   Commissioner Campbell said he  would                 
  be working on the borough transportation plan and methods of                 
  implementation.  He  cautioned that while  the concept of  a                 
  pass-through to  boroughs is simple,  implementation without                 
  losing federal dollars is very difficult.                                    
                                                                               
  Senator  Kerttula noted  that second-class boroughs  with no                 
  road  powers  rely  upon  the  department for  planning  and                 
  design.  That puts them in poor posture compared to boroughs                 
  with planning  and design capability.   The Senator  noted a                 
  lack of projects for  the MatSu area and called  for equity.                 
  He  advised  that  Fairbanks  has  approximately  the   same                 
  population  as  MatSu,  yet  it   receives  a  much  greater                 
  allocation.  Commissioner Campbell acknowledged having heard                 
  similar   sentiments   from   many    other   Senators   and                 
  Representatives.   Similar comments have also been expressed                 
  in the  Governor's Office.   The Commissioner noted  that it                 
  has  taken  an extended  period of  time  for the  system to                 
  evolve  to the present point.  It will likewise take time to                 
  turn it around.                                                              
                                                                               
                                                                               
  Responding  to  a  comment  by  Senator Kelly,  Commissioner                 
  Campbell acknowledged  that Anchorage, with a  population of                 
  over 200,000 and  the AMATS planning  process in place,  was                 
  ready  to  proceed with  ISTEA.   The  decision to  stop the                 
  distribution  to  boroughs   should  not  affect  Anchorage.                 
  Senator Kelly asked if  the ISTEA money would be  there, and                 
  Commissioner Campbell replied affirmatively.                                 
                                                                               
  Senator Sharp voiced support for the Commissioner's decision                 
  to  halt  ISTEA  distribution until  the  program  is better                 
  defined.  Commissioner Campbell reiterated that the plan was                 
  in the formative, idea stage.   There were no provisions for                 
  implementation.  He  acknowledged that some boroughs  do not                 
  have road  powers and  suggested that  the department  might                 
  have to develop a separate plan for each borough.                            
                                                                               
  Senator  Rieger  asked  if  the  Commissioner  would support                 
  inclusion of other projects from the six-year plan in the FY                 
  94 capital budget.  Commissioner Campbell explained that, in                 
  the  past,  the  capital  budget  was  not  developed  on  a                 
  district-by-district basis because  it is almost  impossible                 
  to  forecast  when   a  particular  project  will   come  to                 
  construction.  Design and construction are the easy parts of                 
  the task.  Permits and  environmental impact statements take                 
  considerable  time and  are not  within department  control.                 
  There is thus need for  flexibility in project authorization                 
  to allow for  the shifting  of funding from  a project  that                 
  encounters  problems to  one  that  is  construction  ready.                 
  Without that flexibility,  the state  risks loss of  federal                 
  funding.                                                                     
                                                                               
  Senator Rieger noted  that the Central Region  has no design                 
  and construction money in the Governor's capital budget.  He                 
  then  suggested that  it  would be  useful  to have  several                 
  projects    available    as   alternates,    if   necessary.                 
  Commissioner Campbell said  that he did not  have sufficient                 
  detail to respond.  Co-chair  Frank voiced his understanding                 
  that Central Region  is overauthorized  by $30 million,  and                 
  the  Northern Region  in  underauthorized  by a  substantial                 
  amount.                                                                      
                                                                               
  Co-chair Frank attested to need  for a clearer understanding                 
  of  how the department intends to  proceed.  Co-chair Pearce                 
  asked if the Commissioner could return to committee tomorrow                 
  morning  with  information  explaining  how  the  department                 
  intends  to  proceed  on  projects  that have  already  been                 
  authorized as well as a description of  where the department                 
  is  in  terms of  planning  for each  region.   Commissioner                 
  Campbell responded  negatively, citing lack of adequate time                 
  to come  fully up  to speed  on department  activities after                 
  having  been  on the  job only  ten  days.   Co-chair Pearce                 
  advised that the  committee must know what  the department's                 
  general  plan of action  will be for  moneys appropriated in                 
                                                                               
                                                                               
  the capital  budget.   Co-chair Frank  concurred in need  to                 
  know how much is available  in outstanding authorization for                 
  each  region  as  well  as  how  the department  intends  to                 
  allocate funding in the FY 94 capital budget.   Commissioner                 
  Campbell  said  he  would ask  department  staff  to prepare                 
  material for presentation to committee next Monday.                          
                                                                               
  In his closing remarks, Commissioner Campbell explained that                 
  ISTEA  is simply the  acronym for the  present highway bill.                 
  It is  not   that different  than previous  bills over  past                 
  years.  It has some  new provisions (specific categories for                 
  spending  specific  moneys on  specific  things), but  it is                 
  generally along the  same lines  under which the  department                 
  has always operated.                                                         
                                                                               
  Senator  Kerttula  voiced  his  understanding  that  several                 
  states  (Idaho and  Oregon) have  successfully traded  ISTEA                 
  moneys for  general fund  moneys for  easier utilization  by                 
  counties.   He then  suggested that  that approach might  be                 
  helpful   to   some   boroughs.      Commissioner   Campbell                 
  acknowledged awareness of  the arrangement, but said  he was                 
  not knowledgeable of the specifics.                                          
                                                                               
  Co-chair  Pearce  directed  that   the  meeting  be  briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 10:20 A.M.                                     
                     RECONVENE - 10:30 A.M.                                    
                                                                               
                                                                               
  SENATE BILL NO. 165                                                          
                                                                               
       An   Act  making   an  appropriation  to   the  Alyeska                 
       Settlement Fund  and  making  appropriations  from  the                 
       Alyeska Settlement Fund; and providing for an effective                 
       date.                                                                   
                                                                               
                                                                               
  SENATE BILL NO. 183                                                          
                                                                               
       An Act  making special  appropriations for  restoration                 
       projects relating to the Exxon Valdez oil spill and for                 
       oil  spill  response  projects; and  providing  for  an                 
       effective date.                                                         
                                                                               
  Upon  reconvening the meeting, Co-chair Pearce directed that                 
  SB  165  and  SB  183  be  simultaneously  brought  on   for                 
  discussion.  She explained  that both bills result from  the                 
  EXXON  VALDEZ  oil  spill.   SB  183  funding  for  projects                 
  totalling  $50  milliong will  flow  from settlement  of the                 
  criminal case  against Exxon.   SB  165 appropriates  moneys                 
  from a second  settlement with strict agreement  and consent                 
                                                                               
                                                                               
  decree requirements.                                                         
                                                                               
  TELECONFERENCE                                                               
                                                                               
  Co-chair  Pearce  acknowledged  the  presence  of   Attorney                 
  General CHARLIE COLE  and CRAIG TILLERY,  Assistant Attorney                 
  General, Dept. of  Law, and noted  a teleconference link  to                 
  other areas of  the state.   She said that Attorney  General                 
  Cole and Mr.  Tillery would present an overview  of projects                 
  within the legislation before the  committee proceeds to the                 
  taking of public testimony.                                                  
                                                                               
  Speaking first to acquisition of former state park lands  in                 
  Kachemak Bay, Attorney General Cole noted endeavors had been                 
  ongoing  for  nearly  seventeen years.    Approximately $7.5                 
  million of the $900 million civil  settlement from the EXXON                 
  VALDEZ oil spill  will be  applied toward the  price of  the                 
  lands.  That funding was approved  by both state and federal                 
  trustees.   An additional  $7.5 million  will flow from  the                 
  settlement  between the  state and Alyeska  Pipeline Service                 
  Company.    SB   183  contains  the  remaining   $7  million                 
  appropriation, from the restoration fund, needed to comprise                 
  the $22 million purchase price. Attorney General Cole termed                 
  the   purchase    "the   paramount   project"    sought   by                 
  environmentalists and residents of the  Kenai Peninsula.  It                 
  is  strongly  supported by  Governor  Hickel.   The Attorney                 
  General urged favorable consideration by committee.                          
                                                                               
  Mr.  Cole  explained  that,  as part  of  the  $900  million                 
  settlement decree, the State of  Alaska is to be  reimbursed                 
  for  moneys expended  in damage assessment  and cleanup.   A                 
  like  provisions requires  that  the federal  government  be                 
  similarly reimbursed.   In each of  the past two years,  the                 
  state general fund received $29 million.  The amount of each                 
  payment was  agreed upon by  the U.S. Department  of Justice                 
  and the State of Alaska.   The total amount of reimbursement                 
  expressly  provided in the  consent decrees is approximately                 
  $71 million.  There are provisions, however, which allow the                 
  state to  recoup  additional moneys.   The  reason only  $25                 
  million and $24.5 million were  respectively received by the                 
  state  and  the  federal governments  each  year  is because                 
  neither government wanted to unduly "delete" funds available                 
  for restoration.                                                             
                                                                               
  Future moneys expected  as reimbursement in FY 94  have been                 
  applied to  the Whittier  Road Project.   Mr. Cole  stressed                 
  that under   express  conditions of  the consent  decree $50                 
  million is to  be used for restoration,  rehabilitation, and                 
  enhancement of damaged resources and  services.  However, at                 
  the Governor's insistence, special provisions were  included                 
  which  enable  that   money  to   be  used  for   "long-term                 
  environmental monitoring."   Those moneys  must be used  for                 
  those purposes.                                                              
                                                                               
                                                                               
  In  response  to  a request  from  Co-chair  Frank, Attorney                 
  General Cole  provided background information  on settlement                 
  amounts and  restrictions upon  expenditures.   He explained                 
  that  under the  Clean Water Act  and other  related federal                 
  statutes, moneys recovered from  oil spills must be used  by                 
  state    and    federal    governments   for    restoration,                 
  rehabilitation,  and  enhancement of  damaged  resources and                 
  services.  The state, in its claims against Exxon, proceeded                 
  jointly with the United  States under that statute.   It did                 
  so because of  difficulties in  segregating out whether  the                 
  United States or the State of Alaska owned and had the right                 
  to recover for damaged resources,  i.e., who held the  right                 
  to recover for damage to sea  otters, the water column, etc.                 
                                                                               
                                                                               
  Under  the  terms of  the civil  settlement with  Exxon, the                 
  state  is entitled  to  reimbursement  for expenditures  for                 
  cleanup and damage  assessment.  These moneys accrue  to the                 
  state treasury, unfettered.   Remaining moneys in  the joint                 
  fund under  this settlement  must be  used for  restoration,                 
  enhancement, etc.  The Attorney  General reiterated that, up                 
  to  this time,  the  state  general  fund has  received  $58                 
  million.     Future reimbursements  should total $15  to $20                 
  million.  In response to a question from Co-chair Frank, Mr.                 
  Cole voiced his understanding that the  $58 million has been                 
  expended.    Co-chair  Frank  requested  a  recap  of  those                 
  expenditures.                                                                
                                                                               
  The Attorney General next referred to federal prosecution of                 
  criminal cases against Exxon Corporation and Exxon Shipping.                 
  He explained that after  lengthy discussions surrounding the                 
  amount of the fine,  an agreement was reached between  Exxon                 
  and  the U.S.  Department  of Justice  for  payment of  $125                 
  million as part of the criminal  fine.  Negotiations between                 
  the state  and U.S.  Department of  Justice revolved  around                 
  whether the state  should share in  that amount.  The  state                 
  took the position  that since  it had a  claim for  punitive                 
  damages against Exxon but was not prosecuting that claim, it                 
  should receive  a portion  of the  fine.   An agreement  was                 
  reached whereby the state would receive $50 million from the                 
  federal criminal prosecution.   The agreement  requires that                 
  expenditure of  the $50  million be  limited to  restoration                 
  purposes--the  same  limitation  applied  to  use  of  civil                 
  settlement funds.                                                            
                                                                               
  The  state recently  settled  with Alyeska  Pipeline Service                 
  Company  for miscellaneous  economic  claims  that were  not                 
  prosecuted  against  Exxon.     Under  the  terms   of  that                 
  settlement, $6 million is  to be used for construction  of a                 
  road from  downtown Cordova  to a  deep water  dock site  at                 
  Shepard  Point.     There  is  also  $7   million  each  for                 
  construction of docks at Tatitlek  and Chenaga, $7.5 million                 
  for  the  Kachemak   Bay  purchase,  and  $1.5   million  to                 
  supplement    fisheries    business    tax    payments    to                 
                                                                               
                                                                               
  municipalities.                                                              
                                                                               
  Senator Rieger  inquired concerning  who negotiated  the $22                 
  million purchase  price for  Kachemak Bay  lands.   Attorney                 
  General Cole indicated  he had.  As  background information,                 
  he  explained  that when  negotiations  began, the  Seldovia                 
  Native  Association  wanted considerably  in  excess  of $22                 
  million.  The state took the position that any amount beyond                 
  $22  million  would  not  be  considered.   Following  that,                 
  lengthy discussions  ensued between  representatives of  the                 
  nature conservancy  and various  interest groups,  including                 
  those that held logging rights to the land.  The $22 million                 
  figure was eventually  struck.  The Attorney  General voiced                 
  his belief that the property could not be purchased for less                 
  than  that   amount.    CRAIG  TILLERY,  Assistant  Attorney                 
  General, came  before  committee to  supplement  remarks  by                 
  Attorney General  Cole.   He acknowledged  that $22  million                 
  represents the figure  the state and other  entities reached                 
  in previous years as a result of a number of appraisals.  It                 
  reflects years of negotiations.                                              
                                                                               
  Senator Rieger  directed attention  to funding for  response                 
  and cleanup  research, contained within  Sec. 12 of  SB 183.                 
  He noted  language saying  that the  Dept. of  Environmental                 
  Conservation  would  "work  with   the  academic  community,                 
  inventors,  and   industry   to   develop   more   effective                 
  technologies to deal  with oil  spills."  The  appropriation                 
  itself, however, speaks  to contracts with private  entities                 
  for "research  programs and  prevention, containment,  etc."                 
  He  then raised questions  regarding differences in wording.                 
  Co-chair Pearce  referred to  an amendment  proposed by  Co-                 
  chair Frank  and noted that some of the troublesome language                 
  would be deleted.                                                            
                                                                               
  Attorney General Cole referenced Sec. 4  of SB 183 and noted                 
  the $500.0 appropriation from the spill restoration fund for                 
  construction of the Kachemak Bay  State Park visitor center.                 
  He acknowledged that construction of the center might not be                 
  the most appropriate use for the entire $500.0 and suggested                 
  that  "and  related  facilities"  be  added to  broaden  the                 
  definition.                                                                  
                                                                               
  End, SFC-93, #61, Side 2                                                     
  Begin, SFC-93, #63, Side 1                                                   
                                                                               
  JOHN   SANDOR,   Commissioner,   Dept.    of   Environmental                 
  Conservation,  came  before  committee   in  response  to  a                 
  question  from Co-chair  Frank.  The  Commissioner explained                 
  that the specific  location of the  center has not yet  been                 
  determined.  The Kachemak State Park citizens advisory board                 
  and the Division of Parks  have been reviewing other capital                 
  projects, i.e. trails, access  points, etc.  A site  for the                 
  center will be  developed in  cooperation with the  advisory                 
  board.   The Commissioner  presented a  listing of  proposed                 
                                                                               
                                                                               
  projects and associated amounts  that he acknowledged  could                 
  utilize the entire $500.0.  The intent, however, is to place                 
  the visitor center as the highest priority.                                  
                                                                               
  Co-chair  Frank  voiced  his belief  that  if  the  state is                 
  spending $22 million  for a park, the  visitor center should                 
  be analogous to that at Portage Lake or Denali Access rather                 
  than  a public-use cabin in the  wilderness that many people                 
  would not have an opportunity to use.                                        
                                                                               
  Co-chair  Pearce  advised  of  a  three-hour  teleconference                 
  window for further  discussion of SB  165 and 183, later  in                 
  the day.                                                                     
                                                                               
                                                                               
  SENATE BILL NO. 87                                                           
                                                                               
       An Act  extending the  termination date  of the  Alaska                 
       Public Utilities Commission to June 30, 1994.                           
                                                                               
  Co-chair  Pearce directed  that  SB  87  be brought  on  for                 
  discussion.   Senator  Rieger  MOVED that  SB  87 pass  from                 
  committee  with individual  recommendations.   No  objection                 
  having been raised, SB 87 was REPORTED OUT of committee with                 
  a zero fiscal note  from the Dept. of Commerce  and Economic                 
  Development.    Co-chairs  Pearce  and  Frank  and  Senators                 
  Kerttula  and Rieger signed the  committee report with a "do                 
  pass"   recommendation.      Senator   Jacko   signed    "no                 
  recommendation."  Senator Sharp signed "Do not pass."                        
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:00 a.m.                        
                                                                               

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