Legislature(2003 - 2004)
05/19/2003 08:46 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 19, 2003
8:46 AM
TAPES
SFC-03 # 104, Side A
SFC 03 # 104, Side B
SFC 03 # 105, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 8:46 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice-Chair
Senator Robin Taylor
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: REPRESENTATIVE VIC KOHRING; WIILIAM TANDESKE,
Commissioner, Department of Public Safety; SARA FISHER GOAD,
Financial Analyst, Alaska Industrial Development & Export
Authority, Department of Community and Economic Development; REX
SHATTUCK, Staff to Representative Nancy Dahlstrom, KATE TESAR,
Representative, Alaska Yacht Services and Provisioning; SCOTT
NORDSTRAND, Deputy Attorney General, Civil Division, Department of
Law; PAUL FUHS, Representative, Yukon Pacific Corporation; HEATH
HILYARD, Staff to Representative Lesil McGuire; RICK URION,
Director, Division of Occupational Licensing, Department of
Community and Economic Development; NICO BUS, Administrative
Services Manager, Division of Support Services, Department of
Natural Resources; PATRICK LUBA, Legislative Representative, AARP;
DANIEL PATRICK O'TIERNEY, Senior Assistant Attorney General,
Regulatory Affairs Section, Department of Law
Attending via Teleconference: From Offnet Sites: BILL O'LEARY,
Chief Financial Officer, Alaska Railroad Corporation, Department of
Community and Economic Development; DOUG GRIFFIN, Director,
Alcoholic Beverage Control Board, Department of Revenue
SUMMARY INFORMATION
HB 216-MUNI TAXATION OF REFINED FUEL PRODUCTS
The Committee heard testimony from the Department of Community and
Economic Development and reported the bill from Committee.
HB 251-MARINE PILOT FOR FOREIGN PLEASURE CRAFT
The Committee heard from the sponsor and the industry. One
amendment was adopted, and the bill reported from Committee.
HB 245-SUITS & CLAIMS: MILITARY/FIRE/DEFENSE
The Committee heard testimony from the Department of Law and the
Department of Public Safety. A committee substitute was considered,
but failed to be adopted. The bill reported from Committee.
HB 267-AK RAILROAD BONDS FOR NAT.GAS TRANSPORT
The Committee heard testimony from the sponsor, the industry, and
the Alaska Railroad. The bill reported from Committee.
HB 234-BREWPUBS; ABC BOARD
The Committee heard testimony from the sponsor, and the Department
of Public Safety and the Department of Revenue. Two amendments and
a committee substitute were considered but were withdrawn from
consideration. The bill reported from Committee.
HB 162-FEES: BUSINESS LICENSE & NATURAL RESOURCE
The Committee heard from the Department of Community and Economic
Development and the Department of Natural Resources. The bill
reported from Committee.
HB 111-RCA EXTENSION & POLICIES
The Committee heard from the Department of Law and the industry.
The bill reported from Committee.
CS FOR HOUSE BILL NO. 216(FIN)
"An Act relating to and limiting municipal taxation of
refined fuel and wholesale sales of fuel, and to the bulk
fuel revolving loan fund."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this legislation "clarifies local
municipality's taxing authority for refined fuel sold within and
outside of the local jurisdiction." In addition, he noted that the
maximum amount that could be loaned, on an annual basis, from the
Bulk Fuel Revolving Loan Fund would be increased from $200,000 to
$300,000. He informed the Committee that, in response to a question
from Senator Hoffman during the first hearing on this bill, he has
provided a handout [copy on file] titled "HB216: Municipal Taxation
of Refined Fuel Products."
Senator Hoffman and Senator B. Stevens acknowledged the information
provided in the handout.
Senator B. Stevens inquired whether the Revolving Loan Fund's
entire $6.3 million balance would be available for loans or whether
the loan level would be limited to the earnings on the balance.
SARA FISHER GOAD, Financial Analyst, Alaska Industrial Development
& Export Authority, Department of Community and Economic
Development, responded that the cash balance of the Bulk Fuel
Revolving Loan fund as of March 31, 2003 was $6.04 million. She
specified that of that amount, the uncommitted cash balance of $5.6
million would be available for loans.
Senator B. Stevens observed that only five of the twenty-four FY 03
loan applicants requested loans at the $200,000 maximum loan level.
Therefore, he concluded that, that five loans might be expected at
the proposed $300,000 level.
Ms. Goad responded that because the maximum loan amount was raised
to $200,000 as recently as FY 03, she is unsure how many requests
would be at the $300,000 level.
Senator B. Stevens stated, for the record, "that the rapid rate of
increase" in the maximum loan level in an eighteen-month period is
significant.
Co-Chair Wilken reminded that a rapid increase in fuel costs
parallels the increase in the loan limit amounts. However, he noted
that fuel rates are currently "rapidly decreasing."
Senator Hoffman pointed out "that while fuel costs might be rapidly
decreasing in Fairbanks," they are not decreasing in rural areas.
Senator B. Stevens voiced concern that increasing the maximum loan
level might jeopardize the integrity of the Fund. In addition, he
worried that it might have the potential to reduce the number of
loans that could be awarded. He noted that, while he would not be
opposing this legislation, the Fund should be monitored to ensure
that its integrity is maintained.
Co-Chair Wilken agreed that the fund should be monitored, as the
maximum loan award levels have, in a short period of time,
increased from $100,000 in FY 02 to $200,000 in FY 03, and would,
were this legislation adopted, increase to $300,000 in FY 04.
Senator Hoffman informed that many communities have been able to
increase their bulk fuel storage capabilities and, in addition, are
considering regionalizing storage capabilities in order to purchase
larger quantities of fuel. He noted that being able to purchase
larger quantities of fuel could enable communities to negotiate
lower fuel prices.
Co-Chair Wilken reiterated that the Fund's integrity must be
considered.
Senator Taylor suggested that in order to monitor the integrity of
the Fund, the Committee Co-Chairs could send a letter requesting
that a Bulk Fuel Revolving Loan Fund financial report be provided
to the Committee the following year.
There being no spoken opposition to this suggestion, Co-Chair
Wilken stated that a letter would be drafted.
Co-Chair Green agreed with Senator Hoffman's assessment that
increasing storage capacities could allow communities to negotiate
lower fuel prices. She asked whether different groups could
consolidate into one loan request.
Senator Hoffman reiterated that larger fuel volume purchases could
provide the communities with lower fuel prices. Furthermore, he
stated that a larger loan limit would be required to enable this
situation to occur.
Co-Chair Wilken commented that the point was valid. He stated that
the aforementioned letter would result in a report being supplied
to the Committee.
Senator Olson asked whether there are any delinquent loans or
defaults.
Ms. Goad responded that one FY 03 loan is more than 90 days
delinquent and four FY 02 loans are delinquent. She assured the
Committee that large loan requests are not automatically granted,
and she stressed that were an applicant's ability to repay the loan
a concern, collateral would be required.
Senator Taylor offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
Without objection, CS HB 216 (FIN) was REPORTED from Committee with
zero fiscal note #2 from the Department of Revenue, zero fiscal
note #3 from the Division of Community and Business Development,
Department of Community and Economic Development, and zero fiscal
note #4 from the Alaska Energy Authority, Department of Community
and Economic Development.
SENATE CS FOR CS FOR HOUSE BILL NO. 251(TRA)
"An Act relating to exemption of certain foreign pleasure
craft from the mandatory pilotage requirement and to civil
fines imposed on the owner or operator of a pleasure craft
of foreign registry; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this legislation would exempt
foreign pleasure craft, measuring 65 feet or less, from the State's
mandatory marine pilotage requirements. In addition, he specified
that foreign pleasure craft measuring 66 feet to 175 feet could
apply for an exemption from the requirement.
REX SHATTUCK, Staff to Representative Nancy Dahlstrom, the bill's
sponsor, explained that this legislation would allow for the
imposition of civil fines for violation of the Marine Pilotage Act;
would exempt foreign pleasure craft of 65 feet or less from the
pilotage requirements; would institute an application fee structure
for vessels measuring between 66 and 175 feet applying for an
exemption from the pilotage requirements; would mandate the use of
an Alaskan licensed marine pilot for yachts exceeding 125 feet but
less than 175 feet in overall length on their initial voyage in
State waters; and would establish a process whereby foreign
pleasure craft vessels measuring between 66 feet to 125 feet could
hire a licensed Alaskan agent. In addition, he stated that
provisions are included that specifically address the definition of
"for hire" and "pleasure craft." He stated that this legislation
was prompted by a recommendation from the Legislative Budget and
Audit Committee audit (#08-20015-02 November 1, 2002)[copy not
provided].
Senator Taylor asked for clarification that existing law is based
on gross tonnage as opposed to overall vessel length as specified
in this legislation.
Mr. Shattuck concurred that the change "is a shift" from gross
tonnage to overall length "as length is an easier measure to
understand."
Co-Chair Wilken clarified that the version of the bill being
considered by the Committee is SCS CS HB 251(TRA), Version 23-
LS0865\Z.
Senator Taylor understood that a foreign vessel measuring 65 feet
or less would be exempt from the requirement to have a licensed
Alaska marine pilot onboard in Alaskan waters.
Mr. Shattuck concurred.
Senator Taylor asked for details pertaining to the vessel pilotage
waiver application for vessels exceeding 65 feet.
Mr. Shattuck explained that vessels exceeding 65 feet but measuring
less than 125 feet in overall length could apply for a waiver to be
exempted from the marine pilot requirement. He specified that were
an exemption granted, the vessel would be required to hire an
Alaskan licensed agent to provide information as determined by the
Board of Marine Pilots. He continued that, in addition to acquiring
a waiver and hiring an agent, vessels exceeding 125 feet but being
less than 175 feet in overall length would be required to hire an
Alaskan licensed marine pilot to initially enter Alaskan waters.
Senator Hoffman asked for an explanation regarding the inclusion of
language in Sec. 4, on page 3, lines 17 - 21. This language reads
as follows.
The exemption must remain on the vessel while the vessel is in
state water. An exemption issued under this subsection does
not exempt a vessel for the requirement to employ a pilot
licensed under this chapter while the vessel is in Wrangell
Narrows or in the water between Chatham Strait and Sitka via
Peril Strait.
Mr. Shattuck replied that these areas have been identified as areas
wherein a marine pilot would still be required, regardless of any
provisions that might be implemented in the bill.
Co-Chair Wilken clarified that vessels larger than 65 feet would be
required to hire a Marine pilot to transverse those specific areas.
Mr. Shattuck concurred.
Senator B. Stevens stated that, were this legislation adopted,
transitional language would be necessary to provide vessels
sufficient time to apply for the waiver this year. He specified
that an amendment would be required to address the timeline as
specified in Section 4 on page 3, lines 7 through 12 that reads as
follows.
The application for an exemption must be submitted to the
board at least 30 days before the vessel enters the state. The
Board shall approve or deny an application for the exemption
within 10 working days after the application is received by
the Board.
Mr. Shattuck stated that he must confer with the bill's sponsor
before he could not comment on an amendment. However, he
acknowledged Senator B. Stevens' concern that implementation might
be problematic this year.
Senator Taylor asked how existing law would be affected were the
effective date of the legislation postponed.
Senator B. Stevens clarified that existing law specifies that
vessels exceeding 300 gross tons, or approximately 65 feet, would
be required to have a marine pilot onboard while in Alaskan waters.
Senator Taylor understood that a pilot would be required until this
legislation went into affect.
Senator B. Stevens argued that, were transitional language not
provided in this legislation, vessels would be required to abide by
status quo regulations for the entire summer season of 2003.
Senator Taylor asked the entities that would be affected by this
legislation.
Senator B. Stevens stated that in addition to large yachts, vessel
provision suppliers would be affected.
Senator Taylor declared that pilots are required on vessels to
ensure that vessel transit is safe. He assumed that the majority of
these vessels are private pleasure craft and are not for hire, and
therefore, he questioned the necessity of this legislation, as he
noted, separate legislation has been adopted that exempts private
vessels from liability for its passengers. He asserted therefore,
that this legislation is not necessary.
Co-Chair Wilken asked regarding the United States Coast Guard's
(USCG) position on this legislation.
Mr. Shattuck stated that currently the USCG is issuing "no opinion"
regarding this legislation.
Co-Chair Wilken mentioned that the legislation is modeled after
current State of Washington regulations.
Mr. Shattuck concurred, although he mentioned that one difference
is that the State of Washington has a traffic control system in
place in the Puget Sound area, whereas, none are currently
specified for Alaskan waterways. He continued that an area of
concern that has been discussed but is not addressed in the
legislation is how the State would monitor vessel location and
determine the number of vessels that might be in State waters. He
stated that estimates in the legislation regarding the number of
vessels that might transit Alaskan waters are based on vessel
numbers in the State of Washington as well as on inquiries from
vessels that the State has received.
Co-Chair Wilken asked for further information regarding the
requirement that a vessel measuring between 65 feet and 125 feet or
175 feet must have a marine pilot on board from its entry into
Alaskan waters to its first port of call.
Mr. Shattuck clarified that vessels ranging from 65 feet to 125
feet in overall length must hire an Alaskan agent to arrange the
particulars of their trip and that a vessel measuring 126 feet to
175 feet must hire a marine pilot.
Co-Chair Wilken asked the marine pilotage requirement for vessels
ranging from 65 feet to 125 feet.
Mr. Shattuck responded that rather than being required to hire a
marine pilot, those vessels would be required to hire an Alaskan
agent who would arrange for obtaining their waiver and would
provide the vessel with information established for entry into
Alaskan waters.
Co-Chair Wilken asked whether the agent would be retained until the
vessel's first port of call.
Mr. Shattuck clarified that the agent would be retained for the
vessel's complete journey.
Amendment #1: This amendment inserts a new section into the bill on
page 4, line 11 as follows.
The requirement in AS 08.62.180(b), enacted in Section 4 of
this Act, that an application for exemption be filed at least
30 days before the vessel enters the state does not apply to a
vessel entering the state less than 30 days after the
effective date of this Act.
Senator B. Stevens moved to adopt Amendment #1. He stated that this
transitional language would be identified as Section 5.
Co-Chair Wilken objected for discussion.
Senator B. Stevens explained that, were this legislation adopted,
this language would provide a 30-day transition period to allow
vessels that are traveling to or in Alaska for the summer season to
apply for the waiver.
Co-Chair Wilken expressed that this amendment would be limited to
the initial stage of the legislation.
Senator B. Stevens concurred. He reminded the Committee that the
original marine pilotage legislation was enacted numerous years
earlier to specifically require a marine pilot to be onboard the
Greenpeace vessel, the Rainbow Warrior, during its transit in
Alaskan waters. He noted that in response to the increase in large,
private yacht traffic in the State, this legislation is an attempt
to update the original requirements. He stated that this is a good
"compromise" to address the concerns of the pilots, the USCG, and
other affected parties. He urged members to support his amendment.
Senator Taylor asked whether the amendment would require vessels to
abide by existing regulations or would exempt vessels from all
requirements during the 30-day transition period.
KATE TESAR, Representative, Alaska Yacht Services and Provisioning,
commented that the amendment would allow those vessels in transit
at the time the legislation takes effect to be exempt from the 30-
day prior-to-trip waiver application requirement. She stated that
the inclusion of language in the bill that specifies that vessels
transiting certain waterways, such as the Wrangell Narrows, must
have a licensed marine pilot onboard, addresses marine pilots'
concerns regarding the easing of pilotage requirements.
Mr. Shattuck opined that the amendment would address the concern
regarding the effective date of the bill.
Co-Chair Wilken removed his objection.
There being no further objection, Amendment #1 was ADOPTED.
Co-Chair Green asked whether the committee substitute being
considered would reduce the revenue estimates in the Department of
Revenue's accompanying fiscal note.
Mr. Shattuck responded that the Department's revenue estimation
would not be significantly impacted because the exact number of
vessels that would be affected by this legislation is unknown. He
communicated that more reliable numbers would be provided following
the bill's first year of enactment.
Co-Chair Wilken noted that numerous communities have expressed an
interest in this legislation. He stated that, provided the outcome
of this legislation proves to be safe and environmentally sound, it
would be interesting to receive feedback from communities as to
whether this legislation provided a benefit to them as opposed to
the State "taking this risk with no benefit." Additionally, he
noted that ship provisioners should benefit from the legislation.
He encouraged the bill's sponsor to develop methodology to monitor
the outcome of the legislation.
Mr. Shattuck communicated that Representative Dahlstrom has
expressed an interest in developing methodology to study the
affects of the legislation. He attested that a major goal of this
legislation would be to provide economic benefits to communities in
Southeast Alaska.
Senator Taylor moved to report the bill, as amended, from Committee
with individual recommendations and accompanying fiscal note.
There being no objection, SCS CS HB 251(FIN) was REPORTED from
Committee with a new zero fiscal note, dated May 19, 2003 from the
Department of Community and Economic Development.
CS FOR HOUSE BILL NO. 245(JUD)(efd fld)
"An Act relating to certain suits and claims by members of the
military services; relating to certain suits and claims
regarding acts or omissions of the organized militia; relating
to workers' compensation and death benefits for members of the
organized militia; relating to liability arising out of
certain search and rescue, civil defense, fire management, and
fire fighting activities."
AT EASE 9:15 AM / 9:15 AM
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation would limit civil
action of suits and claims filed against the State by military,
search and rescue, and firefighter personnel. He reviewed that,
during the previous hearing on this bill, Committee Members raised
questions regarding the State's immunity from suits and claims as
well as to how a few provisions of the bill would apply. He noted
that one area of concern regards proposed language in Section 2,
located on page 2, lines 16 - 20 of CS HB 245(JUD)(efd fld),
Version 23-GH1025\H.A that Senator Taylor interprets would exempt
State employees from liability due to their negligence. This
language reads as follows.
Sec. 2. AS 18.60 is amended by adding a new section to read:
Sec. 18.60.125. Civil immunity. A person may not bring a
civil action for damages against the state, a political
subdivision of the state, or the officers, agents, or
employees of the state or a political subdivision of the state
for a death, personal injury, or property damage that results
from an act or omission in performing or failing to perform
activities or duties authorized under AS 18.60.120-18.60.175.
SCOTT NORDSTRAND, Deputy Attorney General, Civil Division,
Department of Law, stated that this section of the bill addresses
search and rescue matters and simply restates "what Alaska law was
two-years ago" by re-clarifying that the State and its search and
rescue employees "would not be civilly liable for their actions" in
a similar fashion as that of the Alaska Supreme Court upholding the
decision that police investigations are immune. He pointed out that
"this is a matter of [the State] taking scare resources that are
engaged in the practice of search and rescue" activities and
attempting to use them in the "best" manner possible with the
recognition that the State has a moral and statutory obligation to
assist people who require these efforts. He stated "that all four
issues" in this bill are "turning back the clock to the year 2000,
before the Alaska Supreme Court, in several different decisions,
changed Alaska law." He declared that this is the goal of the
legislation, and he stressed that, "if we don't turn back the
clock, the State faces potentially calamitous liability with
limited ability to fund those expenses."
Co-Chair Wilken stated that the bill's language mirrors what was in
effect three years prior.
Mr. Nordstrand clarified that the language has been updated to
reflect today's search and rescue scenarios, and with that
consideration, he asserted, that the bill would reflect the
approach to immunity that had previously been commonplace and
reasonable under that previous mode of operation.
WIILIAM TANDESKE, Commissioner, Department of Public Safety, stated
that search and rescue missions are conducted "on the totality of
the circumstance." He stated that initial search and rescue
information is often times secondhand or encrypted in that the
individuals being searched for either do not follow the plan they
told people or neglect to file a flight plan. He shared details of
some situations to which the Department recently responded. He
continued that a recurring situation in Rural Alaska is that people
are routinely overdue and decisions must be made as to how and when
to respond. He stated that the Department routinely relies on
volunteers and residents of the area to address these situations,
and he communicated that these people "do an outstanding job" for
the Department.
Commissioner Tandeske exampled a situation wherein ten
snowmachiners might be lost and eventually nine of the ten
reappear. He stated that the area to be searched might be large and
"a measured response" might be appropriate, as consideration must
be given to things such as how much danger to expose the response
team to. He stated that these are difficult decisions to make.
Oftentimes, he shared, response decisions are misunderstood by the
public who are unaware of the complexity of a situation.
Commissioner Tandeske stressed that the public perception that
action is not being taken in some cases "is inaccurate." He stated
that the question of whether the State should be civilly liable
when people put themselves in harms way and "it doesn't turn out as
everyone would like" is an important issue.
Co-Chair Wilken asked Senator Taylor to restate his concerns
regarding the aforementioned Sections 2, and Section 11 of the
bill. Section 11 reads as follows.
Sec. 11. AS 41.15 is amended by adding a new section to read:
Sec.41.15.045. Civil immunity. Notwithstanding other
provisions of law, a person may not bring a civil action for
damages for death, personal injury, or property damage that
results from an act or omission in performing or failing to
perform activities or duties arising out of prevention,
monitoring, control, or suppression of fires authorized to be
performed under AS 41.15.010-41.15.170 against
1) the state or its officers, agents, and employees;
2) a political subdivision of the state or its
officers, agents, and employees;
3) any organization authorized to prevent, control,
or suppress fires;
or
4) others assisting in the control or suppression
of fires at the request of an officer or employee of the
United States or the state.
Senator Taylor stated that his concern regards the determination
that this legislation would provide "total blanket immunity" and
that "no civil remedy would be allowed," regardless of whether
gross negligence or recklessness or intentional misconduct on the
part of dispatchers or the people in charge of the rescue was an
issue. He asserted that this is the basis for his questioning the
legislation. He understood that a recent State Superior Court
decision that found the State liable for fire damages is being
appealed before the State Supreme Court. He mentioned a separate
fire case wherein the State had to defend itself and was found not
liable; however, he attested that it might be possible for the
State to be found liable were gross conduct or intentional
negligence proven. He continued that the State has recently settled
a case out-of-court rather than go to court and "probably lose a
larger amount." He voiced that recent court cases have prompted
this legislation, and he is concerned about the State being granted
blanket immunity.
Co-Chair Wilken referred the Committee to a new committee
substitute, Version 23-GH1025\I that has been presented by Senator
Taylor. He stated that the single difference between Version 23-
GH1025\H.A and Version "I" is that a new subsection is inserted in
at least four different locations in Version I. That proposed
language reads as follows.
This section does not apply to a civil action for damages as a
result of gross negligence or reckless or intentional
misconduct.
Senator Taylor concurred. He stated that the language would be
inserted in sections of the bill in which the safeguard has not
already been provided.
Co-Chair Wilken characterized the language as an amendment to the
bill.
Mr. Nordstrand voiced that the inclusion of this language would
"recreate the standard of gross negligence or reckless or
intentional misconduct as a basis" for a lawsuit in these
circumstances. He stated that "the distinction between gross
negligence and negligence is something only a lawyer could love."
He assured the Committee that the adoption of Senator Taylor's
language would not prevent "a lawyer from suing the State for
anything" that could be sued in court currently. He declared that
this language "would change nothing in the effect of the law"
except that the State would be forced to defend itself at a great
deal of expense. He furthered that the Court's instruction to the
jury regarding the difference between negligence and gross
negligence "would be meaningless at that point" because the State
would have spent a large amount of money to defend itself, and the
jury "operates just as much from emotion as facts…." He stated that
"from a trial lawyer's point of view," the proposed language in
Version I would "ratify what the Alaska Supreme Court has done"
that the State "is trying to undo."
Senator Hoffman voiced appreciation for Senator Taylor's efforts in
addressing this concern. He stated that the Department appears to
be focusing on preventing lawsuits in order to save the State
money. He voiced concern regarding this position as he attested
that some lawsuits might have merit.
Mr. Nordstrand responded that, "right and wrong is a function of
the policies … we choose." He stated that part of the choice today
"is whether we are going to buy fire trucks or pay lawyers" to sue
the State. He informed that federal firefighters, municipal
firefighters and municipalities have complete immunity from
lawsuits such as the recent fire-related lawsuit, Millers Reach vs.
State of Alaska. He continued that were the State to retain
municipal firefighters, they would be immune. Continuing, he
declared, "the only" ones not immune are State firefighters and the
State. He noted that while the Legislature "has no power" to change
the immunity status of federal firefighters, it could address the
municipality immunity status. However, he declared "those two
policies reflect sound policy thinking." He listed numerous states
that have adopted immunity policies, and he suggested that this
policy stance reflects the reality of limited resources and the
limited number of firefighters. He declared that these limited
resources are an issue that the State, with its vast size, must
consider. He noted that the Millers Reach lawsuit argued that the
State should have used its resources differently. He stated that
the adoption of the Version I committee substitute would allow
lawyers to continue to argue this point.
SFC 03 # 104, Side B 09:34 AM
Mr. Nordstrand specified that the policy being addressed in this
legislation is how the State should be spending its money. He urged
the Committee to spend it on firefighters rather than lawyers and
lawsuits.
Senator Hoffman asked whether Mr. Nordstrand would view the
Department of Public Safety's search and rescue missions in the
same manner.
Mr. Nordstrand responded that it would be "the same premise." He
continued that were a state the size of Alaska to invest heavily in
its search and rescue efforts by strategically placing teams
throughout the State, and guarantee that its response "would be
absolutely perfect every time, it would serve "to eliminate the
liability." He theorized that were the State a private contractor
who was hired to prevent, but did not prevent, a building from
burning down, there would be liability. However, he argued that the
State is not a private contractor, but "is charged with this duty."
He stressed that the State would "always fight fires" and conduct
search and rescue missions even though it is not an obligation
mandated by State statute.
Senator Hoffman commented that while the State has won lawsuits
involving firefighting efforts, it lost the search and rescue
lawsuit of Nancy Kiokun and Cynthia Olrun vs. State of Alaska
Department of Public Safety (S09044, April 5, 1999). He asked
whether the law should be changed in order to reverse judgments
such as this one and prevent such lawsuits from being presented.
Mr. Nordstrand responded that he is unaware of the particulars of
that case; however, he mentioned that its Alaska Superior Court
decision is currently under review by the Alaska Supreme Court. He
stated that it would be inappropriate to judge the State of
Alaska's laws on the basis on one lawsuit.
Senator Hoffman asked whether action on this legislation could be
delayed until the Supreme Court has made its decision on the
aforementioned case, as he expressed that, were the Supreme Court
to rule in favor of the State, action on this legislation might "be
irrelevant."
Mr. Nordstrand opined, "that it is the Legislature's role to define
the policy of sovereign immunity." Furthermore, he stated, "it is
the Legislature's role rather than the Alaska Supreme Court's role
to say what the State could and could not be sued for.
Senator Hoffman pointed out that it is the Legislature's role to
decide how far the State should go "in trying to protect some of
our citizens."
Mr. Nordstrand agreed.
Senator Taylor asserted that, "we're all aware of the distinction
and the need for sovereign immunity." Otherwise, he declared,
Legislators "could be sued for decisions that are made in the
Legislature." However, he avowed that "historically, this has been
reserved for discretionary decisions" such as how a highway would
be designed. Furthermore, he continued that once the highway is
built, the State is responsible for maintaining it and keeping it
safe for travel when road conditions are treacherous. He declared
that, were individuals harmed because of State employee negligence,
"there is a right of suit today."
Mr. Nordstrand concurred and stated that his Division is handling
"a number of cases just like that."
Senator Taylor commented that a former Legislator brought suit
against the State and won the case after his wife was killed on a
poorly-maintained-for-conditions State road. He argued that while
the State road system is a very valuable resource, the State has
limited highway maintenance resources. Therefore, he argued that,
"every State highway should be immune from suit." He declared that,
"the public would react terribly" to this decision. He stated that
the public has a right to sue the State as well as the federal
government for the negligence of their employees. He opined that
were State employees to act with gross negligence in a fire
fighting scenario or a search and rescue mission due to being on
drugs or being despondent about a personal matter, then the State
should be held liable. He noted that even "good Samaritans" are
held to standards that they conduct themselves in a non-reckless
manner. Therefore, he questioned "the legal justification" for not
holding the State to that same standard.
Mr. Nordstrand voiced that these unique activities are wrought with
danger and "with enormous consequences." He stressed that
individuals participating in fire fighting, search and rescue, and
civil defense activities must be committed to the activity rather
than being concerned that their action or involvement might result
in a lawsuit. He stated that were this the case, people might
choose not to respond to these "very dangerous activities that
involve enormous judgment," and "enormous allocation of limited
resources." He asserted that, "in these particular areas, the State
should not absorb the liability because the risks to the treasury
as opposed to the risks of not, are too great." He reiterated that
in response to the question of whether someone could commit gross
negligence, he reiterated that it would be difficult to distinguish
the difference between being negligent or grossly negligent would
accomplish as a State policy matter because, he declared, the
question is whether it would be good State policy to fund lawsuit
defense rather than to provide such things as equipment.
Senator Taylor commented that he would prefer to maintain the
standard of simple negligence; however, he determined that it would
be too difficult for the State to avoid damages caused by summary
judgment actions. He characterized this legislation "as a sales
pitch on the utilization of State resources," rather than having
anything to do with the State's liability for injury, death, or
property damage that might occur as the result of "someone's stupid
mistake." He asked what monitoring system is in place to hold
employees accountable for their actions. Continuing, he questioned
the reasoning for labeling the activities addressed in the
legislation as "so precious" that they could not be held to any
standard at all.
Senator Taylor asked what would be unique about a situation wherein
a pilot committed an act of gross negligence that caused people to
die. He voiced that the State has approximately 50 aircraft in its
fleet and that, were something to happen to an employee involved
with those aircraft, they would be covered by the State's worker's
compensation schedule; however, he noted that, currently, the State
would be liable were a non-State employee injured while traveling
with a State pilot who might commit pilot error or negligence. He
declared that the reason that this legislation is addressing this
issue now is because the State "got sued," and he asserted that a
standard should be established to address a situation wherein gross
negligence is an issue. He concluded that no argument has been
presented to satisfy his concern regarding "this level of
immunity."
Co-Chair Wilken commented that the language included in Version "I"
of the bill as opposed to that of Version "A" addresses the point
that Senator Taylor is making.
Senator Olson voiced concern regarding State efforts to ensure that
adequate oversight in search and rescue operations exists.
Furthermore, he asked whether search and rescue operations, in
light of resource shortages, should be transferred from the
Department of Public Safety to another authority.
Mr. Nordstrand responded that the Department is not advocating for
search and rescue operations to be moved to another authority. He
stated that the Civil Air Patrol and the National Guard conduct a
large amount of these operations. Furthermore, he noted that
although Department aircraft might be involved in a search, limited
manpower resources are provided to the endeavor, particularly, he
noted, in rural areas. He stressed that the primary role of the
Department is to coordinate activities.
Senator Olson opined that contrary to Mr. Nordstrand's comments,
non-Department aircraft are primarily used in search and rescue
operations in his district.
Senator Taylor stated that, in light of the fact "that the State is
not constitutionally mandated to" provide these services, the State
could contract with the private sector to conduct search and
rescue, firefighting, and air transportation efforts. He questioned
whether these entities could therefore be "granted total, absolute
immunity no matter what they did or how they did it."
Mr. Nordstrand responded that he is unsure of how this would be
addressed, although he noted that this legislation would provide
immunity to agents of the State as well as volunteers engaged in
search and rescue efforts. Furthermore, he noted that liability
language would be specified in the contract between the State and
the contractor.
Senator Taylor stated that "of course," the State would write a
contract specifying that the for-profit contractor would be
responsible for the entirety of their actions. The contract, he
attested, along with legislation providing the State with absolute
immunity, would guarantee that the State could not be held liable.
Therefore, he continued, rather than the issue being whether the
State would be protected from legal action, the issue would be
whether the State would grant the for-profit private contractor
total immunity from lawsuit for actions conducted on behalf of the
State. Continuing, he pointed out that he knows a private fire
service contractor who operated in Ketchikan for twenty-five years
"who knew full well" that he would be held liable for his actions.
Senator Olson asked regarding the liability of the contracted-for
search and rescue operations that are conducted in the Norton Sound
Borough.
Senator Taylor interjected that the question is whether the private
contractor operating on behalf of the State would be held to a
quality standard or would be granted, "total blanket immunity."
Mr. Nordstrand replied that, regardless of the means being used for
fire suppression, search and rescue operations, or for civil
defense, "the policy at issue would be the same: that with the
absence of complete resources" to have "all the ability to pay" or
"to be everywhere with unlimited resources" and "to be absolutely
positively certain" that no mistakes would be made, there should be
limits on liability to the entity providing these services.
Senator Taylor moved to adopt the Version "I" committee substitute
as the working document.
Co-Chair Wilken and Co-Chair Green objected.
Co-Chair Wilken stated that the aforementioned language regarding
gross negligence or misconduct is included in at least six
different places in the Version "I" committee substitute. He asked
for confirmation that the addition of this language would be the
only change from Version "A" of the bill.
Senator Taylor confirmed.
Co-Chair Green commented that were the Version "I" committee
substitute adopted, she would be "very interested" in de-activating
fire fighting service, search and rescue service, and any other
service that is offered in the State wherein the State is "the only
entity that is liable." She stated that the federal government and
municipalities would not be liable in these situations; and
therefore, she stressed that it would be unacceptable for the State
to be liable.
Senator Taylor declared therefore, that the State should not be
held liable for any of the functions provided by the State such as
the road system. He asserted that the State has the right to exempt
itself from liability for its road system as well as to any
negligence committed by employees of the Department of
Transportation and Public Facilities.
Co-Chair Green asserted that granting total immunity to the State
for the entirety of its services is not the issue, as she declared
that the routine operations of the State are "a totally different
forum of decision making" than the ones being addressed in this
legislation.
A roll call was taken on the motion to adopt the Version "I"
committee substitute.
IN FAVOR: Senator Hoffman, Senator Olson, and Senator Taylor
OPPOSED: Senator B. Stevens, Senator Bunde, Co-Chair Green, and
Co-Chair Wilken
The motion FAILED (3-4)
The committee substitute Version "I" failed to be adopted.
Senator Taylor moved to report the bill from Committee.
Senator Taylor objected to his motion. He stated that it is
"ludicrous" for the State to resolve litigation against the State
by addressing it with yet another immunity bill. He declared that
some of these bills "are introduced in the middle of the
litigation" process. He voiced discomfort with telling the citizens
of the State that the State has awarded itself blanket immunity for
its actions.
Senator Olson shared that in his personal experience of
participation on search and rescue missions, while some of the
operations have been directed "very well," others "certainly had
room for improvement."
A roll call was taken on the motion.
IN FAVOR: Senator B. Stevens, Senator Bunde, Co-Chair Green, and
Co-Chair Wilken
OPPOSED: Senator Hoffman, Senator Olson, and Senator Taylor
The motion PASSED (4-3).
CS HB 245 (JUD)(efd fld) was REPORTED from Committee with zero
fiscal note #1 from the Department of Law, zero fiscal note #2 from
the Department of Natural Resources, and indeterminate fiscal note
#3 from the Department of Administration.
AT EASE 10:00 AM / 10:00 AM
CS FOR HOUSE BILL NO. 267(FIN)
"An Act authorizing the Alaska Railroad Corporation to provide
financing for the acquisition, construction, improvement,
maintenance, equipping, and operation of a natural gas
pipeline and related facilities for the transportation of
natural gas recovered from the North Slope of this state;
authorizing the Alaska Railroad Corporation to issue bonds to
finance those facilities; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation would authorize the
Alaska Railroad Corporation to issue bonds not to exceed $17
billion for the construction of an Alaska natural gas pipeline.
REPRESENTATIVE VIC KOHRING, the bill's sponsor, informed that this
bill would authorize the Railroad to issue bonds to provide
financing for the construction of a natural gas pipeline. He stated
that in addition to this bill, additional pieces of legislation
such as the Stranded Gas Act bill and bills to streamline State-
permitting regulations are being addressed by the Legislature to
enable this project to proceed.
Representative Kohring stated that this bill would allow for the
issuance of up to $17 billion in tax-exempt bonds, and he noted
that the low interest rates that are currently available would
benefit the State. He communicated that the sale of these bonds
would generate capital that the State would then use to provide low
interest rate loans to private developers. He informed that these
private developers, rather than the State of Alaska, would be
responsible for building the pipeline. Furthermore, he specified
that these bonds would be classified as "non-recourse debt,"
meaning that the developers rather than the State or the Alaska
Railroad would be responsible for the bond debt. Additionally, he
clarified that this type of bond program specifies that no liens
could be placed upon State or Railroad assets. He shared that the
cost of building the pipeline is estimated to range between $12
billion and $30 billion.
Representative Kohring furthered that the bonds would not be issued
without guarantees that the contractor could pay back the money,
and he specified that the legislation would additionally require
that reserves must be maintained for the payments on those bonds.
Representative Kohring referenced a letter from a Seattle-based
bonding company, George K Baum & Company, addressed to
Representative John Harris, the Co-Chair of the House Finance
Committee, dated January 30, 2003 (copy on file) that determined,
upon evaluation, that the viability of these bonds could be
maintained. Furthermore, he stated that a letter he had received
from Conoco Phillips Alaska, dated May 6, 2003 (copy on file) is
indicative of industry support for this mode of funding option for
the pipeline project.
Representative Kohring reminded the Committee that the authority to
issue tax-exempt bonds was granted by the federal government in
1983 when it transferred the ownership of the Alaska Railroad to
the State. He declared that this legislation would incur no cost to
the State, although he noted that the accompanying Department of
Community and Economic Development fiscal note specifies that in FY
06 there would be an expense of $163 million. He specified,
however, that this would not be an expense to the State as, "this
amount would be rolled into the entire financing package." He
reiterated that this non-recourse debt would not incur any
liability on the State.
Representative Kohring informed the Committee that the Alaska
Railroad Corporation supports this bill.
Senator Bunde asked for further information regarding the bill's
fiscal note, as he stated that it is unusual that no liability or
financial obligation would be incurred by the State or, in this
situation, the Railroad.
BILL O'LEARY, Chief Financial Officer, Alaska Railroad Corporation,
Department of Community and Economic Development, testified via
teleconference from an offnet site in Anchorage and explained that
although the Railroad would be the issuer of the non-recourse
revenue bond financing, or what he referred to as conduit
financing, the underlying credit for the transaction would be that
of the producers or pipeline investors. He specified that the
investors would purchase the bonds after reviewing the project and
determining that it would support the repayment of the debt.
Senator Bunde asked how allowing the Railroad to issue these bonds
would benefit the bond purchasers; specifically whether a lower
interest rate could be offered to the purchasers.
Mr. O'Leary noted that the Railroad's issuance of these bonds would
provide tax-exempt financing for the project. He continued that
this type of funding "has historically been significantly cheaper
financing than going out in the taxable debt market." Furthermore,
he stated that furthering the gas pipeline endeavor meshes with the
Railroad's mission of furthering economic development in the State.
Senator Bunde asked whether this conduit financing would impact the
Railroad's ability to fund future projects.
Mr. O'Leary specified that this process would not impact the
railroad's ability to borrow money as it is considered a project-
based, stand-alone situation, and as such, he continued, it would
not negatively impact the Railroad's funding of other projects or
other stand-alone projects.
Senator Bunde surmised that this endeavor would generate additional
work for the Railroad.
Mr. O'Leary voiced that the Railroad "hopes to see a significant
portion of benefit" from the project in terms of increased
workloads such as freight hauls. Furthermore, he stated that the
Railroad would benefit from being required to upgrade rails and
existing infrastructure in order to accommodate the project's
needs. He stated that transporting the heavy pipe that would be
used for the pipeline would place extra demands on the existing
railroad.
Senator Bunde puzzled as to how the expense of being required to
upgrade the railroad would be a benefit. He stated that he has
never felt comfortable with "a free lunch."
Senator Taylor interjected that he does not belief this is a free
lunch scenario. He asked whether the railroad would be allowed to
charge a fee for the service of issuing these unique tax-free
bonds.
Mr. O'Leary responded that the Railroad considers it appropriate to
charge an administrative fee. He furthered that the proceeds from
this fee would be used to help finance the upgrades to the system.
Senator Taylor acknowledged. He declared that this should negate
the earlier concern regarding the cost of upgrading the system. He
suggested that one-half or three-quarters of one percent on a $17
billion issue would generate significant income. He asserted that
the railroad should be well paid for financing this project and
that this would be "a wonderful income stream for the railroad" to
use to upgrade and extend its system which would provide the State
with further development opportunities.
Co-Chair Green clarified that the Railroad did not originate this
legislation, but "was told to do this." She noted that a recent
report in the Alaska Oil and Gas Reporter (copy not provided) noted
that the Railroad has never used its tax-exempt bond authority.
Furthermore, she shared that the Reported specified, "that a
favorable ruling from the US IRS (United States Internal Revenue
Service) would be required" in order for the bonds to be granted
the tax-exempt status.
Representative Kohring concurred and responded that the letter from
the IRS has not yet arrived.
Co-Chair Green asked whether the letter has been requested.
PAUL FUHS, Representative, Yukon Pacific Corporation, explained to
the Committee that the tax-exempt bond authority language in this
legislation is purposefully "very specific to the natural gas
pipeline project." He explained that the letter to the IRS has not
yet been submitted, because he attested "that you really don't want
to trigger that discussion until you apply to do it."
Co-Chair Green understood, therefore that were a favorable ruling
not forthcoming, the tax-exempt bond authority status would be
limited to approximately a quarter of the full loan amount.
Mr. Fuhs confirmed. However, he shared that after discussing the
issue with Alaska's Congressional delegation and other individuals
"who wrote the law," this proposal would be viewed as a legal tax-
exempt situation. He shared that the Bonneville Dam Authority is
the only other entity in the nation that has "this very rare tax
provision." He stated therefore, that when the provision is used,
it is imperative that it be used for a substantial project that
would not garner attention and prompt "someone to come in and
change the law."
Co-Chair Green asked whether there is contingency language or
whether the project would be stopped were a favorable IRS ruling
not forthcoming.
Mr. Fuhs responded that, "it's all or nothing."
Co-Chair Green asked whether, in addition to the Alaska Railroad,
the Alaska Pipeline Authority has the power to issue bonds.
Mr. Fuhs responded that the Alaska Pipeline Authority has the
ability to issue non-recourse bonds; however, he clarified that
"they do not have the federal tax loophole that the Railroad has."
He stressed that the Railroad has "a very rare provision."
Mr. Fuhs pointed out that the Railroad has "the federal tax
loophole, but it does not have the authority in statute to issue
these bonds." Providing that authority, he stated, is another
important provision in this bill.
Senator Bunde stated that testimony specifying, "that this is a
one-shot deal," appears to contradict earlier testimony that the
Railroad could issue these types of bonds for other projects. He
asserted that were this to be a one-time opportunity, it could be
argued that it would negatively "impact the Railroad's ability" to
fund other large projects in the future.
Co-Chair Green understood that were another large project
identified, the Railroad could again seek US IRS approval to use
these types of bonds for that project.
Mr. Fuhs clarified that rather than being a one-time bonding
opportunity, this legislation specifically identifies that the
bonds being requested would be used to fund a gas pipeline project.
He continued that were the Legislature to determine that the
Railroad's unique bonding ability could be used to fund another
project, that project could be authorized, and the IRS could be
petitioned to grant approval specific to that project.
Senator Bunde surmised that while the Legislature could grant
authority to the Railroad for a future project, the IRS might not
approve it.
Senator Taylor asked for clarification that the Legislature must
grant specific authority before the Railroad could issue these
bonds.
Mr. Fuhs clarified that "very specific authority" from the
Legislature must be granted in order for the Railroad to issue
these bonds.
Senator Taylor pointed out that were this funding mechanism desired
to fund another project, specific authority would again have to be
granted by the Legislature for that unique project.
Mr. Fuhs confirmed that Legislative authority would again be
required.
Mr. O'Leary concurred. He specified that the Railroad must acquire
Legislative approval before it could issue any bonds.
Senator Taylor stated that in addition to Legislative approval, the
IRS must agree that this bonding authority is the "appropriate
mechanism" with which to fund the project.
Representative Kohring pointed out that the availability of these
tax-exempt low interest bonds would serve as an incentive to the
industry to build the pipeline, as it is projected to save the
industry one billion dollars.
Senator Taylor asked whether a specific gas pipeline route is
identified in the legislation.
Representative Kohring communicated that the routing is open.
Senator Bunde asked whether the one billion dollars that the
industry is projected to save from the availability of these low
interest, tax-exempt bonds is factored into the fiscal note
analysis.
Mr. Fuhs informed that the administrative fee is not specified;
however, he stated that the savings to the project, as estimated in
the aforementioned George K. Baum financial analysis, "are
projected to be approximately two percent overall" on the return on
investment. He continued that, whereas Senator Taylor suggested
that a one-half or three-quarters percent interest be imposed as an
administrative fee, the Railroad estimates that an administrative
fee of one-tenth of a percent would generate sufficient funding to
conduct the "legitimate" system upgrades the project would require.
Senator Bunde opined that were the total cost to upgrade the rails
a known number, it should be reflected in the bill. He asserted
that the Railroad should be "upfront" on the amount, and he
suggested that the administrative fee should be just below the
maximum taxable bond level allowed.
Senator Taylor moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, CS HB 267 (FIN) was REPORTED from
Committee with zero fiscal note #1 from the Department of Community
and Economic Development.
SENATE CS FOR CS FOR HOUSE BILL NO. 234(L&C)
"An Act relocating the Alcoholic Beverage Control Board from
the Department of Revenue to the Department of Public Safety;
extending the termination date of the Alcoholic Beverage
Control Board; relating to the sale of beer manufactured at a
brewpub; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken informed that Representative Lesil McGuire sponsors
this legislation. He noted that the Committee would be entertaining
a committee substitute that would allow brewpubs to brew their beer
off-site and to sell their beer in quantities of not more than five
gallons a day. In addition, he specified that the forthcoming
committee substitute would extend the Alcoholic Beverage Control
(ABC) Board for one year, and would address other issues raised in
the "Department of Revenue Alcoholic Beverage Control Board Sunset
Review" audit (copy on file), dated November 29, 2002 that was
conducted by the Division of Legislative Audit.
Co-Chair Green moved to adopt the committee substitute for HB 234,
Version 23-LS0862\E as the working document.
Senator Taylor objected for explanation.
HEATH HILYARD, Staff to Representative Lesil McGuire, the bill's
sponsor, explained that the Version "E" committee substitute would
transfer the ABC Board from the Department of Revenue to the
Department of Public Safety.
SFC 03 # 105, Side A 10:23 AM
Mr. Hiyard furthered that, in addition to shifting the ABC Board to
the Department of Public Safety, Version "E" also eliminates
accompanying language beginning on line eight of Section 1. The
revised language in Version "E" reads as follows.
Section 1. AS04.06.010 is amended to read:
Sec. 04.06.010. Establishment of board. There is established
in the Department of Public Safety the [THE] Alcoholic
Beverage Control Board [IS ESTABLISHED] as a regulatory and
quasi-judicial agency. The Board is in the Department of
Public Safety [REVENUE, BUT FOR ADMINISTRATIVW PURPOSES ONLY].
New Text Underlined [DELETED TEXT BRACKETED]
Mr. Hiyard stated that "but for Administrative purposes only."
would be deleted in order to provide the Commissioner and the
Department with expanded discretionary ability regarding the
oversight of the activities and investigations of the ABC Board. He
noted that [unspecified] changes in Section 2 of the bill have been
discussed in other committee hearings and are acceptable to the
sponsor. He expressed that Representative McGuire would defer to
the judgment of the Committee, her position on the committee
substitute and any proposed amendments. He stated that the sponsor
supports the reauthorization of the ABC Board and correcting the
disparities between brewpubs.
Co-Chair Wilken understood that, with the exception of one item in
the bill that "is not important at this time," the Version "E"
committee substitute would return the bill's language regarding the
ABC Board to that as originally proposed by Governor Frank
Murkowski.
WILLIAM TANDESKE, Commissioner, Department of Public Safety, stated
that this is correct. He noted that the Commissioner of the
Department of Revenue initiated the proposal by inquiring as to
whether the Department of Public Safety could assume responsibility
of the ABC Board as part of the new Administration's endeavor to
realign functions within State departments. He stated that he had
responded affirmatively to the request as, he stated, in his 26-
years of experience as an Alaska State Trooper, he understood the
Department of Public Safety's involvement in alcohol and Title IV
issues. He stated that during discussions regarding how to make the
transfer of the ABC Board to his Department as productive as
possible, concerns arose regarding language in Title IV.
Mr. Tandeske referenced concerns and recommendations of the Alaska
Criminal Justice Assessment Commission in a May 2000 report [not
provided] are identified on page 22 of the Audit. The Commission,
he noted, recommended that the criminal investigation function of
the Board be transferred to the Department of Public Safety and, in
addition, suggested that the Board membership be increased from
five members to seven as a result of the Commission's concern that
"historically …. at least one other member of the board has created
a majority for alcohol dispenser interest because of past
experience in the industry" as the result of two industry members
sitting on the Board as required by the AS 04.06.020 mandate that
two board members must be actively engaged in the alcoholic
beverage industry. He stated that the Commission suggested that the
two new members be non-industry members: one of which should
represent the public health or medical community and the other to
represent the law enforcement community in order to "better protect
the public interest."
Commissioner Tandeske communicated that it is the "Administration's
desire to instill two State cabinet members on the Board by
specifying that the Commissioners of the Department of Public
Safety and the Department of Revenue be members of the Board "as
well."
Commissioner Tandeske agreed with findings on pages nine and
nineteen of the Audit, that criminal investigations regarding such
things as prostitution and gambling, are best served by the law
enforcement agency rather than "a four-person team of alcohol law
investigators."
Commissioner Tandeske continued that the third issue addressed in
this legislation pertains to the nine State classified employees
who support the ABC Board. He stated that by clarifying that these
employees, who would be members of the Department of Public Safety
and thereby obligated to adhere to Department policy standards,
would enhance these employees' ability to properly function within
the Department and assure that they would be able to access such
things as important and pertinent Department case management and
tracking records.
Co-Chair Wilken asked regarding the omission of language in the
committee substitute specifying that the Commissioners of the
Department of Public Safety and the Department of Revenue could
appoint a designee to represent them on the ABC Board.
Commissioner Tandeske voiced that incorporating language regarding
the ability to appoint a designee would be "a good idea." He
informed that the Commissioner of the Department of Revenue
requested this language.
Co-Chair Wilken clarified however, that this language is not
included in Version E.
Amendment #1: This conceptual amendment inserts "or the
Commissioner's designee" into Section 2, line 13 of the Version "E"
committee substitute. The revised language would read as follows.
Sec. 2. AS 04.06.020 is amended to read:
Sec. 04.06.020. Appointment and qualifications. The board
consists of seven [FIVE] members. Five members shall be
appointed by the governor, one member shall be the
commissioner of public safety or commissioner's designee, and
one member shall be the commissioner of revenue or
commissioner's designee…
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Wilken moved for the adoption of Amendment #1.
Senator Taylor objected. He voiced that while he supports the
concept of transferring the ABC Board to the Department of Public
Safety and addressing the issue of brewpubs, he disagreed with the
language specifying that the two members being added to the ABC
Board would be the Commissioners of the Department of Public Safety
and the Department of Revenue. He declared that this is not an
Audit recommendation and "appears to be just a takeover by the two
Commissioners or their designees of the five-member Board"…and then
shifting it to a four-member majority and "totaling changing policy
and regulation."
Co-Chair Wilken moved and asked unanimous consent to withdraw
Amendment #1 in order to further discuss the point raised by
Senator Taylor regarding the ABC Board. He noted that the proposed
changes to the Board are included in Sections 2 through 5 of the
Version "E" committee substitute.
There being no objection, Amendment #1 was WITHDRAWN.
Commissioner Tandeske declared that this is not an attempt by the
Commissioners to "take over the Board any more than having a
mandatory two-industry members self-regulating their industry is
any more of an option for a takeover of policy and industry." He
continued that rather it "could be characterized as a check and
balance" measure.
Senator Taylor asked whether this proposal has been discussed with
the industry or organizations that are being regulated.
DOUG GRIFFIN, Director, Alcoholic Beverage Control Board,
Department of Revenue, testified via teleconference from an offnet
site and informed the Committee that the addition of the
Commissioners of Department of Public Safety and Department of
Revenue has not been discussed with the Board.
Senator Taylor reiterated his concern. He argued that a bill of
this nature, being presented toward the end of this Legislative
session, is disconcerting.
Amendment #2: This amendment deletes Sections 2 through 5 of the
Version "E" committee substitute, beginning on page 1, line 10 and
continuing through page 2, line 27. This language reads as follows.
Sec. 2. AS 04.06.020 is amended to read:
Sec. 04.06.020. Appointment and qualifications. The board
consists of seven [FIVE] members. Five members shall be
appointed by the governor, one member shall be the
commissioner of public safety, and one member shall be the
commissioner of revenue. All members except for the
commissioner of public safety and the commissioner of revenue
shall be [AND] confirmed by a majority of the members of the
legislature in joint session. Except for the commissioner of
public safety and the commissioner of revenue, a [A] member of
the board may not hold any other state or federal office,
either elective or appointive. Two members of the board shall
be persons actively engaged in the alcoholic beverage
industry, except that no member may hold a wholesale license
or be an officer, agent, or employee of a wholesale alcoholic
beverage enterprise. No three members of the board may be
engaged in the same business, occupation, or profession. At
least three members of the board shall represent the general
public. A board member representing the general public or an
immediate family member of a board member representing the
general public may not have any financial interest in the
alcoholic beverage industry. In this section, "immediate
family member" means a spouse, child, or parent.
Sec. 3. AS 04.06.030(a) is amended to read:
(a) Except for the commissioners of public safety
and revenue, members [MEMBERS] of the board shall be appointed
for overlapping terms of three years.
Sec. 4. AS 04.06.040 is amended to read:
Sec. 04.06.040. Per diem and expenses. Members of the
board do not receive a salary, but are entitled to per diem
and travel expenses authorized by law for other boards and
commissions. This section does not apply to a member of the
board who is the commissioner of public safety or the
commissioner of revenue.
Sec. 5. AS 04.06.060 is amended to read:
Sec.04.06.060. Quorum and majority. Four [THREE] members
of the board constitute a quorum for the conduct of business,
except that a majority of the whole membership of the board
must approve all applications for new licenses, and all
renewals, transfers, suspensions, and revocations of existing
licenses. If a majority of the board is present, and voting,
the director, with the consent of the members present, may
cast a tie-breaking vote.
New Text Underlined [DELETED TEXT BRACKETED]
Senator Taylor moved Amendment #2. He objected to his motion for
purposes of discussion
Co-Chair Wilken also objected.
Senator Taylor avowed that the Version "E" committee substitute "is
a major policy change." He opined that increasing the Board from
five to seven members and changing the quorum requirements from
three members to four members would serve to "stack the Board." He
noted that the ABC Board has served the State well for 42-years. He
questioned whether this "major policy shift" was the intent of the
sponsor, as he asserted that, were it the intent, an "extensive"
discussion would have transpired. Continuing, he declared that were
the Commissioners appointed to the Board as non-voting members he
could accept the language; however, he continued that appointing
the Commissioners to the Board as voting members whose terms do not
expire as opposed to the three-year rotation required of other
members, is "a big policy call" to which, he continued, the
industry should be able to respond. He suggested that the bill be
held for further consideration during the following year's
Legislative session, rather than being addressed during this
Legislative session, "at the last minute."
Mr. Griffin commented that, in addition to the issues that have
been discussed, the bill would provide a one-year extension of the
Board. This, he noted, would allow the Board to "get back to work,"
and "address some of the issues raised in the Audit" as well as
providing "a short window" of time for the Board to adjust being
transitioned from the Department of Revenue to the Department of
Public Safety. He qualified that the Board would prefer a longer
extension period; however, he noted that the Board would abide by
the will of the Legislature and Governor Murkowski's
Administration.
Co-Chair Wilken noted that an Amendment is on the table, and he
ordered the bill SET ASIDE.
[Note: This bill was heard again later in the meeting.]
RECESS TO THE CALL OF THE CHAIR: 10:39 AM / 12:45 PM
SENATE CS FOR CS FOR HOUSE BILL NO. 234(L&C)
"An Act relocating the Alcoholic Beverage Control Board from
the Department of Revenue to the Department of Public Safety;
extending the termination date of the Alcoholic Beverage
Control Board; relating to the sale of beer manufactured at a
brewpub; and providing for an effective date."
The bill was again before the Committee.
Co-Chair Wilken moved to withdraw the motion to adopt the Version
"E" committee substitute.
There being no objection, the motion was withdrawn.
Senator Bunde moved to report the Senate Labor and Commerce
committee substitute for HB 234, Version 23-LS0862\C from Committee
with individual recommendations and accompanying fiscal notes.
There being no objection, SCS CS HB 234(L&C) was REPORTED from
Committee with zero fiscal note #1 from the Department of Revenue
and indeterminate fiscal note #2 from the Department of Public
Safety.
RECESS TO THE CALL OF THE CHAIR: 12:47 PM / 7:49 PM
CS FOR HOUSE BILL NO. 162(RLS) am
"An Act relating to fees adopted by the Department of Natural
Resources under AS 44.37.025 or 44.37.027 and to business
license fees; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that the House Rules Committee at the
request of the Governor presents this bill. He stated that the bill
would establish a $100 annual license fee for all business
categories and a $50 annual license fee for business whose sole
proprietor is 65 years of age or older within one year of the
license application. In addition, he stated that the bill would
allow the Recorder's Office in the Department of Natural Resources
to charge fees in excess of the average cost of operation.
RICK URION, Director, Division of Occupational Licensing,
Department of Community and Economic Development informed the
Committee that the annual business license fee has been $25 since
1949. He communicated that the Administration has determined that
this legislation is a legitimate means of raising State revenue and
would be easier to administer than basing a fee on the number of
employees or the type of business. He noted that consideration is
provided for sole proprietor businesses owned by senior citizens,
aged 65 or older. He stated that the bill is "reasonable," and he
urged passage of the legislation.
Senator Bunde asked for further information regarding language in
Section 1 pertaining to the Recorders fees in the Department of
Natural Resources.
NICO BUS, Administrative Services Manager, Division of Support
Services, Department of Natural Resources communicated that during
the past several years, the Recorder's Office has experienced an
increase in the number of documents being received as well as an
increase in the size of documents being requested. He shared that
this has resulted in a "significant" increase in Department
expenses. He stated that this proposal would allow the Department
to apply fees in excess of the cost, and thereby enable the
Department to study the situation and further align fees with the
cost of the service as well as establishing a fee structure would
encourage entities to address document size.
Senator Bunde pointed out that the Senate Labor & Commerce
Committee version of the bill would have generated more money for
the State. In addition, he questioned the provision that allows
senior citizens to pay a lower business license fee, as he
understands that there are a lot of "wealthy" Alaskan seniors who
buy business licenses.
Senator Taylor moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS HB 162(RLS) am was REPORTED from
Committee with zero fiscal note #2 from the Department of Natural
Resources and fiscal note #4 in the amount of $193,400 from the
Department of Community and Economic Development.
CSHB 111(JUD) AM
"An Act relating to policies in telecommunications
regulations; extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation would extend the
Regulatory Commission of Alaska (RCA) to June 30, 2007 and require
the RCA to review regulations pertaining to telecommunications
regulations and present proposed regulations on the matter no later
than November 15, 2003. In addition, he removed himself from the
discussion on this bill due to the fact that there is a conflict of
interest because he is "a minority shareholder in a utility that is
regulated by the RCA."
AT EASE 7:54 PM / 7:54 PM
[NOTE: Vice-Chair Bunde chaired this portion of the meeting.]
Senator Taylor moved to report the bill from Committee with
individual recommendations and attached fiscal notes. He objected
to allow for testimony.
PATRICK LUBA, Legislative Representative, AARP, testified that AARP
supports the four-year extension of the RCA. He asserted that the
RCA is an "essential" entity because it is the only place where
consumers could go to present concerns regarding a public utility.
He asserted that the consumers need the Commission.
Senator Bunde voiced the understanding that the Administration
supports the original version of this bill as opposed to the House
Judiciary committee substitute. He asked for an explanation
regarding the Administration's preference.
DANIEL PATRICK O'TIERNEY, Senior Assistant Attorney General,
Regulatory Affairs Section, Department of Law stated that the
original bill "simply sought a four-year extension of the RCA." He
noted that the committee substitute before the Committee
additionally "tasks the RCA with other interim duties." He noted
that the Administration objects because these other duties are
perceived to be "one-sided and over-reaching" in that they give
"one of the market players an advantage." He stated that the
Administration considers this to be "problematic."
Senator Bunde clarified that a new fiscal note accompanies the
bill.
Senator Taylor removed his objection. He clarified that his motion
to move the bill specified, "attached fiscal notes."
There being no further objection, CS HS 111(JUD) am was REPORTED
from Committee with a new $6,039,200 fiscal note, dated May 19,
2003, from the Department of Community and Economic Development.
AT EASE 7:59 PM / 7:59 PM
[Co-Chair Wilken resumed chairmanship of the meeting.]
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 08:00 PM.
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