Legislature(2001 - 2002)
04/08/2002 02:05 PM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE JUDICIARY COMMITTEE
April 8, 2002
2:05 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chair
Senator Dave Donley, Vice Chair
Senator John Cowdery
Senator Gene Therriault
MEMBERS ABSENT
Senator Johnny Ellis
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 418(L&C)
"An Act amending the Alaska Corporations Code as it relates to
delivery of annual reports, notice of shareholders' meetings,
proxy statements, and other information and items to
shareholders, to voting, and to proxies, including electronic
proxy voting and proxy signing; and providing for an effective
date."
HEARD AND HELD
SENATE BILL NO. 204
"An Act relating to wildfires and other natural disasters."
MOVED SB 204 OUT OF COMMITTEE
SENATE BILL NO. 278
"An Act requiring a good faith effort to purchase property before
that property is taken through eminent domain; and providing for
an effective date."
MOVED CSSB 278(JUD) OUT OF COMMITTEE
SENATE BILL NO. 357
"An Act relating to the disposal of state land and interests in
state land; and providing for an effective date."
MOVED CSSB 357(JUD) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
HB 418 - See Labor and Commerce minutes dated 3/21/02.
SB 204 - See Judiciary minutes dated 4/30/01.
SB 278 - See Community and Regional Affairs minutes dated
2/27/02.
SB 357 - No previous action to record.
WITNESS REGISTER
Representative Lisa Murkowski
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 418.
Mr. Joe Nelson
Legal Council
Sealaska Corporation
One Sealaska Plaza, Suite 400
Juneau, AK 99801
POSITION STATEMENT: Testified in support of HB 418.
Ms. Vicki Kindseth
Staff to Senator Lyda Green
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 204.
Mr. Del Smith
Deputy Commissioner
Department of Public Safety
PO Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Testified in opposition to SB 204.
Ms. Dean Brown
Deputy Director
Division of Forestry
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Testified in opposition to SB 204.
Mr. Kevin Saxby
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Testified in opposition to SB 204.
Ms. Barbara Leiss
Palmer, AK
POSITION STATEMENT: Testified in support of SB 204.
Ms. Kim Ognisty
Staff to Senator John Torgerson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 178.
Mr. Rick Kauzlarich
Right-of-Way Chief
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Testified in opposition to SB 178.
Mr. Bill Satterburg
No address given
POSITION STATEMENT: Was online to testify on SB 178 but was not
available.
Mr. Bill Cummings
Assistant Attorney General
Transportation Section
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Testified in opposition to SB 178.
Mr. Ron Wolfe
Corporate Forester
Sealaska Corporation
One Sealaska Plaza
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 178.
Mr. Jon Tillinghast
Independent Legal Council
Sealaska Corporation
One Sealaska Plaza
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 178.
Mr. Dick Mylius
Resource Assessment & Development Manager
Division of Mining, Land And Water
Department of Natural Resources
th
550 W. 7 Ave. Ste. 1050
Anchorage, AK 99501-3579
POSITION STATEMENT: Testified on SB 357.
ACTION NARRATIVE
TAPE 02-13, SIDE A
2:05 p.m.
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee
meeting to order at 2:05 p.m. Present were Senators Cowdery and
Therriault and Chairman Taylor. Senator Donley arrived at 2:47
p.m.
The first order of business before the committee was HB 418.
HB 418-CORPORATE NOTICES/PROCEDURES/VOTING
REPRESENTATIVE LISA MURKOWSKI, Chair of the House Labor and
Commerce Committee, sponsor of HB 418, said HB 418 would help
Alaskan corporations with their management and business
operations by allowing them to offer electronic proxy voting and
deliver materials to shareholders electronically. She said this
change would be similar to corporate code changes made by 25
other states. She said it would allow for efficiencies such as
householding of shareholder information. She said she and her
sons received their annual notices from an out-of-state
corporation in which they were shareholders. She was able to
vote online for the entire family in about a minute and a half.
She was prompted for a personal identification number and her
vote. She said a lot of shareholders received their ballots and
put them in the pile of things to do and didn't get to them until
too late.
SENATOR THERRIAULT asked who would benefit monetarily from the
streamlined process.
REPRESENTATIVE MURKOWSKI said any Alaskan corporation would
benefit, including Alaska-based banks and Native corporations.
She said HB 418 originated from Sealaska because they wanted to
provide notices to their shareholders electronically.
CHAIRMAN TAYLOR asked if there were any further questions for
Representative Murkowski. There were none.
MR. JOE NELSON, legal counsel, Sealaska Corporation, said HB 418
was not a new idea and there was nothing unique in the language
of the bill. He said it was modeled after corporate codes from
across the country but came primarily from Delaware and
California codes and the Federal Communications Commission
guidelines.
CHAIRMAN TAYLOR said HB 418 would provide shareholders with
convenience and should lead to increased participation by
shareholders. He said Alaska had the highest rate of computer
ownership and Internet access in the country.
He said HB 418 would provide for many opportunities to reduce
costs. For example Sealaska could save a lot of money by
householding information. He attended a national meeting of
corporate secretaries that had a discussion panel about
householding and electronic voting. He learned that corporations
across the country were saving millions of dollars by using the
methods outlined in HB 418.
SENATOR THERRIAULT asked if Sealaska paid anything to the State
for oversight.
MR. NELSON didn't know.
SENATOR THERRIAULT thought statutes allowed the State to charge
Native corporations a fee for the oversight provided by the
Division of Banking, Securities & Corporations (DBSC). He did
not believe the State had been charging Native corporations. He
said HB 418 would be revenue neutral for the State but would
provide a savings to corporations. He said perhaps with this
savings it would be time for Native corporations to pay for
oversight like the rest of the corporations in the state.
MR. NELSON said DBSC had previously been concerned with HB 418
but those concerns related to financial impact to the State
rather than fees paid to the State. He said Sealaska and DBSC
worked out those concerns. He said DBSC had testified on HB 418
and he didn't think they had any problems with the reworked bill.
He said the current fiscal note reflected no cost to the State.
CHAIRMAN TAYLOR asked how long a proxy lasted.
MR. NELSON thought a proxy lasted 11 months unless a new proxy
was submitted. He said HB 418 wouldn't impact the length of
proxies.
CHAIRMAN TAYLOR thought HB 418 would be beneficial to all parties
involved. He said there had been a lot of discussion in the
legislature about minority shareholders who were frustrated by
the actions of management and wanted to have their views heard.
He thought HB 418 would make it easier for them to express their
views because of increased ease of communications.
CHAIRMAN TAYLOR asked if there were any further questions for Mr.
Nelson. There were none. He asked if there was anybody else who
wished to testify on HB 418. There was nobody. He asked if
there were any amendments.
SENATOR COWDERY offered the following Amendment 1.
A M E N D M E N T
OFFERED IN THE SENATE
TO: CSHB 418(L&C)
Page 5, lines 13 - 14:
Delete "executed by electronic transmission"
Page 5, line 18:
Delete "transmission; and"
Insert "proxy;"
Page 5, line 20:
Delete "transmission"
Insert "proxy, authorized an attorney-in-fact for the
shareholder, if applicable, authorized an agent under (1) of this
subsection to receive the proxy, if applicable, and authorized an
electronic transmission, if applicable; and
(3) if the corporation is using corporation money
to send out the proxy form, include
(A) on the form a line for the shareholder
to name an eligible shareholder as the holder of the
proxy; and
(B) with the form appropriate instructions
on using the line required by (A) of this paragraph,
including an instruction that the shareholder may name
a person to hold the proxy who is not a part of the
current management of the corporation"
SENATOR THERRIAULT asked if the amendment had been discussed with
the sponsor of HB 418.
REPRESENTATIVE MURKOWSKI said she had not seen the amendment
before.
CHAIRMAN TAYLOR didn't think Amendment 1 would change the intent
of HB 418. He said Amendment 1 would require the corporations to
provide a form with the appropriate instructions so that a person
who wished to could write in a proxy holder. He thought most
corporations already did so.
REPRESENTATIVE MURKOWSKI agreed that was probably what Amendment
1 would do. She asked for the source of Amendment 1.
CHAIRMAN TAYLOR understood that every Native corporation already
provided a blank line to write in proxies. However, he had heard
that Cook Inlet Region, Inc. (CIRI) didn't provide any such space
and threw away any proxies that were written in. He said he
didn't know whether that was true. He said a CIRI shareholder
had asked that shareholders be given the opportunity to name
their own proxy.
MR. NELSON thought Sealaska had always provided for write-in
proxies. He thought it was already a requirement.
SENATOR THERRIAULT asked if that was a requirement of Sealaska or
the State.
MR. NELSON said Sealaska required it. He also thought it was
provided for in State regulations.
SENATOR THERRIAULT wondered if Amendment 1 would codify State
regulations that CIRI might have been ignoring.
CHAIRMAN TAYLOR said that was his assumption but he couldn't
confirm that. He announced that the committee would hear the
bill again on Wednesday to allow time for these questions to be
answered.
HB 418 was held in committee with Amendment 1 pending.
The next order of business before the committee was SB 204.
SB 204-WILDFIRES AND NATURAL DISASTERS
MS. VICKI KINDSETH, Staff to Senator Lyda Green, sponsor of SB
204, said SB 204 addressed the concerns of residents during the
emergency management of wild fires and other natural disasters.
She said SB 204 would give decision-making powers to emergency
personnel based on information at hand to allow residents wanting
to enter an area under emergency management to do so. She said
the residents would be informed of the risks and would enter at
their own risk with the responsibility of injury or death taken
by the resident. She said the provisions for the decision-making
would be authorized by the guidelines adopted by each community.
MS. KINDSETH said the crime of unsworn falsification would be
amended to include anyone making a false statement of residency
in order to enter an area under emergency management. Immunity
from liability would be provided for state and municipal
governments, emergency service workers and organizations for the
injury or death of a person entering an area under emergency
management.
SENATOR COWDERY said people went to the Big Lake area during the
Miller's Reach fire because they were concerned about family
members. He asked if SB 204 would still allow them to be in the
area.
MS. KINDSETH said the emergency guidelines in the packets
addressed some of the questions Senator Cowdery raised. She
thought that decision would be made at the scene.
2:25 p.m.
Chairman Taylor left the meeting.
MR. DEL SMITH, Deputy Commissioner, Department of Public Safety
(DPS), said Senator Cowdery's concerns were probably the reason
SB 204 had been introduced. He said there was a confrontation
between troopers and a man who wanted to check on his grandfather
during the Lazy Mountain fire near Palmer. He recognized the
need to address those issues. He said people came to an area
concerned about their parents, children, other family members,
pets or house.
He said a committee consisting of the Department of Natural
Resources (DNR) and other agencies that responded to wildfires
was formed after the Lazy Mountain fire. He was not directly
involved with the committee but it was his desire to work out
some procedures. He said DPS was working with everyone involved
to come up with a plan to address individual emergency
situations. He met with Lazy Mountain citizens after the fire to
listen to their concerns. He said DPS was working to address
those concerns.
MR. SMITH said SB 204 would allow people to enter an area if they
were a resident of the threatened or affected area and appeared
to be capable of making a reasonable and informed decision. He
was concerned about the ability of law enforcement officers to
make that determination. He said these situations involved high
emotions on the part of both law enforcement officers and
citizens, particularly if people were concerned about their
families or property. His experience was that people in
emergency situations might not remember what they said. He
didn't like putting law enforcement officers in the position of
determining whether a person was able to make an informed
decision.
He said he had never met an emergency responder who would not try
to get someone out of a dangerous situation. He was concerned
allowing people into an area would hinder the efforts of
responders who wanted to rescue them.
He didn't think putting SB 204 into statute was the proper way to
address concerns about emergency management. He understood that
many people felt that agencies wouldn't do anything unless they
were required to by statute. But he felt that the agencies were
involved in making changes and not having anything in statute
allowed them flexibility.
He said there was also the problem of letting nonresidents into
an area under emergency management. He said SB 204 would allow
the State to charge people with making false residency statements
in order to get into an area. He noted that when a disaster was
large enough and went on long enough some people would try to get
into the area to loot unoccupied homes.
SENATOR THERRIAULT said he had the same concerns. He asked if
somebody who was let in would be issued a red vest or something
to indicate that they wished to remain in the area. He didn't
know how SB 204 was supposed to work, especially when things in
an emergency situation were moving quickly.
MR. SMITH said there were problems with emergency situations
before. He believed substantial work had gone into addressing
the problems. He wanted more flexibility in the future for
responding law enforcement officers. He said checkpoints should
be updated if a fire had moved substantially in another direction
and people should be allowed into the safe area. On the other
hand, it was dangerous for people to be in an area if a retardant
drop was needed or the fire turned and came back. He said SB 204
would create substantial amounts of potential liability for the
State.
SENATOR COWDERY said they were discussing people wanting to enter
an area. He noted that there would probably be people already in
the area before responders arrived. He said these people could
be visitors or people driving through as well as residents.
MR. SMITH said that was an issue he had struggled with prior to
the Miller's Reach fire. As a law enforcement officer he was
uncomfortable saying that a person had to leave their residence.
He said there was a man who died because he wouldn't leave his
home in Washington during the Mount St. Helens eruption. He said
it was different if someone wanted to go in an area to protect
his or her residence. He said those people should be given
warning that there was an emergency situation. He said that also
created a problem with responders trying to get people out of a
dangerous area.
SENATOR COWDERY Asked if there were any further questions for Mr.
Smith. There were none.
2:35 p.m.
MS. DEAN BROWN, Deputy Director, Division of Forestry (DOF), DNR,
wanted to testify to the steps that had already been taken to
address concerns about emergency management. She said this was a
complex issue in which the lives of the public and firefighters
were in danger. She said Alaska had experienced a number of
wildland-urban interface fires and related evacuations. She said
the Miller's Reach fire wasn't the first but it was probably the
largest and probably received the most publicity. She said the
Lazy Mountain fire spurred SB 204. She said the bill addressed a
need that was there and was a problem for troopers and fire
fighters in responding to all high-risk emergencies. She said
safety was DNR's first concern.
She said DNR worked with several organizations, including the
Division of Emergency Services, the Alaska State Troopers (AST)
and the Red Cross, to develop guidelines for an official working
document. She said a field guide was created to test evacuation
guidelines. DNR felt the field guide would give them an
opportunity to further refine the guidelines. She said dozens of
organizations responded to huge fires such as the Miller's Reach
fire and those organizations also had valid needs and concerns
about how an evacuation was carried out. She said they were
concerned about documentation making sure all response
organizations knew who was in an area and where they were. DNR
felt the guidelines gave them a good flexible document to use as
a work in progress because they were going to learn as situations
progressed. She said DNR was working with various agencies
regarding recommendations suggested after an investigation of a
fire. She said the guidelines had been created through a good
inter-agency effort and were still being revised. She said the
statute was inflexible and changes would be difficult to make as
they were needed.
2:39 p.m.
Chairman Taylor returned to the meeting.
MS. BROWN said there might be several entrances into an area
under emergency management, each of which would have to be manned
by a law enforcement officer in order to control ingress. But
people with off-road vehicles could enter an area just about
anywhere. She said having unidentified people in an area created
a problem because responders needed to document their presence
and ensure that they had been informed of the latest changes in
the situation.
She thought this was a serious issue and commended the sponsor of
SB 204 for putting it forth and trying to resolve it. She said
DNR worked closely with the Lazy Mountain homeowners' association
on the guidelines. She said a number of very good things that
were incorporated into the guidelines came from their
discussions.
She said there were concerns from DNR and AST about the need to
protect life in wildland-urban interface fires. She said that
was a concern even when a person consented and understood the
risks of staying in an area.
She said the issue was handled considerably differently in other
states. Some states simply determined that if a person entered
an area they had been told not to enter, they were completely on
their own. She said that created an entirely different level of
liability and created serious concerns. She said DNR wanted to
protect life and then property and their responders were
extremely dedicated.
She said the guidelines used in evacuations were a work in
progress and improvements would be made. She said trying to
determine who was already there, who was passing through, and
trying to limit who could enter would create a problem for fire
fighters who should be focused on fire suppression and protecting
life and property. She said DNR would be happy to continue to
work on the guidelines but they needed the flexibility to improve
the guidelines.
SENATOR COWDERY asked what concerns had been expressed by people
who were not supportive of the guidelines.
MS. BROWN thought some people felt there shouldn't be any
restriction on who could enter an area under emergency
management. She said nonresidents might want to check on a
family member in the area. She said a resident who was out of
the area might also call a friend or family member and ask them
to check on pets or children. She said those situations were
addressed in the guidelines but not in SB 204. She said some
areas were very difficult to get into and out of, such as East
End Road in Homer. She said it was difficult to get emergency
vehicles into and out of the area and additional traffic into the
area could affect response efforts.
SENATOR COWDERY said during the Miller's Reach fire there were
people who wanted to go in and retrieve personal effects such as
pictures and family treasures with the knowledge that the
building might burn. He said someone could have been outside and
called their children to go get some things.
CHAIRMAN TAYLOR asked Mr. Kevin Saxby to provide testimony.
MR. KEVIN SAXBY, Assistant Attorney General, Department of Law
(DOL), said there were two legal problems with SB 204. He said
SB 204 would create a legal right for members of the public to be
present in areas under emergency management. He said these were
areas that public safety officials would have determined
evacuation necessary. He said this would override the public
safety tool of evacuation and interfere with emergency
responders.
He said SB 204 would also create a legal duty for emergency
responders to ensure informed consent by residents entering an
area. He said DOL believed this would lead to increased
litigation and litigation risks.
He said Section 1 would make false statements by members of the
public regarding residency illegal. He said SB 204 presumed that
emergency responders would be able to make that determination.
He said DNR firefighters and public safety officers were
relatively ill equipped to make those kinds of decisions on the
spur of the moment in the field. He said a written consent form
could be developed but that would require a higher level of
record keeping in order to ensure and later prove that the
determinations were properly made.
MR. SAXBY said Sec. 2 would create the new rights. He said these
rights would be subject to a number of conditions including
residency determination. He said residency determination would
be very important for the State to address and prove in
litigation. He noted that SB 204 didn't provide for the rights
of nonresidents or family members to be in the area. It only
provided for the rights of the residents of the area.
2:47 p.m.
He said SB 204 wouldn't immunize the State from property damage
occurring as a result of letting the wrong people into an area.
He said property damage often occurred through theft or looting.
He said the State would have to undergo a new burden in order to
ensure that proper determinations about residency and competency
were made.
He said requiring informed consent before allowing residents to
enter an area would carry public policy implications similar to
Miranda warnings. He said Miranda warnings were often videotaped
in order to undercut as many legal arguments as possible. He
said there could be dozens of people wanting to get into an area
during a large emergency situation. He said proving that
informed consent was given would be difficult. He said there
would be people arguing that the warning wasn't given in enough
detail or wasn't understood or people were incapable of making a
reasoned and informed decision because they were afraid, confused
or lacked mental capacity.
He said SB 204 would also allow people who wouldn't be
interfering with the responders' efforts into an area. He noted
that the non-interference would only apply to access. He said SB
204 didn't address people interfering with a backfire or a
retardant drop. He said there would be costly litigation about
the level of non-interference needed to override the rights
created in SB 204. He noted that the legislature could create
the rights but the courts would have to interpret the rights.
He said the immunity clause for the State would only cover the
injury or death of a person entering an area. It wouldn't
immunize the State or the responders against property damage. He
said property damage was the most common damage that occurred in
emergency situations. He said people would be able to tie
property damage to an evacuation decision or a faulty residency
determination.
SENATOR COWDERY said there was a nonresident in the Miller's
Reach fire who had rented a generator and went to the property to
wet the generator down and run the pump so water would be
available. He asked if SB 204 would allow that. He acknowledged
that the person's right to be there would be difficult to prove
on the spot.
TAPE 02-13, SIDE B
1:50 p.m.
MR. SAXBY said it would be difficult to make the determination.
He noted that SB 204 didn't address the right of nonresidents to
enter the area. He said it was presumed that the legislature had
looked at all possibilities and alternatives for State action
when they addressed a concern. He said SB 204 would give a right
to a certain class of people. He said it would be presumed that
the legislature didn't intend for other people to have the same
right. He said there would be litigation and a lot of argument
that statute had been violated if emergency responders allowed
nonresidents into an area.
SENATOR THERRIAULT said Mr. Saxby mentioned that the informed
consent could be given in a written statement. He said he had to
sign a waiver before he went rafting at McKinley. He said the
waiver was nothing more than a speed bump in the road of
litigation. He said people would say they were distraught
because they thought there was a family member, pet or heirloom
in the area. He said Mr. Saxby had done a good job explaining
that there was no good way to limit the liability of the State
and a statute wasn't necessarily enough protection.
He asked if Mr. Saxby was directly involved in putting together
the fiscal note.
MR. SAXBY said he was. He noted that it was an indeterminate
fiscal note.
SENATOR THERRIAULT said it would cost the State money but there
was no way of determining how much.
MR. SAXBY said that was correct.
CHAIRMAN TAYLOR asked if the State had been sued over any of the
recent fires.
MR. SAXBY said the State was still involved in very heavy
litigation regarding the Miller's Reach fire.
CHAIRMAN TAYLOR asked what that litigation alleged.
MR. SAXBY said the main point of the allegation was that
negligent decision-making on the part of State personnel during
the first day or so of the response caused or exacerbated the
property damage that ensued.
CHAIRMAN TAYLOR asked if any of that litigation had been lost.
MR. SAXBY said they had lost some initial motion practice. He
said that was before the Supreme Court but the case had not gone
to trial.
CHAIRMAN TAYLOR asked for suggestions from Mr. Saxby on how the
legislature might enact a law that would provide that people use
a level of common sense.
MR. SAXBY asked if he was speaking of responders or the public.
CHAIRMAN TAYLOR said he was speaking of both. He said existing
laws implied that responders would use some level of common sense
in determining who they allowed into an area and in the way they
dealt with wildland-urban interface fires. He said there were
obviously people who felt they had not done so. He said since
the responders didn't seem to do a very good job deciding who
should enter an area, SB 204 was filed to leave those
determinations up to the people who lived in the area and had
some interest in saving their own property.
He said fires weren't the only concern. He noted that there were
areas in the state that were subjected to flood, earthquake and
tsunami. He said a flood could happen in the Knik River area and
a Fish & Game officer who happened to be the only law enforcement
officer with a boat would be deciding who could go back to their
farm and try to save their cows or who could go back to their
house to save their dog.
He asked for suggestions on how to better tailor SB 204 so that
it would end up with at least some form of standard by which a
reviewing body such as the court or the legislature might address
natural disasters in the future.
MR. SAXBY was sorry that he didn't have any suggestions. He
cautioned that any guidelines that were adopted should be very
general and broad. He said once a statute was adopted and a
legal standard was set people would only need to prove that the
State had violated the statute to prove their negligence case.
He said that was called negligence pro se doctrine. Then they
would just have to prove damages. He said there was a big
difference between guidelines that were internal policy adopted
by an agency and guidelines set into statute by the legislature.
He said it upped the ante when the legislature put them into
statute.
CHAIRMAN TAYLOR said there could be a situation where somebody
called to ask responders to check on their family and nobody
bothered to do so for two days. He said in that situation the
State could be sued. He asked if that was the kind of guideline
he was talking about. He asked if there should be a statute
mandating that such a call should be responded to within 12 hours
or the department would be held liable.
MR. SAXBY said any specific deadline put into statute would
inevitably lead to greater litigation risk for the State.
CHAIRMAN TAYLOR understood his concerns. He said at some point
the legislature had to consider whether it was a risk of
litigation to the State or a risk of loss to the people of the
state. He said that was a very delicate balance. He appreciated
Mr. Saxby's advocacy for the State and the work he had done on SB
204. He said the committee would appreciate suggestions on how
to make it a better piece of legislation.
He asked Ms. Barbara Leiss to provide testimony.
MS. BARBARA LEISS said she and her husband, Mr. Hilary Leiss,
supported SB 204. She said it had been three years since the
Lazy Mountain fire, which started the process.
She was disturbed listening to the testimony saying law
enforcement officers needed more flexibility. She felt they had
all the flexibility in the world during the Lazy Mountain fire
and they abused it and misused it.
She said another testifier said SB 204 would create a new right.
She said it was a legal right that had been taken away from the
people. She said SB 204 was needed to protect the people. She
said law-abiding citizens wanted to make the legislators
understand that they were supposed to enact laws that were for
the people and not against the people. She said without SB 204,
Alaska would be nothing more than a police state with all the
authority and control of lives in the hands of public servants
hired and paid for by the people. She said SB 204 would place
constitutional rights and control over their own lives back into
the hands of the people. She said they didn't wish to be
threatened or coerced by the police like they were during the
Lazy Mountain fire. She said they were honest citizens who
merely wished to protect their homes and families. She said the
existing law went against human nature and the desire to save
loved ones and prevent destruction to their homes. She said no
one should prevent them from performing that natural act. She
said power over others should never be given to the police or any
other public servants without also demanding accountability for
their actions and punishment for inappropriate actions.
MS. LEISS said there was a young man who was running home to
protect his new wife and grandfather and save his farm. She said
the police brought him to his knees, put a gun to his head,
handcuffed him and dragged him off to jail. She said he had to
spend a lot of money to defend himself and his natural born
rights.
She said Alaskans were survivors who were used to helping
themselves and neighbors. She said Alaskans didn't need to be
coddled. She said this wasn't a communist regime. She wanted
elected and hired public servants to understand and accept their
individual independence. She said they were capable of
exercising common sense during a natural disaster.
She said the Lazy Mountain community worked with DPS, AST and DOF
regarding the guidelines. She said the guidelines were very well
written and the community had accepted them. She said the
guidelines had also been presented to and accepted by surrounding
communities. She said SB 204 would merely back up those accepted
guidelines.
She said SB 204 needed to become law because there could be a
change in the different heads of the agencies. She said two of
the individuals who helped to draw up the guidelines weren't with
the agencies anymore. She said they needed to make sure that if
there were a change in personnel the guidelines wouldn't be
changed and would remain the way the communities had accepted
them.
She noted that the guidelines accounted for several possible
situations. She said there was a young man who had been born and
raised in Lazy Mountain who was house sitting his father's house.
He lived in Dutch Harbor so he had no other place to go. She
said he was prevented from going back to the house he was
watching for his father.
She said Alaska drivers' licenses didn't have a physical address
on them. She said anybody looking in their wallet would have a
hard time finding anything with their physical address on it.
She said the guidelines addressed that as well.
MS. LEISS said the communities had accepted the guidelines. She
wondered why the officials were so worried about SB 204 becoming
law. She said people would litigate against the State for
everything and anything. She said the officials in charge of
forestry, fire and law enforcement had fallen down on the job
during the Miller's Reach and Lazy Mountain fires. She said that
was why the people had risen up and wanted SB 204 to protect
them. She expected the Judiciary Committee to pass SB 204 and
give them back their rights.
CHAIRMAN TAYLOR asked if there was anybody else who wished to
testify on SB 204. There was nobody.
SENATOR THERRIAULT asked why was there a problem with putting the
guidelines in SB 204 into law if they would just back up the
guidelines that had been developed. He asked if the bill went
further than the guidelines.
CHAIRMAN TAYLOR said SB 204 would put into statute many of the
guidelines found in the field guide. He said the field guide was
an evolving process that had been developed while working with
agencies and citizens. He said the State felt it should not be
put into law too quickly because changes might be needed.
He said it was his intention to move SB 204 out of committee. He
said the next committee of referral was the Senate Resources
Committee, which had a broader panel than the Senate Judiciary
Committee. He hoped that before SB 204 left Resources, there
would be some finalization of the guidelines that might be
sufficient and incorporated into regulations. He said if that
didn't happen, the Legislature would continue to work on and move
SB 204.
3:10 p.m.
SENATOR COWDERY moved SB 204 out of committee with attached
fiscal note and individual recommendations.
There being no objection, SB 204 moved out of committee with
attached fiscal note and individual recommendations.
The next order of business before the committee was SB 278.
SB 278-TAKING PROPERTY BY EMINENT DOMAIN
MS. KIM OGNISTY, Staff to Senator John Torgerson, sponsor of SB
278, said SB 278 was concerned with eminent domain and
declaration to taking proceedings. She said the bill would
introduce a reasonable and diligent effort clause that attempted
to place the condemnor of the land and the private landholder in
an equal negotiating position. She said the bill did not try to
remove the authority of the State to take land by eminent domain
or complicate existing proceedings. She said current law did not
require the State to engage in a good-faith effort to negotiate
with private property owners and the State was free to make an
unreasonable offer or no offer at all. She said striving to
initiate communication from a more equitable bargaining position
would promote more productive negotiations, facilitate dialogue
over reasonable concerns and encourage suggestions from all
parties involved. She said similar statutes had been adopted in
at least 23 other states. She said the intent of SB 278 was to
reduce litigation by encouraging more cases to be settled up
front, promoting expediency in government actions.
She said Senator Torgerson yielded to the wisdom of the Chairman
regarding any amendments.
SENATOR THERRIAULT asked for the source of the proposed amendment
in the bill packet.
MS. OGNISTY said Sealaska suggested the amendment.
CHAIRMAN TAYLOR asked Mr. Rick Kauzlarich to provide testimony.
MR. RICK KAUZLARICH, State Right-of-Way Chief, Department of
Transportation & Public Facilities (DOTPF), said he had worked
for DOTPF for over 22 years as a right-of-way agent. He said
DOTPF acted in good faith to purchase property before proceeding
into condemnation. He said SB 278 would introduce additional
steps into an already complicated process.
He said DOTPF followed a strict set of guidelines when acquiring
property. He said the guidelines were based on Article 1,
Section 18 of the Constitution of the State of Alaska, which
said, "Private property shall not be taken or damaged for public
use without just compensation." He said that mirrored the
Constitution of the United States of America. He said DOTPF also
followed Title 3 of the Uniform Relocation Assistance and Real
Property Acquisition Act (URARPA) of 1970, which required that
real property must be appraised before initiation of
negotiations.
He said DOTPF required documentation in each acquisition file
that the owner of the property or the owner's representative was
given opportunity to accompany the appraiser during the
inspection of the property. If the appraiser was unable to
contact the owner or the owner refused to sign a form
acknowledging that opportunity that was documented in the file as
well.
MR. KAUZLARICH said the 1987 amendment to URARPA and DOTPF
defined an appraisal as, "A written statement independently and
impartially prepared by a qualified appraiser setting forth an
opinion of defined value of an adequately described property as
of a specific date supported by presentation and analysis of
relevant market information." He said DOTPF's staff was required
to conduct an appraisal review and establish an amount for just
compensation for each parcel to be acquired before an offer was
made to purchase property. This was called a reviewer's
determination. He said the determination could be no less than
the market value as outlined in the approved appraisal.
CHAIRMAN TAYLOR said he understood that a property could be
condemned and the owner could pay for an appraisal to be brought
to DOTPF. He asked if Mr. Kauzlarich was talking about DOTPF
contracting with someone to appraise the land and that person
giving the appraisal to DOTPF for review.
MR. KAUZLARICH said DOTPF contracted with a fee appraiser or a
staff member to do an appraisal that went through a review
process. A negotiator then contacted the property owner. He
said the property owner could also submit an appraisal for
consideration. That appraisal was reviewed and could become part
of the negotiations. He said the federal government would
reimburse all costs associated with the acquisition if an
agreement were reached between DOTPF and the property owner.
CHAIRMAN TAYLOR asked if the owner's appraisal would be paid for.
MR. KAUZLARICH said the appraisal would be paid for if it was a
legitimate cost in the negotiations.
SENATOR COWDERY asked what types of resistance DOTPF received
from property owners. He also asked how many times the property
owner's appraisal was included in negotiations.
MR. KAUZLARICH said condemnation appraising was a very specific
and involved process. He said a bank appraiser who did home
appraisals might not have the expertise necessary to do a
condemnation appraisal. He said condemnation appraisal involved
looking at the value of the part to be acquired as part of the
whole. He said some appraisers didn't understand that concept.
He said many times the property owners' appraisals didn't fall
within DOTPF's published guidelines. He said the review
appraisers worked with the appraisal and the negotiator and
points in that appraisal that were pertinent were considered. He
didn't think there had ever been a case where the negotiator
rejected an appraisal outright. He noted that the negotiator was
concerned with doing what was fair for the property owner in
accordance with the Constitution of the State of Alaska.
SENATOR COWDERY said there was a downturn in property values
during the 1980s. He asked how DOTPF dealt with appraisals that
were less than the mortgage.
MR. KAUZLARICH said a lot of single-family homes were acquired
for the Eagle River Highland Bridge project. He said a lot of
the appraisals were less than the mortgages. He said DOTPF
worked with the Federal Highway Administration and the banks and
was able to buy the properties and put the people into homes as
good as or better than their previous homes without losing any
money. He said DOTPF recognized those situations and worked with
property owners to resolve them.
He said property owners could submit appraisals to DOTPF for
consideration. He said in cases where the property owner's
submittal didn't adequately reflect the value of the part
acquired the review appraiser could outline the shortcomings of
the appraisal for the negotiator and the property owner. He said
the appraisal had to meet the same requirements as DOTPF's
appraisal in order to be reimbursed by the federal government.
Otherwise the costs would come out of State monies.
He said right-of-way acquisition was critical in the timeline of
a project. He said part of the timeline for a project accounted
for contracting the necessary appraisal reports. He said SB 278
had the potential to delay projects while DOTPF waited for the
property owners' appraisals. He said the property owner could
already have their expert review DOTPF's appraisal and come back
to DOTPF with any questions or problems with the appraisal as
well as submitting their own appraisal.
He said SB 278 would introduce additional steps to the process
rather than enhancing and streamlining the process. He believed
it had the potential to increase costs to DOTPF in additional
appraisal expenditures and costs associated with the review and
administration of processing the property owners' appraisals. He
said DOTPF staff was aware that all reasonable costs incurred by
the property owner should be considered in a settlement.
SENATOR COWDERY asked if the appraisers were licensed. He asked
if those licenses had to be renewed.
MR. KAUZLARICH said there were two levels of appraisal licensing.
The first was residential licensing. The second was commercial
licensing. He said condemnation appraisal would be included in
commercial licensing. He said the licenses went through periodic
review and continuing education was required to maintain
licenses. He said DOTPF only contracted with licensed
appraisers.
SENATOR COWDERY said Mr. Kauzlarich mentioned he had done
appraisal work for the State. He asked if he was licensed.
MR. KAUZLARICH said he was not. He said at the time he was doing
appraisal work, there was no license.
SENATOR COWDERY asked if review appraisers were picked randomly
or if the same few were used.
MR. KAUZLARICH said there were two review appraisers on staff.
He said there were situations where it was necessary to hire an
independent appraiser to do a review or an analysis of an
appraisal that had been submitted to DOTPF.
SENATOR COWDERY said he had worked with the Municipality of
Anchorage and there were arbitrators hired by the Municipality.
He said there was some concern that the same arbitrators were
hired over and over again and were conscious of who paid them and
might not be completely fair.
MR. KAUZLARICH said the appraisers used by DOTPF were
independent. He said the review appraisers and the independent
appraisers didn't always agree.
SENATOR THERRIAULT said there were two different types of
acquisitions. He said DOTPF could be putting in a new road and
need to acquire a strip of houses. He thought most of the time
DOTPF was widening the right-of-way and taking a strip of land
from each property. He wondered how much of the negotiations
involved taking a strip of land and what taking that strip of
land would do to the rest of the property.
He said constituents had contacted him during some big projects
in the North Pole area. He found DOTPF to be very reasonable.
He said in one instance an elderly couple was concerned because
the driveway in front of their house would no longer be usable.
He said there was a driveway behind the house that the couple
couldn't use because they couldn't negotiate the steps. He said
DOTPF purchased the entire property and resold it.
MR. KAUZLARICH said that was one of the reasons he was concerned
with SB 278. He said the majority of the approximately 500
takings each year were strip-takings. He said the appraiser had
to determine whether the taking would damage the rest of the
property or make it unusable for the owner. He said DOTPF would
offer to purchase the property in that situation. He didn't
think that most bank appraisers understood how to determine that
sort of loss in value and that was why a condemnation appraiser
was so important.
He said the property owner might not want the project to go
forth. He saw SB 278 as a way for these people to stop or delay
projects. He said property values could increase if a project
was delayed long enough. He said that made the cost of the
entire project increase.
CHAIRMAN TAYLOR asked Mr. Bill Satterburg to provide testimony
over the telephone. Mr. Satterburg was unavailable to testify
but had sent notes regarding SB 278.
He asked Mr. Bill Cummings to provide testimony.
MR. BILL CUMMINGS, Assistant Attorney General, Transportation
Section, DOL, said the State went through the steps Mr.
Kauzlarich outlined whether the project came from State or
federal monies. He said the federal government paid for the
majority of condemnation cases. He said the procedures laid out
in SB 278 would be inconsistent with AS 34.60.120, which set out
a very thorough acquisition policy for federally funded land
acquisitions.
He said SB 278 would add a lot of things that would have to be
proved in court proceedings. He said the State would have to
prove they had been diligent and reasonable in their
negotiations. The State already had to prove they had the
authority to take the land and the necessity to use the land in a
public project and the taking had been done in a manner
consistent with the greatest public good and the least private
injury. SB 278 would add another step in that litigation process
by requiring the State to prove that the manner in which they
treated the property owner was fair. If they hadn't done a
reasonable and diligent effort in their negotiations the taking
would be denied and they would have to start all over again.
MR. CUMMINGS said SB 278 didn't have an appreciation for the
process the State followed as mandated under AS 34.60.120. He
said having a licensed appraiser come in and do an appraisal
wouldn't necessarily fix the situation because that appraisal
could be unacceptable.
He said there was a case in Ketchikan in which a licensed
appraiser did an appraisal of a piece of property for DOTPF. The
negotiations using that appraisal weren't successful. DOTPF had
another appraiser with designation from the American Institute of
Real Estate Appraisers appraise the property and that appraisal
value was higher. He said the property owner had a licensed
appraiser appraise the property but that appraiser used a legally
incorrect method to come up with an estimate of just compensation
and that appraisal was thrown out. The property owner then got a
second appraisal. He said they went to court and the jury didn't
believe either appraisal but the award was closer to DOTPF's
number than the property owner's number. He said appraisers were
always going to differ on numbers. In that case four different
licensed appraisers came up with four different numbers.
He said it could take up to six months for the court to rule on a
motion. He said it might not take six months to rule on whether
DOTPF had been reasonable and diligent but it would cause a delay
nonetheless. He noted that time was money.
He then addressed the following proposed amendment in the bill
packet labeled 22-LS139\A.1:
A M E N D M E N T
OFFERED IN THE SENATE
TO: SB 278
Page 1, line 14, following "negotiation":
Insert "as provided in (b) and (c) of this section"
Page 1, line 14, through page 2, line 5:
Delete "; for purposes of this paragraph, "reasonable and
diligent effort" includes inviting the property owner to secure
an appraisal from a real estate appraiser certified under
AS 08.87, and either offering to purchase the property for its
full appraised value as determined by the property owner's
appraiser plus the cost of the appraisal, or explaining to the
property owner why full appraised value is not being offered"
Page 2, following line 5:
Insert a new bill section to read:
"* Sec. 2. AS 09.55.270 is amended by adding new subsections
to read:
(b) Before taking property, a condemnor shall invite
the property owner to, within a reasonable period of time
set by the condemnor,
(1) obtain an appraisal from a real estate
appraiser certified under AS 08.87 and offer to sell the
property to the condemnor for the appraised value plus the
cost of appraisal; or
(2) offer any alternative means of satisfying the
public purpose for which the property is sought.
(c) If a property owner offers to sell the property
under (b)(1) of this section within the reasonable period of
time set by the condemnor, the condemnor must either accept
the offer, or reject the offer and provide a reasonable
explanation of the reasons for the rejection along with a
reasonable counter offer. If a condemnor invites the
property owner to make an offer to sell the property as
described in (b) of this section and the property owner
fails to respond within a reasonable period of time, or if
the property owner rejects a reasonable counter offer made
under this subsection, the property owner may commence
eminent domain proceedings under AS 09.55.290."
Renumber the following bill section accordingly.
Page 2, lines 23 - 24
Delete "made a reasonable and diligent effort to acquire the
property by negotiation"
Insert "complied with AS 09.55.270(b) and (c)"
Page 2, line 30, through page 3, line 2:
Delete all material and insert:
"(2) the plaintiff was required to make a reasonable and
diligent effort to acquire the property by negotiation under
AS 09.55.270(b) and (c) and the plaintiff failed to comply with
AS 09.55.270(b) and (c)."
MR. CUMMINGS said the amendment would remove some of the more
burdensome language but the replacement language wasn't much
better. He said subsection (c) in Sec. 2 would require the State
to accept a counter-offer or come up with another reasonable
counter-offer. He said those changes would make it a gentler
condemnation code but would increase the amount of possible
litigation. He said litigation on whether the State had been
reasonable could go on for days. He said modern pre-trial
discovery allowed for the disclosure of documents going back to
the beginning of time and depositions of everyone. He said that
would use a lot of valuable resources.
He thought SB 278 addressed a problem that didn't exist. He said
the State had a very fair and reasonable process under the
guidance of AS 34.60.120. He thought the public was well served
by existing laws.
CHAIRMAN TAYLOR said Mr. Satterburg suggested a provision
requiring DOTPF to prepay condemnation costs and fees.
MR. CUMMINGS said that was a bizarre suggestion. He said that
suggestion came from a case Mr. Satterburg lost in Supreme Court
in which he wanted to do a drilling program on some gravel land
he thought held gold. DOTPF would have paid for gold-bearing
land if he had found gold. He said Mr. Satterburg filed a
petition for review that was turned down and he had been trying
to get that provision into law every time he saw a chance.
TAPE 02-14, SIDE A
3:40 p.m.
CHAIRMAN TAYLOR asked what a property owner had to do to protect
their interests against a condemnation.
MR. CUMMINGS said the property owner had a number of
responsibilities and assumptions made about their abilities. He
said the property owner could say there were other things that
could have been done rather than take their land. He said the
State had to consider viable options during the process leading
up to the filing of the condemnation.
CHAIRMAN TAYLOR asked if the property owner had to hire an expert
to do that.
MR. CUMMINGS said that was correct. He said the property owner
would be reimbursed for reasonable costs if they were right.
They would have to bear the costs if they were wrong.
CHAIRMAN TAYLOR said the property owner would only be reimbursed
for a percentage of the costs.
MR. CUMMINGS said Civil Rule 72 provided for reimbursement of
actual and reasonable costs for expenses that were reasonably
necessary to prove the property owner's case including
appraisers, engineering experts, lawyers and paralegals.
CHAIRMAN TAYLOR said the state would have to pay for gold-bearing
land if a property owner were willing to go out and spend $75,000
to $100,000 to get their land drilled to determine whether or not
it was gold-bearing land and did find gold. He asked if the
State would also have to pay for the drilling and attorney's
fees.
MR. CUMMINGS said that depended on the nature of the drilling
program. They would be reimbursed for at least the prorated
portion of those drilling costs that were in the area affected by
the taking.
CHAIRMAN TAYLOR said Mr. Satterburg also suggested that the
decision to appeal a master's decision should be left solely to
the property owner. He said if a master's award had been given,
the State should pay it and not appeal the award. He asked if
existing law allowed both parties to appeal a master's award.
MR. CUMMINGS said the State had 10 days to appeal while the
property owner had 15 days to appeal. He said the State not
being able to appeal would stand everything on its head. He said
there could be situations in which the master did a bad job. He
gave an example in which a master had gone off on a tangent and a
awarded approximately $200,000, which was a lot more than the
State thought the taking was worth. The State appealed and the
case went to a jury trial and the jury agreed with the State. He
said each side should have the ability to appeal because the
ultimate arbiter was the jury, which was the voice of the
community and the people.
CHAIRMAN TAYLOR thought the State had to deposit the value of the
land into the registry of the court.
MR. CUMMINGS said that was correct. He said that despoit would
be available to the claimants of interest such as the property
owner, the city for the prorated portion of taxes and the
mortgage holder.
CHAIRMAN TAYLOR asked if that money could be withdrawn if there
was an appeal.
MR. CUMMINGS said it could always be withdrawn.
CHAIRMAN TAYLOR asked if the property owner could withdraw that
money and still bring suit for a higher value.
MR. CUMMINGS said yes.
CHAIRMAN TAYLOR asked if the State was required to make a deposit
for the master's award.
MR. CUMMINGS said the State was not required to do so if they
appealed the master's award. He said the property owner would be
entitled interest from the time the case was filed on the extra
amount of compensation if the master's award was appealed and a
higher amount was awarded. He said that was an inducement to get
as much money on deposit as possible.
CHAIRMAN TAYLOR asked if the property owner was only entitled
interest if the decision wasn't appealed to the Superior Court.
MR. CUMMINGS said the interest was charged on the amount that was
greater than the amount of the deposit from the date the State
filed until compensation was finally rendered.
CHAIRMAN TAYLOR said the State could go through the process and
deposit $100,000. Then the case could go to a master. He said
the master could say the property was worth $125,000. He asked
if the State would have to deposit another $25,000.
MR. CUMMINGS said no.
CHAIRMAN TAYLOR said the State could then appeal within 10 days.
He said the case could then go to Superior Court for a jury
trial.
MR. CUMMINGS said that was correct.
CHAIRMAN TAYLOR said the jury could award $200,000. He asked if
the State had the right to appeal that decision.
MR. CUMMINGS said yes.
CHAIRMAN TAYLOR said his point was that it could take a long time
for the final decision to be made on the value. He said the
State would owe interest from the date the master's award was
appealed.
MR. CUMMINGS said the interest would be owed from the date the
deposit was made, not from the date the master's award was
appealed.
CHAIRMAN TAYLOR said the interest was accrued on the money that
was awarded above and beyond the amount made in the deposit.
MR. CUMMINGS said that was correct. He said condemnation cases
were major interferences with peoples' lives and the State didn't
really want to condemn property if it wasn't necessary. He said
the State tried to resolve issues without extensive proceedings.
He said only exceptional cases went to jury trial. He said
comments and concerns like Mr. Satterburg's were very broad and
went far beyond what SB 278 was trying to do to the eminent
domain code.
CHAIRMAN TAYLOR asked if Mr. Cummings had any further testimony
to provide. He did not.
MR. RON WOLFE, Corporate Forester, Sealaska Corporation, said SB
278 would require the State to make a reasonable and diligent
effort to negotiate the purchase of real property from a private
property owner before condemning the property. He said Sealaska
had gone through the land acquisition process twice when the
State required Sealaska land for an airport expansion and a
highway realignment and upgrade. He said Sealaska and the State
were able to negotiate equitable land exchanges in a manner that
prevented a hostile eminent domain process. He said the process
was awkward both times because the State had no requirement to
negotiate with the property owner and the rules for negotiation
were not clear.
MR. WOLFE said SB 278 would correct the situation. He said the
bill would require fair and equitable treatment while carrying
out the eminent domain process. He said the result would be that
the property owner would feel they had been treated fairly and
openly by the State and would be less likely to bring forth
litigation. He said the court would also be less likely to find
that a property owner was not treated fairly. He said Sealaska
thought these changes would be positive for the State as well as
property owners.
CHAIRMAN TAYLOR asked if there were any questions for Mr. Wolfe.
There were none.
MR. JON TILLINGHAST, independent legal counsel, Sealaska
Corporation, said at least 23 other states had adopted laws
similar to SB 278. He said the bill was based on a provision of
the model eminent domain code by the Commission on Model State
Laws, which was put together by state legislators to reflect
their judgment on the best public policy in issues like eminent
domain.
He said the scholars on eminent domain such as the author of
Nichols on Eminent Domain felt the provisions deterred
litigation. He said SB 278 would give the property owner a
bargaining chip to use at the table because the State would have
a legal requirement to be reasonable with them. He said this
would make the property owner join the process as more of an
equal rather than a victim.
He said AS 34.60.120 was basically a re-codification of federal
policy, which required the State to make every reasonable effort
to acquire property by negotiation before condemning it when
using federal monies. He said SB 278 would make that requirement
enforceable because the property owner could use that as a
defense to the condemnation.
He then addressed the proposed amendment. He said most states
with similar eminent domain laws didn't define what the State had
to do to be reasonable and diligent in trying to negotiate a
purchase. He said early in the drafting of SB 278, an example of
what might entail reasonable and diligent effort was suggested
and placed in the bill as a safe harbor. This was not intended
to be the only way the State could be reasonable and diligent,
but one of the many things the State could do. He said the
problem with using an example was that people would begin to
focus on the example. He said they struggled to come up with a
better example. He said they had come to the conclusion that the
majority of states had done the right thing by not providing an
example. Sealaska suggested the committee do the same thing.
MR. TILLINGHAST proposed a different amendment to end paragraph
(4) on page 1 at line 14 with the word "negotiation" and deleting
the text after that up through and including line 5 on page 2.
He said SB 278 would then read virtually identical to the model
eminent domain code.
3:58 p.m.
MR. TILLINGHAST said the proposed amendment (marked 22-
LS1399\A.1) would remove the existing example from SB 278 and
insert a new example. He was concerned that this example would
have the same problems. He said the example in the proposed
amendment was probably better than the example in the existing
bill. He said the example in the proposed amendment was worded
in such a way that it would no longer be an example but something
the State would be required to do in every case.
CHAIRMAN TAYLOR asked if the language regarding incapacity
cleared up difficulties that had been encountered.
MR. TILLINGHAST said that clause, which would release the State
from the requirement to negotiate with a property owner if they
couldn't be found or were not legally capable of negotiating, was
similar to almost all other states' eminent domain code.
CHAIRMAN TAYLOR asked if there were any further questions for Mr.
Tillinghast. There were none. He asked if there was anyone else
who wished to testify on SB 278. There was nobody.
He moved Amendment 1 to place a period after the word
"negotiation" on page 1 line 14 and delete the following language
through line 5 on page 2.
There being no objection, Amendment 1 was adopted.
CHAIRMAN TAYLOR shared Mr. Cummings' and Mr. Tillinghast's
concerns about placing an example in statute because the example
would become a mandated opportunity for litigation. He asked if
Mr. Cummings wished to provide further testimony.
MR. CUMMINGS said the difficulty with putting SB 278 in statute
was that there would still be litigation whether or not the State
was reasonable and diligent in its negotiations. He said SB 278
would simply provide a mechanism to delay projects, which would
cost the State money. He said it wouldn't result in changing the
way the State did business.
MR. CUMMINGS thought many people wanted the State to be in the
business of trading land. He said SB 278 wouldn't compel the
State to trade land with property owners. He said DOTPF already
had the ability to purchase land for the purposes of exchange.
He said there would need to be provisions regarding what would
trigger a land trade or how land trades should work if the State
were going to do more land trades.
He said the main argument for SB 278 was that it would give
property owners a way to defend themselves. He said the process
DOTPF used was imminently fair. He felt SB 278 would only delay
projects.
CHAIRMAN TAYLOR asked if it was correct that 23 other states had
similar statutes.
MR. CUMMINGS said he wouldn't be surprised. He said most states'
eminent domain codes weren't as liberal as Alaska's because of
the way interest was paid and costs and fees were reimbursed.
CHAIRMAN TAYLOR asked what percentage of property takings each
year ended up in some form of litigation.
MR. CUMMINGS said between 2% and 5%.
CHAIRMAN TAYLOR said 95% to 98% of the time DOTPF and the
property owner were able to come to some sort of reasonable
agreement.
MR. CUMMINGS said that was correct. He said the biggest problem
the State faced was the lack of time available to pull everything
together.
SENATOR THERRIAULT asked if SB 278 would change the process in
which DOTPF appraised the land and went to the property owners
with proposals.
MR. CUMMINGS said the State would still appraise everything and
make offers to the property owners. He said the State hired
someone who was competent to do the work and had familiarity with
the engineering principles involved. He said the appraiser
needed to be able to predict the impact of the project on the
physical features of the property. The State then invited the
property owner to make a counter offer.
SENATOR THERRIAULT said perhaps there were situations that he was
not aware of but he felt that the existing process worked well
for the most part. He wondered what would be modified in the
process if SB 278 passed that would cause automatic delay.
MR. CUMMINGS said SB 278 would allow people to answer a
condemnation complaint by saying they didn't think the State was
reasonable and diligent in its negotiations. He said they could
already question the authority and necessity for the taking and
whether it was accomplished consistent with the greatest public
good and the least private injury. He said these things were
only tangentially related to the process and could delay
projects. He said all of those things would have to be proved
before construction got started. He said the State currently
condemned the property and did a quick-take. He said if the
property owner was entitled to extra money, that would be
resolved after construction had been started. He said SB 278
would require everything to be settled before construction was
started.
SENATOR COWDERY asked what happened when a property owner had
agreed to a strip taking and later discovered that their driveway
was at a 16% grade.
MR. CUMMINGS said that depended on how the change in grade
occurred. The State would give them more money if the change was
not part of the original design when they signed the agreement.
However, the property owner would be stuck with it if the change
had been explained during the negotiations.
SENATOR COWDERY thought most property owners weren't aware of
what a 16% grade meant in their driveway until after they saw it
because they weren't engineers.
MR. CUMMINGS said the State brought the right-of-way plans and
design plans with them when they negotiated a settlement. He
said right-of-way plans showed each taking in the project and the
property owner's taking. The design plans showed the grade of
the centerlines and what the slopes would be like.
SENATOR COWDERY asked if they showed the grade of the driveway
before and after the project.
MR. CUMMINGS said they did.
SENATOR COWDERY said he didn't think so.
MR. KAUZLARICH said Senator Cowdery had mentioned working with
the Municipality of Anchorage on some projects. He said DOTPF
participated in a project in Anchorage by overseeing the
relocation efforts and the review appraisal efforts. He said the
Municipality of Anchorage employees were perhaps not as
sophisticated as DOTPF employees in doing the negotiations and
there were some communication problems.
He said the property owner was presented with a set of cross-
sections that showed the existing grade of the land as well as
the resultant grade. He said the right-of-way agent and the
property owner discussed what would happen to the property.
SENATOR COWDERY asked how many property owners would recognize
and understand what a change of grade would do to their property.
MR. KAUZLARICH said not very many. He said part of the right-of-
way agent's job was to ensure that the property owner understood.
He said if the property owner came back after the fact and said
they had no idea this would happen to their property, DOTPF would
take another look at it.
CHAIRMAN TAYLOR asked if there was anybody else who wished to
testify on SB 278. There was nobody.
SENATOR COWDERY moved CSSB 278(JUD) out of committee with
attached fiscal note and individual recommendations.
There being no objection, CSSB 278(JUD) moved out of committee
with attached fiscal note and individual recommendations.
The final order of business before the committee was SB 357.
SB 357-STATE LAND SALE REQUIREMENTS
4:13 p.m.
CHAIRMAN TAYLOR said SB 357 was an act relating to the disposal
of State land and interest in State land and providing for an
effective date. He said the State of Alaska received 105 million
acres of land through the statehood act. He said SB 357 would
require DNR to make State land available for sale. The land
would be available in adequate parts and available for over-the-
counter sales. He said SB 357 would also provide for open entry
lands, agricultural lands and purchase by installments.
CHAIRMAN TAYLOR said SB 357 would provide for the utilization of
municipal zoning surveys to be paid for by the person who was
acquiring the property. He said DNR would be required to place a
monument at least every five miles for each parcel.
He noted the ideas behind SB 357 had been around for some time
and had been discussed significantly during the two previous
sessions of the legislature.
SENATOR COWDERY said there had always been the argument that if
the land were opened up to the people it would cost the State a
lot of money. He said there was some discussion earlier about
waivers. He asked if waivers were legal.
CHAIRMAN TAYLOR said waivers could be put in the law so that the
State wouldn't be required to provide school services. He said
that would burden the land with that process. He said SB 357 was
fairly comprehensive in trying to remove as many of the State's
obligations as possible.
He asked Mr. Dick Mylius to provide testimony.
MR. DICK MYLIUS, Resource Assessment & Development Manager,
Division of Mining, Land And Water, DNR, said DNR recognized that
getting land into private ownership was one of the fundamental
responsibilities of DNR as set out in Article 8 of the
Constitution of the State of Alaska. He said SB 357 would modify
some of the existing land disposal statutes and establish two new
land disposal programs. He said the first new program would
include a short-term offering of 50,000 acres of subdivisions
that would be offered through three different first-come first-
serve disposals during the first year and a half of the program.
The second program would be a long-term open entry program
offering 200,000 acres per year. He said that new program would
be a more aggressive land-offering program than the State had
ever offered and would require a significant increase in the land
sales budget.
He said DNR supported some of the proposed changes to existing
programs. He said Sec. 3 of SB 357 would change existing law so
that when a person defaulted on a lottery land-sale contract the
parcel could be immediately offered for sale over-the-counter.
He said DNR supported that change. Sec. 4 would change existing
law so that when a purchaser in an auction failed to sign a
contract of sale or defaulted on a contract of sale DNR could
offer that parcel for sale over-the-counter. DNR also supported
that change. He said DNR also supported Sec. 5, which would
allow DNR to require the purchaser to appraise and survey the
parcel and pay for those costs. He said DNR had been able to do
this through existing regulations but the statute would clarify
their authority.
MR. MYLIUS said DNR did not support Sec. 6, which would create
two new land disposal programs. He said this was partly because
DNR had existing statutes that provided adequate and progressive
programs for the sale of State land into private ownership. He
said DNR's existing programs included the subdivision sales
program, the remote recreational cabin program and re-offering of
agricultural tracts. He said DNR offered nearly 50,000 acres for
sale in FY 02 and FY 03 under the existing programs. He said
DNR's existing budget allowed them to offer between 2,500 and
5,000 acres of new land per year. He said DNR was also
transferring over 20,000 acres per year to municipalities, many
of which also had land sale programs.
He said new land sale programs were not needed to increase land
sales. DNR suggested that the most efficient way to increase the
amount of State land being offered would be to increase funding
for existing programs.
He said DNR had several concerns with the new programs. DNR felt
the programs would not be workable because they would have
unrealistic deadlines and contained unmanageable and potentially
unconstitutional procedures for awarding land. He said the new
programs would fail to provide for the public interest.
He said SB 357 contained conflicting provisions regarding surveys
in compliance with municipal platting requirements. He said the
provisions that would allow individual appraisals and surveys for
parcels of land would result in hundreds of appraisals and
surveys that would overwhelm borough platting boards and staff
and DNR's appraisal and survey staff. He said the existing
programs allowed DNR to consolidate the reviews with the boroughs
internally, which was a much more efficient way of doing
business.
He said the proposed AS 38.14.010 would allow DNR to sell land
that was unclassified or classified as forestry, agricultural,
settlement and recreational. Existing programs allowed DNR to
sell agricultural and settlement lands. He said DNR didn't feel
that forest or recreational lands should be considered for sale
because the public supported retaining these types of land in
State ownership. He said past experience had shown that sale of
timber lands would automatically create a large number of people
opposed to timber harvest in their area. He said subsection (c)
of the proposed AS 38.14.010 on page 4 of SB 357 would exempt
land sales from the provisions of AS 38.04 and AS 38.05, which
protected public access, public resources of the land and access
to subsurface resources and had requirements dealing with
retaining State ownership of minerals.
MR. MYLIUS said the proposed 38.14.040, beginning on page 5,
would require purchasers to appear in person in order to acquire
a parcel. He said this was similar to a previous requirement
that had been found unconstitutional by the courts.
He said the budget and revenue projections reflected in the
fiscal note were very rough and would need to be refined as SB
357 moved through the process and into the Senate Finance
Committee. He said the cost, revenues and general summary were
those that were used in 2000 when the existing land disposal
programs were being considered in SB 283.
SENATOR COWDERY asked how much land DNR had sold to the public in
the previous eight years.
MR. MYLIUS said there wasn't really a land disposal program until
the previous two years. He said over the previous two years, DNR
offered approximately 25,000 acres. He said DNR was proposing to
offer another 20,000 acres, which were mostly parcels that were
previously subdivided and came back to DNR or were never sold.
He said approximately 2,400 parcels had been offered that fiscal
year and 350 of those had been sold.
SENATOR COWDERY asked how much defaulted property had been resold
to the public.
MR. MYLIUS said it was difficult to say because land that had
been defaulted on was lumped in with other types of offerings.
SENATOR THERRIAULT asked for the location of the language
requiring personal appearance in order to purchase land.
MR. MYLIUS said that was in the proposed Sec. 38.14.040 beginning
on page 5. The actual language was in lines 1-3 on page 6. He
said that provision was very similar to a previous requirement
that intended to give local residents a preference in land sales.
He said some people who couldn't attend a land sale because it
was held during the week filed suit and it was determined that
land had to be sold with equal access to all Alaskans.
SENATOR COWDERY said that same subsection said, "The sale price
of the land shall be the fair market value of the land as
determined by an appraiser selected from a list of appraisers
approved by the department under AS 38.14.160." He asked who
those appraisers would be.
MR. MYLIUS said DNR had a list of appraisers who were licensed
and certified to appraise State lands and wanted to do so.
SENATOR COWDERY asked if the appraisers looked at property values
in the vicinity when they did their appraisals.
MR. MYLIUS said they did.
CHAIRMAN TAYLOR asked how to modify Sec. 38.14.040 to bring it
into compliance with the court's determination regarding
appearing in person in order to purchase land.
MR. MYLIUS said he would delete the language regarding appearing
in person.
CHAIRMAN TAYLOR asked if he would place a period after "chapter"
on page 6, line 1.
MR. MYLIUS said he would. He said there were several ways to do
land sales without requiring the personal appearance of the
purchaser. The first was to do sealed bid options. He said
there were also lotteries if more than one person wanted a
parcel. He said there was also the option of an outcry auction,
in which people could have an agent present. He said outcry
auctions were inefficient because each parcel needed an
individual auction.
TAPE 02-14, SIDE B
CHAIRMAN TAYLOR moved Amendment 1 placing a period after the word
"chapter" on page 6, line 1 and deleting "who appears in person
to purchase the land at the site or sites designated by the
department for the sale of land" in lines 1 through 3. He said
that would hopefully bring that into compliance with the
constitutional concerns raised by Mr. Mylius.
There being no objection, Amendment 1 was adopted.
CHAIRMAN TAYLOR asked if there was anybody else who wished to
testify on SB 357. There was nobody.
SENATOR COWDERY moved CSSB 357(JUD) out of committee with
attached fiscal note and individual recommendations.
There being no objection, CSSB 357(JUD) moved out of committee
with attached fiscal note and individual recommendations.
ADJOURNMENT
There being no further business before the committee, the Senate
Judiciary Committee meeting was adjourned at 4:30 p.m.
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