Legislature(2011 - 2012)CAPITOL 120

02/14/2011 01:00 PM Senate JUDICIARY


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01:02:30 PM Start
01:03:36 PM Overview: Department of Law
02:33:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time and Location Change --
+ Joint Hearing with House Judiciary Committee TELECONFERENCED
Presentation by Attorney General Burns
Alaska Department of Law
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                       February 14, 2011                                                                                        
                           1:02 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
SENATE JUDICIARY                                                                                                                
                                                                                                                                
 Senator Hollis French, Chair                                                                                                   
 Senator Bill Wielechowski, Vice Chair                                                                                          
 Senator Joe Paskvan                                                                                                            
 Senator John Coghill                                                                                                           
                                                                                                                                
HOUSE JUDICIARY                                                                                                                 
                                                                                                                                
 Representative Carl Gatto, Chair                                                                                               
 Representative Steve Thompson, Vice Chair                                                                                      
 Representative Wes Keller                                                                                                      
 Representative Bob Lynn                                                                                                        
 Representative Lance Pruitt                                                                                                    
 Representative Max Gruenberg                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
SENATE JUDICIARY                                                                                                                
                                                                                                                                
 Senator Lesil McGuire                                                                                                          
                                                                                                                                
HOUSE JUDICIARY                                                                                                                 
                                                                                                                                
 Representative Lindsey Holmes                                                                                                  
 Representative Mike Chenault                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: DEPARTMENT OF LAW                                                                                                     
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOHN BURNS, Attorney General Designee                                                                                           
Department of Law (DOL)                                                                                                         
Anchorage, AK                                                                                                                   
POSITION STATEMENT:   Delivered an overview of  the Department of                                                             
Law.                                                                                                                            
                                                                                                                                
Rick Svobodny, Deputy Attorney General                                                                                          
Department of Law (DOL)                                                                                                         
Juneau, AK                                                                                                                      
POSITION STATEMENT:   Answered questions about  the Department of                                                             
Law Criminal Division.                                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:02:30 PM                                                                                                                    
CHAIR  CARL GATTO  called the  joint  meeting of  the Senate  and                                                             
House  Judiciary  Standing  Committees  to  order  at  1:02  p.m.                                                               
Senators   Wielechowski,  Coghill,   Paskvan,  and   French;  and                                                               
Representatives Thompson,  Keller, and Gatto were  present at the                                                               
call to order.                                                                                                                  
                                                                                                                                
^OVERVIEW: DEPARTMENT OF LAW                                                                                                  
                  OVERVIEW: DEPARTMENT OF LAW                                                                               
                                                                                                                                
1:03:36 PM                                                                                                                    
CHAIR GATTO  announced the business  before the  committees would                                                               
be  to  hear an  overview  of  the  Department  of Law  (DOL)  by                                                               
Attorney General Designee John Burns.                                                                                           
                                                                                                                                
REPRESENTATIVE PRUITT joined the committee.                                                                                     
                                                                                                                                
JOHN BURNS,  Attorney General Designee, Department  of Law (DOL),                                                               
said it's  a privilege to  present an overview of  the Department                                                               
of  Law to  the  judiciary  committees. While  he  is honored  to                                                               
fulfill  the position  of  Attorney  General, it  is  not one  he                                                               
sought. He  informed the committees  that as a  lifelong Alaskan,                                                               
he  is committed  to bettering  the  state in  a meaningful  way.                                                               
Growing up  in Nome gave  him an  appreciation for life  in rural                                                               
Alaska,  and provided  an  opportunity to  spend  time in  unique                                                               
places  like  King  Island  and  Diomede. In  1970  he  moved  to                                                               
Fairbanks  and  has resided  there  since  except that  he  spent                                                               
summers working  for Fish and  Game in Western Alaska  and Prince                                                               
William Sound.  Since graduating  from UAA  and then  Puget Sound                                                               
Law School  approximately 25  years ago, he  has been  in private                                                               
practice  specializing  predominately  in commercial  law,  doing                                                               
business  transactions and  insurance defense  work. In  the last                                                               
eight weeks  he has  met with  members of  the DOL  in Anchorage,                                                               
Fairbanks and Juneau  to become familiar with the  issues. He has                                                               
also  spent time  in Nome,  Bethel, and  Barrow meeting  with law                                                               
enforcement, DOL  personnel, judges, Youth Court  facilities, and                                                               
women's shelters  to gain a  better understanding of how  the DOL                                                               
can meet the various needs.                                                                                                     
                                                                                                                                
1:06:51 PM                                                                                                                    
REPRESENTATIVE GRUENBERG joined the committee.                                                                                  
                                                                                                                                
ATTORNEY  GENERAL BURNS  stated  that his  objective as  Attorney                                                               
General is  to uphold the constitution  and laws of the  state of                                                               
Alaska with  dignity and integrity,  consistent with  his ethical                                                               
obligations as an attorney.                                                                                                     
                                                                                                                                
The mission of the Department of  Law (DOL) is to prosecute crime                                                               
and  provide   legal  services  to   state  government   for  the                                                               
protection   and   benefit   of  Alaska's   citizens.   This   is                                                               
accomplished  by  three  divisions: the  Criminal  Division,  the                                                               
Civil  Division, and  the Administrative  Services Division.  The                                                               
Criminal Division  has 13 offices  and the Civil Division  has 14                                                               
sections.                                                                                                                       
                                                                                                                                
DOL's core services are fourfold.                                                                                               
      I. Protecting the safety and financial wellbeing of                                                                       
     Alaskans.                                                                                                                  
      II. Fostering conditions for responsible development                                                                      
     of natural resources.                                                                                                      
     III. Protecting the fiscal integrity of the state.                                                                         
     IV. Promoting good governance.                                                                                             
                                                                                                                                
1:08:21 PM                                                                                                                    
As of FY11, 284 attorneys provide  services to the DOL. They hope                                                               
to add two more attorneys in FY12  for a total of 286. These will                                                               
be a district attorney in  Kotzebue and a public records attorney                                                               
in Anchorage.                                                                                                                   
                                                                                                                                
The FY12 budget request by core services includes:                                                                              
   · Sixty-two percent to protect Alaskans, predominantly                                                                       
     through the Criminal Division; and the Child Protection                                                                    
     Services Section, Commercial and Fair Business Section, and                                                                
     Environmental Section within the Civil Division.                                                                           
   · Nineteen percent for state fiscal protection.                                                                              
   · Ten percent for governance.                                                                                                
   · Nine percent for economic opportunity and resource                                                                         
     development.                                                                                                               
                                                                                                                                
1:09:48 PM                                                                                                                    
For FY10, the return on  investment for the department was nearly                                                               
$7 to  every $1 spent;  costs were $85.4 million  and collections                                                               
were   $576   million.   The  benefits   and   collections   were                                                               
concentrated in  the Civil Division  where the return  was nearly                                                               
$12  to  every  $1  spent.  The  costs  were  $48.9  million  and                                                               
collections were  $576 million. To  date for FY11 the  awards and                                                               
collections total $108 million.                                                                                                 
                                                                                                                                
1:10:46 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  if  the  awards  include  the  $500                                                               
million recovery from  Mercer; and if the costs  are all in-house                                                               
or a combination of in-house and outside counsel.                                                                               
                                                                                                                                
ATTORNEY  GENERAL BURNS  replied the  FY10 data  did include  the                                                               
$500 million recovery from Mercer  and the costs reflect both in-                                                               
house and outside counsel.                                                                                                      
                                                                                                                                
1:11:25 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked how much  the state paid  in attorney                                                               
fees to recover the $500 million.                                                                                               
                                                                                                                                
ATTORNEY GENERAL BURNS  said he understands it  was a contingency                                                               
arrangement,  but  he  would  follow  up  with  the  information.                                                               
Collections  fluctuate,  but they  are  typically  closer to  $76                                                               
million.                                                                                                                        
                                                                                                                                
The Criminal  Division takes  up the majority  of the  DOL budget                                                               
carrying  out  the  core  function  of  protecting  Alaskans.  He                                                               
highlighted the following:                                                                                                      
   · Thirteen District Attorney Offices are located in                                                                          
     Ketchikan, Kodiak, Kenai, Kotzebue, Barrow, Bethel,                                                                        
     Anchorage, Dillingham, Palmer, Fairbanks, Nome, and Sitka.                                                                 
   · The Office of Special Prosecutions handles cold cases;                                                                     
     Medicaid;    welfare,   PFD,    insurance,   and    workers'                                                               
     compensation fraud; cybercrimes; fish and game crimes;                                                                     
     environmental crimes; alcohol interdiction; criminal non-                                                                  
     payment of child support; and violations of state tax law.                                                                 
   · Appeals.                                                                                                                   
   · The Rural Prosecution Unit assists rural offices when                                                                      
    workload demands outstrip available staff or expertise.                                                                     
                                                                                                                                
1:13:28 PM                                                                                                                    
ATTORNEY  GENERAL BURNS  displayed a  state map  that showed  the                                                               
numbers of prosecutors  in each of the  statewide offices. Sitka,                                                               
Kotzebue,   and  Barrow   each  have   one  prosecutor;   Kodiak,                                                               
Dillingham, and  Nome each  have two;  Juneau and  Ketchikan each                                                               
have three; Bethel has seven  prosecutors; Kenai has nine; Palmer                                                               
has 11; Fairbanks has 14; and Anchorage has 35 prosecutors.                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked if  Bethel has  seven prosecutors                                                               
because  it's a  heavy crime  area compared  to the  rest of  the                                                               
state.                                                                                                                          
                                                                                                                                
ATTORNEY  GENERAL BURNS  replied he  didn't have  the statistics,                                                               
but that seems to be the case.                                                                                                  
                                                                                                                                
RICK  SVOBODNY,  Deputy   Attorney  General,  Criminal  Division,                                                               
Department  of  Law (DOL),  said  a  lot  of violent  crimes  are                                                               
committed in the  Yukon/Kuskokwim Delta, which is  an area that's                                                               
about the  size of Oregon. When  he last checked, Bethel  had one                                                               
more sexual assault than the entire Anchorage area.                                                                             
                                                                                                                                
REPRESENTATIVE  GRUENBERG  highlighted  that there  are  as  many                                                               
district attorneys in  Bethel as in the  entire Southeast region.                                                               
He  expressed concern  and  said  he'd like  to  know more  about                                                               
what's going on in that region.                                                                                                 
                                                                                                                                
CHAIR GATTO asked what population the Bethel office serves.                                                                     
                                                                                                                                
MR.  SVOBODNY  said   he  didn't  know  the   population  of  the                                                               
Yukon/Kuskokwim Delta, but the Bethel  office serves 47 villages.                                                               
By comparison, the Juneau office serves five locations.                                                                         
                                                                                                                                
1:16:39 PM                                                                                                                    
ATTORNEY GENERAL  BURNS said  he personally  intended to  spend a                                                               
significant amount of time addressing that issue.                                                                               
                                                                                                                                
The Civil Division  has seven offices statewide with  a number of                                                               
attorneys  in each,  predominantly in  Fairbanks, Anchorage,  and                                                               
Juneau.  Six  sections in  the  Civil  Division handle  the  core                                                               
function of protecting Alaskans.                                                                                                
   · Child Protection - 23 attorneys.                                                                                           
   · Commercial and Fair Business - 18 attorneys.                                                                               
   · Human Services - 9 attorneys.                                                                                              
   · Regulatory Affairs and Public Advocacy - 3 attorneys.                                                                      
   · Environmental Section - 10 attorneys.                                                                                      
   · Labor and State Affairs - 19 attorneys.                                                                                    
                                                                                                                                
Attorneys working  in the Child  Protection Section  handle 3,000                                                               
Child in  Need of  Aid (CINA)  cases every  year; 2,000  of these                                                               
cases are  ongoing at any  time, rolling from  year-to-year. Each                                                               
child protection  attorney handles  113 cases, which  exceeds the                                                               
recommended national  average of  100 cases. These  attorneys are                                                               
very  busy  and very  successful.  They  prevailed in  eleven  of                                                               
eleven  recent Alaska  Supreme Court  appeals  of superior  court                                                               
orders terminating parental rights. This  says that the Office of                                                               
Child  Services  is  doing  an  outstanding  job  in  making  the                                                               
determination as to which cases warrant moving forward.                                                                         
                                                                                                                                
1:19:28 PM                                                                                                                    
The  Commercial  and  Fair   Business  Section  handles  consumer                                                               
complaints.  The Consumer  Protection  Unit  handled the  DIRECTV                                                               
case; negotiated  a $300,000 settlement from  Publishers Clearing                                                               
House; a  $425,000 settlement  from Dannon  Yogurt; and  has thus                                                               
far recovered  $13 million from "Average  Wholesale Price," which                                                               
was drug  litigation related to overcharging  the Alaska Medicaid                                                               
program. These  were all associated  with false  advertizing. The                                                               
unit also  handled the lawsuit  in which jewelers  doing business                                                               
in Juneau falsely advertised "40-75% off" sales.                                                                                
                                                                                                                                
At the  request of the  Legislature, DOL in  2010 did a  study to                                                               
determine why  rural fuel costs  were so high. The  University of                                                               
Alaska  Anchorage  Institute  of  Social  and  Economic  Research                                                               
(ISER) also did a study and  concurred with DOL that there was no                                                               
evidence of price-fixing. Nevertheless,  DOL continues to monitor                                                               
this issue.                                                                                                                     
                                                                                                                                
ATTORNEY GENERAL BURNS made special  mention of the Florida court                                                               
that threw out as unconstitutional  the entire Patient Protection                                                               
and Affordable  Care Act (PPACA).  The court determined  that the                                                               
valid  portions could  not be  severed from  the unconstitutional                                                               
aspects  and  therefore,  the  entire  Affordable  Care  Act  was                                                               
unconstitutional.  DOL  continues  to advise  the  Department  of                                                               
Health  and Social  Services (DHSS),  the Division  of Insurance,                                                               
and the Division  of Retirement and Benefits on how  PPACA, if it                                                               
is  constitutional, will  affect  the Alaska.  The Department  of                                                               
Justice  will probably  appeal that  decision, but  because 13-14                                                               
other  states have  similar suits,  the U.S.  Supreme Court  will                                                               
ultimately have to weigh in on the issue.                                                                                       
                                                                                                                                
CHAIR GATTO  asked if the  state is investing funds  to implement                                                               
part of the PPACA.                                                                                                              
                                                                                                                                
ATTORNEY GENERAL BURNS said he wasn't sure of the answer.                                                                       
                                                                                                                                
CHAIR FRENCH noted that when  the Florida district court decision                                                               
was  announced  Governor  Parnell  indicated  he  would  ask  the                                                               
attorney general  the legal  status of  the federal  law. Senator                                                               
French asked  what his advice is  to the governor in  the face of                                                               
that ruling.                                                                                                                    
                                                                                                                                
ATTORNEY GENERAL  BURNS said Alaska  intervened in that  case and                                                               
that  remains the  binding law,  as  relates to  Alaska, at  this                                                               
time. All the governors that  were impacted by that decision sent                                                               
a letter urging the Obama  administration to move forward with an                                                               
appeal directly  to the Supreme  Court. It's a matter  that needs                                                               
to be  addressed and  it won't find  resolution until  it reaches                                                               
the highest court, he said.                                                                                                     
                                                                                                                                
CHAIR GATTO asked him to describe the term "nonseverability."                                                                   
                                                                                                                                
ATTORNEY GENERAL BURNS explained  that the Florida district court                                                               
determined that  the healthcare mandate  was so  intricately tied                                                               
to the  other aspects of the  Affordable Care Act, that  it could                                                               
not be  pulled out or severed  and leave the remaining  part able                                                               
to be  enforced. The  court couldn't make  a determination  as to                                                               
whether or not the PPACA  could survive if the healthcare mandate                                                               
was severed and therefore it had to be thrown out entirely.                                                                     
                                                                                                                                
CHAIR  FRENCH asked  if the  federal judge  in Florida  issued an                                                               
injunction against further application of the law.                                                                              
                                                                                                                                
ATTORNEY GENERAL BURNS answered no.                                                                                             
                                                                                                                                
CHAIR FRENCH asked if it means  that Alaska would be breaking the                                                               
law  if it  continued to  abide  by the  PPACA, in  light of  his                                                               
advice to the governor that the  decision by the judge in Florida                                                               
was binding on the state.                                                                                                       
                                                                                                                                
ATTORNEY  GENERAL  BURNS  replied  it was  the  decision  of  the                                                               
Florida  court  that  the  PPACA   was  unconstitutional  so  our                                                               
position is that we're not obligated to follow the PPACA.                                                                       
                                                                                                                                
CHAIR FRENCH asked if the governors  who are party to the lawsuit                                                               
and also  taking steps to ready  their states for the  PPACA were                                                               
breaking the law                                                                                                                
                                                                                                                                
ATTORNEY  GENERAL BURNS  replied,  "Not at  all."  Each state  is                                                               
taking different steps  to evaluate the law and just  how it will                                                               
be evaluated remains to be seen.                                                                                                
                                                                                                                                
1:26:30 PM                                                                                                                    
CHAIR FRENCH  said he's unclear as  to the binding affect  of the                                                               
Florida court ruling on the State of Alaska.                                                                                    
                                                                                                                                
ATTORNEY GENERAL BURN replied the  court's determination was that                                                               
it was  unconstitutional. "That is the  law as it relates  to the                                                               
State of Alaska, its position vis-a-vis that act," he added.                                                                    
                                                                                                                                
CHAIR FRENCH  noted the  absence of an  injunction, and  asked if                                                               
he's  saying that  the State  of Alaska  is relieved  of all  its                                                               
obligations under  the federal PPACA  because of the  decision in                                                               
Florida.                                                                                                                        
                                                                                                                                
ATTORNEY  GENERAL BURNS  replied there  is no  obligation on  the                                                               
State  of Alaska  to follow  the  federal mandate,  but it  could                                                               
elect  to  move forward  and  evaluate  independently whether  to                                                               
pursue a [healthcare] exchange.                                                                                                 
                                                                                                                                
CHAIR GATTO  asked if an  injunction was necessary, or  was there                                                               
an  implied consent  that allows  any state  operating under  the                                                               
PPACA to make an independent decision  as to whether it will move                                                               
forward.                                                                                                                        
                                                                                                                                
ATTORNEY GENERAL BURNS replied that's right; it was implied.                                                                    
                                                                                                                                
1:28:14 PM                                                                                                                    
REPRESENTATIVE LYNN joined the meeting.                                                                                         
                                                                                                                                
SENATOR COGHILL  asked if the  reason that an injunction  was not                                                               
issued related to the timeline.                                                                                                 
                                                                                                                                
ATTORNEY GENERAL BURNS said the  court didn't indicate whether or                                                               
not the  timelines were  relevant to  not issuing  an injunction,                                                               
but a number of timelines do  apply. The court emphasized and the                                                               
parties all  recognized the importance  of getting  this decision                                                               
to the  U.S. Supreme Court on  an expedited basis because  of the                                                               
potential cost.                                                                                                                 
                                                                                                                                
SENATOR  COGHILL asked  if there  was  a reason  the suit  wasn't                                                               
filed  under an  original jurisdiction  question rather  than the                                                               
federal court.                                                                                                                  
                                                                                                                                
ATTORNEY GENERAL BURNS said he didn't know.                                                                                     
                                                                                                                                
CHAIR FRENCH  said in  the face  of this  decision in  Florida he                                                               
hopes the governor  doesn't decide that it is elective  on him as                                                               
to  whether  or  not  to  follow  federal  law  and  allow  state                                                               
employees to keep their children  on their health insurance until                                                               
age  26, starting  in August  2011. I  hope, he  urged, that  you                                                               
advise the governor that in the  absence of an injunction, that I                                                               
believe that  the State  of Alaska  has to  continue to  abide by                                                               
that federal law.                                                                                                               
                                                                                                                                
ATTORNEY GENERAL BURNS  said he understands that  the governor is                                                               
evaluating that point.                                                                                                          
                                                                                                                                
CHAIR  GATTO asked  if  it's true  that  retired state  employees                                                               
would  not have  the ability  to keep  a child  on their  retiree                                                               
state insurance policy until age 26; the cutoff would be age 23.                                                                
                                                                                                                                
ATTORNEY GENERAL BURNS replied he didn't have an answer.                                                                        
                                                                                                                                
CHAIR GATTO  said the  State of  Alaska was  the only  state that                                                               
declined  $1  million  to   implement  the  mandated  [healthcare                                                               
exchange,] indicating  that the governor made  a decision earlier                                                               
than the Florida court decision.                                                                                                
                                                                                                                                
ATTORNEY GENERAL BURNS said, "I'm not aware of any decline."                                                                    
                                                                                                                                
1:31:58 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked, since  the governor has  declined to                                                               
work  under  the  federal  law,  if he  would  advocate  for  the                                                               
governor  to  propose  legislation   to  provide  healthcare  for                                                               
children  up to  age 26,  ban discrimination  against preexisting                                                               
conditions, and prohibit lifetime monetary limits on healthcare.                                                                
                                                                                                                                
ATTORNEY GENERAL  BURNS replied he  had had no  conversation with                                                               
the governor on that and did not know his position.                                                                             
                                                                                                                                
CHAIR  GATTO  asked  if  it's  his  job  to  defend  the  state's                                                               
position, but not to take a position himself.                                                                                   
                                                                                                                                
ATTORNEY  GENERAL  BURNS  replied  he would  defend  the  state's                                                               
position to the  extent that the position  was constitutional and                                                               
consistent with the statutes.                                                                                                   
                                                                                                                                
1:33:20 PM                                                                                                                    
He continued with the overview.                                                                                                 
                                                                                                                                
The Human Services  Section defends the Department  of Health and                                                               
Social  Services  in  lawsuits  related to  foster  care,  public                                                               
assistance  and Medicaid  overpayments.  Recently an  independent                                                               
auditor indicated that  there had been excessive  charges and DOL                                                               
was able to recover $1.9 million.                                                                                               
                                                                                                                                
The   Environmental   Section   filed   litigation   against   BP                                                               
Exploration  Alaska  to  recover civil  assessments  and  revenue                                                               
losses related to  the 2006 Prudhoe Bay pipeline  shutdown due to                                                               
corrosion.  The Environmental  Section  also  handled the  Cruise                                                               
Ship Initiative. HB 134  regulating wastewater discharges allowed                                                               
cruise ship owners and operators  until 2016 to fully comply with                                                               
the new water quality standards.                                                                                                
                                                                                                                                
The  Regulatory  Affairs  and   Public  Advocacy  (RAPA)  Section                                                               
advocates  the  public  interests in  regulated  utility  matters                                                               
before the  Regulatory Commission  of Alaska (RCA).  For example,                                                               
DOL was instrumental in the  evaluation of the Cook Inlet Natural                                                               
Gas Storage  Alaska (CINGSA). The  RCA approved that  facility on                                                               
January 31,  2011. The  DOL through RAPA  is also  monitoring the                                                               
$5.7 million in refunds that the  RCA ordered Enstar to return to                                                               
eligible customers as a result of overbilling.                                                                                  
                                                                                                                                
1:37:07 PM                                                                                                                    
The Department  of Law played  a key  role in developing  the 10-                                                               
year  Sexual  Assault  Domestic  Violence  Initiative.  They  are                                                               
collaborating  with  agencies  and  non-profits  to  support  the                                                               
initiative,  doing  public  services announcements  like  "Choose                                                               
Respect", and sponsoring pro-bono summits.                                                                                      
                                                                                                                                
Four sections  within the Civil  Division handle the  second core                                                               
function of fostering responsible development.                                                                                  
   · Oil Gas and Mining - 14 attorneys.                                                                                         
   · Transportation and Public Facilities - 8 attorneys.                                                                        
   · Environmental - 10 attorneys.                                                                                              
   · Natural Resources - 13 attorneys.                                                                                          
                                                                                                                                
DOL, through  the Oil  Gas and Mining  Section, is  continuing to                                                               
pursue   resolution  of   the  Point   Thomson  litigation   with                                                               
ExxonMobil.                                                                                                                     
                                                                                                                                
The Transportation and Public Facilities  Section is advising the                                                               
Department of  Transportation and  Public Facilities  (DOTPF) and                                                               
defending  the state  on building  projects such  as Goose  Creek                                                               
Prison,  the  Alaska  Marine   Highway  System  headquarters  and                                                               
Ketchikan dry  dock expansion, the  Juneau access road,  the Knik                                                               
Arm Crossing, and instate gas pipeline and propane projects.                                                                    
                                                                                                                                
DOL,  through the  Environmental Section,  prevailed in  the U.S.                                                               
Supreme Court,  which allowed the  Kensington Mine to  open. This                                                               
resulted  in jobs  for 300  workers during  construction and  200                                                               
workers during production, 85 percent of which are Alaska-hire.                                                                 
                                                                                                                                
CHAIR  GATTO  noted  that  the   25-30  legislators  who  visited                                                               
Kensington yesterday learned what a  great resource it is for the                                                               
state. It cost  $450 million to put  the mine in place  and it is                                                               
expected to generate about $1 billion per year before expenses.                                                                 
                                                                                                                                
ATTORNEY GENERAL  BURNS added that  DOL received many  letters of                                                               
appreciation  for  its  efforts  to  open  the  mine.  A  similar                                                               
positive  result   was  the  Red  Dog   Mine.  The  Environmental                                                               
Protection  Agency (EPA)  withdrew  key components  of the  water                                                               
pollution  discharge permit  and DOL  assisted the  Department of                                                               
Environmental    Conservation   (DEC)    in   promulgating    new                                                               
regulations.  This allowed  the  mine to  continue operation  and                                                               
preserved 516 direct and 2,800 ancillary  jobs. In a side note he                                                               
related how  the mine came to  be named after a  bush pilot's red                                                               
dog.                                                                                                                            
                                                                                                                                
1:41:16 PM                                                                                                                    
The Oil  Gas and Mining  Section within DOL  fostered responsible                                                               
development defending  the Outer  Continental Shelf  (OCS) leases                                                               
in court  challenges including Lease 193  and Interior's approval                                                               
of Shell's Beaufort  and Chukchi Sea OCS  exploration plans. This                                                               
is an  example of the  state working  in tandem with  the federal                                                               
government  for positive  results. Likewise,  DOL challenged  the                                                               
Interior  Department's purported  imposition of  a moratorium  on                                                               
development in Alaska  and the OCS. The  court recently dismissed                                                               
Alaska  v.  Salazar,   based  on  the  fact   that  the  Interior                                                               
Department unequivocally  asserted in  filings that there  was no                                                               
moratorium.                                                                                                                     
                                                                                                                                
1:42:24 PM                                                                                                                    
Through  the DOL  Natural Resources  Section, the  state partners                                                               
with the U.S. Forest Service  (USFS) in management of the Tongass                                                               
National Forest.  DOL has supported  "Tongass Exemptions"  to the                                                               
USFS  "Roadless  Rule,"  and USFS  authorization  of  the  Logjam                                                               
timber sale. If successful, this will preserve jobs.                                                                            
                                                                                                                                
DOL is also  seeking to develop a comprehensive  strategy to deal                                                               
with  issues  related  to  the  Endangered  Species  Act.  It  is                                                               
challenging  a number  of  unwarranted  listings and  unwarranted                                                               
critical  habitat designations.  These listings  and designations                                                               
can  have  a  significant   effect  on  transportation,  resource                                                               
development,  sport  and  subsistence hunting  and  fishing.  ESA                                                               
listing  petitions that  have been  sought  include polar  bears,                                                               
beluga whales in Cook Inlet,  Steller sea lions, humpback whales,                                                               
Pacific walrus, ringed  and bearded seals, and  SE Alaska Pacific                                                               
herring.  These have  significant impact  to the  state. Critical                                                               
habitat designations  have been  made for  the Cook  Inlet beluga                                                               
whale and 187,000 square miles  of the state have been designated                                                               
as critical  habitat for the  polar bear. The state  filed intent                                                               
to  sue challenging  this critical  habitat  designation for  the                                                               
polar bear.  The Arctic Slope  Regional Corporation,  North Slope                                                               
Borough, and industry have also  filed separate notices of intent                                                               
to sue.                                                                                                                         
                                                                                                                                
In addition  to the  listings, a number  of lawsuits  and appeals                                                               
are  appending for  the polar  bear, beluga  whales, Steller  sea                                                               
lions,  humpback whales,  and  ribbon seal.  The  state has  been                                                               
petitioning to de-list the eastern  stock of the Steller sea lion                                                               
based on  population densities. The  effect of the  western stock                                                               
listing was  a fishery closure, which  significantly impacted the                                                               
community of Adak.                                                                                                              
                                                                                                                                
DOL  has  budgeted  $1,396,875  in  FY11  to  challenge  the  ESA                                                               
listings.  The budget  for  FY12  is roughly  the  same, but  the                                                               
actual amount  will depend on  the additional listings  that come                                                               
forward.                                                                                                                        
                                                                                                                                
1:46:39 PM                                                                                                                    
The  Oil Gas  and  Mining Section  also assists  DNR  and DEC  in                                                               
requesting  prompt  federal  review of  challenges  to  petroleum                                                               
exploration  in the  National  Petroleum Reserve-Alaska  (NPR-A).                                                               
The Clean  Water Act  wetlands fill permit  for the  CD-5 project                                                               
was  initially denied  despite overwhelming  stakeholder support.                                                               
However,  that decision  was remanded  to the  Corps for  further                                                               
evaluation. DOL  is optimistic that  the Corps will  act promptly                                                               
to reevaluate that permit.                                                                                                      
                                                                                                                                
Likewise,  DOL advised  DNR on  responses to  BLM Wilderness  and                                                               
"Wild  Lands" designations.  Interior  Secretary Salazar  ordered                                                               
the evaluation of 72 million acres  of federal land in Alaska for                                                               
wilderness  characteristics.  The  potential  of  that  would  be                                                               
creation   of   a   de-facto   wilderness   in   Alaska   without                                                               
congressional  oversight. This  affects permitting  and right  of                                                               
way  determinations.  The  U.S.  Fish  and  Wildlife  Service  is                                                               
evaluating  revisions  to  the Arctic  National  Wildlife  Refuge                                                               
(ANWR)  Comprehensive  Conservation   Plan.  DOL  provided  legal                                                               
advice  to the  governor who  wrote  to urge  President Obama  to                                                               
respect ANILCA                                                                                                                  
                                                                                                                                
1:48:18 PM                                                                                                                    
The  Environmental Section  of  DOL continues  to  assist DEC  in                                                               
requesting  EPA  action  on  Shell Oil's  Clean  Air  Act  permit                                                               
application.  Because of  the delays,  Shell  has indicated  that                                                               
nothing  will   be  done  in   2011.  The   Alaska  congressional                                                               
delegation  unanimously   denounced  the   EPA  action   in  this                                                               
instance.                                                                                                                       
                                                                                                                                
The Environmental and Natural Resources  Sections of DOL continue                                                               
to work on aspects of the  Clean Water Act. Under a memorandum of                                                               
agreement (MOA)  with the  Army Corps of  Engineers, the  EPA can                                                               
invoke 404(c) to veto Corps  permit decisions. This authority has                                                               
been  used  very  sparingly,  but  the  EPA  indicated  it  would                                                               
evaluate the Pebble Mine in this regard.                                                                                        
                                                                                                                                
The Environmental Section also defended  the state in the Nunamta                                                               
Aulukestai v.  State suit  alleging constitutional  violations in                                                               
statutes and regulations that authorize  temporary land and water                                                               
use permits  for mineral exploration  at the Pebble  project. The                                                               
plaintiffs want  these temporary  permits to be  publicly noticed                                                               
and best interest  findings to be established  before permits are                                                               
issued.                                                                                                                         
                                                                                                                                
The  Natural  Resources  Section is  defending  Alaska  fisheries                                                               
management. The  state intervened in  the Upper Cook  Inlet Drift                                                               
Association v. Locke lawsuit where  UCIDA wanted to preempt ADF&G                                                               
management of salmon fisheries in  Cook Inlet. The expectation is                                                               
that this will be resolved amicably.                                                                                            
                                                                                                                                
1:52:13 PM                                                                                                                    
Four sections  within the  Civil Division  handle the  third core                                                               
function of protecting fiscal integrity.                                                                                        
   · Collections and Support - 8 attorneys.                                                                                     
   · Oil Gas and Mining - 14 attorneys.                                                                                         
   · Labor and State Affairs - 19 attorneys.                                                                                    
   · Torts and Workers' Compensation - 15 attorneys.                                                                            
                                                                                                                                
The Collections  and Support Section collects  criminal fines and                                                               
surcharges  owed  to the  state  and  restitution owed  to  third                                                               
parties. In  FY10 they  collected $7.3  million, $1.1  million of                                                               
which  was for  victim  restitution. A  pie  chart reflected  the                                                               
following  recoveries  for  FY10:  civil -  $32,121.23;  cost  of                                                               
appointed  counsel   -  $758,197.26;  cost  of   incarceration  -                                                               
$798,070.89;  correctional  facility   surcharge  -  $285,276.80;                                                               
court fines - $3,026,028.55; forfeited  bonds - $31,473.67; minor                                                               
offense -  $1,228,392.06; criminal restitution -  $85,919.46; and                                                               
juvenile restitution - $329,867.60.                                                                                             
                                                                                                                                
State operating revenues  come from oil and  gas corporate income                                                               
taxes, production  taxes, property taxes and  royalties on Alaska                                                               
North Slope  crude oil.  The Oil Gas  & Mining  Section collected                                                               
nearly $82 million in additional  taxes and royalties in calendar                                                               
year 2010 and $95.9 million in FY11 through February 8, 2011.                                                                   
                                                                                                                                
1:53:32 PM                                                                                                                    
SENATOR  WIELECHOWSKI  said  testimony in  the  Senate  Resources                                                               
Committee  indicates  that  virtually  every  day  the  state  is                                                               
blowing  the  statute  of  limitations  for  filing  lawsuits  on                                                               
royalty  cases  due  to  a lack  of  computer  equipment,  proper                                                               
auditing equipment,  and databases.  He asked if  this was  a DNR                                                               
issue or if DOL had suggestions on how this can be remedied.                                                                    
                                                                                                                                
ATTORNEY GENERAL  BURNS said  he was unaware  that the  state was                                                               
blowing  statutes of  limitations, but  he would  meet with  Tina                                                               
Kobayashi, the head of the Oil  Bas & Mining Section, to check on                                                               
that.                                                                                                                           
                                                                                                                                
SENATOR WIELECHOWSKI reiterated that it  might be a Department of                                                               
Natural Resources issue.                                                                                                        
                                                                                                                                
SENATOR  PASKVAN agreed  that  this was  an  internal issue  that                                                               
bears scrutiny. The  statute of limitations passed  and the state                                                               
didn't  know  if monies  were  owed  because audits  hadn't  been                                                               
conducted.  The question  was whether  to conduct  an audit  when                                                               
something was past  the statute of limitations, if at  the end of                                                               
the audit there was no capacity  to do anything other than in the                                                               
general  context  that  if  an  audit  is  completed,  the  state                                                               
generally seeks and recovers additional monies.                                                                                 
                                                                                                                                
1:55:48 PM                                                                                                                    
ATTORNEY GENERAL BURNS directed attention  to a pie chart of oil,                                                               
gas,  and mining  decisions  and  settlements FY00-FY10  totaling                                                               
$1.95  billion. This  was a  combination  of oil  and gas  taxes,                                                               
tariffs, royalties,  and non  oil and gas  taxes, which  would be                                                               
property-related.  The next  slide  shows the  breakdown of  oil,                                                               
gas, and  mining decisions and settlements  FY11 through February                                                               
8, 2011 totaling $95.9 million.                                                                                                 
                                                                                                                                
1:56:26 PM                                                                                                                    
CHAIR GATTO asked  if the state ever loses these  lawsuits and if                                                               
the totals  reflect total wins or  the balance of the  wins minus                                                               
the losses.                                                                                                                     
                                                                                                                                
ATTORNEY GENERAL  BURNS replied he  was not aware that  the state                                                               
had ever lost a case wholesale,  but the state often asserts that                                                               
a significantly  larger amount  was owed  than was  recovered. He                                                               
understands that a vast majority of these cases are settled.                                                                    
                                                                                                                                
CHAIR GATTO recalled a large  case of pipeline tariff overcharges                                                               
in which  the state gave  up recovery beyond a  certain look-back                                                               
period. He asked if the state  was being efficient in its actions                                                               
this time.                                                                                                                      
                                                                                                                                
ATTORNEY  GENERAL  BURNS  agreed  that the  issue  needed  to  be                                                               
evaluated to determine if the state  was losing money. If it was,                                                               
quick and decisive corrective measures are in order.                                                                            
                                                                                                                                
CHAIR  GATTO surmised  that there  might be  a benefit  to adding                                                               
attorneys to pursue  these law suits; the  Legislature would make                                                               
a decision about that addition to the DOL budget.                                                                               
                                                                                                                                
ATTORNEY GENERAL  BURNS reiterated  that he  would follow  up and                                                               
find the answers to those issues.                                                                                               
                                                                                                                                
SENATOR  WIELECHOWSKI expressed  concern  that some  leaseholders                                                               
were sitting on their leases. He  asked if DOL had taken steps to                                                               
ensure that  the leaseholders  of mining leases  and oil  and gas                                                               
leases were fully engaged in their duty to produce.                                                                             
                                                                                                                                
ATTORNEY  GENERAL BURNS  replied  he assumes  that  DNR would  be                                                               
reviewing the  leases from that  perspective, but he  didn't know                                                               
that for certain. The Department  of Law was not reviewing leases                                                               
from that perspective at this time.                                                                                             
                                                                                                                                
2:00:41 PM                                                                                                                    
DOL is  currently engaged in  TAPS tariff  litigation questioning                                                               
the rates for 2005. Other  ongoing litigation relates to the TAPS                                                               
Strategic  Reconfiguration case,  which is  currently before  the                                                               
Federal Energy  Regulatory Commission  (FERC) and  the Regulatory                                                               
Commission of Alaska (RCA). The  state challenged TAPS owners for                                                               
including hundreds  of millions  of dollars in  imprudent capital                                                               
project expenditures in  the tariffs. The status of  that case is                                                               
that an eight-week hearing before  FERC and RCA was scheduled for                                                               
November 2011.                                                                                                                  
                                                                                                                                
The  ongoing   litigation  in  which  DOL   is  representing  the                                                               
Department of  Revenue (DOR) in  superior court on the  2006 TAPS                                                               
property   tax   valuation   is   currently   on   appeal.   That                                                               
determination could  have significant financial  ramifications to                                                               
municipalities.  There  is  also  an  eight-week  trial  set  for                                                               
September 2011  regarding TAPS property tax  litigation for 2007-                                                               
2009.  Ms.  Kobayashi  will  give a  presentation  to  the  House                                                               
Finance  Committee tomorrow  on the  specific issues  relative to                                                               
oil and gas and how it affects that budget component.                                                                           
                                                                                                                                
2:02:51 PM                                                                                                                    
The Commercial and Fair Business  Section and the Labor and State                                                               
Affairs  Section  worked  on  the   cruise  ship  initiative  and                                                               
passenger  tax issues.  The cruise  ship  initiative made  income                                                               
from cruise  ship water activities  subject to Alaska  net income                                                               
tax  and imposed  a gambling  tax and  a $46  head tax.  When the                                                               
cruise  industry  sued  over  the  head  tax,  DOL  defended  the                                                               
Department of  Revenue and assisted in  negotiating a settlement.                                                               
The Legislature passed a new law  reducing the head tax to $34.50                                                               
and  the  cruise  industry  dropped   their  lawsuit.  This  will                                                               
preserve payment  of about $34  million per year to  defray costs                                                               
of services and facilities to accommodate passenger visits.                                                                     
                                                                                                                                
CHAIR GATTO  said in addition to  the reduction in the  head tax,                                                               
the state  agreed to pay  what had  been an additional  $15 local                                                               
head tax  in Juneau and Ketchikan  and so much per  port of call.                                                               
In the  end, it looked like  this essentially wiped out  the head                                                               
tax and conceivably  the state was subsidizing  the cruise ships.                                                               
He  asked  Mr.  Burns  if  he  had  followed  the  math  as  that                                                               
legislation passed  in the waning  hours of the  26th legislative                                                               
session.                                                                                                                        
                                                                                                                                
ATTORNEY GENERAL BURNS replied the  only thing he knew about that                                                               
issue was that the current tax is $34.50.                                                                                       
                                                                                                                                
SENATOR WIELECHOWSKI agreed that the  state came out on the short                                                               
end of the stick; that decision  was based on the legal advice to                                                               
settle the case.  The result was supposed to be  that more cruise                                                               
ships would come back  but he was only aware that  one did so. He                                                               
asked if more did in fact return.                                                                                               
                                                                                                                                
ATTORNEY GENERAL BURNS offered to  find out how many cruise ships                                                               
came back.                                                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  said he'd  like to  know because  the state                                                               
gave back  tens of millions  of dollars in exchange  for agreeing                                                               
to  settle the  lawsuit. To  his knowledge  there's never  been a                                                               
follow-up as to what the state actually received.                                                                               
                                                                                                                                
2:06:33 PM                                                                                                                    
He continued the presentation.                                                                                                  
                                                                                                                                
The Labor and  State Affairs Section handled  the state's lawsuit                                                               
against Mercer,  the actuary for  the state PERS and  TRS pension                                                               
plans. The suit was settled and Mercer paid $500 million.                                                                       
                                                                                                                                
The Natural  Resources Section represented  the state  in Carlson                                                               
v. State.  This was  a 26 year  lawsuit by  nonresident fishermen                                                               
who sought refunds of commercial  fishing permit fees, which were                                                               
three times  higher than resident  fees. The court  ruled against                                                               
the state  and the  principal in that  judgment was  $12 million.                                                               
Adding the interest and attorney  fees brought the total to $82.3                                                               
million. The state  appealed to the supreme court  the 11 percent                                                               
prejudgment interest and the attorney  fees. A successful outcome                                                               
could mean a $60 million savings  for the state. The judgment was                                                               
fully  funded and  it just  awaits a  final determination  by the                                                               
court as to the appropriate interest rate.                                                                                      
                                                                                                                                
2:08:02 PM                                                                                                                    
SENATOR  PASKVAN  asked  if the  $60  million  potential  savings                                                               
reflected the difference  between a 3.5 interest  rate as opposed                                                               
to an 11 percent rate.                                                                                                          
                                                                                                                                
ATTORNEY GENERAL BURNS  answered yes, and the  amount of attorney                                                               
fees, which were calculated on the full amount.                                                                                 
                                                                                                                                
CHAIR  GATTO asked  if  there  was ever  any  question about  the                                                               
legality of charging nonresident commercial boats more.                                                                         
                                                                                                                                
ATTORNEY GENERAL  BURNS replied he  only knows the facts  as they                                                               
exist  today, but  the focus  of the  appeal was  the 11  percent                                                               
prejudgment interest that was compounded quarterly.                                                                             
                                                                                                                                
2:09:33 PM                                                                                                                    
The Transportation  Section is handling litigation  involving the                                                               
boat  builder  and the  manufacturer  of  the fast  ferries,  M/V                                                               
Fairweather and  M/V Chenega.  The state  wasn't able  to resolve                                                               
this  and had  to  file  a lawsuit  to  preserve  the statute  of                                                               
limitations. The M/V Fairweather is  currently out of service but                                                               
neither vessel lived up to what was represented.                                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked if those ferries  would have made                                                               
money for  the state, had they  been operating. He added  that he                                                               
was thinking about consequential damages.                                                                                       
                                                                                                                                
ATTORNEY GENERAL BURNS replied he  doesn't know that the state is                                                               
pursuing  damages as  much  as  it is  focused  on getting  those                                                               
ferries to perform as warranted.                                                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG commented  that he  hopes the  state is                                                               
looking for all the damages it can  get. "If not, I would like to                                                               
know why not," he said.                                                                                                         
                                                                                                                                
ATTORNEY GENERAL BURN assured him that  it was a component of the                                                               
damage claim.                                                                                                                   
                                                                                                                                
CHAIR  FRENCH commented  that it  might save  money to  keep them                                                               
tied up.                                                                                                                        
                                                                                                                                
CHAIR GATTO  said he  understands that  the state  collects about                                                               
$.35 for every $1 that it spends to operate these ferries.                                                                      
                                                                                                                                
2:12:40 PM                                                                                                                    
ATTORNEY GENERAL  BURNS said  regardless of  whether or  not they                                                               
make  money,  these   ferries  aren't  living  up   to  what  was                                                               
represented.                                                                                                                    
                                                                                                                                
ATTORNEY GENERAL  BURNS said the last  slide regarding protecting                                                               
fiscal  integrity reflects  that DOL  successfully defended  over                                                               
200 tort claims with no  adverse judgments against the state. DOL                                                               
is obviously doing a good job  handling those cases but this also                                                               
indicates that the  other departments are doing a  very good job.                                                               
This also  speaks to the  good communication between the  DOL and                                                               
the agencies.  This includes the  Department of  Corrections, the                                                               
Office  of  Child Services,  and  the  other agencies  that  have                                                               
historically been named defendants.                                                                                             
                                                                                                                                
CHAIR GATTO asked  if the state was released  from the obligation                                                               
of medical care once a prisoner is released from incarceration.                                                                 
                                                                                                                                
ATTORNEY GENERAL BURNS  offered to look into that,  but his sense                                                               
was  that  the obligation  to  provide  services would  end  upon                                                               
release.                                                                                                                        
                                                                                                                                
2:15:20 PM                                                                                                                    
Three sections within  the Civil Division handle  the fourth core                                                               
function of promoting good governance.                                                                                          
   · Natural Resources - 13 attorneys.                                                                                          
   · Opinions, Appeals and Ethics - 11 attorneys.                                                                               
   · Labor and State Affairs - 19 attorneys.                                                                                    
                                                                                                                                
The  DOL  was heavily  involved  in  the 2010  federal  elections                                                               
lawsuits related  to a write-in  candidate's name,  Miller public                                                               
records,  Miller state,  Miller federal,  Voting Rights  Act, and                                                               
others. Legislation  has been introduced  to address some  of the                                                               
issues that came up in that last election.                                                                                      
                                                                                                                                
The Labor  and State  Affairs Section  also defended  and settled                                                               
the  Nick  v. State  elections  lawsuit  in Western  Alaska.  The                                                               
result  was  that enhancements  to  the  language assistance  for                                                               
Yup'ik  speaking voters  will be  available at  elections in  the                                                               
Bethel area.                                                                                                                    
                                                                                                                                
The Opinions, Appeals and Ethics  Section and the Labor and State                                                               
Affairs  Section  defended  the  initiative  process  in  Planned                                                               
Parenthood   v.  Campbell   and  "The   Natural  Right   to  Life                                                               
Initiative."  DOL also  provided advice  on the  Executive Branch                                                               
Ethics  Act; new  regulations  were  adopted including  standards                                                               
governing  state  reimbursement  of attorneys  fees  incurred  by                                                               
state  officers exonerated  in  an  ethers complaint  proceeding.                                                               
They also do  ethics training for senior managers  and boards and                                                               
serve  advisory   opinions  and  investigations.   The  Opinions,                                                               
Appeals  and  Ethics  Section  is also  involved  in  the  issues                                                               
related  to the  burgeoning  public  records requests,  including                                                               
requests for 26,500 pages of  former Governor Palin's emails. The                                                               
definitive date  for production through the  Governor's Office is                                                               
May  31,  2011.  In  2010, forty-three  additional  and  separate                                                               
public records  requests were directed  to the DOL.  This process                                                               
includes privilege reviews and deliberative protections.                                                                        
                                                                                                                                
2:18:28 PM                                                                                                                    
ATTORNEY  GENERAL  BURNS said  the  challenges  in FY12  will  be                                                               
essentially  the same,  and DOL  will  continue to  focus on  its                                                               
mission  and   core  objectives.  In  addition,   DOL  will  have                                                               
increased  involvement with  federal agencies  such as  BLM, EPA,                                                               
U.S.  Fish and  Wildlife, and  ESA on  issues related  to natural                                                               
resource development. This is a  clear recognition that the State                                                               
of  Alaska must  dialog early-on  to  address the  issues and  be                                                               
involved  in the  public process  as opposed  to litigating.  DOL                                                               
will continue to work with  ADF&G, DNR, and other stakeholders to                                                               
work  with the  federal  government and  to collectively  address                                                               
responsible  development.  While  there's been  some  uncertainty                                                               
about  the  federal  government's objective  related  to  natural                                                               
resource  development, it's  a misperception  that  the State  of                                                               
Alaska is  anti federal government  because the  relationship has                                                               
got  to  be symbiotic.  However,  when  the federal  government's                                                               
policy is  unclear, it  creates uncertainty  within the  arena of                                                               
development generally.  For example,  federal involvement  in the                                                               
planning process for  the NPRA and the ANWAR  Coastal Plain study                                                               
could  lead   to  a  recommendation  of   Wilderness  designation                                                               
effectively precluding  development. Also, the BLM  recent notice                                                               
of wetlands and wilderness policy  for evaluating lands under its                                                               
management could have  impact. The new ocean  zoning and possible                                                               
incursion into  what traditionally has been  state water resource                                                               
management. Likewise, the federal  policy on the Tongass National                                                               
Forest appears to be changing.                                                                                                  
                                                                                                                                
The federal government  owns 60 percent of the land  in the state                                                               
of Alaska and has  a right to do what it is  doing. But the state                                                               
also  has  a significant  interest  because  it receives  revenue                                                               
sharing when  resources are developed. The  state received nearly                                                               
105 million acres in conjunction  with the Statehood Act, but the                                                               
federal government permitting policies  are impacting the state's                                                               
ability to  develop those  resources. The  EPA's Clean  Water Act                                                               
Section 404(c) designation, for example, is significant.                                                                        
                                                                                                                                
2:23:18 PM                                                                                                                    
Examples of successful state-federal  cooperation include the DEC                                                               
air permitting  program for facility and  construction operation,                                                               
except OCS;  DEC assumption of  the National  Pollutant Discharge                                                               
Elimination  System  (NPDES)  permit program  under  the  federal                                                               
Clean Water  Act; and  the cleanups  at federal  facilities under                                                               
the  Comprehensive  Environmental   Response,  Compensation,  and                                                               
Liability Act  (CERCLA). Clearly, the relationship  is not always                                                               
adversarial.  The  state  is trying  to  engage  proactively  and                                                               
maximize opportunities of good science benefitting good science.                                                                
                                                                                                                                
Specific  examples of  state  cooperation  with federal  programs                                                               
include the  defense of the  Army Corps of Engineers  Clean Water                                                               
Act  permit  authorizing  disposal  of  mine  tailings,  allowing                                                               
Kensington Mine  to open;  work with  EPA to  incorporate revised                                                               
DEC regulations  into the  Red Dog Mine  Clean Water  Act permit;                                                               
support for the  U.S. Forest Service authorization  of the Logjam                                                               
timber sale; and Outer Continental Shelf (OCS) challenges.                                                                      
                                                                                                                                
Areas where  the state is  challenging federal  overreach include                                                               
the critical  habitat designations  under the  Endangered Species                                                               
Act;  the Clean  Water Act  Section 404(c)  fill permit  elevated                                                               
scrutiny of the  CD-5 Pebble permit and the  Tanana River Bridge;                                                               
the  EPA  intervention under  the  Clean  Air  Act on  Shell  Oil                                                               
Beaufort Sea drilling plans; Wilderness  and "Wild Lands" and the                                                               
constitutionality of  the Patient Protection and  Affordable Care                                                               
Act.                                                                                                                            
                                                                                                                                
2:26:07 PM                                                                                                                    
DOL  is  working   to  address  these  issues   by  developing  a                                                               
comprehensive  5-year   interdepartmental  plan.   The  executive                                                               
agencies    will   also    collaborate   with    tribes,   Native                                                               
organizations, and attorneys general in other states.                                                                           
                                                                                                                                
2:27:19 PM                                                                                                                    
CHAIR  GATTO   asked  if  the   2477  access  was   different  or                                                               
essentially the same as it was in 2003.                                                                                         
                                                                                                                                
ATTORNEY GENERAL  BURNS said he  wasn't part of any  decisions in                                                               
2003, but  DOL is working with  DNR to evaluate and  identify the                                                               
areas that  qualify for 2477  access and prioritize  the benefits                                                               
of access  and potential success.  There is no sense  in spending                                                               
lots  of money  on  2477  if the  probability  of  proving up  is                                                               
minimal.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  that for  some time  he had  been                                                               
interested in  a lawsuit in  which a number of  attorneys general                                                               
joined to help  the owners of unclaimed WW II  bonds regain their                                                               
property.  The  suit,  which  is  worth  millions  upon  millions                                                               
nationally,  alleges that  the war  bonds went  unclaimed because                                                               
the  federal  government  neglected  to notify  owners  of  their                                                               
existence. Alaska didn't join that  claim, but assistant attorney                                                               
general Chris Poag  is looking at the potential  for commencing a                                                               
new lawsuit. Alaska  is one of the four  jurisdictions where this                                                               
could  be done.  He suggested  the  committee ask  for a  written                                                               
status report on this issue.                                                                                                    
                                                                                                                                
2:31:06 PM                                                                                                                    
ATTORNEY GENERAL BURNS  said he understands that  no decision has                                                               
been made,  but it will be  evaluated further and he  would get a                                                               
response.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG said  he had also been  working with Mr.                                                               
Poag to deal  with the fact that there is  no statutory mechanism                                                               
for  the   state  to  follow   up  to  ensure  that   grants  are                                                               
administered  properly and  that people  don't take  advantage of                                                               
unsophisticated grantees.                                                                                                       
                                                                                                                                
2:32:35 PM                                                                                                                    
SENATOR  PASKVAN said  the state  provides a  20 percent  capital                                                               
credit for  capital expenditures  and he believes  it's important                                                               
for  the state  in its  analysis  of the  statute of  limitations                                                               
issue  to  find   out  what  is  being  deducted   as  a  capital                                                               
expenditure. This  is a significant  issue right now  because the                                                               
state  doesn't know  if the  billions of  dollars that  are being                                                               
spent as capital expenditures are for ordinary maintenance.                                                                     
                                                                                                                                
ATTORNEY GENERAL BURNS said okay.                                                                                               
                                                                                                                                
CHAIR GATTO thanked Attorney General Burns for the presentation.                                                                
                                                                                                                                
2:33:49 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Gatto adjourned the meeting at 2:33 p.m.                                                                                  

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