00 CS FOR HOUSE BILL NO. 119(L&C) 01 "An Act exempting certain joint action agencies from regulation by the state or 02 municipalities; relating to the relationship between certain joint action agencies and the 03 public utilities that form the joint action agencies; relating to powers and immunities of 04 certain joint action agencies; requiring filing of certain joint action agency agreements; 05 relating to the financial affairs of certain joint action agencies; declaring certain joint 06 action agencies to be political subdivisions for certain purposes; relating to liability and 07 indemnification of officers, employees, and agents of certain joint action agencies; and 08 defining 'agency agreement' and 'parties to the agency agreement' as used with 09 reference to certain joint action agencies." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. AS 29.35.070(a) is amended to read: 12 (a) The assembly acting for the area outside all cities in the borough and the 01 council acting for the area in a city may regulate, fix, establish, and change the rates 02 and charges imposed for a utility service provided to the municipality or its inhabitants 03 by a utility that is not subject to regulation under AS 42.05 unless that utility is 04 exempted from regulation under AS 42.05.711(a), [OR] (d) - (k), or (o), or is 05 exempted under regulations adopted under AS 42.05.810 from complying with all or 06 part of AS 42.05.141 - 42.05.721. 07 * Sec. 2. AS 42.05.711(b) is amended to read: 08 (b) Except as otherwise provided in this subsection and in (o) of this section, 09 public utilities owned and operated by a political subdivision of the state, or electric 10 operating entities established as the instrumentality of two or more public utilities 11 owned and operated by political subdivisions of the state, are exempt from this 12 chapter, other than AS 42.05.221 - 42.05.281 and 42.05.385. However, 13 (1) the governing body of a political subdivision may elect to be 14 subject to this chapter; and 15 (2) a utility or electric operating entity that is owned and operated by a 16 political subdivision and that directly competes with another utility or electric 17 operating entity is subject to this chapter and any other utility or electric operating 18 entity owned and operated by the political subdivision is also subject to this chapter. 19 * Sec. 3. AS 42.05.711(l) is amended to read: 20 (l) A person, utility, joint action agency established under AS 42.45.310, or 21 cooperative that is exempt from regulation under (a), [OR] (d) - (k), or (o) of this 22 section is not subject to regulation by a municipality under AS 29.35.060 and 23 29.35.070. 24 * Sec. 4. AS 42.05.711 is amended by adding a new subsection to read: 25 (o) A joint action agency established under AS 42.45.310 is exempt from 26 regulation under this chapter, including the requirement to obtain a certificate of 27 public convenience and necessity under AS 42.05.221, for the operation of, sale of 28 power from, and other activities related to the power project the joint action agency 29 purchases from the Alaska Energy Authority until the wholesale agreement and any 30 related contract assigned by the authority becomes subject to review or approval by 31 the commission under AS 42.05.431. The exemption provided by this subsection 01 extends to repairs and improvements to the power project the joint action agency 02 purchases from the authority but does not extend to any other power project or other 03 activity of the joint action agency. 04 * Sec. 5. AS 42.45.310(a) is amended to read: 05 (a) Two or more public utilities that purchase power from a power project 06 acquired or constructed as part of the former energy program for Alaska and owned by 07 the Alaska Energy Authority under AS 44.83.396 may form a joint action agency 08 under AS 42.45.300 and under this section to purchase the power project from the 09 Alaska Energy Authority if the purchase and sale of the project has first been 10 authorized by law. 11 * Sec. 6. AS 42.45.310(c) is amended to read: 12 (c) The agency is a body corporate and politic and an instrumentality of the 13 public utilities that form the agency, but has a separate and independent legal 14 existence from the public utilities. A debt, obligation, or liability of the agency does 15 not constitute a debt, obligation, or liability of a public utility. A liability 16 incurred by the agency shall be satisfied exclusively from the assets or revenue of 17 the agency, and a creditor of the agency or any other person does not have any 18 right of action or claim against a public utility, because of a debt, obligation, or 19 liability of the agency. The agency has the powers of a public utility under 20 AS 42.05 and the immunities of a public utility. In addition to the powers granted 21 to the agency [AUTHORIZED] under AS 42.45.300 and this section, the agency has 22 the power 23 (1) to adopt bylaws of the agency; 24 (2) to sue and be sued; 25 (3) to carry out the authorized purposes of the agency; [AND] 26 (4) subject to (e) of this section, to issue revenue bonds and other 27 obligations [SECURE FINANCING] that are not obligations of either the state or the 28 public utilities that are parties to [FORMED] the agency agreement to provide 29 financing to carry out the authorized purposes of the agency; and 30 (5) to exercise the powers of eminent domain and declaration of 31 taking to acquire land or materials under the procedures set out in AS 09.55.240 - 01 09.55.460 to carry out the authorized purposes of a joint action agency within the 02 boundaries of the power project purchased by the agency from the Alaska 03 Energy Authority. 04 * Sec. 7. AS 42.45.310(d) is amended to read: 05 (d) The agency is created by a written agreement among the public utilities 06 forming the agency. Each public utility forming the agency shall adopt the terms of 07 the agreement by ordinance or resolution. After the public utilities that are parties 08 to the agency agreement adopt and execute the agreement, the board of directors 09 of the agency shall file the agency agreement with the Department of Community 10 and Economic Development. Subject to (c) of this section, the agency agreement 11 [ESTABLISHING THE AGENCY] may define the powers, functions, and activities 12 of the agency and specify the means by which they shall be performed. The agency 13 agreement may establish the rights and responsibilities of the public utilities that form 14 the agency. If applicable, the agency agreement must [SHALL] provide for 15 (1) apportionment between the public utilities that are parties to 16 [FORMING] the agency agreement of responsibility for [PROVIDING FINANCES 17 TO THE] expenses incurred in the performance of the functions or activities; 18 (2) apportionment of fees or other revenue derived from the functions 19 or activities and the manner in which the revenue shall be accounted for; 20 (3) the transfer of personnel and the preservation of employment 21 benefits; and 22 (4) the rights of the public utilities that are parties to [FORMING] 23 the agency agreement to terminate the agreement, subject to (e) of this section, 24 including resolving disputes if the public utilities are unable, upon termination of the 25 agency agreement, to agree on the transfer of personnel or the division of assets and 26 liabilities between the parties to the agreement. 27 * Sec. 8. AS 42.45.310(e) is amended to read: 28 (e) The public utilities that are parties to [FORMING] the agency 29 agreement shall pledge and agree with the holders of revenue bonds or other 30 obligations issued by the agency [FINANCING SECURED UNDER THIS 31 SECTION], including with a state entity that provides financing to the agency, that 01 the public utilities and the agency will not terminate the agency or take any other 02 action that would limit or alter the rights and powers vested in the agency by this 03 section to fulfill the terms of a contract made by the agency with the holders of the 04 bonds or other obligations and that the public utilities and the agency will not in any 05 way impair the rights and remedies of the holders until the bonds or other obligations 06 [FINANCING SECURED UNDER THIS SECTION], together with the interest on 07 them with interest on unpaid installments of interest, and all costs and expenses in 08 connection with an action or proceeding by or on behalf of the holders of the bonds 09 or other obligations are fully met and discharged. The agency may include this 10 pledge and agreement of the public utilities and the agency, insofar as it refers to 11 holders of bonds and other obligations of the agency, in a contract with the holders 12 and, insofar as it relates to a state entity, in a contract with the state entity. 13 * Sec. 9. AS 42.45.310(f) is repealed and reenacted to read: 14 (f) Bonds and other obligations issued by the agency and all interest and 15 income from them and all fees, charges, funds, revenue, income, and other money 16 pledged or available to pay or secure the payment of the bonds or obligations or 17 interest on them are exempt from taxation. The real and personal property of the 18 agency and the assets, income, and receipts of the agency are exempt from all taxes 19 and special assessments of the state or a political subdivision of the state, except that 20 electricity sold at retail by the agency is subject to the electric cooperative tax 21 (AS 10.25.540 - 10.25.570). 22 * Sec. 10. AS 42.45.310(g) is amended to read: 23 (g) A loan to, investment in, or other financial assistance [AID] provided to 24 the agency by the state or any political subdivision of the state does not constitute a 25 violation of AS 37.10.085. 26 * Sec. 11. AS 42.45.310(h) is amended to read: 27 (h) An agency formed by, and that continues to include, one or more 28 municipal public utilities is a political subdivision [ONLY] for purposes of 29 AS 38.05.810. 30 * Sec. 12. AS 42.45.310(i) is amended by adding new paragraphs to read: 31 (4) "agency agreement" or "agreement" means the written agreement 01 described in (d) of this section between or among the public utilities creating a joint 02 action agency; 03 (5) "parties to the agency agreement" means those public utilities that 04 initially form the agency and, 05 (A) in the event of a permitted withdrawal of a public utility 06 from the agency in accordance with the terms of the agency agreement, those 07 public utilities that remain parties to the agency agreement; and 08 (B) if authorized by law, includes an additional public utility 09 that becomes a party to the agency agreement. 10 * Sec. 13. AS 42.45 is amended by adding a new section to article 6 to read: 11 Sec. 42.45.320. Liability, indemnification, and insurance. (a) A protected 12 person is not individually liable for conduct performed within the scope of the person's 13 duties for the agency. However, the protected person may be held individually liable 14 for conduct if it was not reasonable for the person to believe that the conduct was in, 15 or not contrary to, the best interests of the agency. 16 (b) Unless prohibited by the agency agreement, the agency shall indemnify a 17 protected person who is or may be made a party to a contested matter arising out of 18 acts or omissions within the scope of the person's duties for the agency against 19 expenses actually and reasonably incurred in connection with the contested matter. 20 However, the agency may not indemnify the protected person if the person did not 21 reasonably believe the conduct to be in, or not opposed to, the best interests of the 22 agency. With respect to a criminal action or proceeding, the agency shall indemnify a 23 protected person unless the person had reasonable cause to believe that the conduct 24 was unlawful. 25 (c) An agency may purchase and maintain insurance on behalf of a protected 26 person against liability asserted against the protected person and incurred in an official 27 capacity or arising out of the person's status. 28 (d) In this section, 29 (1) "agency" means a joint action agency formed under AS 42.45.310; 30 (2) "conduct" includes action, inaction, and omission; 31 (3) "contested matter" means a proposed, pending, or completed action 01 or proceeding, whether civil, criminal, administrative, or investigative; 02 (4) "expenses" include attorney fees, judgments, fines, and amounts 03 paid in settlement; 04 (5) "protected person" means a director, officer, employee, or agent of 05 an agency.