Legislature(1995 - 1996)
03/09/1995 01:38 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HCRA - 03/09/95 HB 154 - REGULATORY TAKING OF PRIVATE PROPERTY CO-CHAIR IVAN invited Representative Vic Kohring to introduce the new Committee Substitute for HB 154. He entertained a motion to adopt the CS for HB 154 for discussion purposes. Number 041 REPRESENTATIVE PETE KOTT moved that the CS for HB 154 be adopted by the committee for discussion. Number 043 Hearing no objection, the committee substitute for HB 154 was adopted for discussion purposes. Number 047 REPRESENTATIVE VIC KOHRING, Sponsor, said he appreciated the opportunity to come before the committee to discuss CS for HB 154. He had two primary changes to the bill he wished to discuss. The first one called for the Department of Law to draw up guidelines identifying what exactly determined a regulatory taking and what procedures would be required to assist the victim regarding compensation for a taking. The second change dealt with the compensation. The original wording in the bill stated the victim would be compensated in the event there was a taking which reduced the assessed value of the property. As the bill sponsor, Representative Kohring wanted to take this one step further and require that full compensation of the reduction in value be paid to the property owner in cash. Another point Representative Kohring made was the bill writers took the word "unconstitutional" out of the bill and from the title. Representative Kohring also pointed out that 11 different states had enacted similar legislation throughout the Lower U.S. and this year 13 other states had similar bills that were being deliberated. A bill similar to this has been taken up for consideration in Congress. There also have been some court cases at the U.S. Supreme Court level as well as the Alaska Supreme Court level, where rulings have recognized the rights of private property owners and curtailed the ability of governments to impose excessive costs on businesses as a condition of further development. These courts have also said public good is best served by protecting individuals from the arbitrary power of the state. Another point pertained to a recent survey done by the National Federation of Independent Businesses which found 81 percent of small business owners supported the notion that government be required to pay just compensation to property owners. Representative Kohring believed the passage of this bill would provide public protection from the government concerning any unconstitutional taking of private property without some form of compensation. He stated there were witnesses on teleconference wishing to testify in support of this bill. He invited Craig Lyon, his legislative aide, to discuss the bill. Number 125 CO-CHAIR IVAN asked if the committee had any questions or comments. He invited Steve Noey on teleconference from Anchorage to testify on HB 154. Number 131 STEVE NOEY, testified via teleconference in support of HB 154. The various cases Representative Kohring referred to, on both the State and Federal Supreme Court level, have been expensive for the individual because there was no codified law effecting just compensation under the Fifth Amendment. Number 152 CO-CHAIR IVAN invited Bill Cummings from the Department of Law to testify. Number 159 BILL CUMMINGS, Assistant Attorney General, Transportation Section, Department of Law (DOL), commented on HB 154. He apologized for having just received the committee substitute. MR. CUMMINGS listed his concerns regarding the statutes. The first pertained to the requirement imposed upon the DOL to come up with annual guidelines constituting a regulatory taking. The DOL had serious concerns because it would be a difficult duty to perform. Each of the takings cases one reads in the U.S. Supreme Court are incredibly fact dependent. There might be circumstances in one case that have no particular relation to other applications or fact patterns. Another difficulty is that the DOL represents agencies that promulgate regulations someone might claim was a regulatory taking. This puts the department in a difficult position of having to explain what has already been said and makes it difficult to defend just and appropriate actions of state agencies. MR. CUMMINGS discussed the statute of limitations. The difficulty with this is people want to believe five years is a reasonable time limit to bring suit if there is a regulatory taking. This ignores a long-standing tradition in Alaska law and most other jurisdictions in the United States. Complaining against an administrative agency, a person should first exhaust administrative remedies before running to court to bring action. Secondly, most of these administrative actions a person complains about are appealed to a Superior Court. One could go to the Superior Court if other attempts for filing one's complaint haven't been noticed. This usually has to be done within 30 days. By allowing the five year statute of limitations, there could be decisions that are reached with no finality and the government could find it difficult to conduct its affairs. Finally, in regard to annually creating the guidelines, it could take two months to do the first set of guidelines and the yearly revisions. The guidelines would be little more than just listing individual cases because of the special nature of the cases and because they are fact specific. He welcomed questions from the committee. Number 231 REPRESENTATIVE KIM ELTON wondered if this bill would be a playground for attorneys because of the potential litigation that could occur whenever someone determined a taking. Number 245 MR. CUMMINGS said it had the tendency to increase litigation because there were strict procedural burdens placed on administrative agencies. There are burdens of proof assigned to administrative agencies which would increase litigation. Number 254 CO-CHAIR ALAN AUSTERMAN reconfirmed that Mr. Cummings had just received the Committee Substitute. He asked if the DOL went through these bills when they were first introduced and came up with guidelines. Number 258 MR. CUMMINGS said that the bill he's gone through and reviewed was the original one. He believed the guideline requirements in the committee substitute were the same as in the original bill. He stated there were many procedural and substantive rights created in the committee substitute not included in the original bill. The original was benign in that it had specific statements that neither decreased nor increased the rights of private property owners. Mr. Cummings thought a very compelling argument could made that the committee substitute did exactly the opposite. Number 278 CO-CHAIR IVAN asked if he had any suggestions on how to remedy some of the problems he has noticed. Number 281 MR. CUMMINGS said it struck him as an extreme response. He would like to know a fact pattern this related to. He questioned the effectiveness of the original bill, but when he had the committee substitute, he believed it was going to apply to just about every administrative decision made by the state or municipality. He didn't think the system was broken quite that badly. Mr. Cummings wanted a sectional analysis concerning specific problems that engendered HB 154. Number 296 REPRESENTATIVE KOHRING said his staff aide would provide information and examples of regulatory takings that have occurred in Alaska. Representative Kohring stated the guidelines were justified in moving forth and setting them up would protect peoples' private property rights from takings. It's been commonplace for years for government entities to come in after someone has acquired property and impose a restriction on how the private property owner can develop his property, thus rendering their property less developable, less valuable and virtually worthless. This bill gives private property owners a chance to assert their rights and tell a government agency they can't do this. Number 318 MR. CUMMINGS asked for further questions from the committee. Number 324 JOE RYAN, Legislative Assistant to Representative Al Vezey, said he has been helping Representative Kohring and had some input. Mr. Ryan has read about 80 examples of case law court rulings throughout the country regarding takings. These courts have been generous in their attitude toward government takings. They have allowed many times the devaluation of peoples' property and have taken away the rights to their property. When these cases have finally reached appeal in the United States Supreme Court, it was ruled under the Fifth Amendment that these were takings, but then they remanded them back to the smaller courts for final judgment so the rulings could be applied at the separate state's law. The Supreme Court didn't make any particular remedies but told the lower courts to adjust their remedies and, under peculiar circumstances, the laws of that state. The guidelines basically tell the agencies what latitude they have in the takings of personal property. It is like operating on the concept of buying an automobile and being told one could only drive it on the weekends; one would then say the government had no right to restrict the use of the automobile if a car wasn't provided for the other five days. The government takes away the value of a person's property and the right to use that property when they impose unreasonable conditions, but it is the private property owner who ends up paying for the property, paying the interest on the loan and maintaining the property taxes. It is taking a person's wealth to devalue that property. There would be no fiscal note or compensation costs if the agencies quit taking people's property. We are not only trying to protect property but also water rights, timber rights, extractable minerals, right to grow things and all the things for which a person could use his property. A government taking without compensation diminishes the value of the property and makes a private property owner that much poorer. The bill is very comprehensive, addressing many issues brought forth through litigation. Decisions by the United States Supreme Court said those activities were not allowable under the law. The cases should have been addressed as public nuisance and/or eminent domain. Number 383 CO-CHAIR IVAN asked Representative Kohring about specific data or cases concerning a regulatory taking. Number 386 REPRESENTATIVE KOHRING said his staff aide, Craig Lyon, had the information. Number 387 CRAIG LYON, Legislative Aide to Representative Vic Kohring, said there were numerous cases around the country. He referred to two cases that were determined. The first was Lucas v. South Carolina, and the second, Dowlan v. Tigard. The cases in Alaska were Noey DEC and Kenai v. Burnett. The latter was a case in which the city of Kenai granted an easement to a citizen by ordinance for access to his property which he'd planned to subdivide. The city later leased adjacent land to a developer for a golf course and removed the property owner's access. The citizen was unable to secure other access because of the cost of putting in another road and couldn't continue development plans. The Alaska Supreme Court held that a compensable taking had occurred but ruled on several grounds that it had not taken place at the time the lower courts ruled it had and the Supreme Court remanded it back to the lower court to reconsider the compensation aspects. Mr. Lyon said Mr. Noey could probably better explain the case he brought to the State Supreme Court. Mr. Lyon was willing to go over the U.S. Supreme Court cases if the committee wished. Number 409 CO-CHAIR IVAN asked if Mr. Noey was still on line. Number 411 MR. NOEY explained his case which started in 1982. The DOL explained the administrative appeal process and followed an administrative appeal in 1984 which went to the Supreme Court. It was heard in 1987 and remanded back for administrative appeal. His case went through two more appeal hearings and finally went through the administrative appeal process in 1991. Because this administrative process was so lengthy and expensive, Mr. Noey filed a case to the Superior Court in an attempt to speed it up because he had exhausted his administrative remedies. The current system is cumbersome for someone trying to get results. Getting through the administrative process could take eight or nine years where this law specifies the time limit. Mr. Noey's case was set up by the department instead of being an administrative procedure and it went to the first administrative hearing where a member of that same division was the administrative hearing officer in favor of the division. Mr. Noey then didn't have an impartial body hearing the evidence of his case. Number 435 CO-CHAIR IVAN asked if committee members had any questions or comments. He invited Mr. Lyon to describe another case. Number 438 MR. LYON noted he had two U.S. Supreme Court cases to discuss if the committee was interested. He said he had 15 other state Supreme Court cases that related to takings. He also had other cases or instances where regulations devalued or inhibited property owners use of their land. Number 443 CO-CHAIR IVAN asked if the committee would like to hear the other cases. Number 449 REPRESENTATIVE KOHRING pointed out that his staff had accumulated information regarding Alaska residents who were considered victims. He said he was amazed at the number of people who have come to him expressing their interest in HB 154 and who have shared their personal cases. He reiterated that a taking wasn't about literally taking land back, but about reducing the value of the land. When restrictions are placed on property by a state agency or a governmental agency, the litigation caseload would increase. Representative Kohring believed the caseload would decrease with these kinds of restrictions in place because they would make clear to a government agency these private property owners had rights. A government can't impinge on these rights because there would be a repercussion in having to compensate the victim. He believed HB 154 would be an incentive for government agencies not to impose restrictions and would affect the amount of resulting litigation. He pointed out he wasn't anti-regulation but believed in the rights of private property owners. Number 473 REPRESENTATIVE KOTT asked if there were several states with similar measures. Number 475 REPRESENTATIVE KOHRING said within the last two years, a total of 32 other states have submitted similar legislation almost identical to HB 154. Six of those bills have passed into law. Number 478 REPRESENTATIVE KOTT asked if there had been a proliferation of litigation based on those statutes in the books? Number 481 MR. LYON stated the information he has found has not suggested an explosion in litigation as it has only been recently that those bills have passed. Number 485 REPRESENTATIVE KOTT asked if the bill sponsor had requested research from those states that have implemented similar measures to find out in what direction the Alaskan Legislature should head. Number 487 MR. LYON said that he had requested information on litigation from the National Conference of State Legislatures (NCSL) and the American Legislative Exchange Council (ALEC). Initial reports state litigation has not occurred. Number 491 REPRESENTATIVE KOTT said the committee's questions could be answered if the Department of Law in those states with similar measures was contacted. Number 494 CO-CHAIR AUSTERMAN asked if there was a new fiscal note with the committee substitute or if the existing fiscal note was still the same. Number 496 MR. LYON said the committee substitute had just come out so he thought the DOL was going to keep it the same, as the representative from the DOL stated the guidelines were virtually the same. He didn't want to speak for the DOL but he assumed it would be similar. Number 501 REPRESENTATIVE KOHRING wanted to add as far as the cost that would be incurred, one was talking about a zero fiscal note because it would be the agencies that would provide compensation through the budgets so there wouldn't be any extra financial burden on the state of Alaska. Number 507 REPRESENTATIVE ELTON said if the bill didn't move from the committee it may behoove the committee to solicit some comments from other parties who hadn't commented on the affect on municipalities. The committee may want to talk to the Alaska Municipal League (AML) and other municipalities. Number 513 MR. LYON stated the AML did request information before the first hearing but he wasn't sure if the AML wanted to come before the committee. Number 515 REPRESENTATIVE VEZEY said he found the bill to be interesting as he'd followed a number of the court cases. He wanted to have a scheduled teleconference to see input from around the state before the committee passed the bill. Number 522 CO-CHAIR IVAN agreed and asked for questions or comments from committee members. Number 527 REPRESENTATIVE KOHRING expressed his appreciation of the committee's time and consideration toward HB 154. He would be willing to provide subsequent information and arrange the teleconference. Number 534 REPRESENTATIVE KOTT asked the bill sponsor to explain Section 10 as it related to Section 11 which asked the DOL to prepare the guidelines by January 1996 but enacted the bill in July 1995. He wondered if this bill would be enacted with no guidelines and if the government would have to compensate retroactively. Number 538 MR. LYON said he believed the bill would become effective July 1995. He stated the DOL couldn't start drawing up the guidelines until the bill came into effect and when it did come into effect, the DOL needed to have the initial guidelines done by January 1996. Number 548 REPRESENTATIVE KOTT asked if this bill shouldn't tie the effective date more in line with the guideline date called for in the bill. He wanted to know how long it's going to take the DOL to put the guidelines in place if HB 154 become law. Number 554 REPRESENTATIVE KOHRING said he's working with the DOL on identifying the appropriate timing of those two dates. Number 557 CO-CHAIR IVAN invited Bill Cummings from the DOL to respond to the question. Number 562 REPRESENTATIVE KOTT expressed his concern on the effective date and the date called for the DOL to have the guidelines in place. Number 565 MR. CUMMINGS said a better drafting technique to the substantive provisions of the Act would be effective on the latest date. The DOL would have the guidelines done and six months later, the rest of the bill would go into effect. This technique is used quite frequently to have various effective dates for various portions of a bill. Number 574 REPRESENTATIVE KOTT asked if Mr. Cummings was familiar with any other states that have implemented this kind of statute on their books and whether there had been a proliferation in lawsuits. Number 576 MR. CUMMINGS said he wasn't familiar with any of the other states that have enacted it. Number 580 CO-CHAIR IVAN asked if this problem had been identified in rural Alaska before, and how the DOL dealt with these cases and problems that may have occurred. Number 582 MR. CUMMINGS answered these cases depend upon where one is going to cut the line because the legislation makes reference to private, real and personal property. Under this legislation, when there has been a constitutional taking and whoever is affected, has to make payment for it. He believed the impact of this legislation will occur in Alaska's urban centers. Number 593 CO-CHAIR IVAN said he understood that the DOL had some problems with this legislation because the DOL thought it benefitted state agencies. He wondered about individuals having problems with this. He was on the side of individuals having these kinds of problems. Number 601 MR. CUMMINGS stated the assumption that state and cities are uncaring and don't care much about the rights of private property was not a fair comment. The people he works with are very conscious of the impact they have upon private property owners and they try to craft what they are doing as narrowly as they can. The examples such as Mr. Noey's and in Kenai are extreme examples. He questioned all other situations where there wasn't a regulatory taking and how it's possible to paint a horrible picture. Number 614 CO-CHAIR IVAN stated that he would hold this bill until next Thursday and try to coordinate telephone calls to other states and Legal Services. Number 617 REPRESENTATIVE KOTT asked if this bill was being teleconferenced and if there were other witnesses that wished to testify. Number 622 SARA HANNON, Lobbyist, Alaska Environmental Lobby, Inc., said she would speak as a citizen and a student of public policy. She wanted the committee to think about this in the real context. She stated the committee hadn't heard the fact pattern behind the two given examples. She wondered what were the resolutions and what was the infringement of property rights. She urged the committee to remember the whole basis of the judicial system and law body was the best protection for the individual and equal application of the law. She stated the closest infringement of one's property rights usually comes from your neighbor's behavior. If one wanted to cut down his trees on his private property, it didn't impact his neighbor, but if your neighbor wanted to open a waste incinerator next to you, that impacted your value. She asked who does the government compensate if the waste incinerator is not allowed to open. Does the government compensate the person who wanted to open the waste incinerator or does it compensate all the citizens who are impacted when their property value falls? If a porn shop is zoned out of business because of the residential neighborhood's outcry, is the business compensated? Or if the business was allowed to operate, is their compensation for the citizens whose property values have been impacted? She didn't believe there was an upswell among the citizens of Alaska to deal with this because she believed there were few cases where remedy for situations were not found. She stated there were citizens the government has treated in a malicious way or the result is malicious. She said the government wasn't trying to impact people's lives in a negative way but trying to help the state of Alaska. She urged the committee to think about the bureaucratic implications. She believed this bill would open a litigating sink hole the state would never recover from by complicating a bureaucratic government and the citizens of Alaska don't care if 25 other states had takings laws. If the state didn't need it, the laws shouldn't be changed. She agreed that the government had room for some fine tuning of regulatory actions and behaviors, but HB 154 was a nightmare no local government would ever be able to keep up with financially and the state of Alaska would never get out of litigation. She urged the committee to kill the bill. Number 664 CO-CHAIR IVAN asked if there were any questions for Sara Hannon. He stated there were other teleconference witnesses wishing to testify on HB 154. Number 669 DOYLE CURRIER testified via teleconference, and stated everyone was worrying about what the government would do in case the bill split into sections. He asked if anyone on the committee had ever been in litigation with the government. He stated that currently in the Valley, they have an arbitrary setback that has caused problems with the value of property. The same size piece of property that had a waterfront value of $50,000, currently has a waterfront primeval valued at $12,000. This is justified in a daily report survey. This is part of the problem this bill would supposedly address. He believed it was long past due. Number 691 CO-CHAIR IVAN asked if the committee had any more questions or comments for Representative Kohring's staff. He stated he would schedule a meeting on Thursday of next week where there needed to be coordination to hook up with legal services from the sister states. He also asked the DOL representative, Bill Cummings, to look at the committee substitute and make further comments in reference to the bill. Number 702 REPRESENTATIVE KOTT agreed with Representative Vezey's earlier comment and thought the committee needed to hear input from around the state. He believed the municipalities needed to voice their concern because they may construe HB 154 as an unfunded mandate. He stated the next course of action should be to hold the bill and schedule another hearing. He asked the bill sponsor if he was planning to revise the sponsor statement. He was still troubled with the word "unconstitutional." Since the committee has taken the wording from the bill it should be reflected in the sponsor statement. TAPE 95-6, SIDE B Number 007 REPRESENTATIVE ELTON agreed with Representative Kott. He expressed his desire for the bill sponsor or his staff to answer within the context of the committee substitute at the next meeting. He wondered what exactly did happen in the case raised by the previous testifier, where a municipality rezones a neighborhood too close to a porn shop. He was curious about the liability of the municipality and the municipal taxpayers in the context of this bill in a situation like this. Number 032 CO-CHAIR IVAN said some coordination had to be made and communications set up. He asked if there were any more questions or comments from committee members.
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