Legislature(1993 - 1994)
04/21/1993 08:40 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 269 "An Act making special appropriations for restoration projects relating to the Exxon Valdez oil spill and for oil spill response projects; and providing for an effective date." Representative Martin MOVED to report CSHB 269 (FIN) out of Committee with individual recommendations. Representative Brown OBJECTED. A roll call vote was taken on the motion. 1 IN FAVOR: Grussendorf, Hanley, Martin, Parnell, MacLean, Larson OPPOSED: Brown, Hoffman Representatives Foster, Navarre and Therriault were absent for the vote. The MOTION PASSED (6-2). CSHB 269 (FIN) was reported out of Committee with "no recommendation". MENTAL HEALTH TRUST LAND DISCUSSION BOB STYLES, PRESIDENT, D AND R VENTURES testified via teleconference. He reviewed Chapter 66. He concluded that Chapter 66 is hopelessly tangled in litigation. He discussed business concerns regarding Chapter 66. He asserted that holders of interest cannot develop new funding sources. He stressed the inability to forecast economics. He noted that title issues of affected lands are clouded. He referred to amendments that will be offered. (Amendments were not provided to the Committee.) JEFF JESSE, ATTORNEY, ADVOCACY OF ALASKA discussed Chapter 66. He stressed the improbability of reconstituting lands truly comparable to the lands removed from the trust. He reviewed the land selection process. He emphasized that there was an under estimation of the opposition to Chapter 66. He noted the volume of litigation pertaining to Chapter 66. Mr. Jesse observed that in January 1993 the State of Alaska sent a letter to the plaintiffs indicating that the State would no longer comply with the terms of the settlement. Mr. Jesse gave a brief history of the Mental Health Lands Trust exchange and settlement litigation. He discussed proposed amendments to Chapter 66. He promoted continued state support at 6 percent in addition to a land reconstitution. Representative Martin noted that the University has been involved in land management. Mr. Jesse noted that the University has indicated that it is difficult to make money on land development. Representative Therriault asked if the offset is available only to the extent of land sold. Land through municipal entitlement is not included. Mr. Jesse stated that only land sold without notice of trust inclusion would be offset. 2 Mr. Jesse guessed that land sold would be valued at approximately $100 million dollars. Representative Brown asked if all parties must agree on the settlement package prior to legislative action. Mr. Jesse stressed the improbability of reaching a consensus. He anticipated that additional amendments would be offered. TOM WALDO, ATTORNEY, SIERRA CLUB DEFENSE FUND noted that he represents a coalition of environmental and recreational groups. He opposed the massive land exchange provisions contained in Chapter 66. He noted three concerns: * Replacement lands could exceed the size of the original trust; land could be conveyed without public process in violation of existing land use plans; * Large portions of the Haines State forest and the Tanana Valley State forest would be conveyed; * There would be no public process in regards to the Trust Authority land management. Mr. Waldo outlined claims raised by the environmental coalition. He spoke in support of solutions contained in HB 201 and SB 67. (Tape Change, HFC 93-114, Side 1) Representative Navarre noted that the Trust would be reconstituted and 6 percent of state general fund dollars committed to mental health services. He asked if the original land was reconstituted would the revenues from the land equal $100 million dollars a year. Mr. Waldo did not think that income from management of the original land would generate $100 million dollars a year. Representative Navarre noted the legislature's obligation to consider the interests of all Alaskans. Mr. Waldo asserted that the proposal (contained in HB 201) does not commit the state to spend 6 percent on mental health programs in perpetuity. He noted that the Commissioner of the Department of Revenue is directed to allocate 6 percent of the unrestricted general fund revenue to the Mental Health Trust Income Account. The legislature would have to make an appropriation before money could be spent. Representative Navarre asked if litigation would be an option for the mental health community if the legislature 3 appropriated less than 6 percent. Mr. Waldo agreed that litigation would be an option. He did not think that the courts would rule against the legislature's determination of need. Representative Navarre asked if Mr. Waldo would support language prohibiting litigation if the legislature determines that mental health needs are less than 6 percent. Mr. Jesse stated that mental health beneficiaries would not give up the right to seek redress through the courts. Co-Chair Larson recounted the 1991 legislative action regarding the Mental Health Trust Land Settlement. He noted that a 6 percent state contribution to mental health programs was rejected by plaintiffs in 1991. He observed that litigation pursued the development of a land trust under Chapter 66. He observed that the state is now being asked to both capitalize mental health programs and reconstitute a land trust. He asked what would happen to the 500 million acres of land held in trust if the state continues to capitalize programs at 6 percent. Mr. Jesse maintained that the 6 percent will be reduced as state revenues decrease. Co-Chair Larson pointed out that the courts ruled that the land trust be reconstituted. He asked what would prevent the courts from rejecting a settlement based on 6 percent funding by the state. Mr. Jesse pointed out that a Trust Authority will be established to assist in proper management of the Trust. Land will also be allocated to augment the decline of revenues. He noted that the prior settlement was not subject to "full, fair, open discussions." Mr. Waldo added that the courts rejected the prior settlement as a unilateral settlement not supported by the plaintiffs. He asserted that the majority of plaintiffs will support the settlement proposed by HB 201. RICK JOHANNSEN, ATTORNEY, PERKINS COIE, ANCHORAGE noted that he represents the Usibelli Coal Mine and D and R Ventures. He observed that these companies propose to develop areas within the original land trust. He stressed that his clients wish to see the dispute resolved. He emphasized that Chapter 66 will not withstand all of the legal challenges. He asserted that HB 201 is the product of deliberations by a coalition of the involved parties. He spoke in support of HB 201. Mr. Johannsen provided members with an explanation of CSHB 201 (RES) (Attachment 1). He reviewed attachment 1, detailing HB 201's solution to problems within Chapter 66. He asserted that HB 201 removes the "fuel for the fire that has embroiled Chapter 66 in litigation." He stated that the 4 "fuel" is the hypothecated and substitute land. He noted that over 6 million acres are involved in the Chapter 66 settlement. He stated that there are no land exchanges in HB 201. The Trust Authority proposed by HB 201 would receive land that can be returned from the original trust. The Trust will be compensated for land that cannot be returned. He maintained that the Legislature will have the power of appropriation. Mr. Johannsen stated that HB 201 contains other refinements to Chapter 66 designed to eliminate legal challenges. He pointed out that the intent of CSHB 201 (RES) is to turn a land based trust into a trust that receives both land and a financial commitment. He alluded to additional amendments that will be proposed. He asserted that the matter should not be resolved through litigation. CHARLES COLE, ATTORNEY GENERAL, DEPARTMENT OF LAW stressed that the state represents the interests of the public. He noted that all of the plaintiffs are not in agreement. He maintained that the fiscal commitment must be fair and reasonable. He asserted that there must be a relationship to the income potential that would have been generated by the original trust. He asserted that $150 million dollars is more than the missing lands could have generated. The state opposes HB 201. Representative Brown stressed that the state is paying for their failure to live up to the state's responsibility as trustees. She asked if the Administration recommends that no action be taken by the legislature. Attorney General Cole recommended that no action be taken in regards to HB 201. He suggested that litigation continue until there is a consensus. Representative Navarre asked if the Administration was involved in the drafting of HB 201. Attorney General Cole responded that the Administration was not involved. He clarified that the Administration's main objection is that the state's fiscal support is for perpetuity. Representative Navarre asked if the 6 percent appropriation by the state would be considered an asset of the Trust. TOM KOESTER, ATTORNEY, JUNEAU felt that the state's fiscal commitment would be considered an asset of the Trust. He suggested that the court would view the money as a trade for lands not returned to the Trust. He asserted that there will be litigation over the state's discretionary spending for mental health programs. Co-Chair Larson reiterated that the state has made critical 5 errors concerning the original trust. He maintained that the state has not made critical errors regarding the funding of mental health programs. He asked if the legislature should continue to uphold the settlement agreement. Attorney General Cole stressed that the Governor has not indicated that the settlement will be terminated. He observed that the issue is in negotiation. Co-Chair Larson asked if the land sold from the original trust can be considered as an offset. Attorney General Cole replied that the Administration does not believe that the land sold would be considered as an offset. Representative Martin asked if the current legislature can bind future legislatures. Mr. Koester stated that any settlement would be considered as a contractual agreement. Future legislatures would be bound by a contractual agreement. Representative Hoffman noted that litigation will continue unless there is a legislative settlement. Attorney General Cole agreed that the litigation will continue. He emphasized that the state has not benefited from quick and easy settlements.
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