Legislature(2003 - 2004)
04/27/2004 01:46 PM 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 FINANCE COMMITTEE
April 27, 2004
1:46 P.M.
TAPE HFC 04 - 99, Side A
TAPE HFC 04 - 99, Side B
TAPE HFC 04 - 100, Side A
TAPE HFC 04 - 100, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:46 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Representative Norman Rokeberg; Representative Carl Gatto;
Representative Beverly Masak; Senator Bert Stedman; Pete
Ecklund, Staff, House Finance Committee, Representative Bill
Williams; Amanda Wilson, Staff, Representative Norman
Rokeberg; Greg O'Claray, Commissioner, Department of Labor;
Jerry Fuller, Project Director, Office of the Commissioner,
Department of Health & Social Services; Cody Rice, Staff,
Representative Carl Gatto; Eleanor Wolfe, Staff,
Representative Beverly Masak; Cindy Cashen, Executive
Director, Mothers Against Drunk Driving (MADD), Juneau; Jack
Chenoweth, Attorney, Alaska Legal Services; Barbara Huff-
Tuckness, Director of Legislative and Governmental Affairs,
Teamsters Local 959, Anchorage
PRESENT VIA TELECONFERENCE
Rick Vanderkolk, Staff, Representative John Harris,
Anchorage; Mark Meyers, Director, Division of Oil and Gas,
Department of Natural Resources, Anchorage; John Seder,
Attorney, Alaska Fishermen, Anchorage; Bill Evans, Attorney,
Anchorage
SUMMARY
HB 255 An Act amending the Alaska Wage and Hour Act as it
relates to flexible work hour plans, the provision
of training wages, and the definitions of certain
terms; and repealing the exemption in the Act from
the payment of minimum wages for learners.
HB 255 was HEARD and HELD in Committee for further
consideration.
HB 275 An Act relating to veterinarians and animals.
CS HB 275 (FIN) was reported out of Committee with
"no recommendation" and zero note #1 by the
Department of Law, zero note #3 by the Department
of Environmental Conservation, zero note #4 by the
Department of Public Safety and indeterminate note
#5 by the Department of Administration.
HB 342 An Act relating to driving while intoxicated; and
providing for an effective date.
CS HB 342 (FIN) was reported out of Committee with
an "amend" recommendation and with zero note #1 by
the Alaska Court System, zero note #2 by the
Department of Law, zero note #3 by the Department
of Public Safety, indeterminate note #5 by the
Department of Corrections and a new indeterminate
note by the Department of Administration.
HB 395 An Act relating to shallow natural gas leasing and
the regulation of shallow natural gas operations.
CS HB 395 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal note #2
by the Department of Natural Resources.
HB 531 An Act relating to natural gas exploration and
development and to nonconventional gas, and
amending the section under which shallow natural
gas leases may be issued; and providing for an
effective date.
CS HB 531 (FIN) was reported out of Committee with
a "no recommendation" and with zero note #1 by the
Department of Natural Resources.
SB 285 An Act relating to medical assistance coverage for
targeted case management services and for
rehabilitative services furnished or paid for by a
school district on behalf of certain children; and
providing for an effective date.
SB 285 was reported out of Committee with a "do
pass" recommendation and with zero notes #1 & #2
by the Department of Health & Social Services.
CS SB 300(FIN)
An Act relating to an attorney's lien, to court
actions, and to other proceedings where attorneys
are employed; and providing for an effective date.
HCS CS SB 300 (JUD) was reported out of Committee
with a "do pass" recommendation and with zero note
#1 by the Department of Natural Resources, zero
note #2 by the Alaska Court System, and zero note
#3 by the Department of Law.
HOUSE BILL NO. 342
An Act relating to driving while intoxicated; and
providing for an effective date.
Co-Chair Williams MOVED to ADOPT Amendment #1, #23-
LS1292\V.2, Luckhaupt, 4/26/04. (Copy on File).
Representative Croft and Co-Chair Harris OBJECTED.
PETE ECKLUND, STAFF, HOUSE FINANCE COMMITTEE STAFF,
REPRESENTATIVE BILL WILLIAMS, explained Amendment #1, noting
the chart indicating how to get a limited license in current
law. (Copy on File). Amendment #1 would modify the
conditions under which a person could apply for a limited
license. Page 3, Line 1, changes the law back to current
statute. Language on Page 3, Lines 2-9, clarifies that
under the first offense, the license would be revoked or
suspended for 90-days and the person would not be eligible
for a limited license in the first 30-days of the
revocation. Page 3, Line 16, addresses situations if there
were more than one offense, they could be eligible, however,
during the first 90 days of the revocation, the offender
would not be eligible for the limited license. Additional
sections reinsert language regarding "severely impaired",
raising the bar slightly on who would be eligible to get a
license.
Representative Croft questioned the reason for the change
indicated in Amendment #1. Mr. Ecklund responded that it
was a policy call, currently in statute. Present law
indicates that if a person has more than one misdemeanor
offense, they do not qualify for a limited license. The
manner in which the bill currently is drafted, the person
would be eligible for a limited license from day one of the
revocation. Amendment #1 clarifies that person could not
get a license in the first 90-days of the revocation.
Representative Croft asked why. Mr. Ecklund replied that if
a person has multiple driving charges while Under the
Influence (DUI), they "should be without a license" for a
period of time.
Co-Chair Harris inquired if Mothers Against Drunk Driving
(MADD) supported the changes to that language. Mr. Ecklund
did not know. Co-Chair Williams interjected that Amendment
#1 would make the requirements more stringent.
*CINDY CASHEN, EXECUTIVE DIRECTOR, MOTHERS AGAINST DRUNK
DRIVING (MADD), JUNEAU, stressed that Amendment #1 would
make the bill more "high-risk drunk driver friendly". The
original intent of the legislation was to have increased
penalties for high-risk drunk drivers, which would be
removed from the bill. The amendments make it easier for
high-risk drivers who still qualify for therapeutic or
wellness court to get out sooner.
Ms. Cashen stated that MADD opposes the proposed changes.
Those change are not the original intent. The goal was to
get ignition interlock for high risk drivers based on their
blood-alcohol levels and that language has been removed.
The ignition interlock program is up and ready to go
throughout Alaska. The State is more than ready. The
majority of other states already have the ignition interlock
system in place. Ms. Cashen questioned why that language
was removed as it has been proven to work for high-risk
drivers nationwide. The original bill is very important to
all MADD victims. Ms. Cashen urged that the House Finance
Committee reconsider the Amendment that removes increased
penalties for high-risk drivers. She emphasized that at
this time, MADD does not support the bill.
Co-Chair Harris asked if MADD does not support the V version
of the bill or the amendments. Ms. Cashen responded that
MADD does not support the V version of the bill because it
removes ignition interlock increased penalties for high-risk
drivers. Co-Chair Williams pointed out that Amendment #2
would replace the interlock concern.
Vice Chair Meyer was confused regarding which version MADD
would support. Ms. Cashen responded that MADD supports the
version that has ignition interlocks and fines for BAC
levels of .16 to .24. She stated that language is simple,
clean and works in other states. Vice Chair Meyer requested
that the sponsor come before the Committee to explain the
various versions of the bill.
REPRESENATIVE CARL GATTO, SPONSOR, requested that his staff,
Mr. Rice explain the bill's history.
CODY RICE, STAFF, REPRESENATIVE CARL GATTO, advised that
version I had been passed out of the House Judiciary
Committee and was originally before the House Finance
Committee. Version Q was a combined version and originally
discussed, combining HB 175 and HB 342. Mr. Ecklund added
that version S had been slightly modified from version Q.
The Committee has not adopted versions Q or S; they are only
work drafts.
Vice Chair Meyer asked which version MADD supports. Mr.
Cody responded that MADD supports version Q and I. Vice
Chair Meyer questioned if the sponsor supports versions Q,
S, or I.
Representative Gatto acknowledged that he would prefer the
original version, which essentially used more penalties.
That language was the "meat and potatoes" of the intent, in
which, the more drunk a person is, the more the penalty
would be increased and require longer interlock devices. He
understood that the bill had evolved and then,
Representative Rokeberg requested to combine the two bills.
Representative Gatto acknowledged that the current version
of the bill was acceptable, however, he did prefer it to be
"tougher". He knew that if the bill did not move, there
would be no value at all. He hoped to pass the most
stringent version possible.
Vice Chair Meyer understood that the original version Q and
Representative Rokeberg's version S and then the V version
removed the language supported by MADD. Mr. Rice explained
that the progression moved from version Q to S, and now
version V. Vice Chair Meyer reiterated that MADD has
voiced concern with version V. Mr. Rice acknowledged that
was true.
Representative Croft commented by removing Section 6 from
version S would accommodate the concerns of MADD. Mr. Rice
responded that Section 6 was a stand-alone section that
addresses the sentencing requirements for people with double
or more the legal level of blood alcohol. Representative
Croft inquired if there had been fiscal concerns around
Section 6. Representative Gatto said yes, noting the
indeterminacy of the note. Mr. Ecklund interjected that
there is a conceptual amendment pending to address that
issue.
Representative Croft thought that Amendment #1 would move
the V version in the right direction by making it harsher.
Representative Croft and Co-Chair Harris WITHDREW their
OBJECTIONS. There being NO further OBJECTION, Amendment #1
was adopted.
Co-Chair Williams MOVED to ADOPT Amendment 2, #23-
LS1292\V.3, Luckhaupt, 4/26/04. (Copy on File). Co-Chair
Harris OBJECTED for an explanation.
Mr. Ecklund spoke to Amendment 2 providing some background.
He said it would partially provide ignition devices for
those people applying for a limited license. The ignition
interlock devices are allowable under State statute. There
are only a limited number of companies that manufacture the
devices and they need a certain amount of volume to come to
Alaska to do business. He understood that Anchorage would
be the only point that the company would be willing to come
at this time. The first section of Amendment 2 applies to
those who have more than one offense, but no felony. For
drivers in communities off the Anchorage road system, they
could get a limited license without an interlock device.
Mr. Ecklund continued, the second portion of Amendment 2
allows for people currently having a suspended or revoked
license for a DUI offense already committed, and allowing
them by meeting the conditions of the court, to apply for a
limited license at that time.
Representative Stoltze asked if it was fair that a "lesser
standard" would be created for the person not living in
Anchorage or on that road system. Mr. Ecklund explained
that this issue exists because the requirement for the
device is not available because of geographic isolation and
would ban that person from getting a limited license.
Co-Chair Williams further explained that there is only one
company that can do the work and they are located in
Florida. They require a certain number of Driving While
Under the Influence (DWI) changes in an area to make it
feasible. The company is attempting to make the concept
work in Alaska but has indicated that the area is too vast.
Representative Chenault asked what would happen with those
who currently have a DWI. Mr. Ecklund explained that the
manner in which the bill is currently drafted, if a person
has already been convicted and their license is under
suspension, they would not be eligible to apply for a
limited license. The second portion of Amendment 2
clarifies that if that person meets the conditions of the
court, they can apply, following the passage of the bill.
Co-Chair Harris questioned if there has been a U.S. Congress
attempt to mandate that breathalyzer units be placed into
cars, used to determine if the person driving had been
drinking, keeping the car from starting. Representative
Gatto responded that one state tried such legislation and it
did not pass. It has not been considered nationally.
Representative Gatto stated that the concept of the bill is
to "get the drunks separated from the cars that they are
driving". He acknowledged that the Anchorage road system
does have the greatest number of cars and that of course,
any decision would be subject to a judge's discretion.
Representative Gatto did not envision a serious compromise
by a judge to let someone off. Incarceration does not
always work or pay off in the long run and that it is
important that there is a motivation in receiving a limited
license. The intent of the legislation is to install that
device. He noted that the State will have had to work with
an international supplier and the willingness of that
company requires a certain volume.
Representative Chenault inquired if the bill applied to four
wheelers, snow machines and boats. Representative Gatto
replied it would not.
Representative Chenault asked if the intent was to get
offenders off the road, why did it not apply to other moving
vehicles. Representative Gatto commented on conditions that
affect the off road vehicles and that the proposed
legislation was designed only for legally driven, on-road
vehicles.
A roll call vote was taken on the motion to adopt Amendment
2.
IN FAVOR: Hawker, Joule, Moses, Chenalut, Fate, Foster,
Harris, Williams
OPPOSED: Stoltze, Croft
Vice Chair Meyer was not present for the vote.
The MOTION PASSED (8-2).
Representative Croft MOVED to ADOPT conceptual Amendment 3,
reinstating language that Section #6 of the S version,
include the stair steps of the blood alcohol level (BAC) and
increase the penalties and requirements for interlock
devices. Co-Chair Williams OBJECTED.
Co-Chair Williams stated that the HB 342 would be HELD in
Committee for further consideration.
HOUSE BILL NO. 275
An Act relating to veterinarians and animals.
Co-Chair Harris MOVED that work draft #23-LS0940\B,
Luckhaupt, 4/27/04, be the version of the legislation before
the Committee. There being NO OBJECTION, it was adopted.
PETE ECKLUND, STAFF, HOUSE FINANCE COMMITTEE STAFF,
REPRESENTATIVE BILL WILLIAMS, explained the changes made to
the work draft.
· Page 2, Lines 16, clarifies that the Department of
Environmental Conservation is the Department to
establish the regulations.
· Page 2, Line 28, adds language "if warranted" to
clarify if cruelty is happening to animals.
· Page 4, Line 24, provides a technical change for
st
cruelty to animals in the 1 degree and would
reenact the proposed language in the same section.
· Page 4, Line 31, adds new language, "intentionally
kills or injures a pet or livestock by the use of
poison".
· Page 5, indicates that in existing State statute,
offenses are listed for prosecution. Language was
also added in Subparagraph 1 & 5, and Line 15,
Subparagraph 2, removed language "for just cause".
· Page 5, Line 24, added language: "This section does
not apply to generally accepted dog musher practices
or contests."
· Page 6, Line 4, the Department of Law has
recommended that a probation can last no longer than
ten years.
· Page 6, Lines 8 & 12, deletes "domestic animal" and
inserts "pet or livestock".
· Page 6, Line 25, addresses concerns with subsistence
hunting or trapping activities.
· Page 6, Line 27, adds language "to control vermin".
· Page 7, Line 3, adds a technical amendment "in the
second degree" as a Class B misdemeanor.
· Page 7, Line 12, adds language "after 10 years" as
recommended by the Department of Law.
· Page 7, Line 23, defines pet to mean, "Domesticated
animal kept for companionship or amusement."
Co-Chair Harris MOVED to report CS HB 275 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 275 (FIN) was reported out of Committee with "no
recommendation" and zero note #1 by the Department of Law,
zero note #3 by the Department of Environmental
Conservation, zero note #4 by the Department of Public
Safety and indeterminate note #5 by the Department of
Administration.
HOUSE BILL NO. 255
An Act amending the Alaska Wage and Hour Act as it
relates to flexible work hour plans, the provision of
training wages, and the definitions of certain terms;
and repealing the exemption in the Act from the payment
of minimum wages for learners.
Co-Chair Harris MOVED to ADOPT work draft #23-LS082\B,
Craver, 4/26/04, as the version of the legislation before
the Committee. There being NO OBJECTION, the draft was
adopted.
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, explained the
change made removes any reference to the flextime
provisions. Also, categories have been redefined under the
wage and hour act by removing the test and changing the
regulatory multiplier from 2.5% to 2.0% above minimum wage.
The change removes uncertainty for the employers in
accounting for their employee's activities.
Representative Rokeberg requested that the Committee
consider an amendment to the work draft, deleting Section 3.
He commented that the B version is "lightweight" compared to
the original bill. The bill would enable employers
throughout the State to recruit and retain management type
personnel without stepping on the rights of the employees to
receive overtime. He added, changing the multiplier equates
to an amount equal to former wage and hour pay when there
was a lower minimum wage. Under current regulations and
law, given the increase of the minimum wage, the 2.5%
multiplier equals $37 thousand dollars per year. Prior to
the increase in minimum wage, that amount was $29 thousand
dollars per year. HB 255 proposes a two times multiplier,
thus providing a minimal increase.
Representative Rokeberg noted that there are attorneys on
line representing the employers.
Co-Chair Harris MOVED to AMEND HB 255, deleting language on
Page 3, Line 23, which would clean up the intent. There
being NO OBJECTION, the amendment was adopted.
Representative Croft mentioned the overtime restriction,
Page 2, Lines 24 and 25. He pointed out that there were
three different definitions:
· An individual engaged in an administrative capacity;
· An individual engaged in an executive capacity; and
· An individual engaged in the professional capacity.
Representative Croft asked the use of the wage and hour
laws, if the three groups are listed. Representative
Rokeberg pointed out that language currently exists in
current State Statute and is somewhat reflective of federal
guidelines.
Representative Croft asked where the section was located
that deleted the old definitions. Representative Rokeberg
replied it is in regulation.
TAPE HFC 04 - 99, Side B
AMANDA WILSON, STAFF, REPRESENTATIVE NORMAN ROKEBERG, stated
that the definitions are currently in regulation and fit
under the statutes that provide for anything that needs to
be clarified. Representative Croft asked if the intent was
to place the regulations into statute. Ms. Wilson pointed
out there have been changes made and that the current
regulations were developed in 1976 and have not been
updated.
Representative Croft pointed out one change added the
language "holding position of responsibility"; that was
customarily exercised as discretionary authority. He asked
if the language would be a substitution. Representative
Rokeberg responded that it would be added in addition. He
reminded members of the online testimony available to
provide a legal analysis.
Representative Croft emphasized the language had been
deleted from federal regulation for important reasons. He
worried that the proposed language would be too vague for
the federal government. Representative Rokeberg responded
that there had been discussion on adopting new federal
regulations but the Alaska regulations were modified to them
based upon caseloads.
Co-Chair Harris inquired if Representative Rokeberg had
worked with organized labor on the legislation.
Representative Rokeberg responded that they had but did not
come to a final conclusion. He admitted that he did not
have an indication that labor endorses the legislation.
Co-Chair Harris asked what some of the Union "blocks" were.
Representative Rokeberg responded that perhaps would be the
removal of the 80/20, 60/40 passes.
BARBARA HUFF-TUCKNESS, DIRECTOR OF LEGISLATIVE AND
GOVERNMENTAL AFFAIRS, TEAMSTERS LOCAL 959, ANCHORAGE,
explained that there had been a meeting in which
Representative Rokeberg invited the industry representatives
and several members of organized labor. The two issues
discussed at that meeting was industry concern with respect
to the minimum wage issue and the 80/20, 60/40. Organized
labor has not participated in any of the drafts. There have
been conversations regarding some of the concerns. She
asked to discuss those for the record.
Ms. Huff-Tuckness referenced Page 1, Section 1, Lines 10-11,
deleting language specifying that it would not apply to
those persons acting in a supervisor capacity. By removing
that language, if a person was a "supervisor", they could
receive overtime. Nor does the bill define anywhere, the
definition of "supervisor". The regulations do define a
supervisor and maintains the 20% rule. Ms. Huff-Tuckness
noted concern that it is easier to change regulations within
the departments than it is to change laws through the
legislative process. She questioned if not including that
definition was the intent to modify what is currently in
regulation. The supervisory issue has created some concern.
She referred to Page 2, Line 17(b), which raises the
question of who is entitled to overtime. She pointed out
Page 2, Line 5, language is much too broad and exempt from
other provisions under that change. Ms. Huff-Tuckness read
from a report, which covers the proposed labor standard
changes. After careful consideration of submitted public
comments, the Department agrees that the standard brings
clarity and certainty to the administrative exemption. She
offered to provide a copy of the document, which describes
the fair labor standards.
Ms. Huff-Tuckness objected to language on Page 2, Line 5.
On Lines 11 & 12, the language has been changed. She
indicated that language was deleted from current statute:
"As and does not devote more than 20% on the case of an
employee in a retail or service establishment who earns time
and a half". That language removes the sideboards from
regulation and out of statute. Theoretically, there could
be an individual that has worked in any area. The primary
duty must be defined as it is in State statute and
regulation negating the 60/40 or 80/20.
Ms. Huff-Tuckness referred to Page 2, Lines 18&19, stating
that current regulation reads, "Who customarily and
regularly directs the work of two or more other employees".
Redundant language was added and she questioned the purpose
of that change. Line 23 contains the position of
responsibility issue as raised in Line 5. On Line 24,
language was added that has changed how an administrator or
administrative employee would be compensated. Under the
regulations, the employee is compensated based on a salary.
Under the proposed statute change, the employee would be
compensated at least double the minimum wage. The Union has
not agreed to that change.
Ms. Huff-Tuckness noted that Page 3, Line 16, marks the
position of responsibility concern raised earlier. Line 23,
and the repeal of the training, is language supported by the
Union.
Ms. Huff-Tuckness summarized there are many concerns with
the proposed bill, and urged that the members of the House
Finance Committee consider the federal labor standards. The
application of the proposed statute would have a dramatic
effect on thousands of employees in the State of Alaska who
currently receive overtime, and would no longer be eligible
for it.
Representative Croft thought that the old 80-20 rule put
sideboards up defining what the real work is and if it
merits time and a half. He asked what the 60-40 portion
represented. Ms. Huff-Tuckness understood that would apply
a more stringent task, allowing for an employer to not pay
overtime.
JOHN SEDER, (TESTIFIED VIA TELECONFERENCE), ATTORNEY ON
BEHALF OF ALASKA FISHERMEN, ANCHORAGE, noted that the
rd
federal regulations were filed on April 23, 2004. They
rd
will be effective August 23, and by that change, the
federal system will no longer have an 80-20 test. Without
that in place in the federal system, the result will make
Alaska law antiquated. Mr. Seder reviewed the exemption
language of all states, 31 of which currently follow the
Fair Labor Standard Act (FLSA) automatically, making the
federal change in August 2004. Seven states, which includes
Alaska, track the long test under the federal system, so
that employers will have to comply under both federal and
state standards. HB 255 moves the State to more primary
duties and would become the cornerstone for federal
regulations.
Representative Rokeberg asked about the sole branch or
single operator system. Mr. Seder stated that the sole
charge exemption has been under federal guidelines for the
last fifty years. In the sole charge of business, assumes
that if you would qualify under language listed on Page 2,
Lines 17-19, there would be a qualification of tests. The
title does not dictate the result, but focuses on the
position, duties and responsibilities.
AT EASE: 2:59 P.M.
RECONVENE: 3:03 P.M.
BILL EVANS, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
ANCHORAGE, referenced the argument of why the 80/20
provision was essentially "unworkable and unfair".
GREG O'CLARAY, COMMISSIONER, DEPARTMENT OF LABOR, noted that
the Department took no position on the bill.
Co-Chair Harris pointed out that HB 255 contained a major
disagreement between the sponsor and organized labor. He
asked how long since both parties had come together to
discuss these changes. Representative Rokeberg replied it
had been six weeks.
Co-Chair Harris advised that there are two other major
issues, the unemployment insurance and worker's compensation
bills. He noted concern that these are serious issues for
labor and business and recommended that everyone come
together and gets the bill to a place of acceptance for all
concerned parties. Representative Rokeberg indicated that
he was willing. He added that the Legislature has not been
"friendly to business", pointing out that HB 255 provides
recognition that the wage and hour laws should have certain
uniformity. He believed that the legislation would bring
st
Alaska into the 21 Century. Testimony has shown that the
tests are dated and that the bill before the Committee
provides a compromise to a 30-year old standard. The
legislation would modify the current regulations.
Representative Rokeberg reiterated that he was willing to
meet with labor as these issues are past due. He added that
there is a need to have joint effort between the leadership
and the Legislature to resolve these concerns.
Co-Chair Harris requested to work with Representative
Rokeberg regarding the issues and asked to include unionized
labor to help better understand them more thoroughly. Co-
Chair Harris hoped that the bills could all move forward at
the same time.
HB 255 was HELD in Committee for further consideration.
CS FOR SENATE BILL NO. 300(FIN)
An Act relating to an attorney's lien, to court
actions, and to other proceedings where attorneys are
employed; and providing for an effective date.
SENATOR BERT STEDMAN, SPONSOR, commented that SB 300 would
eliminate an unfair and potentially disastrous federal
income tax issue affecting Alaskan taxpayers and would
prevent the Internal Revenue Service (IRS) from taxing two
Alaskans on the same income. SB 300 would correct the
unjust treatment of Alaskans under the current 9th Circuit
rulings.
Senator Stedman continued, that because of a peculiarity in
State law, Alaskans who win in court might pay federal
income tax on income. When Alaskans file their federal tax
return, they must report any litigation recovery allocated
to attorney fees as gross income, even if they receive no
economic benefit from the fees. The federal government
taxes the portion of the prevailing award twice, once as
income to the client and again as income to the client's
attorney. There is no federal tax deduction to offset the
inequity.
Under the current Alaska lien law, AS 34.35.430, attorneys
have a "subordinate lien" or ownership interest in the
"cause of action". Other states, including Oregon, use
different language to specify that as long as an attorney
has filed an appropriate lien and is owed money by the
winning client, all fee awards or payments made to the
client belong exclusively to the attorney. In so vesting
the attorney with the property interests of the award, those
states avoid the unfair tax burden currently imposed on
Alaskans. Instead, any portion of an award retained to pay
attorney costs, is not income to the client.
Senator Steadman summarized that SB 300 would change Alaskan
law to prevent the Internal Revenue Service (IRS) from
taxing Alaskans on income they do not receive. The bill
recognizes that court awarded fees, which pass through to
the attorney would be income to that attorney. And as such,
the attorney would be responsible for paying federal income
tax on that portion of their income.
Representative Hawker inquired if Senator Steadman was
comfortable with the language change made in the House
Judiciary version. He believed that those changes made the
intent more clear. Senator Steadman replied he was
comfortable with changes made in preceding committees.
Representative Hawker MOVED to report HCS CS SB 300 (JUD)
out of Committee with individual recommendations and with
the accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
HCS CS SB 300 (JUD) was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the Department
of Natural Resources, zero note #2 by the Alaska Court
System, and zero note #3 by the Department of Law.
SENATE BILL NO. 285
An Act relating to medical assistance coverage for
targeted case management services and for
rehabilitative services furnished or paid for by a
school district on behalf of certain children; and
providing for an effective date.
JERRY FULLER, PROJECT DIRECTOR, OFFICE OF THE COMMISSIONER,
DEPARTMENT OF HEALTH & SOCIAL SERVICES, noted that the
Department had requested SB 285 to address technical changes
on missing language from when school based service
legislation was added to statute. The bill makes a
modification to define school-based services as
rehabilitation services for the federal Medicaid funding
dollars.
The bill also allows the Department to take a more liberal
view of the requirements for prescriptions so to provide
better services. The language change allows the schools
more flexibility in administrating the program while billing
for Medicaid services in the schools.
Mr. Fuller continued, the second portion of the bill targets
case management as an additional "optional" Medicaid service
so the Department can begin coverage. The intent was to
find areas where the State is currently paying general fund
dollars for case-management and define it in Medicaid
language, providing about 60% federal funds for those
services. He pointed out that it is part of the
Department's efforts to leverage federal funds to support
Medicaid programs.
Representative Hawker referenced a March 3, 2004 letter from
the Alaska Mental Health Board, requesting a reply to
certain concerns. (Copy on File). Mr. Fuller responded
that the major concern indicated by the Board is the
fragmentation of the mental health system. An issue based
on the assumption that the Department is ready to add
behavioral health services as an optional service, which
schools could provide as a rehabilitation option. The
reality is that the Department has not yet made that leap.
The only services that the Department is moving forward with
are the therapies such as:
· Physical
· Speech
· Occupation
Mr. Fuller continued, before anything can occur around
behavioral health services in a school setting, there must
be a thorough discussion with mental health providers to
guarantee that if those services are included, they will not
result in the previously mentioned fragmentation. The
discussion has not occurred and there are no pending
regulations to add behavioral health services at this time.
Representative Foster MOVED to report SB 285 out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SB 285 was reported out of Committee with a "do pass"
recommendation and with zero notes #1 & #2 by the Department
of Health & Social Services.
HOUSE BILL NO. 342
An Act relating to driving while intoxicated; and
providing for an effective date.
PETE ECKLUND, HOUSE FINANCE COMMITTEE STAFF, REPRESENTATIVE
BILL WILLIAMS, noted there was a conceptual amendment on the
table offered by Representative Croft.
Representative Croft WITHDREW his MOTION to adopt conceptual
Amendment 3. (Copy on File).
Co-Chair Williams MOVED to ADOPT conceptual Amendment 4.
(Copy on File). The amendment reads:
"If a person violates the conditions of a limited
license or is convicted of Driving Under the Influence
(DUI) while operating a vehicle with a limited license,
they will be ineligible for a limited license in the
future."
Mr. Ecklund explained that the amendment would clarify that
if a person has a limited license and they violate the
conditions or receive another DUI while having the limited
license, the language would ban them from getting a future
limited license. There being NO OBJECTION, conceptual
Amendment 4 was adopted.
Representative Foster MOVED to report CS HB 342 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 342 (FIN) was reported out of Committee with an
"amend" recommendation and with zero note #1 by the Alaska
Court System, zero note #2 by the Department of Law, zero
note #3 by the Department of Public Safety, indeterminate
note #5 by the Department of Corrections and a new
indeterminate note by the Department of Administration.
TAPE HFC 04 - 100, Side A
HOUSE BILL NO. 531
An Act relating to natural gas exploration and
development and to nonconventional gas, and amending
the section under which shallow natural gas leases may
be issued; and providing for an effective date.
Representative Fate WITHDREW Amendment 1, #23-LS1818\V.1,
Chenoweth, 4/21/04. (Copy on File).
Representative Croft MOVED to ADOPT Amendment 2. Co-Chair
Williams OBJECTED.
Representative Croft explained that Amendment 2, Page 1,
Lines 5-8, addresses "the owner and the State and its
lessees, successors, or assigns reach a prior written
agreement". The amendment allows the surface owner, the
right to have control of what is done on their property. It
requires that an agreement be reached with the surface owner
before the rigs and drilling operations begin. He
acknowledged the inherent difficulty in Alaska's ownership
of the subsurface rights, which is often referred to as the
split estate issue, a difference in ownership between the
subsurface and the surface rights. It creates tension
because they are often not in agreement about what should
happen below. In the area of coal bed methane as the
language is limited to that, there needs to be deference to
the surface owner, receiving their permission before using
the land.
ELEANOR WOLFE, STAFF, REPRESENTATIVE BEVERLY MASAK, stated
that the issue of "permission" was addressed in the House
Resource Subcommittee and the legal drafter advised that the
language was contrary to the intent of the State
Constitution. She stated it could set the State up for a
lawsuit, adding that the sponsor objects to inclusion of
Amendment 2.
Co-Chair Harris understood that HB 531 contained a "best
interest finding" section so that property concerns would be
addressed between the Department of Natural Resources and
the leaseholder. Ms. Wolfe said that was correct.
Co-Chair Harris asked if there could possibly be a legal
problem associated with the legislation and with the
amendment. Representative Croft responded that someone
could sue if the State maintains the right to decide whether
to develop or to choose the conditions under which to
develop the resources. The federal government does not want
the State to give the resources away. He claimed that the
amendment would allow the State to choose when and under
what conditions to develop. He believed that someone will
challenge the issue.
Co-Chair Harris asked if Representative Croft thought that
the Alaska Constitution would allow a private property
owner, under the split estate issue, to legally withhold
access onto their property to someone who held a lease from
the State subsurface rights. Representative Croft responded
that bonding only requires that the party put a bond up for
the damage they do. Government bureaucrats determining if
it is in everyone's best interest and not just the property
owner determine the best interest finding. He thought that
the legislation could take the State too far. In the area
of non-conventional gas, the State should require an
agreement first.
Co-Chair Harris commented that could address State ownership
of land. He asked what will happen with private ownership.
He understood that Amendment 2 could provide the private
property owner the responsibility and right to demand, from
the subsurface leaseholder, certain criteria before they
allow access on the property for drilling. Representative
Croft acknowledged that they could have veto authority if
they do not come to an agreement and reminded members that
the nature of coal bed methane is often in small parcels in
developed areas and would be part of the lease when
released.
Co-Chair Harris inquired if Amendment 2 applies only to new
leases. He mentioned the current shallow gas-leasing
program, asking if the amendment would be retroactive.
Representative Croft did not know.
JACK CHENOWETH, ATTORNEY, ALASKA LEGAL SERVICES, responded
to concerns voiced by Co-Chair Harris. He noted that
Amendment 2 would not cover existing leases as drafted.
Representative Croft interjected that had been his intent.
He recommended using a buy back for the looking back
portion, setting the correct rules for the looking forward.
Co-Chair Harris observed that if HB 531 were passed, the
current Shallow Gas Act would be repealed. Representative
Croft stated that would be good. He noted that there are
references to non-conventional gas in the bill. The
proposed amendment provides one additional requirement for
the conventional gas.
REPRESENTATIVE BEVERLY MASEK, SPONSOR, spoke in opposition
to Amendment 2, commenting that the amendment was not
relevant to the issue.
A roll call vote was taken on the motion.
IN FAVOR: Joule, Stoltze, Croft, Harris
OPPOSED: Meyer, Chenault, Fate, Williams
Representatives Moses, Foster, and Hawker were not present
for the vote.
The MOTION FAILED (4-4).
Vice Chair Meyer MOVED to ADOPT Amendment 3, 23-LS1818\V.3,
Chenoweth, 4/27/04, on behalf of Representative Masek.
(Copy on File). Co-Chair Williams OBJECTED for the purpose
of discussion.
Ms. Wolfe stated that one of the concerns that the Alaska
Oil and Gas Association (AOGA) had with the proposed
legislation was a provision listed on Page 40, Lines 9-11,
Section (B); Amendment 3 would remove that language.
Representative Joule pointed out that Amendment 3 would also
deleted Section (A). Ms. Wolfe advised that section was no
longer needed once Section (B) was deleted.
Co-Chair Williams WITHDREW his OBJECTION. Representative
Croft OBJECTED, questioning why the section should be
removed. Ms. Wolfe replied that portion of the bill takes
the State into Title 38 and was far more stringent than
anything currently under conventional gas leasing.
Representative Croft WITHDREW his OBJECTION to Amendment 3.
There being NO further OBJECTION, Amendment 3 was adopted.
Co-Chair Harris MOVED to ADOPT Amendment 4, 23-LS1818\V.2,
Chenoweth, 4/27/04. (Copy on File). Co-Chair Williams
OBJECTED for the purpose of discussion.
Ms. Wolfe explained that Amendment 4 had been a
recommendation received from the Division of Oil and Gas in
an effort to solve the miner's difficulty. The amendment
language takes the existing held applications and allows
them to convert to an exploration license. It would be a
"one-time good deal" only at the same rate of $1 dollar per
acre, the same as the shallow gas lease, allowing them to
continue to pursue their gas interest, while eliminating
some speculators.
Co-Chair Harris pointed out that there are applications for
leases near shallow gas mining. He questioned if they would
be required to have a best finding.
Mr. Chenoweth explained that the best interest findings
would be required, found in the amendment on Page 1, Line 20
& 21, (b): "The provisions of AS 38.05.035(e) apply to an
application made under (a) of this section." That language
is the best interest finding requirement for the applicant.
Co-Chair Harris noted that the applicant would not have to
go through the competitive bid process.
Representative Chenault asked if the language would allow
conventional drilling. Mr. Chenoweth responded that coal
bed methane leases would only be allowed conversion to a
conventional gas lease.
Co-Chair Williams WITHDREW his OBJECTION to Amendment 4.
There being NO further OBJECTIONS, it was adopted.
Co-Chair Harris MOVED to report CS HB 531 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 531 (FIN) was reported out of Committee with a "no
recommendation" and with zero note #1 by the Department of
Natural Resources.
HOUSE BILL NO. 395
An Act relating to shallow natural gas leasing and the
regulation of shallow natural gas operations.
RICK VANDERKOLK, (TESTIFIED VIA TELECONFERENCE), STAFF,
REPRESENTATIVE JOHN HARRIS, reviewed the legislation and
provided a sectional analysis. He stated that the bill was
designed to resolve concerns of many Alaskans who have coal
bed methane development in the area of their property
rights, water quality assurance, and local involvement of
residents. Recently, many concerns have been raised by
residents of the Mat-Su and Homer areas through a series of
public forums. All sponsors have worked diligently,
listening to public input from numerous community hearings
and comments received during the committee process.
Mr. Vanderkolk pointed out that the committee substitute
from the House Resources Committee requires that:
· Public comment and other routes of access are
considered prior to executing a lease.
· The integrity of the affected water supply is
protected.
· Public notice is given prior to the award of a lease
via newspaper and direct mail.
· The owner's surface property is restored in the
event of damage.
· Noise from field operation is mitigated.
· Shallow natural gas exploration is defined and
capped at 3,000 feet.
Mr. Vanderkolk highlighted changes made to that version of
the bill.
Section 2: Terminology change: Shallow natural gas was
redesignated as "nonconventional gas".
Section 7: Adds a new chapter on nonconventional gas
operations for land not governed by 38.05.
Section 9: Stipulates the manner (distance) in which
water wells are tested for purity, as suggested by
Alaska Oil and Gas Conservation Commission (AOGCC) as
best engineering practice.
Section 16: Mandates that water discharge from coal bed
methane drilling be regulated by the Department of
Environmental Conservation (repeating the current
exemption).
Sections 23 & 24: These sections are the contingency
repealers. They enumerate that Sections [2, 4, 6, 12,
15, 17, 19, & 22] will take effect if, and only if, HB
531 passes.
Co-Chair Harris MOVED to ADOPT Amendment 1, #23-LS1314\M.1,
Chenoweth, 4/27/04. (Copy on File). Representative
Chenault OBJECTED for the purpose of discussion.
JACK CHENOWETH, ATTORNEY, ALASKA LEGAL SERVICES, explained
that the focus was the public forum process, located in
Sections 3 & 4. The intent is to move the shallow natural
gas provision and delete it and the remaining changes
provide the conforming language. Co-Chair Harris pointed
out that Sections 3 and 4 would be deleted because with the
enactment of HB 531, the public notice falls under the
general best interest findings.
Representative Croft noted concern that the timelines under
the best interest findings would not be well defined. Co-
Chair Harris stressed that there would be a transition
between the two different systems. The previous bill would
eliminate the existing system. There would not be any other
leases under the existing shallow natural gas provision.
Representative Croft maintained that the previous system
failed the public and that he would prefer specifics. Co-
Chair Harris thought it would be "cleaner" if it were
removed, however, it was not critical.
MARK MEYERS, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL RESOURCES,
ANCHORAGE, noted that there are differences between Sections
3 and 4, regarding the best interest finding process. In
Section 3, Line 19, the authority that the process works
through and the regulations for that should pass through the
Alaska Oil and Gas Conservation Commission (AOGCC) process.
He believed that the best interest findings could look at
issues in a more general sense with some overlap.
Representative Croft referred to Sections 3 and 4, noting
that Section 3 establishes AS 31.05.098 and Section 4
repeals and reenacts AS 31.05.098(a). The reason those two
sections had been included was because they address the
conditional effects of what happens if HB 531 passes. He
stressed that those sections are important and offered to
work with the sponsor to address his concerns.
Co-Chair Harris WITHDREW Amendment 1.
Co-Chair Harris MOVED to ADOPT Amendment 2, #23-LS1314\M.2,
Chenoweth, 4/27/04. (Copy on File).
Mr. Chenoweth commented that Amendment 2 had been introduced
in response to an initiative submitted by Representative
Seaton, who wanted to see a clear statement that the
provisions added would apply to leases issued under 177(c,
f, k issues omitted) and (p & q were added). The language
defines when the lease shall be in effect. Those are leases
already issued and in effect on the effective date.
There being NO OBJECTION to Amendment 2, it was adopted.
Co-Chair Harris MOVED to ADOPT Amendment 3, #23-LS1314\M.3,
Chenoweth, 4/27/04. (Copy on File).
Mr. Chenoweth explained that the amendment addresses if a
lessee should surrender or releases a lease, the lease could
not be re-leased without going through the new requirements
under HB 395 and if HB 531 takes effect, without complying
under the appropriate sections in that bill.
Co-Chair Harris noted that under the current shallow natural
gas provisions, the State would be required to issue leases
if a second party was interested in a returned lease. Mr.
Chenoweth agreed that there would be no specific protection
to require them to be released under the amended law.
There being NO OBJECTION, Amendment 3 was adopted.
Representative Croft WITHDREW Amendment 4.
Mr. Chenoweth noted the sponsor had requested an additional
amendment, presently being drafted, to address coal mining
and mineral leasing. Mr. Chenoweth requested the latitude
to conform HB 531 and HB 395, including all technical
changes.
Co-Chair Harris MOVED to allow all conforming amendments and
technical changes to be drafted by Mr. Chenoweth. There
being NO OBJECTION, it was so ordered.
TAPE HFC 04 - 100, Side B
Representative Foster MOVED to report CS HB 395 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 395 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal note #2 by the
Department of Natural Resources.
ADJOURNMENT
The meeting was adjourned at 4:16 P.M.
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