Legislature(1997 - 1998)

04/15/1997 08:12 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     HOUSE FINANCE COMMITTEE                                   
                         APRIL 15, 1997                                        
                            8:12 A.M.                                          
  TAPE HFC 97 - 95, Side 1, #000 - end.                                        
  TAPE HFC 97 - 95, Side 2, #000 - end.                                        
  TAPE HFC 97 - 96, Side 1, #000 - #416.                                       
  CALL TO ORDER                                                                
  Co-Chair Gene Therriault called the House Finance  Committee                 
  meeting to order at 8:12 A.M.                                                
  Co-Chair Hanley               Representative Kelly                           
  Co-Chair Therriault           Representative Kohring                         
  Representative Grussendorf    Representative Martin                          
  Representative Davis          Representative Moses                           
  Representative Foster         Representative Mulder                          
  Representative J. Davies was not present for the meeting.                    
  ALSO PRESENT                                                                 
  Senator  Lyda Green;  Michael Pauley,  Staff, Senator  Loren                 
  Leman;   Susan   Schrader,   Executive    Director,   Alaska                 
  Environmental  Lobby,  Juneau;  Tuckerman   Babcock,  Staff,                 
  Senator   Lyda   Green;   Janice   Adair,   (Testified   via                 
  teleconference), Department  of Environmental  Conservation,                 
  Anchorage;  Mike  Crouch,  (Testified  via  teleconference),                 
  Eagles'   Ridge  Ranch,   Delta   Junction;  Mike   Schultz,                 
  (Testified   via   teleconference),    Grain-Farmer,   Delta                 
  Junction;  Laurie  Knopp,  (Testified  via  teleconference),                 
  Knopp Dairy,  Delta Junction;  Charles Thompson,  (Testified                 
  via  teleconference),  Agriculture  Credit Director,  Alaska                 
  Farm Service Agency, U.S. Department of Agriculture, Palmer;                 
  Sigmund  Restad,  (Testified  via teleconference),  Northern                 
  Pioneer Ranch,  Palmer; Ray DeVilbiss,  Farmer, Mat-Su; Gene                 
  Williams,  (Testified  via  teleconference),  Range  Farmer,                 
  Palmer;  Harvey  Baskin,  (Testified   via  teleconference),                 
  Farmer,   Wasilla;   Gerhard   Groeschez,   (Testified   via                 
  teleconference),  Pt.  MacKenize; Harry  Wassink, (Testified                 
  via teleconference), Anchorage;  Gary Stromberg,  (Testified                 
  via  teleconference),  Farmer,  Pt.  MacKenize;  Bill  Ward,                 
  (Testified via teleconference), Farmer, Kenai.                               
  HB 146    An Act relating to competency testing requirements                 
            for  secondary  students;  and  providing  for  an                 
            effective date.                                                    
            HB 146 was rescheduled for a latter hearing.                       
  SB 41     An Act relating to environmental audits and health                 
            and  safety audits  to  determine compliance  with                 
            certain laws, permits, and regulations.                            
            HCS  CS SB 41 (JUD) was  reported out of Committee                 
            with a "do pass" recommendation  and with a fiscal                 
            note  by  the Department  of  Law and  zero fiscal                 
            notes by  the Department of  Labor dated  3/18/97,                 
            the Department of Health and Social Services dated                 
            3/13/97 and the Alaska Court System.                               
  SB 109    An  Act  relating  to land  used  for agricultural                 
            purposes  and   to  state   land  classified   for                 
            agricultural   purposes   or   subject    to   the                 
            restriction of use for agricultural purposes only;                 
            and annulling certain  program regulations of  the                 
            Department   of   Natural   Resources   that   are                 
            inconsistent with the amendments made by this Act.                 
            SB   109  was  HELD   in  Committee   for  further                 
  SENATE BILL 41                                                               
       "An Act relating to environmental audits and health and                 
       safety audits  to  determine  compliance  with  certain                 
       laws, permits, and regulations."                                        
  MICHAEL PAULEY,  STAFF, SENATOR LOREN  LEMAN, commented that                 
  SB  41  would establish  two  incentives for  businesses and                 
  other regulated entities to conduct voluntary self-audits of                 
  internal operations, in an effort  to secure full compliance                 
  with environmental laws and regulations.                                     
  The first  incentive would  be limited  immunity.   Entities                 
  that  conduct voluntary  self-audits  would be  immune  from                 
  civil   and   administrative   penalties    for   violations                 
  discovered, provided several  conditions had been met.   The                 
  instances  of  noncompliance must  be  discovered  through a                 
  self-audit  and   reported  promptly   to  the   appropriate                 
  regulatory agency.  The regulated entity must take action to                 
  correct  the  identified  problem  and  prevent  its  future                 
  recurrence.    Immunity  is  not  available  for  violations                 
  causing  substantial  off-site  damage  or  serious  on-site                 
  injury.   In addition,  no immunity  would be  available for                 
  violations that were  knowingly committed  or that  resulted                 
  from  recklessness.   Immunity  can  be denied  to regulated                 
  entities with a history of  similar violations, or a pattern                 
  of disregard for environmental laws.                                         
  The second incentive would be  qualified privilege.  Certain                 
  portions of the reports generated from voluntary self-audits                 
  will be  considered privileged and  therefore not admissible                 
  as   evidence   or  subject   to   discovery  in   civil  or                 
  administrative  proceedings.   The provision  recognizes the                 
  valuative  portion  of  an  audit   report  which  is  self-                 
  incriminating.  Privilege can be overcome if asserted  for a                 
  fraudulent  purpose or if the regulated entity has failed to                 
  take required actions to correct areas of noncompliance.                     
  SB  41  would   create  an   incentive  for  companies   and                 
  individuals acting in  good faith  to police themselves  and                 
  maintain full compliance with highly complex regulations.                    
  Co-Chair  Therriault  asked  if immunity  would  need  to be                 
  disclosed to the regulatory agency.  Mr. Pauley replied that                 
  immunity would only be available  for those violations which                 
  are   disclosed   and  discovered   through   a  self-audit.                 
  Additionally,  the   bill  provides   a  notice   provision,                 
  providing a fifteen day in advance notice  to the Department                 
  of Environmental  Conservation (DEC) explaining the scope of                 
  the audit.                                                                   
  Co-Chair  Therriault  questioned  concerns  which  had  been                 
  expressed in  previous committees of referral  regarding the                 
  "whistleblower"  protection laws.  Mr. Pauley explained that                 
  SB 41 neither  adds or takes  away any rights or  protection                 
  currently provided to whistleblowers under applicable  State                 
  law.    In  several  places,  the  text  of  SB  41  clearly                 
  anticipates  the positive  role whistleblowers  may play  in                 
  calling attention to environmental problems.                                 
  Certain provisions in the bill will strike a balance between                 
  the  rights of  employees  to testify  about what  they have                 
  witnessed  and  the  rights  of  employers to  preserve  the                 
  confidentiality of audit documents which are  typically very                 
  sensitive and  costly to  produce.   SB 41  also provides  a                 
  mechanism  through  which  any party  can  petition  to have                 
  privileged audit documents disclosed for serious reasons.                    
  ENVIRONMENTAL CONSERVATION  (DEC), ANCHORAGE,  spoke to  the                 
  sections of  the bill  which the  Department would  support,                 
  pointing out that their concerns had been addressed.                         
  She  continued,   the  "privilege  of  support"   which  the                 
  legislation would allow  is narrow.   It applies  only to  a                 
  portion of the audit addressing the analytical aspect of the                 
  auditor including recommendations.   The Department has  the                 
  authority to review  the privilege portion of  the audit and                 
  the confidentiality of the owner/operator.  That information                 
  can be retained in the agency file, not being subject to the                 
  Public Audit Act.                                                            
  Ms. Adair added that if the  audit indicated a violation, it                 
  would need to  be addressed  by the Department.   From  that                 
  point forward, the  proposed practices are similar  to those                 
  currently used by DEC.   She reiterated that the  bill would                 
  not preclude  DEC from  seeking damages  for cost  recovery,                 
  only penalties for violation.                                                
  LOBBY (AEL), JUNEAU, testified  that AEL supports industry's                 
  efforts  towards  voluntarily compliance  with environmental                 
  regulations, but that they strongly oppose passage of SB 41.                 
  Achieving compliance with  regulations will require industry                 
  and government to work  together.  The broad language  of SB
  41 will cripple the State's ability to enforce protection of                 
  Alaska's environment and public welfare.  She noted that the                 
  legislation  would  greatly  obstruct efforts  to  find  the                 
  balance between  incentives for  responsible monitoring  and                 
  effective enforcement of  regulations.  Ms. Schrader  listed                 
  the reasons that AEL oppose SB 41:                                           
       *    The legislation  is a  bill of  secrecy.   It                      
            would  keep  vital information  regarding the                      
            public's health and safety hidden from review                      
            by the  agencies we  depend  upon to  enforce                      
            environmental  laws.    It  would  limit  the                      
            employees' right to know.                                          
       *    This is a bill of  amnesty to industries that                      
            conceal or condone  noncompliance.   Immunity                      
            from  civil  and administrative  penalties is                      
            bad  public  policy  and effectively  rewards                      
            non-compliance.  The bill would  let crime go                      
            unpunished and encourages violators to profit                      
            at the expense of law-abiding competitors.                         
       *    The  legislation  would be  a full-employment                      
            bill  for attorneys.   The  bill will  create                      
            more   confusion,   litigation   and  expense                      
            regarding the enforcement of regulations.                          
  Ms. Schrader pointed out that environmental regulations have                 
  been  passed out of  necessity.  She  stressed that industry                 
  has a less  than admirable record  of self-regulating.   The                 
  public's health and  safety must  continue to be  protected,                 
  particularly  in today's  heated  competitive climate  where                 
  industry  is  more  likely  to   cut  corners  for  economic                 
  In response to Co-Chair Therriault  query regarding the "in-                 
  camera"  review, Mr.  Pauley  explained  the  procedure  was                 
  outlined on Page 7, Line 9, of the Judiciary  version of the                 
  bill.   In the  "in-camera" review, the  judge determines if                 
  any  of the  conditions described in  numbers #1  through #5                 
  would require disclosure of audit reports.                                   
  Co-Chair Therriault  inquired if  DEC had  offered a  fiscal                 
  note.  Ms.  Adair replied that  the financial impact to  the                 
  Department would  be reflected  in the  Department of  Law's                 
  fiscal note.                                                                 
  Co-Chair Hanley MOVED  to report HCS CS  SB 41 (JUD) out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
  HCS CS SB  41 (JUD) was reported out of Committee with a "do                 
  pass" recommendation  and with  fiscal notes  by the  Alaska                 
  Court System  and the  Department of  Law, and  with a  zero                 
  fiscal note by the Department of Labor dated 3/18/97.                        
  SENATE BILL 109                                                              
       "An Act relating to land used for agricultural purposes                 
       and to state land classified for agricultural  purposes                 
       or subject to  the restriction of use  for agricultural                 
       purposes   only;   and   annulling    certain   program                 
       regulations of the Department of Natural Resources that                 
       are inconsistent with the amendments made by this Act."                 
  SENATOR  LYDA  GREEN  noted  that  SB  109  was  similar  to                 
  legislation passed last year as SB  162.  Last year, it  was                 
  vetoed  by  the Governor;  the  override vote,  according to                 
  Judge Weeks of Juneau, came a day late.                                      
  She listed the key provisions of the bill:                                   
       1.   The State  of Alaska  will be  taken off  the                      
            title to the  land.   An essential aspect  if                      
            farmers with agricultural land are to have an                      
            opportunity to finance their  operations with                      
            private funding.                                                   
       2.   Numerous  regulations  will be  repealed that                      
            provide for micro-management of private farms                      
            by  the State.    The Department  of  Natural                      
            Resources (DNR) has no objection to repealing                      
            those regulations.                                                 
       3.   An original  agricultural parcel  can now  be                      
            subdivided into any number of parcels as long                      
            at they are  no smaller than  40 acres.   The                      
            subdivisions do  not include  the ability  to                      
            build  a  home  on  the  property.   However,                      
            current law provides  for a  home site to  go                      
            along  with  any subdivision  of  an original                      
            parcel as  long as the parcel is at least 640                      
       4.   For a subdivided parcel which includes a home                      
            site,  must be under  640 acres, and conveyed                      
            to  someone  outside  the   owners  immediate                      
            family.  There will be two options:                                
                 *    Option  #1  would  provide an  increased                 
                      value fee of $6 thousand dollars payable                 
                      to the State.                                            
                 *    Option #2  would allow for the  owner to                 
                      do an  appraisal and pay  the difference                 
                      in the increased value from agricultural                 
                      land with a home site and without a home                 
       5.   Agricultural use  would  be  protected  by  a                      
            perpetual  covenant  running  with the  land.                      
            Any citizen, municipality or  the State could                      
            bring  suit in  civil  court  to enforce  the                      
            covenant.    The  process  should  reduce  or                      
            eliminate frivolous suits.                                         
       6.   A limited liability  report would be required                      
            to indemnify the State during the transfer of                      
       7.   Existing requirements for a survey before the                      
            State can  offer agricultural  land to  allow                      
            the Commissioner of the Department of Natural                      
            Resources to waive the expensive process.                          
  The legislation will remove unnecessary regulations, promote                 
  family  farming,   allow  farmers  the  option   of  private                 
  financing, promote  more  offerings  of  agricultural  land,                 
  allow a limited number additional home sites on agricultural                 
  land and guarantee continued agricultural use of the land.                   
  Co-Chair Therriault asked when the $6 thousand dollar charge                 
  would be made.   Senator  Green explained that  the fee  was                 
  determined as the cost  of building a second home  and would                 
  be revenue for the State.  She suggested to establish a flat                 
  fee would discourage  the small 40  acre parcel farmer  from                 
  building.    She  clarified  that  family members  would  be                 
  exempted from paying  the $6 thousand dollars.   There would                 
  be no fee coming back to the State until the parcel was sold                 
  out of the family.   The definition of "family" is  the same                 
  as that indicated  in the Legislative Ethics  Bill.  Senator                 
  Green pointed out  that language was being  reconsidered and                 
  would be changed to $4 thousand dollars.                                     
  Co-Chair  Therriault  questioned  the   "limited  liability"                 
  provision.  Senator Green  explained that in the  process of                 
  changing the title from agriculture  rights to the perpetual                 
  covenant,  a  limited  liability  policy  would be  offered,                 
  provided to Department of Natural Resources (DNR), who would                 
  then provide a  new "deed of conveyance".  In  the period of                 
  time that the farmer conveys his land  back to the State for                 
  the purposes of the  transaction, the State did not  want to                 
  have liability over  actions occurring  on the farmers  land                 
  during  that  period.    The   State  requested  a  "limited                 
  liability" clause to  protect them  during the  time of  the                 
  In  response  to   Representative  Grussendorf's   question,                 
  Senator Green explained  that a  40 acre plot  could not  be                 
  subdivided into smaller  parcels for another family  member.                 
  If the person owned  80 acres, there would be no  fee to the                 
  State to  divide it for  a family member.   If it  was given                 
  outside the family, a fee would be charged.                                  
  (Tape Change HFC 97-95, Side 2).                                             
  Representative  Grussendorf  asked the  average size  of the                 
  agricultural plots.   Senator Green replied that  every size                 
  parcel imaginable exists.  There will be no net loss of land                 
  for agriculture use.                                                         
  Representative Martin  spoke to  the "family  farm" concept.                 
  He asked if the bill had provisions to keep the farmers from                 
  selling-out  to  the  federal  government.    Senator  Green                 
  explained that SB  109 did  not address that  concern.   She                 
  commented  that the  40 acre  parcel was  the  minimum below                 
  which you can go, although, would allow a retention within a                 
  family which would allow for a  family farm member to have a                 
  homesite on that plot.                                                       
  Co-Chair Therriault questioned language included  on Page 7,                 
  Line  4:  "Housing  for the  landowner  and  farm laborers".                 
  Senator Green  advised that  seasonal workers  could need  a                 
  bunk-house to live in; that would be tied to the appropriate                 
  use for agricultural  purposes.  She stressed  that language                 
  of the bill would not permit building a condo.                               
  Representative  G.  Davis  asked  how the  Department  would                 
  monitor the area  once the parcel  was conveyed.  He  voiced                 
  concern implementing the legislation with the current budget                 
  cuts.  Senator  Green reiterated  that anyone  in the  State                 
  would have the authority  to address when farm land  was not                 
  being used  as it should  be.   The change  of title  should                 
  reflect any restriction possibilities.                                       
  TUCKERMAN BABCOCK,  STAFF, SENATOR  LYDA GREEN,  added, last                 
  year, the bill only allowed  the State authority to initiate                 
  civil  action;  in  response  to the  Department's  concern,                 
  Senator Green included authority  for the municipalities  to                 
  file civil action.  He  believed sufficient oversight exists                 
  in the legislation.                                                          
  RANCH, DELTA JUNCTION, spoke in  support of the legislation.                 
  Aspects of the  legislation which  he specifically  embraced                 
       *    The  right of  the individual  to farm  their                      
            lands as  deemed necessary to  make a  living                      
            without   micro-management   by   the   State                      
            agencies; and                                                      
       *    The  ability  of  current law  to  appeal any                      
            process when in violation.                                         
  He urged Committee members to move  the bill from Committee.                 
  Representative Martin inquired  what Mr. Crouch would  think                 
  about a prohibition  on the small family  farmer selling-out                 
  to the federal government.  Mr. Crouch replied that decision                 
  should  be  the right  of  the individual  to  determine the                 
  future of his  operations and then make  that consideration.                 
  He believed  that would  create a  conservation program  and                 
  would be based on placing marginal  farm land to better use.                 
  GRAIN  FARMER,  DELTA JUNCTION,  noted  his support  for the                 
  legislation, agreeing  that Pt. MacKenzie  should be treated                 
  separately.  He explained that Pt. MacKenzie has local,  not                 
  statewide,  problems.   The  proposed legislation  addresses                 
  concerns  experienced  by the  farming  industry  which have                 
  existed  for  twenty years  when  the original  ag-title was                 
  created.    He  urged  Committee   members  to  support  the                 
  DELTA JUNCTION,  testified in  support  of the  legislation.                 
  She spoke  to her concern regarding a  employee housing unit                 
  on her property.   Co-Chair Therriault clarified  that there                 
  would be no  added assessment to  the employee house on  her                 
  Ms. Knopp read testimony from Scott  Miller in support of SB
  109.  Mr. Miller elaborated  the legislation would keep  the                 
  State from  micro-managing farms, concluding  that farm land                 
  must be protected.                                                           
  U.S.  DEPARTMENT  OF  AGRICULTURE,  PALMER,  noted that  the                 
  Alaska  Farm  Service Agency's  interest  in the  bill would                 
  favor the fee-simple title passed on  through the bill.  The                 
  U.S. Department of  Agriculture shares  a loan program  with                 
  bankers   of  Nationwide.    Including  the  guarantee  loan                 
  incentive, the loan process  could be expedited and be  more                 
  responsive to the needs of farmers.  To date, the banks have                 
  not been willing to accept title as it currently exists.  He                 
  recommended passage of the legislation.                                      
  PIONEER RANCH, PALMER, voiced appreciation for the Senator's                 
  consideration   of  previous   voiced   concerns  with   the                 
  legislation.  He spoke to the  40 acre subdivision clause, a                 
  parcel  size which  would  not lend  itself  to a  practical                 
  operation.    A   profitable  farm   must  allow  itself   a                 
  substantial rotation process.                                                
  (Tape Change HFC 97-96, Side 1).                                             
  PALMER,  suggested that the  legislation would  increase the                 
  price of  agricultural land.   He  added that  SB 109  would                 
  allow  present owners  of ag-right  titles to apply  for and                 
  receive the new title without value being hindered, whereas,                 
  new purchasers of that land from  the State in future sales,                 
  must pay  for it at  that time.   Such an action  could make                 
  some owners more "equal" than others.                                        
  Mr. Devilbiss  questioned how  long would  it take  before a                 
  concern  surfaces  over  the loss  of  ag-land  turning into                 
  primary residence for  off-farm wage earners.   He suggested                 
  there would  be pressure at that time  for the State to buy-                 
  back the developed lands.                                                    
  WASILLA,  stated that any  farmer making a  living in Alaska                 
  can not  afford to subdivide.   The State is  the major land                 
  holder and current laws are not logical.                                     
  PT. MACKENIZE, spoke to the fiasco  the State has created in                 
  the dairy  industry at Pt.  MacKenzie.  He  recommended that                 
  the  State  continue to  keep  the covenant  with  the dairy                 
  facility on that land.   Mr. Groeschez spoke to  his support                 
  for passage of SB 109.                                                       
  PALMER,  informed Committee  members  of  the difficulty  of                 
  farming  in  Alaska  where the  weather  conditions  and the                 
  shortness  of  the season  dramatically  affect  the growing                 
  season.   She admitted that many people  have made a "go" of                 
  it.  Ms.  Williams encouraged for  more people to have  that                 
  opportunity, requires subdividing to 40  acres parcels.  She                 
  supported keeping it "ag-only land" and urged passage of the                 
  commented that SB 109  provides a good title for  farmers in                 
  Alaska.  He noted his support for the legislation.                           
  MACKENIZE, testified in support of SB 109.                                   
  spoke in support of the proposed legislation.  The intent of                 
  the bill  would diversify the  economy and help  the farming                 
  industry grow  successfully.  He  urged members to  move the                 
  bill from Committee.                                                         
  SB 109 was HELD in Committee for further consideration.                      
  The meeting adjourned at 10:00 A.M.                                          

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