Legislature(2015 - 2016)HOUSE FINANCE 519

03/23/2015 01:30 PM House FINANCE

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 115(FIN) Out of Committee
Moved HB 140 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 23, 2015                                                                                            
                         1:34 p.m.                                                                                              
1:34:09 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Thompson called the House Finance Committee                                                                            
meeting to order at 1:34 p.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Scott Kawasaki                                                                                                   
Representative Tammie Wilson                                                                                                    
ALSO PRESENT                                                                                                                  
Tom Wright, Staff, Representative  Mike Chenault; Ed Fogels,                                                                    
Deputy  Commissioner,   Department  of   Natural  Resources;                                                                    
Representative Mike Chenault,  Sponsor; Jane Pierson, Staff,                                                                    
Representative Steve Thompson.                                                                                                  
PRESENT VIA TELECONFERENCE                                                                                                    
Dick Coose, Self, Ketchikan; Lois Epstein, Arctic Program                                                                       
Director, Wilderness Society, Anchorage; William O'Leary,                                                                       
President and CEO, Alaska Railroad Corporation.                                                                                 
HB 115    AK SOVEREIGNTY; US TRANSFER LAND TO ALASKA                                                                            
          CSHB 115(FIN)  was REPORTED out of  committee with                                                                    
          a  "do  pass"  recommendation  and  with  one  new                                                                    
          indeterminate fiscal  note from the  Department of                                                                    
          Natural Resources.                                                                                                    
HB 140    LEG. APPROVAL: AK RAILROAD REVENUE BONDS                                                                              
          HB 140  was REPORTED out  of committee with  a "do                                                                    
          pass" recommendation and with  one new zero fiscal                                                                    
          note  from the  Department of  Commerce, Community                                                                    
          and Economic Development.                                                                                             
Co-Chair Thompson discussed the meeting agenda.                                                                                 
HOUSE BILL NO. 115                                                                                                            
     "An Act  relating to the  transfer of public  land from                                                                    
     the  federal  government  to  the   state  and  to  the                                                                    
     disposal of  that land; and providing  for an effective                                                                    
1:35:06 PM                                                                                                                    
Co-Chair  Thompson noted  that  the bill  had  a new  fiscal                                                                    
note.  He asked  for a  motion on  the Committee  Substitute                                                                    
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for HB  115,  Work  Draft 29-LS0587\I  (Bullard,                                                                    
3/18/15). There being NO OBJECTION, it was so ordered.                                                                          
TOM WRIGHT, STAFF, REPRESENTATIVE  MIKE CHENAULT, pointed to                                                                    
the change in the bill on  page 2, line 24. An exemption had                                                                    
been  added  for  land  designated as  a  national  park  by                                                                    
January 1,  2015. He  noted that  another exemption  was for                                                                    
land  used  for  military  or naval  purposes  (including  a                                                                    
military reservation).  He relayed  that the  bill addressed                                                                    
issues  related to  public lands  including the  transfer of                                                                    
title  of public  lands  to the  state  and asserting  state                                                                    
sovereignty under  the 9th and  10th Amendments of  the U.S.                                                                    
Representative Gara  did not support  the bill.  He remarked                                                                    
that the  State of  Alaska and  the federal  government were                                                                    
negotiating over  55 million  acres of  land owed  to Alaska                                                                    
under statehood  [Note: this  statement was  corrected later                                                                    
in the meeting to 5.5  million acres]. He discussed that the                                                                    
bill took  away 168  million acres, which  was significantly                                                                    
more than the  state was owed. He referred  to a Legislative                                                                    
Legal  Services   memorandum  addressed  to   House  Speaker                                                                    
Chenault  specifying  that  the  bill  was  unconstitutional                                                                    
(copy on  file). He had  not found  a provision of  the U.S.                                                                    
Constitution that would  allow Alaska to take  land from the                                                                    
federal government.  He asked how  the bill was  not clearly                                                                    
Mr. Wright  answered that it  would be  up to the  courts to                                                                    
decide the  bill's constitutionality. He stated  that if the                                                                    
issue went to court it would be fought out there.                                                                               
Co-Chair   Thompson  noted   that   Department  of   Natural                                                                    
Resources  (DNR)  staff  were  available  for  questions  by                                                                    
Representative Gara stated  that it was not  necessary to go                                                                    
to  court  to  determine the  bill's  constitutionality.  He                                                                    
underscored that  it was unconstitutional. He  noted that it                                                                    
would cost  the State of Utah  a down payment of  $2 million                                                                    
to fight  the litigation  [related to  similar legislation].                                                                    
He  pointed out  that  Arizona's  conservative governor  had                                                                    
vetoed similar legislation in order  to avoid spending money                                                                    
on defending  an unconstitutional  law. He wondered  how the                                                                    
legislation was not clearly unconstitutional.                                                                                   
Mr. Wright  answered that he  could not answer  the question                                                                    
from a legal standpoint. He  cited a legal overview from the                                                                    
Federalist Society (copy on file)  on Utah's legislation. He                                                                    
read from the overview's conclusion:                                                                                            
     Utah's   Transfer   of   Public  Lands   Act   presents                                                                    
     fascinating  issues  for  the areas  of  public  lands,                                                                    
     natural  resources, and  constitutional law.  There are                                                                    
     credible legal arguments  supporting Utah's demand that                                                                    
     the federal government  extinguish certain public lands                                                                    
     within the  State. At  the very  least, it  seems clear                                                                    
     that the law is  not "clearly" unconstitutional as some                                                                    
     opponents contend.                                                                                                         
Mr. Wright would provide the document to the committee.                                                                         
1:39:55 PM                                                                                                                    
Co-Chair Thompson requested  a copy of the  document for the                                                                    
committee.   He   noted    that   Vice-Chair   Saddler   and                                                                    
Representative Pruitt had joined the committee meeting.                                                                         
Representative  Gara  remarked  that  he had  not  seen  the                                                                    
document [written  by the Federalist  Society]. He  asked if                                                                    
it  included  a  citation  of  any  provision  in  the  U.S.                                                                    
Constitution  allowing a  state  to take  federal land.  Mr.                                                                    
Wright answered not that he was aware of.                                                                                       
Co-Chair  Thompson noted  that  Representative Chenault  had                                                                    
joined the meeting.                                                                                                             
Representative  Guttenberg observed  that the  former fiscal                                                                    
note   and  its   replacement   were  the   same,  but   the                                                                    
explanations  were   different.  He  asked  how   DNR  would                                                                    
facilitate the land transfer. He  wondered if similar action                                                                    
had  occurred  in  the  past  and if  so,  how  the  federal                                                                    
government had reacted. He believed  that unless the federal                                                                    
government  acquiesced  the  bill could  result  in  ongoing                                                                    
court cases.                                                                                                                    
ED  FOGELS,  DEPUTY   COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES,  replied that  he could  not  readily answer  the                                                                    
question. He stated that if  the bill passed and the federal                                                                    
government  decided to  give  the lands  to  the state,  the                                                                    
department  would  have  additional   lands  to  manage  and                                                                    
additional  revenues generated  from  the  lands. He  stated                                                                    
that  the  indeterminate  fiscal  note  reflected  that  the                                                                    
department  could not  specifically identify  what the  cost                                                                    
would  be. He  did  not believe  speaking  to any  potential                                                                    
litigation was in the department's realm of expertise.                                                                          
1:43:30 PM                                                                                                                    
Representative  Guttenberg asked  what the  department would                                                                    
do  to implement  the change  of ownership  from federal  to                                                                    
state  land. Mr.  Fogels replied  that DNR's  response would                                                                    
partly depend  on which lands  the state received.  He noted                                                                    
that   the  bill   considered  national   forests,  wildlife                                                                    
refuges, and Bureau of Land  Management (BLM) land. He noted                                                                    
the  importance of  identifying and  refusing land  that the                                                                    
state did  not want  (e.g. contaminated sites),  which would                                                                    
be a key component of DNR's action.                                                                                             
Representative  Guttenberg remarked  that the  state, Native                                                                    
entities,  cities,  municipalities,  and  boroughs  had  all                                                                    
over-selected lands.  He remarked that the  entities did not                                                                    
lose  their  ability  for selection.  He  wondered  how  the                                                                    
department  would  mitigate  the  issue.  In  the  past  the                                                                    
department  reflected that  all  of the  entities wanted  to                                                                    
over-select  and then  went through  a long-term  process of                                                                    
whittling  down  what  each  entity  actually  received.  He                                                                    
wondered how  the relationship with the  other entities with                                                                    
land to select would play out.                                                                                                  
Mr.  Fogels  responded  that the  Native  corporations  were                                                                    
almost  complete with  their  land  entitlement. He  guessed                                                                    
that  the  state would  not  accept  the lands  that  Native                                                                    
corporations had  selected (that  were yet to  be conveyed).                                                                    
He  relayed that  municipalities received  their lands  from                                                                    
the  state; therefore,  opportunities for  municipalities to                                                                    
get land could increase if the state's holdings increased.                                                                      
1:46:29 PM                                                                                                                    
Co-Chair Neuman  noted that under  the Alaska  Statehood Act                                                                    
the federal government  had granted the state  28 percent of                                                                    
the  total  land within  its  borders  with additional  land                                                                    
grants  for  schools,  the University  of  Alaska,  and  the                                                                    
Alaska Mental  Health Trust Authority (AMHTA).  According to                                                                    
DNR, the  state had  received about  99.5 million  acres and                                                                    
awaited transfer  of the remaining 5.5  million. He wondered                                                                    
if  the federal  government had  approached the  state about                                                                    
settling up.                                                                                                                    
Mr. Fogels  replied that DNR  was in  constant communication                                                                    
with  the federal  government  regarding  the remaining  5.4                                                                    
million acres and  what could be done to  resolve the issue.                                                                    
He  detailed   that  the  state   needed  to   address  some                                                                    
significant issues before it picked  which 5.4 million acres                                                                    
it wanted.  He elaborated  that public  land orders  were at                                                                    
the top  of the  list of items  that needed  resolution. The                                                                    
department  did not  want to  accelerate  the remaining  5.4                                                                    
million acres until the public land orders were lifted.                                                                         
Co-Chair   Neuman  wondered   if   the  federal   government                                                                    
recognized  that the  state depended  on the  development of                                                                    
its  resources. He  noted that  the state  would like  lands                                                                    
that  had  economic  value   for  resource  development.  He                                                                    
wondered  if it  was the  goal.  Mr. Fogels  replied in  the                                                                    
affirmative.  He   elaborated  that   the  purpose   of  the                                                                    
statehood land  entitlement was to  generate an  economy for                                                                    
the  state;  therefore,  DNR looked  for  lands  that  would                                                                    
maximize that potential in the future.                                                                                          
Co-Chair Neuman  believed the state's  only option  would be                                                                    
to  do as  directed  in  the bill  and  to  sue the  federal                                                                    
government to enable the state  to select lands it could use                                                                    
for resource  development. He wondered  if there  were other                                                                    
options available.                                                                                                              
Mr. Fogels  replied that DNR  would prefer to  work amicably                                                                    
with  the  federal government  and  have  it relinquish  the                                                                    
public land  orders in order  to broaden the  selection pool                                                                    
for the state. The state  was currently working on the issue                                                                    
with  the   federal  government;   if  all  went   well  the                                                                    
government would lift all or  some of the public land orders                                                                    
to provide the state access  to the highest potential lands.                                                                    
He added that if the method  did not succeed DNR may have to                                                                    
look at other  options in the future, but it  was working to                                                                    
solve the issue without litigation.                                                                                             
1:50:20 PM                                                                                                                    
Co-Chair  Neuman  asked  for  verification  that  the  other                                                                    
option  would be  to  sue the  federal  government over  the                                                                    
selection of lands.  Mr. Fogels agreed that it  would be one                                                                    
Co-Chair  Thompson referred  to a  question from  Vice-Chair                                                                    
Saddler in  a previous  meeting regarding Section  2(b). The                                                                    
question pertained to the value  of the injuries caused from                                                                    
the  federal government.  He asked  Mr. Fogels  to reiterate                                                                    
the information.                                                                                                                
Mr. Fogels  answered that he  had sent an email  to Co-Chair                                                                    
Thompson and  Co-Chair Neuman  regarding the  question (copy                                                                    
on file).                                                                                                                       
Co-Chair  Thompson  confirmed that  he  had  the email.  Mr.                                                                    
Fogels relayed  that DNR did  not have a  comprehensive list                                                                    
of all the  injuries it believed the  federal government had                                                                    
caused the state. There were  many different ways to look at                                                                    
the issue. He had cited  two prominent examples in his email                                                                    
including potential  revenue the state would  not receive if                                                                    
Alaska National  Wildlife Refuge (ANWR) continued  to be off                                                                    
limits and  the loss of  5,000 timber jobs in  Southeast due                                                                    
to federal land management  policies in the Tongass National                                                                    
Co-Chair Thompson referred to  the Mr. Fogel's email stating                                                                    
that the estimated  loss of revenue to the  state related to                                                                    
ANWR   was  between   $94.8   billion   and  $210   billion.                                                                    
Additionally, 5,000 jobs in the  timber sector had shrunk to                                                                    
a few  hundred jobs;  6 communities  had seen  schools close                                                                    
due  to low  student  enrollment, which  in  many cases  was                                                                    
directly or indirectly  related to the health  of the forest                                                                    
product industry.                                                                                                               
Representative Munoz  wondered if the bill's  purpose was to                                                                    
expand the land selection pool  or to obtain land beyond the                                                                    
state's entitlement.  Mr. Wright answered that  the original                                                                    
intent  was  to receive  the  remaining  5.5 million  acres;                                                                    
however, the state would gladly take additional lands.                                                                          
Representative Munoz  asked for  verification that  the bill                                                                    
identified all federal land with  the exception of land used                                                                    
by the military  and national parks. Mr.  Wright answered in                                                                    
the affirmative.                                                                                                                
Representative Munoz  asked for  confirmation that  the bill                                                                    
also asked  for the removal  of land orders on  10.3 million                                                                    
acres  that  were top-filed.  Mr.  Wright  responded in  the                                                                    
1:53:58 PM                                                                                                                    
DICK COOSE, SELF,  KETCHIKAN (via teleconference), testified                                                                    
in   support   of   the  legislation.   He   discussed   his                                                                    
professional background in  forestry management. He believed                                                                    
the federal government no longer  had the desire, direction,                                                                    
or  ability to  manage the  land  to utilize  the goods  and                                                                    
services  needed by  local  residents,  communities, or  the                                                                    
nation.  He   stated  that   federal  land   management  was                                                                    
currently driven by politics,  false public information, and                                                                    
excessive regulations and legal  actions. He opined that the                                                                    
cost was excessive. He had  observed that land management by                                                                    
the   State  of   Alaska  was   much  more   cost-effective,                                                                    
efficient,  and provided  for the  needs of  the people.  He                                                                    
reasoned  that people  needed  the jobs  and  the state  and                                                                    
communities needed  the economic  benefits of  the available                                                                    
land resources (i.e. oil,  minerals, fish, timber, wildlife,                                                                    
recreation, tourism, and scenery).  He believed if the state                                                                    
was managing the lands, especially  in Southeast Alaska, the                                                                    
jobs  related  to  the management  would  greatly  increase.                                                                    
Additionally, the communities  would be economically healthy                                                                    
and the  state treasury would benefit.  He communicated that                                                                    
earlier in his  career the national forest  system lands had                                                                    
contributed more to the treasury  than its budget by several                                                                    
billion dollars.  He believed additional lands  could have a                                                                    
positive impact  on the state's  revenue. He noted  that the                                                                    
Alaska  Statehood Act  had limited  the  selection from  the                                                                    
Tongass to  approximately 500,000  acres in order  to ensure                                                                    
that the  pulp mills always  had timber. He stated  that the                                                                    
reason for  the limitation was  no longer valid  because the                                                                    
federal government ran  the pulp mills off.  He believed the                                                                    
issue should not  be partisan; the issue  was about Alaskans                                                                    
determining  their  future  as a  resource-based  state.  He                                                                    
believed many  of the resources were  renewable indefinitely                                                                    
(fish,  wildlife, timber,  water, recreation,  and tourism).                                                                    
He encouraged the committee to pass the legislation.                                                                            
1:57:51 PM                                                                                                                    
LOIS EPSTEIN,  ARCTIC PROGRAM DIRECTOR,  WILDERNESS SOCIETY,                                                                    
ANCHORAGE  (via   teleconference),  testified   against  the                                                                    
legislation on constitutional grounds.  She relayed that the                                                                    
society had  been following the  issue in other  states. She                                                                    
communicated that the  issue had been vetoed  by the Arizona                                                                    
Governor  Jan Brewer  due  to  its unconstitutionality.  The                                                                    
group was not  opposed to the land  selection process moving                                                                    
forward.  However, the  most  sensitive  federal lands  were                                                                    
under federal  protection for a  reason, which went  back to                                                                    
statehood   and   the   Alaska   National   Interest   Lands                                                                    
Conservation  Act  (ANILCA).   The  Wilderness  Society  was                                                                    
working  with the  state and  federal governments  to ensure                                                                    
appropriate  protections  for   the  lands.  She  reiterated                                                                    
opposition to the bill.                                                                                                         
Co-Chair Thompson CLOSED public testimony.                                                                                      
Vice-Chair Saddler asked if it  was likely that revenue from                                                                    
the development of  resources on the land would  be equal to                                                                    
or  greater than  the costs  managing the  land. Mr.  Fogels                                                                    
referred  to  his  email  to  the  co-chairs  and  a  recent                                                                    
presentation   in  the   House   Resources  Committee   that                                                                    
projecting revenues  from ANWR would be  between $90 billion                                                                    
and $200 billion.                                                                                                               
Representative   Gara   remarked  that   Legislative   Legal                                                                    
Services had  deemed the bill unconstitutional.  He asked if                                                                    
the  department   had  spoken   to  the   administration  to                                                                    
determine whether the state's  attorney general believed the                                                                    
bill  was  unconstitutional.  Mr.  Fogels  answered  in  the                                                                    
Vice-Chair Saddler read  from page 5 of  legal overview from                                                                    
the Federalist Society:                                                                                                         
     As Governor Herbert has noted,  the legal case for H.B.                                                                    
     148 may not be a  "slam dunk," but there are legitimate                                                                    
     arguments to  support the law and  certainly critics of                                                                    
     the law overstate their legal  case against the law. At                                                                    
     the  very   least,  there  are  open   legal  questions                                                                    
     involved  in   the  TPLA   that  have   never  received                                                                    
     definitive resolution  in the courts. As  such, critics                                                                    
     cannot  make a  cut and  dry case  against the  law. In                                                                    
     fact, if  anything, opposition statements made  so fare                                                                    
     regarding  the law  may reflect  an over-confidence  in                                                                    
     its  unconstitutionality and  an  overstatement of  the                                                                    
     strength of precedent.                                                                                                     
2:02:14 PM                                                                                                                    
Representative  Gara understood  the sponsor's  frustration.                                                                    
He recognized there were many  instances in Alaska where the                                                                    
federal  government  had  taken inappropriate  actions.  For                                                                    
example,   when  the   federal   government  had   prevented                                                                    
ConocoPhillips  from building  a  bridge  over the  Colville                                                                    
River  to  access  oil field  development  in  the  National                                                                    
Petroleum   Reserve-Alaska  (NPRA).   He   and  others   had                                                                    
contacted  federal agencies  in  opposition  to the  ruling;                                                                    
subsequently,   the   bridge    was   eventually   approved.                                                                    
Additionally,  he  had  fought and  helped  resolve  federal                                                                    
land-access  rulings that  prevented  public fishing  access                                                                    
along  the Kenai  River. He  remarked that  there were  many                                                                    
places  the legislature  could  discuss  things the  federal                                                                    
government had  done either  to give the  state money  or to                                                                    
take away  rights that  belonged to  the state.  However, he                                                                    
reasoned, "if you're  angry at your neighbor  you can't just                                                                    
bulldoze their  house." He  corrected his  earlier statement                                                                    
about  the  acreage  owed  to   the  state  by  the  federal                                                                    
government under  statehood; it was owed  5.5 million acres.                                                                    
He stated that the bottom line  is "we are both Alaskans and                                                                    
Americans.    We   can't    violate   the    United   States                                                                    
Constitution."  He  reasoned   that  the  U.S.  Constitution                                                                    
included no provision  allowing the state to  take land from                                                                    
the  federal government.  He noted  that legislators  had an                                                                    
oath to uphold both the state and federal constitutions.                                                                        
Representative Gara  continued that the bill  would take 166                                                                    
million acres  of non-park land from  the federal government                                                                    
when the  state was only owed  5 million. He stated  that it                                                                    
was  not legal.  He  referred to  the  state's $3.5  billion                                                                    
deficit. He  elaborated that  Utah estimated  its litigation                                                                    
would  cost $2  million. He  stressed  that it  was not  the                                                                    
responsible  thing  to do  with  limited  state funding.  He                                                                    
discussed that Utah had a  claim under its statehood compact                                                                    
where it was  promised that some of the  federal lands would                                                                    
only remain in federal hands  temporarily. He noted that the                                                                    
same did not apply to  Alaska. He highlighted that under the                                                                    
bill any  state could  take any federal  land it  wanted. He                                                                    
reasoned that  if that were  the case the State  of Kentucky                                                                    
could  take  the  U.S.  Mint, which  would  be  an  economic                                                                    
disaster. He believed  it meant the State of  New York could                                                                    
take  the U.S.  Mint at  West Point  and Philadelphia  could                                                                    
take the  liberty bell  for sale to  the highest  bidder. He                                                                    
agreed  with  Mr.  Fogels  that  the  state  should  harshly                                                                    
negotiate  for the  lands it  was owed  under statehood.  He                                                                    
believed the  state should either  negotiate or  litigate if                                                                    
there was a  valid legal claim on the 5.5  million acres. He                                                                    
opined that taking  another 163 million acres  with no legal                                                                    
authority would  just cost the  state money. He  agreed that                                                                    
in many areas the federal  government had been very harsh on                                                                    
Alaska's  access  to lands  within  the  state. However,  he                                                                    
could not  vote for something that  was unconstitutional. He                                                                    
stated that  he could support  the bill if it  addressed the                                                                    
5.5 million acres and offered something legal.                                                                                  
2:08:08 PM                                                                                                                    
Co-Chair  Neuman believed  that in  the event  of a  dispute                                                                    
anyone  should have  a right  to  go to  court. He  believed                                                                    
there  was  a dispute  between  the  state and  the  federal                                                                    
government as to  the lands that should be  purveyed back to                                                                    
the state. He  stressed that under the  Alaska Statehood Act                                                                    
with the federal government, the  state was owed another 5.5                                                                    
million  acres.  He elaborated  that  the  state wanted  the                                                                    
ability to  specify the acreage  it would like  conveyed. He                                                                    
continued that  the federal government knew  that Alaska was                                                                    
a  resource development  state,  which it  needed to  create                                                                    
jobs. He reasoned  that if the acreages  were resource rich,                                                                    
it would be  prudent for the state to receive  the lands for                                                                    
development in order  to help with its  deficit. He referred                                                                    
to revenue from potential royalty  shares in addition to job                                                                    
creation. He  did not know  how the issue could  be resolved                                                                    
without  going  to court.  He  surmised  that attorneys  had                                                                    
varying  opinions on  the legality.  He  concluded that  the                                                                    
legislation directed  the state to continue  to move forward                                                                    
to  try  to  select  lands for  transfer  from  the  federal                                                                    
government. He  supported the  legislation and  the benefits                                                                    
it  could provide  to  the state.  He  opined that  benefits                                                                    
would outweigh any litigation costs.                                                                                            
2:10:35 PM                                                                                                                    
Vice-Chair Saddler stated  that he was not  an attorney, but                                                                    
cited Amendment 10 in the U.S. Constitution:                                                                                    
     The powers not delegated to the United States by the                                                                       
     Constitution, nor prohibited by it to the States, are                                                                      
     reserved to the States respectively, or to the people.                                                                     
Vice-Chair  Saddler  remarked  that  the text  was  open  to                                                                    
interpretation. He  stated that the U.S.  Constitution meant                                                                    
what the U.S. Supreme Court  says it means. He supported the                                                                    
bill. He  reasoned that the  courts would decide  the matter                                                                    
if there was a constitutional challenge.                                                                                        
Representative Guttenberg wondered  if the legislature would                                                                    
have intentionally negated its half  of the statehood act if                                                                    
the legislation was passed. He read from Section 4:                                                                             
     As a compact with the  United States said State and its                                                                    
     people do agree and  declare that they forever disclaim                                                                    
     all right and title to  any lands or other property not                                                                    
     granted  or confirmed  to the  State  or its  political                                                                    
    subdivisions by or under the authority of this Act.                                                                         
Representative Guttenberg  was concerned  that if  the state                                                                    
went  to court  it would  put everything  on the  table; the                                                                    
state's right in addition to  the federal government's claim                                                                    
for  whatever it  may want  back. He  noted that  the courts                                                                    
could  choose   to  "call  it   quits."  He   believed  more                                                                    
information about  the liability was needed.  He had respect                                                                    
some of the  bill's concepts, but he did  not believe enough                                                                    
thought had gone into the end process.                                                                                          
REPRESENTATIVE MIKE  CHENAULT, SPONSOR, believed  the issues                                                                    
had all been  discussed. He opined that it  was important to                                                                    
keep the  type of issues  out in front  in terms of  how the                                                                    
legislature  represented the  people of  Alaska. He  was not                                                                    
afraid of  a fight or of  doing what he believed  was right.                                                                    
He stated  that there  had been increased  federal overreach                                                                    
in  regards to  federal lands  in  Alaska. He  spoke to  the                                                                    
concerns  Alaskans  had  around  not having  a  say  in  the                                                                    
Co-Chair  Neuman  MOVED  to  REPORT  CSHB  115(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
Representative  Gara remarked  that he  would not  object to                                                                    
the  bill moving  out of  the committee;  he believed  House                                                                    
Speaker  Chenault  was  entitled   to  have  the  bill  move                                                                    
There being NO OBJECTION, CSHB  115(FIN) was REPORTED out of                                                                    
committee with a  "do pass" recommendation and  with one new                                                                    
indeterminate  fiscal note  from the  Department of  Natural                                                                    
2:15:00 PM                                                                                                                    
HOUSE BILL NO. 140                                                                                                            
     "An Act authorizing the  Alaska Railroad Corporation to                                                                    
     issue  revenue  bonds  to   finance  a  positive  train                                                                    
     control   rail  transportation   safety  project   that                                                                    
     qualifies  for  federal  financial  participation;  and                                                                    
     providing for an effective date."                                                                                          
2:15:43 PM                                                                                                                    
JANE   PIERSON,   STAFF,  REPRESENTATIVE   STEVE   THOMPSON,                                                                    
communicated  that  the  bill  would  authorize  the  Alaska                                                                    
Railroad  Corporation to  issue  up to  $37  million in  tax                                                                    
exempt bonds  backed by  the federal  transit administration                                                                    
formula  funds received  annually  by  the corporation.  She                                                                    
detailed  that  bond  proceeds  would  be  used  to  finance                                                                    
positive  train  control,  a   safety  program  mandated  by                                                                    
federal government without any correlating funding.                                                                             
Co-Chair   Neuman    noted   that   the    railroad   needed                                                                    
approximately  $55  million  to  complete  the  program.  He                                                                    
referred to the bonding  authority of $34.1 million provided                                                                    
under the bill,  which left $18 million. He asked  if it was                                                                    
the intent  of the  Alaska Railroad  Corporation to  ask the                                                                    
legislature for the additional funds.                                                                                           
WILLIAM   O'LEARY,  PRESIDENT   AND  CEO,   ALASKA  RAILROAD                                                                    
CORPORATION (via teleconference),  replied that the railroad                                                                    
had yet  to determine  where it  would obtain  the remaining                                                                    
$18  million; $55  million would  be  addressed through  the                                                                    
legislation. He  elaborated that  $37 million would  get the                                                                    
railroad through approximately two  years of activity on the                                                                    
project, which  would provide the  railroad time to  look at                                                                    
Co-Chair Neuman  asked if the corporation  had discussed the                                                                    
$18  million   with  its  board  and   the  possibility  the                                                                    
legislature may  need to provide  additional funding  in the                                                                    
future.  Mr. O'Leary  in the  affirmative. He  detailed that                                                                    
originally  the  plan  had  been to  request  the  full  $55                                                                    
million over  a three-year period from  the legislature. The                                                                    
corporation's had  the ability  to refinance  existing debt,                                                                    
which  created headroom  to  bond for  the  $37 million.  He                                                                    
addressed  the   remaining  $18  million  and   agreed  that                                                                    
everyone was  considering where the  funds would  come from.                                                                    
He stated that the corporation  did not currently know where                                                                    
the additional funds could come from.                                                                                           
2:19:44 PM                                                                                                                    
Co-Chair Neuman  was concerned that  the state did  not have                                                                    
capital funds to  put towards the project.  He wondered what                                                                    
would happen  in three years'  time. He wondered  what other                                                                    
options  the corporation  had besides  requesting the  funds                                                                    
from the legislature.                                                                                                           
Mr. O'Leary replied  that he did not know.  He reasoned that                                                                    
the issue would  be dealt with as the  project went forward.                                                                    
He  communicated that  the  corporation's primary  objective                                                                    
was to  keep the project  moving forward and to  continue to                                                                    
make a good  faith effort as required by  its regulators. He                                                                    
believed that  the legislation would hopefully  provide time                                                                    
to  come up  with  a  solution for  the  remainder of  funds                                                                    
needed to complete the project by 2018.                                                                                         
Co-Chair Neuman  commented that he  did not mind  moving the                                                                    
bill  forward, but  he wanted  assurance  from the  railroad                                                                    
that it did not intend  to come forward with further capital                                                                    
fund requests in the future.                                                                                                    
Representative Gattis wanted  assurance that the corporation                                                                    
did not  intend to  come back  to the  state for  funds. She                                                                    
spoke to decisions businesses were  required to make related                                                                    
to  financing; there  were choices  to sell  assets, to  re-                                                                    
bond, or other.                                                                                                                 
Mr. O'Leary  answered that he  was not  trying to be  coy in                                                                    
his response. The  corporation did not know  where the funds                                                                    
would  come from.  He agreed  that  the corporation's  major                                                                    
focus  was  continuing to  move  forward  with the  unfunded                                                                    
mandate.  He  mentioned  options   of  state,  federal,  and                                                                    
railroad funds. He underscored  that the railroad understood                                                                    
that it  had to obtain the  funds somewhere and that  it was                                                                    
necessary to keep moving forward on the project.                                                                                
Representative  Gattis  asked  if the  corporation  had  the                                                                    
assets it could  utilize if push came to  shove. Mr. O'Leary                                                                    
answered that the railroad did  not have the money or assets                                                                    
currently. He noted  that if it did have the  money it would                                                                    
most likely  be moving  forward with  those funds.  The goal                                                                    
was to  begin to determine  what the corporation  would need                                                                    
to do to obtain the $18 million.                                                                                                
2:24:11 PM                                                                                                                    
Co-Chair  Thompson  believed  the railroad  had  significant                                                                    
assets that it may need  to consider utilizing. He hoped the                                                                    
committee  had  adequately  conveyed that  the  state  would                                                                    
probably not have any money for three or four years.                                                                            
Co-Chair Thompson CLOSED public testimony.                                                                                      
Co-Chair  Neuman MOVED  to REPORT  HB 140  out of  committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB  140   was  REPORTED   out  of   committee  with   a  "no                                                                    
recommendation" recommendation and with  one new zero fiscal                                                                    
note  from   the  Department  of  Commerce,   Community  and                                                                    
Economic Development.                                                                                                           
Co-Chair Thompson  discussed the schedule for  the following                                                                    
2:26:05 PM                                                                                                                    
The meeting was adjourned at 2:26 p.m.                                                                                          

Document Name Date/Time Subjects
HB 115 CS WorkDraft FIN I version.pdf HFIN 3/23/2015 1:30:00 PM
HB 115
HB 115 Opposition.pdf HFIN 3/23/2015 1:30:00 PM
HB 115
HB 140 Response Deven Mitchell.pdf HFIN 3/23/2015 1:30:00 PM
STRA 4/7/2015 1:00:00 PM
HB 140
HB 115 NEW FN DNR.pdf HFIN 3/23/2015 1:30:00 PM
HB 115
HB 115 Response Ed Fogels.pdf HFIN 3/23/2015 1:30:00 PM
HB 115
HB 115 Federalist Society Legal Overview Utah Act.pdf HFIN 3/23/2015 1:30:00 PM
HB 115