Legislature(1993 - 1994)

03/29/1993 08:00 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               HOUSE RESOURCES STANDING COMMITTEE                              
                         March 29, 1993                                        
                            8:00 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Bill Williams, Chairman                                       
  Representative Bill Hudson, Vice Chairman                                    
  Representative Con Bunde                                                     
  Representative Pat Carney                                                    
  Representative John Davies                                                   
  Representative Jeannette James                                               
  Representative David Finkelstein                                             
  MEMBERS ABSENT                                                               
  Representative Joe Green                                                     
  Representative Eldon Mulder                                                  
  OTHER LEGISLATORS PRESENT                                                    
  Representative Gail Phillips                                                 
  Representative Tom Brice                                                     
  Representative Cliff Davidson                                                
  Representative Carl Moses                                                    
  COMMITTEE CALENDAR                                                           
  HB 76:    "An Act making a special appropriation to the                      
            Department of Natural Resources for the purchase                   
            of the inholdings of the Seldovia Native                           
            Association and the Cook Inlet Region, Inc., and                   
            the timber rights of the Timber Trading Company,                   
            within the Kachemak Bay State Park; and providing                  
            for an effective date."                                            
            PASSED FROM COMMITTEE WITH A DO PASS                               
  HB 132:   "An Act extending the time period of all permits                   
            issued by the state relating to the extraction or                  
            removal of resources if the holder of the permits                  
            is involved in litigation concerning the issuance                  
            or validity of any permit related to the                           
            extraction or removal."                                            
            ADOPTED CS (RES) AND PASSED FROM COMMITTEE WITH A                  
            DO PASS RECOMMENDATION                                             
  HB 201:   "An Act amending provisions of ch. 66, SLA 1991,                   
            that relate to reconstitution of the corpus of the                 
            mental health trust, the management of trust                       
            assets, and to the manner of enforcement of the                    
            obligation to compensate the trust; and providing                  
            for an effective date."                                            
            REPRESENTATIVE JAMES                                               
  WITNESS REGISTER                                                             
  Representative Gail Phillips                                                 
  Alaska State Legislature                                                     
  State Capitol, Room 216                                                      
  Juneau, Alaska  99801-1182                                                   
  Phone:  465-2685                                                             
  Position Statement: Prime Sponsor, HB 76                                     
  Rick Johanssen                                                               
  Attorney for Usibelli Mines, Coalition Member                                
  Coalition for Alternative Settlement                                         
  1029 W. Third Ave., Suite 300                                                
  Anchorage, Alaska  99501                                                     
  Phone:  279-8561                                                             
  Position Statement: Described the coalition's proposed CS to                 
                      HB 201                                                   
  Brian Bjorkquist                                                             
  Assistant Attorney General                                                   
  Alaska Department of Law                                                     
  1031 W. 4th, Suite 200                                                       
  Anchorage, Alaska  99501-1994                                                
  Phone:  269-5100                                                             
  Position Statement: Advised that the state did not endorse                   
                      or support HB 201                                        
  David Walker                                                                 
  Attorney for Settling Plaintiffs                                             
  417 Harris                                                                   
  Juneau, Alaska  99801                                                        
  Phone:  586-3537                                                             
  Position Statement: Testified in opposition to the proposed                  
                      committee substitute to HB 201                           
  Pam Finley, Assistant Revisor of Statutes                                    
  Legislative Affairs Agency                                                   
  Legal Services Division                                                      
  130 Seward Street, Suite 405                                                 
  Juneau, Alaska  99801-1219                                                   
  Phone:  465-2450                                                             
  Position Statement: Proposed a change to HB 201                              
  Representative Jeannette James                                               
  Alaska State Legislature                                                     
  State Capitol, Room 501                                                      
  Juneau, Alaska  99801-1182                                                   
  Phone:  465-3743                                                             
  Position Statement: Presented a position statement on HB 201                 
  Bruce Phelps                                                                 
  Department of Natural Resources                                              
  Division of Land, Title Section                                              
  P.O. Box 107005                                                              
  Anchorage, Alaska 99510-7005                                                 
  Phone:  762-2239                                                             
  Position Statement: Recommended amendments to HB 201                         
                      proposed CS                                              
  Representative Tom Brice                                                     
  Alaska State Legislature                                                     
  Court Building, Room 605                                                     
  Juneau, Alaska  99801-1182                                                   
  Phone:  465-3466                                                             
  Position Statement: Prime Sponsor of HB 132                                  
  Raga Elim                                                                    
  Special Assistant to the Commissioner                                        
  Department of Natural Resources                                              
  400 Willoughby Ave.                                                          
  Juneau, Alaska  99801-1724                                                   
  Phone:  465-2400                                                             
  Position Statement: Responded to questions on proposed CS HB
  PREVIOUS ACTION                                                              
  BILL:  HB 76                                                                 
  BILL VERSION:                                                                
  SPONSOR(S):   REPRESENTATIVE(S) PHILLIPS                                     
  TITLE: "An Act making a special appropriation to the                         
  Department of Natural Resources for the purchase of the                      
  inholdings of the Seldovia Native Association and the Cook                   
  Inlet Region, Inc., and the timber rights of the Timber                      
  Trading Company, within the Kachemak Bay State Park; and                     
  providing for an effective date."                                            
  JRN-DATE     JRN-PG               ACTION                                     
  01/22/93       129    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/22/93       129    (H)   CRA, RESOURCES, FINANCE                          
  03/23/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
  03/23/93              (H)   MINUTE(CRA)                                      
  03/24/93       755    (H)   CRA RPT  3DP  3NR                                
  03/24/93       755    (H)   DP: DAVIES, OLBERG, TOOHEY                       
  03/24/93       756    (H)   NR: SANDERS, BUNDE, WILLIAMS                     
  03/24/93       756    (H)   -ZERO FISCAL NOTE  (F&G)                         
  03/29/93       819    (H)   RES RPT  6DP  1NR                                
  03/29/93       819    (H)   DP: HUDSON, CARNEY, JAMES,                       
  03/29/93       819    (H)   DP: DAVIES, BUNDE                                
  03/29/93       819    (H)   NR: WILLIAMS                                     
  03/29/93       819    (H)   -PREVIOUS ZERO FN (F&G) 3/24/93                  
  03/29/93              (H)   RES AT 08:00 AM CAPITOL 124                      
  BILL:  HB 132                                                                
  BILL VERSION:                                                                
  SPONSOR(S):   REPRESENTATIVE(S) BRICE,Kott,James                             
  TITLE: "An Act extending the time period of all permits                      
  issued by the state relating to the extraction or removal of                 
  resources if the holder of the permit is involved in                         
  litigation concerning the issuance or validity of any permit                 
  related to the extraction or removal."                                       
  JRN-DATE     JRN-PG               ACTION                                     
  02/05/93       236    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/05/93       236    (H)   RESOURCES, JUDICIARY, FINANCE                    
  03/22/93       739    (H)   COSPONSOR(S): KOTT                               
  03/29/93              (H)   RES AT 08:00 AM CAPITOL 124                      
  03/29/93       838    (H)   COSPONSOR(S): JAMES                              
  BILL:  HB 201                                                                
  SHORT TITLE:  MENTAL HEALTH TRUST AMENDMENTS                                 
  BILL VERSION:                                                                
  SPONSOR(S):   RESOURCES                                                      
  TITLE: "An Act amending provisions of ch. 66, SLA 1991, that                 
  relate to reconstitution of the corpus of the mental health                  
  trust, the management of trust assets, and to the manner of                  
  enforcement of the obligation to compensate the trust; and                   
  providing for an effective date."                                            
  JRN-DATE     JRN-PG               ACTION                                     
  03/05/93       552    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  03/05/93       552    (H)   RESOURCES, JUDICIARY, FINANCE                    
  03/12/93              (H)   RES AT 08:00 AM CAPITOL 124                      
  03/12/93              (H)   MINUTE(RES)                                      
  03/12/93              (H)   MINUTE(RES)                                      
  03/19/93              (H)   RES AT 08:00 AM CAPITOL 124                      
  03/19/93              (H)   MINUTE(RES)                                      
  03/29/93              (H)   RES AT 08:00 AM CAPITOL 124                      
  03/29/93       826    (H)   JUD REFERRAL WAIVED Y22 N17 E1                   
  ACTION NARRATIVE                                                             
  TAPE 93-38, SIDE A                                                           
  Number 000                                                                   
  The House Resources Committee was called to order by                         
  Chairman Bill Williams at 8:16 a.m.  Members present at the                  
  call to order were Representatives Williams, Hudson, Bunde,                  
  Carney, Davies, James and Finkelstein.  Members absent were                  
  Representatives Green and Mulder.                                            
  CHAIRMAN BILL WILLIAMS announced the bills for consideration                 
  at this meeting would be HB 76, HB 201 and HB 132, in that                   
  order, and he noted that the meeting was being held by                       
  teleconference with sites in Anchorage and Fairbanks.  He                    
  introduced the prime sponsor of HB 76, Representative Gail                   
  HB 76:  APPROP: KACHEMAK BAY ST. PK.TIMBER RIGHTS                            
  Number 044                                                                   
  briefly described the background of the Kachemak Bay State                   
  Park timber rights purchase, which she said had been an                      
  issue in Alaska for almost twenty years.  Lands were set                     
  aside for Kachemak Bay State Park but private lands within                   
  the park became an issue when they were granted to the                       
  Seldovia Native Corporation as part of the Alaska Native                     
  Interests Lands Claim Act (ANILCA).  Attempts at land trades                 
  and sales have not been successful, she said.  The state now                 
  has the means to make a settlement, she explained, without                   
  any money coming from the general fund.                                      
  REPRESENTATIVE PHILLIPS noted the events that have occurred                  
  relating to financing the timber rights purchase.  She                       
  alleged $20.5 million was deposited in the Alyeska                           
  Settlement Fund for an agreement and consent decree in a                     
  civil settlement entered into on November 20, 1992.  This,                   
  she said, included an allotment of $7.5 million for the                      
  purchase of the inholdings of Kachemak Bay State Park.                       
  Additionally, the Exxon Oil Spill trust Council approved                     
  $7.5 million from the Exxon Settlement Fund for Kachemak                     
  REPRESENTATIVE PHILLIPS said the purpose of the $7 million                   
  appropriation requested in HB 76 will come out of the Exxon                  
  criminal settlement fund that was not appropriated and not                   
  spent in 1992.  On March 4, 1993, she explained, Governor                    
  Hickel formally announced an agreement between all parties                   
  concerned to buy back the private inholdings in Kachemak Bay                 
  State Park.  She said the agreement was formally signed by                   
  Seldovia Native Association, Cook Inlet Region, Timber                       
  Trading Company, and the state of Alaska.                                    
  Number 097                                                                   
  REPRESENTATIVE PAT CARNEY asked Representative Phillips to                   
  clarify whether the governor had already signed that                         
  REPRESENTATIVE PHILLIPS explained that a copy of the                         
  purchase agreement was in committee members' packets, and                    
  constituted an agreement toward which the money would come                   
  from the three components she described.  (A copy of the                     
  purchase agreement may be found in the House Resources                       
  Committee Room, Capitol Room 124, and after the adjournment                  
  of the second session of the 18th Alaska State Legislature,                  
  in the Legislative Reference Library.)                                       
  CHAIRMAN WILLIAMS noted for the record that Representative                   
  Cliff Davidson was present, as well as Representative Tom                    
  Number 110                                                                   
  VICE CHAIRMAN HUDSON asked whether a previously raised                       
  question regarding subsurface rights had been resolved.                      
  REPRESENTATIVE PHILLIPS answered that the issue had been                     
  resolved and was included in the agreement, signed for and                   
  agreed upon by Cook Inlet Region.                                            
  REPRESENTATIVE JOHN DAVIES noted that he intended to sign                    
  "do pass" on the bill.                                                       
  REPRESENTATIVE CON BUNDE MOVED to pass HB 76 from the                        
  committee with individual recommendations.  He asked                         
  unanimous consent.                                                           
  CHAIRMAN WILLIAMS asked whether anyone else wished to                        
  testify on HB 76.  Hearing none, he asked whether there were                 
  any objections to the motion.  Hearing none, the MOTION                      
  HB 201:  MENTAL HEALTH TRUST AMENDMENTS                                      
  Number 142                                                                   
  CHAIRMAN WILLIAMS told the committee the next bill for                       
  consideration would be HB 201, the Mental Health Lands Trust                 
  Settlement amendment bill introduced by the House Resources                  
  Committee.  At the bill's last hearing, he explained,                        
  several amendments had been proposed by a coalition of                       
  groups involved in the issue.  He said the committee had                     
  asked for comments on the amendments from the Attorney                       
  General and from the attorneys for the settling plaintiffs.                  
  The coalition's recommendations had since been developed                     
  into a proposed committee substitute, he said, with input                    
  from the Department of Natural Resources (DNR).                              
  Number 178                                                                   
  CHAIRMAN WILLIAMS said the work of the coalition had                         
  concentrated on the lands-related issue, with work on fiscal                 
  issues to be left to the finance committee.  In addition to                  
  the draft committee substitute, he explained there was an                    
  additional amendment proposed by Rick Johanssen on behalf of                 
  the coalition.                                                               
  Number 197                                                                   
  VICE CHAIRMAN HUDSON asked for clarification on whether the                  
  work draft dated 3/27/93 was the document under discussion,                  
  and whether it incorporated the major amendments proposed in                 
  the previous hearing.                                                        
  CHAIRMAN WILLIAMS confirmed this was the case.                               
  MINES, explained that the coalition includes members of                      
  industry; the Resources Development Council; two of the                      
  Weiss litigation plaintiffs; all of the public interest                      
  interveners; and the two intervening oil companies.  He                      
  explained that the coalition had worked closely with the                     
  Department of Law and the DNR on the recommendations in the                  
  committee substitute (CS).                                                   
  MR. JOHANSSEN noted that the amendments marked K.1 were                      
  typographical items that resulted from hasty drafting of the                 
  CS.  He clarified that the CS with the page of amendments                    
  reflected a combination of the original bill, the three                      
  amendments discussed at the previous meeting, and further                    
  refinements developed with the departments of Law and                        
  Natural Resources.  The coalition, he said, felt the bill                    
  was ready for action.                                                        
  MR. JOHANSSEN remarked on the substantive changes that had                   
  been incorporated into the CS.  A detailed explanation of                    
  those changes, he said, was contained in members' packets,                   
  in a document titled "Explanation of Differences between the                 
  Previously Proposed Amendments and the Committee Substitute                  
  (work draft 3/27/93)."  (A copy of this document may be                      
  found in the House Resources Committee Room, Capitol Room                    
  124, and after the adjournment of the second session of the                  
  18th Alaska State Legislature, in the Legislative Reference                  
  MR. JOHANSSEN advised that those changes included first, a                   
  change in the land management provision, and second, a                       
  clarification in the way title is conveyed to the                            
  reconstituted trust.  Third, the CS included a mechanism for                 
  funding the DNR's Mental Health Trust land management duties                 
  from the Mental Health Trust income account.                                 
  MR. JOHANSSEN then described those three substantive changes                 
  in greater detail.  Regarding the changes to land management                 
  provisions, he explained that under the amendments presented                 
  at the previous hearing on HB 201, original mental health                    
  trust lands currently subject to a third party interest,                     
  such as a coal or surface lease, would be managed in total                   
  by the DNR under the DNR's current land management                           
  standards.  Under the 3/27/93 CS, he said that only                          
  preexisting third party interests would be managed under                     
  current DNR rules.  Subsequent property rights, he said,                     
  would be issued and managed by the trust authority or the                    
  DNR as its contractor, in a fiduciary manner like other                      
  trust lands.                                                                 
  MR. JOHANSSEN commented that there was a potential for                       
  conflict among the various users of a parcel of land in                      
  having the DNR manage the preexisting interests while the                    
  trust authority manages the subsequent interests.  He said                   
  this is not unusual in property law where the mineral estate                 
  is often severed from the surface estate.  The CS includes a                 
  provision, he explained, that requires the trust authority                   
  to honor the various legal principles developed to handle                    
  the potential conflicts between concurrent users of real                     
  MR. JOHANSSEN addressed the subject of preexisting coal                      
  leases.  Those on original mental health trust lands, he                     
  said, will have rent and royalty adjustments made by the DNR                 
  under the DNR's existing standards.  That allows for pricing                 
  stability and consistency the coal industry needs to                         
  continue marketing and development.  Other resource                          
  interests are also protected by the provisions, he added.                    
  MR. JOHANSSEN addressed the second substantive provision of                  
  the CS, which would require the DNR to convey title to the                   
  trust authority for lands that are being returned to the                     
  reconstituted trust, by giving a patent without a survey.                    
  The purpose of the provision, he explained, is to satisfy                    
  the Weiss plaintiffs' desire for a patent to reconstituted                   
  trust land, while saving millions of dollars by not                          
  requiring a survey of the lands until there is a reason to                   
  do so.  He said the bill accomplishes that by exempting                      
  those conveyances that would go from the DNR to the trust                    
  authority from the existing Alaska statute which requires a                  
  MR. JOHANSSEN described the third substantive provision of                   
  the CS.  This provided a mechanism for funding the DNR's                     
  land management duties for original mental health trust                      
  lands.  He said the DNR's position was that because the                      
  mental health trust income account would receive all of the                  
  proceeds of the DNR's land management efforts, the                           
  legislature should have the ability to fund those efforts                    
  from the income account.                                                     
  Number 360                                                                   
  REPRESENTATIVE DAVIES asked Mr. Johanssen what time frame                    
  would be used to determine whether land interests were                       
  MR. JOHANSSEN replied that it would be the date when Chapter                 
  66 becomes effective, which would be when it is approved by                  
  the courts.                                                                  
  Number 370                                                                   
  REPRESENTATIVE DAVIES asked whether new leases entered into                  
  now would be considered preexisting by the time Chapter 66                   
  becomes effective.                                                           
  Number 377                                                                   
  MR. JOHANSSEN answered that that would be the case,                          
  technically, but that the DNR was subject to a court                         
  injunction which prevents them from issuing any interests                    
  without court approval.  As a practical matter, he                           
  explained, that means that if anyone desired to obtain an                    
  interest in original mental health land, they would first                    
  have to go to the plaintiffs in the Weiss litigation and                     
  negotiate a deal.  The deal would then have to be brought to                 
  the court, he said.                                                          
  Number 385                                                                   
  BRIAN BJORKQUIST, ASSISTANT ATTORNEY GENERAL, testified from                 
  Anchorage by teleconference.  He told the committee that the                 
  state does not endorse or support HB 201 as a whole, but                     
  added that he had worked with the coalition on the statutory                 
  language relating to the land portion of the bill.  He said                  
  the attorney general (AG) found that portion acceptable.  He                 
  noted a suggestion made by the AG's office that had not been                 
  incorporated into the CS:  On page 6, line 6, referring to                   
  AS 38.05.800 (a)(1.C), Mr. Bjorkquist recommended that this                  
  should include any municipal selection that has been either                  
  approved or disapproved rather than just any selection that                  
  has been approved.                                                           
  Number 412                                                                   
  MR. BJORKQUIST said that selections that were disapproved                    
  should be retained in state ownership instead of being                       
  returned to trust status.  The reason he cited was that                      
  under the municipal selection process, the selection may be                  
  disapproved only upon a finding that the public interest in                  
  retaining state ownership of the lands outweighs the                         
  municipalities' interest in obtaining the land.  If a                        
  selection has already been disapproved, he said, there would                 
  have already been a finding of the public interest in                        
  retaining the parcel in state ownership.  Chapter 66, he                     
  explained, protected that determination; HB 201 should also,                 
  he added.                                                                    
  MR. BJORKQUIST referred to the amendments to HB 201 and said                 
  those before the committee do not address amendments                         
  suggested by the Department of Revenue in a memorandum dated                 
  March 15, 1993.  The coalition, he explained, had requested                  
  those amendments be addressed by the House Finance                           
  Committee.  The state had no objection to the temporary                      
  delay in addressing those amendments, but believed those                     
  amendments should be dealt with at some point in the                         
  Number 431                                                                   
  MR. BJORKQUIST addressed the state's position on the                         
  multiple use mandate on management of trust lands, stating                   
  that this would be detrimental to the trust and would cause                  
  management difficulties in the DNR.  He said he would defer                  
  discussion on that issue to Bruce Phelps of the DNR who                      
  would provide greater detail.                                                
  MR. BJORKQUIST noted that the state had concerns about                       
  HB 201 and the fact that the environmental interveners had                   
  not publicly explained whether they believe the proposed                     
  amendments remove all the constitutional challenges they                     
  have raised regarding Chapter 66 as the settlement of the                    
  mental health trust litigation.  He noted that HB 201 was                    
  being presented by the coalition as an alternative                           
  settlement, and is being portrayed as a means to avoid the                   
  constitutional and legal challenges that have been raised in                 
  opposition to Chapter 66.                                                    
  Number 453                                                                   
  MR. BJORKQUIST remarked that litigation over the                             
  constitutionality of Chapter 66 had progressed at                            
  considerable expense to the state, to the point, he added,                   
  that the constitutional issues were pending before the trial                 
  court.  He did not believe it was in the state's best                        
  interest to enter into an alternative settlement such as                     
  that proposed by HB 201, which would be subject to the same                  
  or similar constitutional challenges already litigated and                   
  pending before the trial court.  Litigation over challenges                  
  to HB 201 would have to begin anew, he cautioned, and would                  
  result in additional delays and expense to the state.                        
  Number 460                                                                   
  MR. BJORKQUIST declared if HB 201 has constitutional                         
  problems with respect to the public interest safeguards,                     
  those problems should be fixed or HB 201 should not be                       
  passed by the legislature.                                                   
  MR. BJORKQUIST remarked that the AG believes the                             
  environmental interveners should stipulate in writing                        
  whether they believe there are any constitutional problems                   
  with HB 201.  He noted that HB 201 is the environmental                      
  interveners' own bill.  He said that if they do not believe                  
  their bill passes constitutional mandates, the AG's office                   
  believes the environmental interveners have an obligation to                 
  the legislature to explain what portions of their bill they                  
  believe are unconstitutional.  Only by disclosing possible                   
  problems, he said, would the legislature have full                           
  opportunity to correct the problems.                                         
  Number 478                                                                   
  MR. BJORKQUIST commented that as a rule, the legislature has                 
  a right to rely on the presumption that anyone who proposes                  
  legislation believes it to be constitutional.  He suggested                  
  that to do otherwise would be to perpetrate a fraud.                         
  Number 485                                                                   
  REPRESENTATIVE DAVIES asked about Mr. Bjorkquist's proposed                  
  amendment on page 6, line 6, and asked if adding the words,                  
  "or disapproved" would meet the intent.                                      
  MR. BJORKQUIST replied that it would.                                        
  Number 492                                                                   
  VICE CHAIRMAN HUDSON asked Mr. Bjorkquist about the issue of                 
  default of the foreclosed lands and minerals pledged for                     
  security, on page 4 of the CS.  He asked what would trigger                  
  that action.                                                                 
  MR. BJORKQUIST replied that the provision referred to,                       
  regarding collateral of the Legislatively Designated Areas                   
  (LDAs), secure the allocation under subsection (c) of                        
  AS 37.14.036.  The provision for foreclosure would only                      
  arise if the legislature or the DNR's commissioner did not                   
  allocate the percentage due the mental health income fund on                 
  the annual basis as required under that section of AS 37.14.                 
  Number 520                                                                   
  VICE CHAIRMAN HUDSON asked whether the funds would flow to                   
  the mental health trust within the general fund holdings,                    
  then be appropriated out by the legislature.                                 
  MR. BJORKQUIST replied that this was correct.  The provision                 
  for foreclosure, he said, would only arise if the allocation                 
  did not occur to the mental health trust.                                    
  VICE CHAIRMAN HUDSON asked if it were accurate to say that                   
  it had nothing to do with the appropriation, but rather with                 
  the annual allocation and maintenance of the trust account.                  
  MR. BJORKQUIST confirmed that.                                               
  Number 525                                                                   
  REPRESENTATIVE DAVID FINKELSTEIN asked why it appeared that                  
  the views of the environmental interveners were more                         
  important regarding the constitutionality of HB 201 than the                 
  views of the other parties to the settlement and                             
  MR. BJORKQUIST explained that the concern was focussed on                    
  the environmental interveners because of implications raised                 
  in testimony before the Senate Judiciary committee on the                    
  senate equivalent of HB 201.  A representative of the                        
  coalition, he said, had implied that the environmental                       
  interveners are "convinced that the Alaska Supreme Court                     
  would impose more restrictions on trust management or                        
  safeguards of the public interest on trust management than                   
  is contained in HB 201."                                                     
  MR. BJORKQUIST suggested the implication that can be derived                 
  from that statement, is that the environmental interveners                   
  believe that HB 201 with its provisions for trust management                 
  do not meet constitutional minimum requirements under                        
  Article VIII, Section 10 of the constitution.  If that is                    
  the case, he stated, the environmental interveners should                    
  come forward and explain what additional safeguards, in                      
  their view, should be added to make the bill constitutional.                 
  He noted that he had heard no comments from other parties                    
  that would indicate potential problems related to the                        
  constitutionality of the legislation.                                        
  Number 560                                                                   
  DAVID WALKER, COUNSEL FOR SETTLING PLAINTIFFS, addressed the                 
  proposed committee substitute to HB 201.  The purpose of the                 
  bill and the CS, he summarized, is to amend the settlement                   
  that had been entered into by the plaintiffs and the state                   
  which is before the court for approval.  The purpose for                     
  passing a bill that amends the settlement, he explained,                     
  would be to diminish the litigation and resolve the                          
  controversy.  He noted that he had suggested that to do                      
  that, it would be necessary for the state to negotiate                       
  alternative settlements and discuss those with counsel and                   
  with the plaintiffs.                                                         
  MR. WALKER expressed his concern with the process and                        
  suggested any settlement of the litigation could be                          
  challenged.  Any settlement involving large amounts of land,                 
  he said, would cause conflicts among the parties having                      
  interests in those lands.                                                    
  Number 575                                                                   
  MR. WALKER referred to letters in members' packets as well                   
  as to the previous testimony of the Attorney General before                  
  the Resources Committee, that the AG had requested the                       
  settling plaintiffs to meet with him to discuss relief to                    
  third parties, among other matters.  Mr. Walker said those                   
  meetings were scheduled for later in the week of March 29,                   
  Number 598                                                                   
  REPRESENTATIVE PAT CARNEY commented that he had been under                   
  the impression some agreement had been reached between the                   
  plaintiffs and the state regarding relief to the third                       
  parties, and that the agreement had been turned down by the                  
  court.  He asked Mr. Walker if that was a true assessment.                   
  MR. WALKER replied that it was accurate.  Under the terms of                 
  the settlement agreement, he said the parties were to submit                 
  a stipulation to the court providing a release while the                     
  litigation was pending to the private third parties who                      
  received trust land.  The court, he explained, refused to                    
  grant the stipulation.  The state asked the Supreme Court to                 
  review the decision, and the Supreme Court said it would not                 
  review it.  Following that, he noted, the AG provided Mr.                    
  Walker with notice that under the terms of the settlement,                   
  the timetable of 60 days would be implemented to find a way                  
  to provide that relief.  If not, the state would withdraw                    
  from the settlement.                                                         
  Number 614                                                                   
  MR. WALKER explained that as a consequence of that, the                      
  plaintiffs had asked to meet with the AG, and the settling                   
  plaintiffs independently filed a motion with the court                       
  asking the court to reconsider the decision.  The judge, he                  
  said, held that it would be appropriate to approve the                       
  stipulation if it became more likely that the settlement                     
  before her would be approved, and not appropriate if the                     
  settlement were not to be approved.  He said the plaintiffs,                 
  in asking her to readdress that issue, pointed out that were                 
  the state to follow through on withdrawing from the                          
  settlement, unless the judge readdresses the issue, she                      
  would never get to the equity issue.                                         
  Number 634                                                                   
  VICE CHAIRMAN HUDSON asked Mr. Walker who he represented.                    
  MR. WALKER replied that he represented the original                          
  plaintiffs in the litigation, Carl Weiss and Vern Weiss, and                 
  other plaintiffs similarly situated.                                         
  VICE CHAIRMAN HUDSON asked Mr. Walker whether he supported                   
  existing law, and holding off on making changes to existing                  
  law until the results of the court are known.                                
  MR. WALKER answered that the parties who signed the                          
  settlement and still support the settlement on the                           
  plaintiffs' side include his own clients and the Alaska                      
  Mental Health Association, represented by Jim Gottstein.                     
  VICE CHAIRMAN HUDSON asked Mr. Walker if he still supported                  
  Chapter 66.                                                                  
  MR. WALKER said yes, he did.  He added that Chapter 66 is                    
  awaiting preliminary approval as the settlement of the                       
  Number 645                                                                   
  REPRESENTATIVE FINKELSTEIN commented that he shared the                      
  feeling of the plaintiffs on the importance of negotiation,                  
  but added that the legislature faces the dilemma that the                    
  legislative process is slow and to consider an issue the                     
  process needs to begin only.  By taking action, he said the                  
  legislature is not trying to slight the importance of the                    
  Number 658                                                                   
  VICE CHAIRMAN HUDSON asked whether there was anything in                     
  HB 201 that might enhance Chapter 66.                                        
  MR. WALKER replied that he had not focussed on the                           
  amendments, but said he did have one concern.  That was                      
  regarding the naming of parts in one amendment, which                        
  contained a definition of an  unrestricted earnings                          
  deferment fund.  He called it an improvement to define that.                 
  Number 675                                                                   
  SERVICE DIVISION, proposed one suggested change to HB 201.                   
  She referred to page 5, line 17, and recommended the                         
  language regarding survey requirements be amended to read,                   
  "the requirements of this section do not apply to the                        
  conveyance of land to the Alaska Mental Health Authority"                    
  (striking "to be conveyed").  She said the reason for the                    
  change was so no one would think that land that was                          
  originally conveyed to the authority does not have to be                     
  TAPE 93-38, SIDE B                                                           
  Number 000                                                                   
  REPRESENTATIVE JEANNETTE JAMES read a position statement she                 
  had authored, which was included in members' bill packets.                   
  She noted that she did support moving the bill.  She                         
  requested that the position statement be passed with HB 201                  
  to the next committee of referral.                                           
  Number 062                                                                   
  LANDS, addressed the portion of HB 201 that dealt with                       
  multiple use.  He said the concerns that the DNR had have to                 
  do with the section of HB 201 dealing with multiple use and                  
  requirements for fiduciary responsibility.  He said the                      
  DNR's reading of that section indicates that when there is a                 
  conflict between multiple use standards and fiduciary                        
  responsibilities, the department would always have to side                   
  with the fiduciary responsibilities.  This would create                      
  confusion and ambiguity, he said, when the DNR needs clear                   
  objectives in terms of development.  This could cause a                      
  reduction in development possibilities of trust lands, he                    
  Number 113                                                                   
  VICE CHAIRMAN HUDSON asked Mr. Phelps where this language                    
  was contained in the committee substitute work draft.                        
  MR. PHELPS told the committee he had referred to the section                 
  located on page 2, lines 30 and 31, and on page 3, line 2                    
  and line 5.                                                                  
  MR. JOHANSSEN responded to Mr. Phelps' comments.  He said                    
  the way the CS is drafted, the trust authority will                          
  promulgate its land management program by regulation through                 
  the administrative procedures act.  The trust authority                      
  would contract with the DNR.  He understood Mr. Phelps'                      
  concerns about the statutory language, but noted that this                   
  was not uncommon in legislation.                                             
  MR. JOHANSSEN said the coalition was in support of the                       
  amendment requested by Mr. Bjorkquist to page 6, line 6.                     
  With respect to the change proposed by Pam Finley of Legal                   
  Services, he said it was a good change that was consistent                   
  with the intent of the coalition.                                            
  REPRESENTATIVE DAVIES asked Mr. Johanssen to respond to the                  
  concerns of the attorney general's office regarding the                      
  constitutionality of HB 201.                                                 
  Number 174                                                                   
  MR. JOHANSSEN saw those concerns as litigation posturing.                    
  He said the coalition was here to solve a problem, and this                  
  involves legislation which required compromise.  The court                   
  case, he said, involves litigation that requires the parties                 
  to state their positions, and which often involves parties                   
  taking shots at each other to use information in court to                    
  their advantage.  He said the coalition's primary goal was                   
  resolution of the issue.                                                     
  Number 182                                                                   
  REPRESENTATIVE DAVIES asked Mr. Johanssen whether he saw any                 
  constitutional problems with HB 201.                                         
  MR. JOHANSSEN replied that only the court can finally decide                 
  what is constitutional and what is not, but he did believe                   
  the bill was constitutional.  Article VIII, Section 10 of                    
  the constitution says the state shall dispose of state                       
  lands, consistent with public interest safeguards                            
  established by the legislature.  He said HB 201 was an                       
  attempt to do that, and he felt the courts would find the                    
  bill constitutional.                                                         
  Number 199                                                                   
  REPRESENTATIVE CARNEY asked whether Mr. Johanssen was                        
  convinced there would be no litigation resulting from                        
  HB 201.                                                                      
  MR. JOHANSSEN commented that no one could make that                          
  assurance because there is always a risk of litigation.  In                  
  his view, he said, the risk of litigation over HB 201 is no                  
  worse than the risk of litigation that exists each time the                  
  DNR makes a land management decision.  He suggested the                      
  committee recognize that the provision included in HB 201 is                 
  an existing state statute, in Title 38.05.  Under Chapter                    
  66, he explained, the trust authority is exempt from 38.04                   
  and 38.05.  House Bill 201 just takes one section of 38.05                   
  and puts it back in the bill so the trust authority must                     
  comply with it.                                                              
  Number 216                                                                   
  REPRESENTATIVE JAMES made a MOTION to adopt the 3/27/93                      
  committee substitute.                                                        
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, CS HB 201 (RES) was ADOPTED.                          
  REPRESENTATIVE JAMES made a MOTION to adopt amendment K.1,                   
  plus the proposed amendment to page 6, line 6 inserting                      
  "disapproved," and the proposed amendment to page 5, line 17                 
  replacing "to be conveyed" with "conveyance."                                
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  amendments.  Hearing none, the AMENDMENTS were ADOPTED.                      
  Number 242                                                                   
  REPRESENTATIVE FINKELSTEIN OFFERED one additional amendment,                 
  to page 3, line 17, changing the percentage from three to                    
  4.5%.  He said his primary concern was what amount would go                  
  to mental health programs.  He felt the higher amount would                  
  better meet the actual needs of those programs.  He MOVED                    
  that the percentage be changed to 4.5%.                                      
  VICE CHAIRMAN HUDSON OBJECTED and stated the percentage                      
  should be a Finance Committee decision.                                      
  REPRESENTATIVE CARNEY, addressing the motion, stated that he                 
  did not see that changing the percentage in the Resource                     
  Committee would cause any problems.  He agreed with                          
  Representative Finkelstein that the programs are costing                     
  more than the three percent called for in HB 201.  He felt                   
  4.5% was a good compromise.                                                  
  Number 289                                                                   
  REPRESENTATIVE JAMES commented that the percentage did not                   
  make any difference; that the legislature would always make                  
  a sufficient appropriation to mental health programs.                        
  Number 292                                                                   
  REPRESENTATIVE DAVIES expressed concern with leaving the                     
  number as low as 3% in the Resources CS, because it could                    
  end up actually being that low in the bill's final version.                  
  He suggested 4.5% would be a good compromise.                                
  REPRESENTATIVE BUNDE remarked that if the number is being                    
  changed from the proposed 6% as a negotiating strategy, it                   
  would be best to start low and work up, rather than start in                 
  the middle and work higher.                                                  
  VICE CHAIRMAN HUDSON explained that one reason for making                    
  the number less than 6% was that there had been substantial                  
  contributions over the years into the mental health programs                 
  by the state, and he was convinced the legislature would in                  
  future years guarantee those programs would be appropriately                 
  funded.  The question, he said, was how much of the income                   
  stream in the future should be put into the trust account.                   
  He recommended the decision regarding the percentage take                    
  into consideration funds that have in the past been put into                 
  the mental health programs.  The Finance Committee would be                  
  the appropriate place for those decisions to be made, he                     
  Number 337                                                                   
  REPRESENTATIVE FINKELSTEIN noted that he actually supported                  
  6% but in the spirit of compromise had offered the 4.5%.                     
  His reason, he said, is that the interpretation of how we                    
  define mental health programs has been very broad, and that                  
  we are already spending more than 3%.  He said he saw many                   
  unmet needs in the state in those areas and that a higher                    
  percentage would be appropriate.                                             
  CHAIRMAN WILLIAMS called for a roll call vote on                             
  Representative Finkelstein's amendment.  Voting YEA were                     
  Representatives Carney, Davies and Finkelstein.  Voting NAY                  
  were Representatives Hudson, Bunde, James, and Williams.                     
  The MOTION FAILED.                                                           
  VICE CHAIRMAN HUDSON made a MOTION to move CSHB 201 (RES) as                 
  amended with a revised fiscal note from committee with                       
  individual recommendations.  He asked unanimous consent.                     
  REPRESENTATIVE JAMES requested that her position statement                   
  be conveyed with the bill and fiscal note.                                   
  VICE CHAIRMAN HUDSON AMENDED his MOTION to ask that                          
  Representative James' statement be included with CSHB 201                    
  (RES) and the fiscal note.                                                   
  Number 372                                                                   
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the MOTION PASSED.                                    
  CHAIRMAN WILLIAMS announced the committee would next take up                 
  HB 132.                                                                      
  HB 132:  EXTEND RESOURCE EXTRACTION PERMIT/LEASE                             
  Number 380                                                                   
  REPRESENTATIVE TOM BRICE, PRIME SPONSOR of HB 132, explained                 
  that the bill helps the so-called moms and pops with timber                  
  interests where the title is unclear.  He said the bill                      
  would allow permits enjoined in court and found to be issued                 
  properly, to have time elapsed in the court case not be                      
  taken from the permit time period.  He saw it as a question                  
  of equity, if the developer had been working within the                      
  letter of the law.  The bill was initiated by concerns by                    
  the Alaska Minerals Commission, he explained.  The                           
  Governor's Task Force on Regulations came up with the same                   
  proposal, he added.                                                          
  Number 415                                                                   
  REPRESENTATIVE BUNDE asked Representative Brice to address                   
  the position paper by the Department of Commerce and                         
  Economic Development (DCED) in members' packets, and                         
  specifically, the improvements proposed there.                               
  REPRESENTATIVE BRICE replied that he had amendments drawn up                 
  to address the first and second of those recommendations.                    
  Number 425                                                                   
  CHAIRMAN WILLIAMS noted that Representative Carl Moses had                   
  joined the meeting.                                                          
  REPRESENTATIVE DAVIES asked to see copies of the amendments.                 
  REPRESENTATIVE BRICE distributed copies of one amendment to                  
  HB 132, which defines the permit, and said that the second                   
  one was being drawn up, which relates to expansion of the                    
  application beyond resource extraction and removal.  He                      
  noted that the language was being clarified with the DCED.                   
  Number 454                                                                   
  REPRESENTATIVE BRICE described the amendment to page 2,                      
  following line 17, adding a new subsection, "in this                         
  section, permit means the permit, lease, authorization,                      
  license, or any other determination necessary for or related                 
  to resource extraction or removal for the expansion of a                     
  permit."  On page 2, line 18, following "applicability,"                     
  insert (a).  On page 2, following line 21, he said a new                     
  subsection would be inserted, to read, "(b) in this section                  
  permit has meaning given in AS 46.35.300(D), added by                        
  section 1 in this act."                                                      
  Number 473                                                                   
  REPRESENTATIVE JAMES asked whether the sponsor would prepare                 
  a committee substitute reflecting the amendments.                            
  REPRESENTATIVE BRICE said he had a CS drawn up, which                        
  included recommendations of the Alaska Miners Association,                   
  which would include language relating to when an agency has                  
  a suit brought against it, and when permittees are not able                  
  to use a permit.                                                             
  Number 488                                                                   
  REPRESENTATIVE CARNEY suggested that if a CS had been                        
  prepared, the committee should work off that.                                
  Number 500                                                                   
  REPRESENTATIVE FINKELSTEIN commented that he had a hard time                 
  understanding HB 132 because of the complexity of the                        
  situation and the variety of permits it appeared to apply                    
  to.  He suggested it could invite abuse of the provisions,                   
  if a permittee intentionally enlisted someone to file a suit                 
  against him for the purpose of prolonging the permit period.                 
  Number 523                                                                   
  REPRESENTATIVE BRICE replied that there was nothing in law                   
  to prevent that now.                                                         
  RESOURCES, interjected that a lawsuit would be dismissed if                  
  the court deemed it frivolous.                                               
  Number 534                                                                   
  REPRESENTATIVE FINKELSTEIN suggested that it was conceivable                 
  the parties could make the case so factually complex that it                 
  would not be dismissed as frivolous.                                         
  CHAIRMAN WILLIAMS agreed that frivolous lawsuits are                         
  wasteful and commented that he saw HB 132 as helping to                      
  alleviate the harm they cause.                                               
  REPRESENTATIVE FINKELSTEIN said that loopholes in the law                    
  could be used for the advantage of the permittee, with the                   
  company getting into a lawsuit as a delaying tactic.  He                     
  referred to section 2 at the top of page 2, addressing                       
  activity being prevented from occurring.  He asked what                      
  degree of activity would have to be impaired if there is a                   
  big operation and one small portion is the subject of the                    
  suit.  He wanted to know if the entire operation would be                    
  subject to the provisions of HB 132.                                         
  REPRESENTATIVE BRICE asked whether the committee had                         
  suggestions to resolve that potential problem.                               
  Number 562                                                                   
  MR. ELIM suggested that HB 132 could be fashioned so the                     
  permittee's activities on the larger portion (not subject to                 
  a suit), could continue while the smaller portion would be                   
  on hold.  The extension of rights with respect to the permit                 
  would be extended only in connection with that smaller                       
  percent, he explained.  That activity would be held in                       
  abeyance pending the outcome of the litigation, and they                     
  would then have that period of time extended after the                       
  litigation was settled to complete the permitted activity.                   
  MR. ELIM noted that this could change the whole economics of                 
  the project because the company would have its                               
  infrastructure in place to complete a project as a whole,                    
  and it might not be economical to complete that small                        
  percentage when the rest has been completed.                                 
  MR. ELIM added that in that scenario, the parcel that was                    
  frozen for the period of litigation would be extended.                       
  Number 583                                                                   
  REPRESENTATIVE FINKELSTEIN suggested that HB 132 was not                     
  written to allow that.  Another problem, he added, was that                  
  in the permitting process, there could be several issues                     
  within one permit, and the language in the bill needs to                     
  address that.                                                                
  Number 593                                                                   
  VICE CHAIRMAN HUDSON raised an issue which he said could                     
  present a bigger challenge.  He explained that currently, if                 
  a party applied for a permit to do resource extraction or                    
  other activity, they could be sued by a person other than                    
  the state and they could be prevented from going ahead with                  
  whatever the project was.  Meanwhile, the time clock has                     
  been running on the permit period.  He said this presents a                  
  policy question of whether the permit time should be stopped                 
  by the suit.  If a suit is filed, he said, the clock is                      
  stopped.  If the suit is not successful, the clock starts                    
  running again.                                                               
  VICE CHAIRMAN HUDSON suggested this was a question of                        
  fairness, as to which way it should apply.  The legislature                  
  had to make a policy call on this matter, he stated.                         
  Number 622                                                                   
  REPRESENTATIVE DAVIES commented that at first the issue                      
  seems simple, but that it opens arcane issues of resource                    
  extraction.  He also noted ambiguity in the distinction                      
  between the applicant for a permit and the holder of a                       
  permit.  He recommended that a distinction be made in                        
  HB 132.                                                                      
  Number 630                                                                   
  REPRESENTATIVE CARNEY commented that HB 132 was trying to                    
  correct a potential problem, and that it would be preferable                 
  to take care of the honest people through this bill, and to                  
  worry about the crooks later.                                                
  REPRESENTATIVE FINKELSTEIN agreed with the intent of HB 132,                 
  but thought it was possible to find a solution to the                        
  questions raised.  He discussed the permitting process, and                  
  said when someone applies for a permit, and then someone                     
  sues, there would be a temporary restraining order on the                    
  issuance of the permit.                                                      
  MR. ELIM clarified that usually there would be an injunction                 
  on the activity itself if the permit had been issued.                        
  REPRESENTATIVE FINKELSTEIN asked if the case of the                          
  temporary restraining order would not apply if the permit                    
  had not begun.  So, he added, the permit would have had to                   
  be issued for the activity to begin, and if a suit is then                   
  filed, it seemed to him that HB 132 was trying to get at a                   
  suit that tries to undo the purposes of the permit.                          
  REPRESENTATIVE FINKELSTEIN suggested an amendment to deal                    
  with that situation where an insignificant portion of an                     
  activity is all that is stopped, allowing the rest of the                    
  permitted activity to go on.  This would be on page 2, line                  
  2, adding language to say "completely prevented" or                          
  "substantially prevented."  This, he explained, would                        
  address the potential for a small portion of an operation                    
  holding up the whole project.                                                
  REPRESENTATIVE CARNEY suggested that since a committee                       
  substitute had not been adopted, perhaps the suggestions                     
  could be considered in a work session.                                       
  Number 680                                                                   
  REPRESENTATIVE JAMES addressed the suggestion made by the                    
  Alaska Miners Association, on page 2, line 24 of the                         
  proposed committee substitute to HB 132, to include "that                    
  related to resource extraction are removable as defined by                   
  AS 46.35.204."                                                               
  TAPE 93-39, SIDE A                                                           
  Number 000                                                                   
  REPRESENTATIVE BRICE noted that he was looking into the                      
  questions regarding conflicting permits.  He believed the                    
  miners' suggestions were intended to address that, but he                    
  was concerned that their suggested language referred to an                   
  old section of law that had not been updated since 1977.                     
  This was something he said he planned to look into.  He                      
  suggested HB 132 be moved on with the commitment to make                     
  sure the questions were addressed in the next committee.                     
  Number 026                                                                   
  VICE CHAIRMAN HUDSON made a MOTION to adopt the committee                    
  substitute for HB 132.                                                       
  CHAIRMAN WILLIAMS asked for objections to the motion and,                    
  hearing none, CSHB 132 (RES) was ADOPTED.                                    
  Number 033                                                                   
  REPRESENTATIVE FINKELSTEIN MOVED to make a conceptual                        
  amendment to page 2, line 2, relating to the degree of work.                 
  He recommended inserting the word "substantially."                           
  REPRESENTATIVE BRICE said he was amenable to the change.                     
  REPRESENTATIVE BUNDE agreed that "substantially prevented"                   
  would address the problem.                                                   
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the AMENDMENT was ADOPTED.                            
  REPRESENTATIVE JAMES MOVED to amend page 2, line 24, to add                  
  the language suggested by the Miner's Association, "as                       
  defined by AS 46.35.204."                                                    
  CHAIRMAN WILLIAMS asked if there were objections.  Hearing                   
  none, the AMENDMENT was ADOPTED.                                             
  VICE CHAIRMAN HUDSON MOVED to pass CSHB 132 (RES) as amended                 
  with zero fiscal note with individual recommendations.  He                   
  asked unanimous consent.                                                     
  Number 119                                                                   
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the MOTION PASSED.                                    
  CHAIRMAN WILLIAMS noted that he was distributing to the                      
  members a legal opinion from the Department of Law                           
  addressing the governor's point of view on the appointees to                 
  the Board of Game.  He asked that members review the opinion                 
  for the next meeting on the Board of Game appointments.  He                  
  reminded members that the next meeting of the Resources                      
  Committee would be on Wednesday, March 31, 1993, at 8:00                     
  a.m. to hear HB 197 and HB 239.                                              
  There being no further business to come before the House                     
  Resources Committee, Chairman Williams adjourned the meeting                 
  at 9:57 a.m.                                                                 

Document Name Date/Time Subjects