SB 309-ADVERSE POSSESSION    SENATOR THERRIAULT said he agreed to introduce SB 309 but it pertains to an area of statute that he has not dealt with before. He noted the committee discussion to this point has raised some interesting public policy calls. He said he is not an expert in this area but others are here to testify on the legislation. MR. RUSSELL DICK, resource manager for the Sealaska Corporation, introduced Mr. John Tillinghast, legal counsel for Sealaska Corporation and said they would address any technical/legal issues with this bill. MR. DICK said that Sealaska is very supportive of SB 309, which will restrict claims of adverse possession against private property. Sealaska Corporation is the regional corporation under the Alaska Native Claims Settlement Act and the largest private property landowner in Southeast Alaska. Alaska Native Corporations are the largest private landowners in Alaska in general. Sealaska has talked with other regional corporations who indicated their support for SB 309 as well. MR. DICK explained that lands conveyed to the Native corporations serve two fundamental purposes: to settle Alaska Natives aboriginal claims and to meet the social, cultural and economic needs of Natives, hence these lands are the foundation of Native people's existence. Congress imposed a prohibition of adverse possession claims as long as these lands remained in an undeveloped state. Sealaska felt that was probably good policy when ANCSA was first created, but many did not recognize how expansive these land bases would become in the future. ANCSA didn't consider the degree of development on these lands nor did it consider the burden that it places on having to actively police these large, remote landholdings. Sealaska alone has 290,000 acres of land throughout Southeast Alaska with an entitlement expected to reach upwards of 350,000 acres. The burden of having to police those lands doesn't serve any public purpose and seems to Sealaska to be an economic waste. In addition, Sealaska has a real estate department to purchase non- ANCSA lands. Those lands do not maintain the same prohibition of adverse possession claims so Sealaska must deal with that as well. MR. DICK said that Alaska has always seemed to respect private property rights, as there is so little private property in Alaska: the doctrine of adverse possession seems inconsistent with that recognition. The state has made itself immune to adverse possession claims due to the expansive nature of its lands and the economic burden associated with having to police them. Sealaska, as a private property owner, is asking for those same protections. CHAIRMAN TAYLOR asked if any state allows adverse possession of state land. MR. JON TILLINGHAST said to the best of his knowledge, every state prohibits its land from being taken by adverse possession, as does the federal government. CHAIRMAN TAYLOR commented, "And that is because every state has either the Fifth Amendment that the federal government has or has an amendment identical to it that the state cannot take land - the king cannot take land from its citizens without a payment of just compensation. Right?" MR. TILLINGHAST said he understood the question to be whether any state allows land to be taken from the king. They do not. He thought the policy justification for that is that the state and federal government own large parcels of remote land and it would be too much of a burden on the public fist to require the government to patrol its own lands. CHAIRMAN TAYLOR said it is also part of the Fifth Amendment that the king is not allowed to take by adverse possession either. The king must take land by eminent domain and pay full, fair and true value and use a formal process. He asked why the state should afford the same privilege to a private landowner. MR. TILLINGHAST responded: Two answers. First, we are also firm believers in state and private land being treated equally and if you were going to elevate the one over another, frankly my ideology suggests that you elevate private land over public but we're not asking for that, we're just asking for equal treatment. My understanding is that state does take land from private people by adverse possession. CHAIRMAN TAYLOR said he just learned that the other day and he does not believe the state or a city or borough should be able to "take private land by road grader." He explained: They're taking a ten-foot wide easement and every year when they grade the road they move a little further out in the guy's yard. The next thing you know the street's 25 feet wide. They never purchased it. They never condemned it and took it. They never paid a dime for it and here the city or the state is enforcing some right of adverse possession through prescription, some sort of prescriptive right, because 'well we've used it all of these years so now it's ours.' I think that is totally backwards and we should not tolerate it. MR. TILLINGHAST replied that during the earlier hearings on this bill, the Alaska Department of Transportation and Public Facilities (DOTPF) opposed it because it wanted to preserve its right to take people's private property without paying for it. Sealaska was shocked. CHAIRMAN TAYLOR said he wanted that on the record because he was given that information yesterday and he too was stunned. That is a major shift in real property law in this state and he is thinking about drafting legislation to address the problem. MR. TILLINGHAST remarked that SB 309 will prevent anyone from doing that. He said the only justification for the doctrine of adverse possession in Alaska Supreme Court cases is the theory that if you have an idle capitalist doing nothing with vacant land, and an industrious worker is willing to squat on it and grow corn, it is good public policy to let the squatter take the land. He said in his mind, it is none of the state's business what a private property owner does with his property. He said he does not believe any other state has done what SB 309 proposes to do but Alaska has always been proud that it does not do things the same way as other states. MR. TILLINGHAST asserted that ANCSA corporations have enormous holdings in remote places and the cost of policing those lands to make sure that squatters are not living on them is huge. It might be a cost worth bearing if it served a valid public purpose but it does not. Squatters should not be rewarded by the state for living on private land. He said if the state wants to send a clear signal that it respects private property rights, it should enact SB 309. CHAIRMAN TAYLOR recounted a case he had that went to the Supreme Court but was dismissed. He represented a couple that owned a small house in Wrangell for over 50 years. The couple had loaned money to their nephew to buy an adjoining piece of property. The state came along and widened Evergreen Ave., which they lived on. The state did a survey for right-of-way purposes and found the lines for all of the lots on the street to be incorrect. The nephew's lot was a pie shaped piece that took in the couple's sidewalk, garden and a corner of their house. The neighbors had a new survey done of the whole neighborhood and "each guy handed the other guy a quit claim deed" so that they owned their original pieces of property, except the nephew. TAPE 02-21, SIDE B CHAIRMAN TAYLOR then explained the nephew insisted the couple pay him for the corner of their property at close to the amount the couple had loaned him. If SB 309 had been enacted, the couple would have to pay to the nephew, from the day they took possession, full market value at the current appraisal plus interest plus the cost of an appraisal. In addition, the couple would have to pay in a short time frame otherwise ownership would revert to the nephew. Chairman Taylor said he was able to find U.S. Forest Service aerial photographs of the land in 1954 and, coupled with reliable testimony, was able to establish by adverse possession that the couple had occupied the area of the lot with the garden. MR. TILLINGHAST said Chairman Taylor interpreted the legislation correctly and drew a distinction that the bill itself draws. Section 1 is the "anti-squatter act," which is aimed at the bad- faith guy who puts up a shack on land with no legitimate claim or title. Section 2 involves those situations in which both sides are proceeding with some good faith, or certainly the adverse possessor is. The possessor has some claim of title but something went wrong, such as an erroneous survey. The bill proposes to keep the doctrine of adverse possession in those instances because that's where the doctrine does have a legitimate current use. He suggested in a situation where the adverse possessor is making a claim under claim of title in which the couple had a deed but the survey was wrong, the allocation of rents and payments ought to be discretionary with the court. He noted in the case Chairman Taylor described, it would be unfair to make the couple pay. CHAIRMAN TAYLOR commented that most folks in Wrangell leased before the 1970s and everything was done on contract of sale, which was not recorded. He noted that the couple he represented would not have been able to comply with some of the provisions of Section 2(a)(1), in which the possessor would need "(C) an instrument under which the possessor claimed title was recorded at the time the possessor's claim of title began;". MR. TILLINGHAST said the intent of SB 309 is to make major changes to the squatter provision in Section 1. It was not Sealaska's intent to unduly complicate or change the situations Chairman Taylor is talking about. He said it may well be that some of the items in Sections 2 and 3 should be removed and that it is healthy to take a critical look at the details of Sections 2 and 3 because that has not happened yet. To this point, the debate has been about Section 1 with the state arguing that it still wants to take people's land for highways. CHAIRMAN TAYLOR said he is willing to work with Mr. Tillinghast on Sections 2 and 3. He noted he has some sympathy for a vast landowner who must patrol for squatters, but Congress has already given protection on undeveloped land. He said he owns undeveloped remote acreage and gets to that property once every year to make sure no one has put a cabin on it. He believes that is part of the responsibilities of a diligent landowner. He said he is not ready to rewrite the property laws on adverse possession yet but he is willing to look at the other provision. Chairman Taylor noted that he has hired Mike Wright, an attorney, as committee staff until the end of the session so Mr. Wright will be available to provide additional effort in this regard. SENATOR THERRIAULT commented that his wife had a pro bono case that was similar to the one Chairman Taylor related so he is aware that there are instances in which the adverse possession doctrine has proved useful. CHAIRMAN TAYLOR asked Jim Cantor to testify. MR. JIM CANTOR, Assistant Attorney General, Department of Law, Transportation Section, informed members he was testifying on behalf of the Department of Transportation and Public Facilities (DOTPF). CHAIRMAN TAYLOR noted, for the record, that he discussed this legislation for an hour the previous day with Assistant Attorney General Bill Cummings. MR. CANTOR informed members that DOTPF opposes SB 309 as it raises two areas of concern. The first is with accommodation between neighbors, which is more of a problem in rural areas. For example, a maintenance crew may show up to deal with a drainage problem and work with the landowner to come up with a solution. The solution may inadvertently or intentionally involve a pipe that crosses into another piece of property. Sometimes the adjoining landowner has given explicit or tacit approval that is not recorded. Time then passes, the adjoining landowner has moved on and the new landowner looks at SB 309 and sees a way to collect money on what was actually done permissively. He noted there have been many situations where crews in the field work with landowners and things are done permissively. The current statute of limitations is 10 years, which would be changed by SB 309, so that a cause of action could exist 30 years later, after all memory of the arrangement is gone. He noted this situation primarily arises with drainage issues and driveway linkage issues. In regard to Chairman Taylor's comment about the movement of road right-of-ways, MR. CANTOR pointed out that gravel roads tend to drift as they are maintained. DOTPF now has a program that local governments have pushed to put asphalt on gravel roads and those roads are eventually turned over to the local governments. He said the initial objection to that program was that all roads would have to be surveyed. The communities' response was that they knew the roads were there so they encouraged the state to put the asphalt on them. Essentially the communities did that knowing adverse possession claims could be made on the areas where the road had drifted. MR. CANTOR noted that SB 309 has no statute of limitations. He recounted that when he was in law school, he bought a house in Upstate New York. Before he signed the papers, the lawyers told him the title had a flaw, that being that a group of investors bought a large part of the parcel during the Civil War. They disappeared and no heirs came forward. They assumed the matter was cleared up by adverse possession by the 1870s. He signed the papers but, under SB 309, he would have had to worry about record interests back to the Civil War. Those interests could have been resurrected. He suggested, on behalf of DOTPF, changing the statute of limitations to 15 years to give property owners a little more certainty as to who owns the land. CHAIRMAN TAYLOR asked Mr. Cantor to forward to his office the legal theories and precedent cases upon which the state bases its arguments that it, through inverse condemnation, takes land over time because a road grader drifts to the outside corner of a road each time it is graded so that after 15 years the state owns the property that a private property owner is paying taxes on. He said Mr. Cummings said some of the judges in this state allow the state to acquire private property in that way. MR. CANTOR said he was not versed in the names of those cases but would look into them and that the theory used in those cases is the statute of limitations on inverse condemnation. CHAIRMAN TAYLOR said he is aware that is a positive way for the state to acquire land at no cost but he does not feel it is appropriate. MR. TILLINGHAST said he realizes SB 309 has raised complex issues, particularly Sections 2 and 3. He asked Chairman Taylor if the committee would be comfortable allowing Section 1 to move out of committee so that at least the private landowners of the state can stop spending money chasing after squatters. CHAIRMAN TAYLOR replied: I'm concerned about some of the ways in which the state itself is using that. We do have properties we have sold under the state sales. We have now retaken some of those. There's adverse possession claims within those too. I just have a general concern about that entire body of law at this point, Jon, and I'd like to instead hold the bill, work with you, and work with the state to see if we can come up with some additional alternatives. A whole batch of this West was settled by squatters, most of Oklahoma - they call their football team the "Sooners" because they got there sooner than they were supposed to and they squatted on that land. We used to allow squatters in this state - we called them homesteaders. Go out and squat on any piece of land you can and make a house out of it, make a cabin, clear a little bit of land - if you live there, we'll give you 160 acres. That's what the federal government did so I think there's a whole body of law and reasons why we have something like the adverse possession laws and I really want to think about this one a little further before we go forward with it. Thank you very much Jon, I appreciate it. SENATOR THERRIAULT said that now that he understands the problems associated with Sections 2 and 3, he would be agreeable to dropping those sections, if that is the Chair's desire. He said knowing that Chairman Taylor is a strong proponent of putting large amounts of remote land in private ownership, he hopes Chairman Taylor can see the benefit of Section 1. CHAIRMAN TAYLOR said he intends to work on Section 1. He then noted SB 159 was also on today's calendar but Senator Donley asked that it not be taken up at this time. He then adjourned the meeting at 2:56 p.m.