HOUSE FINANCE COMMITTEE March 1, 1994 1:36 p.m. TAPE HFC 94-43, Side 1, #000 - end. TAPE HFC 94-43, Side 2, #000 - end. TAPE HFC 94-44, Side 1, #000 - 572. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:36 p.m. PRESENT Co-Chair Larson Representative Hoffman Vice-Chair Hanley Representative Martin Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Navarre Co-Chair MacLean not present for the meeting. ALSO PRESENT Avrum Gross, Attorney, Juneau; Florian Sever, Sitka; Don Muller, Sitka; Chip Thoma, Juneau; Paula Terrel, President, Thane Homeowners Association; Chuck Auchberger, Juneau Chamber of Commerce; Mary Nardale, Attorney, Alaska Pulp Association; Vern Culp, Sitka; Authur Hackett, Sitka; Florian Sever, Sitka; Rollo Pool, Sitka; Robert Ellis, Sitka; Don Muller, Sitka; Valorie Nelson, Sitka; Ernestine Griffin, Sitka Chamber of Commerce; Denton Pearson, Sitka; Matt Donohue, Sitka. SUMMARY INFORMATION HB 394 "An Act relating to limited partnerships; and providing for an effective date." HB 394 was WAIVED from Committee. SB 178 "An Act relating to civil nuisance actions; and providing for an effective date." HCSSB 178 (FIN) was HELD in Committee for further discussion. CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. CONTRACT SENATE BILL NO. 178 "An Act relating to civil nuisance actions; and 1 providing for an effective date." AVRUM GROSS, ATTORNEY, JUNEAU emphasized that he was not representing any client or lobbying group. He spoke in opposition of HCS CSSB 178 (FIN). He asserted that HCS CSSB 178 (FIN) is not about nuisance lawsuits. He maintained that the legislation is about a suit to abet a private nuisance. He explained that "private nuisance" is defined as "the unreasonable interference of the property rights of another." The nuisance pertains to an interference through air, water, noise or odor that makes it impossible to operate the property or maintain an existing business. Mr. Gross alleged that there has never been a defense that the person who is creating the nuisance, which destroys another person's property value, is not violating the law because they have a permit to perform the activity which is creating the nuisance. He observed that laws and permits pertain to public rights. He demonstrated that the criteria for permits issued by the state is whether or not the public value is harmed or the holder is violating their public obligations. Mr. Gross referred to page 2, lines 7- 10, HCS CSSB 178 (FIN). He argued that subsection (c) places private property rights in the public arena. He queried to whom subsection (c), "a result that was unknown or not reasonably foreseeable at the time of the authorization," pertains. He underscored that the activity creating a nuisance outside of the public domain would be unforeseen since the state does not measure the affect of the permitted activity on adjacent private property. Mr. Gross alleged that the legislation authorizes private people to take other peoples property for their benefit. He maintained that if a business is immunized through the permitting process and their activities destroy the value of the adjacent property the state would be liable for the damages incurred. He stressed that the legislation would allow private parties to take other peoples property through a state permit that has to do with public rights not with the other person's property. Mr. Gross suggested that an opinion be solicited from the Attorney General on the issue of state liability. He suggested that the legislation would lengthen the permitting process. Mr. Gross summarized that the legislation is a private property rights bill. He maintained that the legislation was introduced to assist a large corporation that can protect its own interests. 2 Representative Therriault observed that a person that claims damages from a public regulated activity must demonstrate that their damages are greater than that experienced by the general public. Mr. Gross clarified that Representative Therriault's remarks pertain to public nuisances. Public nuisances affect the general public. Private nuisances are linked to private property. He emphasized that an unreasonable interference with the use of the property must be demonstrated. He emphasized that it is difficult to prove a private nuisance exists. He maintained that nuisance laws are the citizens only protection against activities that take place around them. Representative Therriault clarified that noise disturbances are not covered by HCS CSSB 178 (FIN). Representative Navarre suggested that passage of the legislation will require the state to consider the effects of the activity being permitted on adjoining private property. Mr. Gross suggested that he could provide the Committee with language to clarify the intent of the Subcommittee regarding subsection (c). VERN CULP, SITKA testified via the teleconference network from Sitka. He spoke in opposition to HCS CSSB 178 (FIN). He maintained that the legislation would diminish his right as a citizen for protection against harm. AUTHOR HACKETT, SITKA testified via the teleconference network. He spoke in support of HCS CSSB 178 (FIN). He maintained that nuisance lawsuits cost millions of dollars to businesses and municipalities. He asserted that Alaskan industry is hampered by increasing state and federal regulations. He maintained that regulations are impeding the ability of Alaskan businesses to compete in foreign markets. FLORIAN SEVER, SITKA testified via the teleconference network. He spoke in opposition to HCS CSSB 178 (FIN). He maintained that HCS CSSB 178 (FIN) strips from the public their right to protect themselves from habitual polluters and lax regulators. ROLLO POOL, ALASKA PULP CORPORATION (APC), SITKA testified via the teleconference network. He urged the Committee to pass HCS CSSB 178 (FIN) without delay. He stressed that HCS CSSB 178 (FIN) is supportive of Alaskan businesses. He stated that HCS CSSB 178 (FIN) gives businesses that operate within the limits of their permits a small reward. He 3 observed that polluters that exceed their permit amount will be open to litigation. He maintained that the retroactive clause is fair. (Mr. Pool's written testimony is on file with the House Finance Committee) Representative Navarre noted that the state could face additional liability if the retroactive clause is adopted. He questioned if permits issued in the last year should be cancelled and reissued based on a new finding by the state, that considers unknown or unreasonable events at the time the permits are issued, in regards to private property rights. Mr. Pool acknowledged that permits could be reopened. Representative Navarre reiterated that additional burden to consider effects on neighboring private property could further delay the permitting process. ROBERT ELLIS, SITKA testified via the teleconference network. He spoke in opposition to HCS CSSB 178 (FIN). He emphasized that the legislation takes away the rights of private citizens. He maintained that the legislation confuses frivolous lawsuits with serious lawsuits. He maintained that constitutional rights are being legislated away to protect a Japanese company. DON MULLER, SITKA testified via the teleconference network. He expressed strong opposition to HCS CSSB 178 (FIN). (Tape Change, HFC 94-43, Side 2) VALORIE NELSON, SITKA testified via the teleconference network. She spoke in strong opposition to HCS CSSB 178 (FIN). She referred to a letter she sent to Representative Grussendorf, dated April 23, 1993 (copy on file). In the letter she outline her difficulties with the expansion of a nonconforming rock quarry located near her property. Discussion pursued in regards to the letter sent by Ms. Nelson. She asserted that HCS CSSB 178 (FIN) would take away property owner's rights to protect their property. ERNESTINE GRIFFIN, SITKA CHAMBER OF COMMERCE testified via the teleconference network in support of HCS CSSB 178 (FIN). She stressed that companies that operate within the boundaries of major permits should have immunity from persecution. MATT DONOHUE, SITKA testified via the teleconference network in opposition to HCS CSSB 178 (FIN). He emphasized the role of the judicial branch in balancing the executive branch. He stressed that the state of Alaska's Constitution guarantees due process. He asserted that the legislation challenges due process. 4 CHIP THOMA, JUNEAU testified in opposition to HCS CSSB 178 (FIN). He maintained that HCS CSSB 178 (FIN) contradicts Article I, section 18 of the Alaska Constitution. He noted that section 18 states that "property shall not be taken or damaged for public use without just compensation." He reiterated that nuisance cases are rare. He emphasized that the Superior Court has determined that the case has merit. PAULA TERREL, THANE HOMEOWNER'S ASSOCIATION testified in opposition to HCS CSSB 178 (FIN). She gave examples of how property owners in Juneau could be affected by HCS CSSB 178 (FIN). She referred to the proposed reopening of the Alaska Juneau Mine. She asserted that property owners need to have a recourse for the effects of permitted activities that cause damages to property values. CHUCK AUCHBERGER, DIRECTOR, JUNEAU CHAMBER OF COMMERCE testified in support of HCS CSSB 178 (FIN). He noted that the permitting process is extensive. He maintained that the rights of property owners trying to develop economic activities should also be protected. He emphasized the investment of business activities. MARY NARDALE, ATTORNEY, ALASKA PULP CORPORATION testified in support of HCS CSSB 178 (FIN). She contended that HCS CSSB 178 (FIN) is narrowly crafted. She stated that only activities which are specifically permitted are exempt from private nuisance actions. She maintained that liability would not shift to the state. She observed that most permits contain clauses which allow the state to revoke or modify them if the permitted activity causes problems beyond the property line, of the property on which the activity is being pursued. Regulations are designed to limit the impact beyond the property line. She did not think that the legislation would expand the permitting process. Ms. Nardale referred to the provisions on page 2, line 7. She asserted that "unknown or foreseeable" refers to anyone. She maintained that the regulatory environment is designed to protect individuals from unreasonable and substantial interference with their property rights. Representative Brown referred to subsection (c). She suggested that not every possible impact will be dealt with expressly as part of the record. She questioned if it is the agencies obligation to demonstrate that there is no interference with private property rights. She asked if something was not expressly dealt with, how it will be demonstrated that the result is known or foreseeable. Ms. Nardale replied that the "reasonable man" test would apply. She noted that the legislation is specific. 5 Representative Brown clarified that some permits are issued without public notice. Ms. Nardale and Representative Brown debated whether all or one of the provisions of subsection (b) on page 2, lines 1 - 6 would need to be present. Ms. Nardale asserted that all of the first three categories under (b) would have to be met. She maintained that the "or" pertains to AS 46.40, or a court order or judgement. Representative Brown interpreted (b) to require that only one of the first three requirements on lines 2 - 4 needs to apply. Discussion pursued regarding the issuance of general permits. DENTON PEARSON, ATTORNEY, SITKA testified via the teleconference network in support of HCS CSSB 178 (FIN). He asserted that the primary issue raised by HCS CSSB 178 (FIN) is the uniform application of laws relating to the regulation of emissions and discharges as a result of commercial or municipal activities. He asked if it is good policy to invite the contradictory results which are the product of court intervention. He maintained that regulators are specialists while courts are generalists. (Mr. Pearson's written remarks are on file with the House Finance Committee.) (Tape Change, HFC 94-44, Side 1) Representative Brown stated that while she has confidence in the state's regulatory agencies the permit process cannot fully anticipate all the problems all the time. Mr. Pearson insisted that activities clearly permitted are the ones that will be shielded from further litigation. Representative Brown observed that problems can arise because activities are not expressly barred. Representative Parnell asked what avenues are available to stop activities that are immune through nuisance legislation. Ms. Nardale noted that abetment or damages could be sought under citizen suit provisions. Citizen suit provisions could force a regulatory agency to take action against the activity if unreasonable interference is found. She pointed out that damages resulting from a citizen suit would go to the state. In response to a question by Representative Martin, Ms. Nardale stated that the purpose of the permitting process is to prevent pollution and unreasonable interference with property and to bring to the attention of the authorities problems with the potential impact of the activity. She pointed out that in the permitting process there is an opportunity to discern if the adjoining uses of property will be so impaired as to destroy the economic value of the 6 property. At that point, the state can institute a condemnation action to take the property by eminent domain and allow full compensation to property owners. Ms. Nardale referred to subsection (c). She maintained that subsection (c) provides a safety net. Representative Martin and Ms. Nardale discussed a case involving zoning in North Carolina. They continued to discuss zoning issues. CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. CONTRACT Co-Chair Larson noted that renewal of the contract with the House and Senate Finance Committees and the Cambridge Energy Research Associates was before the Committee for approval (Attachment 1). Representative Navarre questioned if information provided the Legislature by the Cambridge Energy Research Associates contract is redundant to information provided by the state's revenue economist. Co-Chair Larson noted that the periodic updates are useful. He suggested a second opinion may be beneficial. Representative Martin OBJECTED to the contract renewal. A roll call vote was taken on the motion to renewal the contract with the Cambridge Energy Research Associates. IN FAVOR: Hanley, Hoffman, Parnell, Foster, Grussendorf, Larson OPPOSED: Martin, Navarre, Therriault, Brown Co-Chair MacLean was not present for the vote. The MOTION PASSED (6-4). SENATE BILL NO. 178 "An Act relating to civil nuisance actions; and providing for an effective date." Co-Chair Larson reflected the Committee's desire to have the Attorney General address the question of constitutionality in regards to HCS CSSB 178 (FIN). Representative Brown provided members with AMENDMENT 1 (copy on file). She explained that the amendment would make HCS CSSB 178 (FIN) more fair to private property owners by ensuring that they have knowledge of actions that are to take place. The amendment would require written notification to adjacent land owners 60 days prior to permit 7 issuance. HCSSB 178 (FIN) was HELD in Committee for further discussion. HOUSE BILL NO. 394 "An Act relating to limited partnerships; and providing for an effective date." Co-Chair Larson noted that HB 394 would be WAIVED from Committee. ADJOURNMENT The meeting adjourned at 3:36 p.m. 8