SENATE BILL REPORT

SB 5973

BYSenators Rasmussen, Johnson, Wojahn, Bottiger, Gaspard, von Reichbauer, Moore, Smitherman, Vognild, Zimmerman, Nelson, Owen, Benitz, Newhouse, Craswell and Deccio

Authorizing state reinsurance of titles to tideland and river beds which may be subject to Indian ownership claims.

Senate Committee on Natural Resources

Senate Hearing Date(s):March 4, 1987

Majority Report:  Do pass and be referred to Committee on Ways & Means.

      Signed by Senators Owen, Chairman; DeJarnatt, Vice Chairman; Barr, Craswell, McDonald, Metcalf, Patterson, Rasmussen, Stratton.

Senate Staff:Kaleen Cottingham (786-7415)

                  March 5, 1987

Senate Committee on Ways & Means

Senate Hearing Date(s):March 6, 1987; March 9, 1987

Majority Report:  That Substitute Senate Bill No. 5973 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Gaspard, Vice Chairman; Bauer, Craswell, Deccio, Hayner, Kreidler, Owen, Rasmussen, Talmadge, Vognild, Warnke, Wojahn.

Senate Staff:Charles Langen (786-7715)

                  March 10, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 9, 1987

BACKGROUND:

Currently there are several Indian land claim cases pending in federal courts in Washington:  Suquamish Tribe, Puyallup Tribe, Swinomish Tribe and the Kalispel Tribe.

These cases are based on the premise that the tidelands or beds of navigable rivers vested in the state at statehood only if not previously reserved for other purposes.  The tribes assert that the reservations were established prior to statehood and such federal reservations preclude the state from asserting ownership.

Several recent cases have held that former river bed lands within original Indian reservations are vested in a tribe rather than the state (Muckleshoot Tribe's claim to the bed of the White River and Puyallup Tribe's claim to the old river bed of the Puyallup River).  The Puyallup Tribe, in addition to the issue of the river bed is asserting that it owns the filled-in tideland on Commencement Bay which was adjacent to its reservation.  The Swinomish Tribe is asserting a claim to the tidelands (now filled-in) on the south end of Padilla Bay over which now run railroad tracks and a natural gas pipeline.  The Suquamish Tribe claims right to approximately 12 miles of tidelands (2/3 now privately owned and developed) adjacent to the Port Madison Reservation.

In each of the ongoing or potential cases, the state has a proprietary interest.  Should the U.S. and the tribe succeed in winning these cases, ownership of tidelands and submerged land, including those now filled in, would be placed in doubt.  Long established understandings of title, public rights-of-way and easements and access rights to the water will be disturbed.

This comes before the Legislature because in the areas of litigation or outstanding claims, title insurance companies have been refusing coverage if a new policy is needed.  In the absence or refusal of title insurance, financing by lending institutions is usually denied.  Thus, much of the land or businesses in the area of the disputed claims has become valueless at worst and an ownership risk at best.

If the U.S. or the tribes succeed in these actions, arguably the final liability will rest with the state for deeding land it had no right to deed.

SUMMARY:

A system is established to support and stabilize the certainty of title, to protect values of such property, and to promote the economy associated with such lands.

A reinsurance program is established to allow title insurance for lands with a risk of a land claim by a federally recognized Indian tribe or one of its members.  The premium charged for such insurance may be increased by 25 percent above the applicable rate.

The reinsurance fund is created to carry out this chapter.  The fund derives its income from the insurance premiums on lands with Indian land claims and from appropriated moneys.  Payment of losses, settlements, judgments and all liabilities incurred by the state for reinsurance are paid from the fund.

Under this program, the Insurance Commissioner is authorized to:  1) issue policies, rules and regulations relating to the reinsurance program; 2) adjusts and pay losses, compromises and settles claims, and pays judgments; 3) prescribes forms, amounts insured and premiums.

Domestic title insurance corporations may be authorized to act as the Commissioner's underwriting agent.

Disagreements involving property insured under this reinsurance program shall be as actions affecting title to real property and such action shall be the exclusive remedy.

Persons having an interest which qualifies for the reinsurance program may obtain additional insurance.  The Commissioner shall not be entitled to the benefit of such amount.

EFFECT OF PROPOSED SUBSTITUTE:

The reinsurance program remains with the premium of 25 percent above the applicable rate for title insurance.

The Risk Manager, Department of General Administration, is to manage the program of reinsurance, effective April 1, 1988.

The Department of Community Development is to conduct a study of the tax revenue and economic impact of Indian Tribal claims in tidelands, former tidelands, and lands formerly lying beneath the navigable waters of the state.  The study is to be submitted to the legislature no later than December 1, 1987.

$100,000 from the general fund is appropriated to carry out the study.

Fiscal Note:      requested

Senate Committee - Testified: NATURAL RESOURCES:  Karl Anderson; Corey McFarland; Bill Short; Jim Waldo; Paul Vey; Doug Sutherland, Mayor of Tacoma; Don Anderson; Mrs. Messer

Senate Committee - Testified: WAYS & MEANS: Karl Anderson, Dick Carkeny, Mrs. Mesler, Jim Waldo