Legislature(1999 - 2000)

04/08/1999 01:20 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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HB 57 - STATE & MUNI IMMUNITY FOR Y2K                                                                                           
                                                                                                                                
CHAIRMAN KOTT announced that the final order of business is HB 57,                                                              
"An Act relating to immunity for certain claims against the state,                                                              
a municipality, or agents, officers, or employees of either,                                                                    
arising out of or in connection with the year 2000 date change; and                                                             
providing for an effective date."                                                                                               
                                                                                                                                
Number 1207                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved to adopt the proposed committee                                                                   
substitute, Version GH1005\G, Ford, 4/8/99, as the working draft                                                                
before the committee.  There being no objection, it was so ordered.                                                             
                                                                                                                                
MIKE FORD, Legislative Counsel, Legislative Legal and Research                                                                  
Services, Legislative Affairs Agency, explained that on page 3 of                                                               
the proposed committee substitute a provision regarding the state's                                                             
immunity was deleted.  In Section 3, Mr. Ford inserted a new                                                                    
standard which is the same standard in HB 82 that applies to                                                                    
private businesses.                                                                                                             
                                                                                                                                
REPRESENTATIVE CROFT asked if the proposed committee substitute                                                                 
maintains the state's immunity and provides the same immunity for                                                               
municipalities as provided for private businesses.                                                                              
                                                                                                                                
MR. FORD clarified that the standard for municipalities has changed                                                             
in which certain steps must be taken that are reflected on page 5                                                               
or reasonable care must be taken.  The state is immune.                                                                         
                                                                                                                                
REPRESENTATIVE CROFT inquired as to whether the state is immune to                                                              
intentional misconduct with regard to Y2K.                                                                                      
                                                                                                                                
MR. FORD said that is not addressed.                                                                                            
                                                                                                                                
REPRESENTATIVE CROFT asked what applies to gross negligence                                                                     
regarding Y2K by the state.                                                                                                     
                                                                                                                                
MR. FORD stated that it is simply in reference to the year 2000                                                                 
date change.                                                                                                                    
                                                                                                                                
Number 1308                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA commented, "Well, it's just the bad example                                                             
of if, you know, you have intentional misconduct.  You can still be                                                             
immune."                                                                                                                        
                                                                                                                                
MR. FORD agreed that is not excluded.  Mr. Ford did not believe                                                                 
that was ever addressed.                                                                                                        
                                                                                                                                
REPRESENTATIVE CROFT pointed out that there was language in an                                                                  
amendment which addressed that issue.                                                                                           
                                                                                                                                
MR. FORD noted that could be addressed easily, but the legislation                                                              
does not at this point.                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired as to how that was addressed in                                                                
HB 82.                                                                                                                          
                                                                                                                                
MR. FORD explained that HB 82 utilizes the standard of reasonable                                                               
care.  Mr. Ford affirmed Representative Rokeberg's comment that the                                                             
committee adopted the reasonable care standard for the                                                                          
municipality, but not the state.  The state has a blanket immunity                                                              
while the municipalities have the qualified immunity.                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG commented that there are no resolution                                                                  
steps as in HB 82, therefore one would have to go straight to                                                                   
court.                                                                                                                          
                                                                                                                                
MR. FORD agreed that there is no provision for that with the state.                                                             
                                                                                                                                
Number 1460                                                                                                                     
                                                                                                                                
MIKE GATTI, testifying via teleconference from the Mat-Su Valley,                                                               
inquired as to the rationale behind providing the state and                                                                     
municipalities blanket and qualified immunity, respectively.                                                                    
Municipalities provide the same type of necessary services as does                                                              
the state and therefore, should be given blanket immunity as well.                                                              
He urged the committee to review the reasoning behind the                                                                       
municipality having qualified immunity.                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG said that there is no assurance that those                                                              
local bodies are taking the appropriate steps.  If those local                                                                  
bodies do have a plan, HB 57 provides them with protection.                                                                     
                                                                                                                                
KEVIN SMITH, Joint Insurance Association, Alaska Municipal League,                                                              
noted that John Corso would be explaining what the City & Borough                                                               
of Juneau would be doing.  Possibly the MIS Director for the                                                                    
Municipality of Anchorage is still on-line to inform the committee                                                              
of Anchorage's efforts.  He informed the committee that he also had                                                             
information regarding what 14 other municipalities are doing with                                                               
regard to this issue.                                                                                                           
                                                                                                                                
JOHN CORSO, City Attorney, City & Borough of Juneau, informed the                                                               
committee that Y2K compliance is regarded as a public safety and                                                                
welfare issue which cities should do independent of liability.                                                                  
That is Juneau's approach.  Fear of liability does not provide                                                                  
anything particularly constructive.  Mr. Corso agreed with Mr.                                                                  
Gatti that municipalities should be treated more like the state.                                                                
Furthermore, municipalities should be treated differently than                                                                  
private businesses because private businesses are better able to                                                                
quickly adapt to the detailed list outlined in statute.  Mr. Corso                                                              
stated that it will be likely that creative plaintiff counsel will                                                              
hold defendants to exact compliance to the specific language of                                                                 
this statute.  Although municipalities such as Juneau may have met                                                              
the substance of Y2K preparedness, as government agencies there                                                                 
would be difficulty in complying with the technicality of the                                                                   
statute and may have to defend litigation not based on the merits.                                                              
                                                                                                                                
Number 1790                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if Mr. Corso would be more                                                                        
comfortable if the multi-step plan was removed leaving only the                                                                 
reasonable care standard as set out on page 5, line 19.                                                                         
                                                                                                                                
MR. CORSO believed that subparagraph (B) on page 5, line 19 is the                                                              
legal standard that would apply.  Mr. Corso suggested that the                                                                  
statute should be as close to the state's liability which could be                                                              
achieved by inserting "." after "law" on page 4, line 29.                                                                       
                                                                                                                                
REPRESENTATIVE CROFT said that it seemed to him that the state                                                                  
should be under the same standard as the municipality.  He                                                                      
indicated that the state is probably meeting its obligations now,                                                               
but he was not sure if that would continue.  Furthermore, the                                                                   
alternative dispute resolution which was in the original business                                                               
Y2K preparedness could be applied to the state in order to provide                                                              
an avenue other than the courts to reach resolution.                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired as to whether Mr. Corso had                                                                    
reviewed the curative, mediative, and litigated steps prior to                                                                  
pro-litigation which HB 82 includes.                                                                                            
                                                                                                                                
MR. CORSO replied no.  In further response to Representative                                                                    
Rokeberg, Mr. Corso stated that alternative dispute resolution                                                                  
could be helpful.                                                                                                               
                                                                                                                                
MR. GATTI pointed out that parties can already agree to alternative                                                             
dispute resolution.  He noted that he had not seen the HB 82                                                                    
provisions pertaining to that issue.  Mr. Gatti stated that he                                                                  
always advised his clients not to make alternative dispute                                                                      
resolution mandatory because it adds another step and cost to the                                                               
litigation process which could be agreed to independent of what is                                                              
expressly stated in a contract or legislation.                                                                                  
                                                                                                                                
Number 2046                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT informed the committee that he intends to hold HB 57                                                              
and to review the provisions in HB 82.                                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that the amendment regarding the                                                                  
REAAs could be adopted.                                                                                                         
                                                                                                                                
REPRESENTATIVE CROFT pointed out that the statute is unclear                                                                    
regarding what REAAs are, whether an REAA is a political                                                                        
instrumentality of the state, political subdivision, or a hybrid.                                                               
REAAs are treated differently in different statutes.                                                                            
                                                                                                                                
CHAIRMAN KOTT reiterated that HB 57 would be held.                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG informed the committee that the problem is                                                              
that the "state" is defined as including a REAA city or rural                                                                   
school district.  He recommended that the committee review that.                                                                

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