Legislature(1999 - 2000)
03/21/2000 02:00 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 21, 2000
2:00 P.M.
TAPE HFC 00 - 75, Side 1.
TAPE HFC 00 - 75, Side 2.
TAPE HFC 00 - 76, Side 1.
TAPE HFC 00 - 76, Side 2.
TAPE HFC 00 - 77, Side 1.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 2:00 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Representative Austerman Representative Moses
Representative Bunde Representative Phillips
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
Mike Tibbles, Staff, Representative Gene Therriault; Bob
Mintz, Self, Anchorage; Pamela LaBolle, President, Alaska
State Chamber of Commerce, Juneau; Senator Robin Taylor; Jim
Pound, Staff, Senator Robin Taylor; Carol Carroll, Director,
Division of Administrative Services, Department of Natural
Resources; Steven Daugherty, Assistant Attorney General,
Department of Law; Susan Cox, Assistant Attorney General,
Department of Law; Ken Freeman, Executive Director, Resource
Development Council (RDC), Anchorage; Michael Lessmier,
Attorney, State Farm Insurance, Juneau; Jon Tillinghast,
Attorney, SEALASKA Corporation, Counsel to Resource
Development Council, Juneau; Wendy Redman, Vice President,
Statewide Programs, University of Alaska, Fairbanks.
TESTIFIED VIA TELECONFERENCE
Janice Adair, Director, Division of Environmental Health,
Department of Environmental Conservation; Karen Cowert,
General Manager, Alaska Support Industry Alliance,
Anchorage; Dick Myllius, Resource Assessment Development
Section of Land, Mine and Water, Department of Natural
Resources.
SUMMARY
HB 42 An Act relating to civil liability for certain
false or improper allegations in a civil pleading
or for certain improper acts relating to a civil
action; amending Rule 82(b), Alaska Rules of Civil
Procedure; and providing for an effective date.
CS HB 42 (FIN) was reported out of Committee with
a "no recommendation" and with new fiscal notes by
the Department of Law and the Alaska Court System.
HB 239 An Act relating to the Uniform Commercial Code;
relating to secured transactions; amending Rule
79, Alaska Rules of Civil Procedure; and providing
for an effective date.
HB 239 was POSTPONED for hearing until 3/22/00.
HB 361 An Act relating to charges for state services;
requiring that fees levied by resource agencies
for designated regulatory services be based on the
actual and reasonable direct cost of providing the
services, except in the case of certain negotiated
or fixed fees; relating to negotiated or fixed
fees of resource agencies; relating to invoices
for designated regulatory services; establishing a
petition process regarding fees charged by
resource agencies for regulatory services; and
providing for an effective date.
HB 361 was HEARD and HELD in Committee for further
consideration.
HB 428 An Act relating to interest on child support
overpayments that are disbursed to the obligor.
HB 428 was POSTPONED for hearing until 3/23/00.
SB 7 An Act relating to the University of Alaska and
university land, and authorizing the University of
Alaska to select additional state land.
HCS CS SB 7 (FIIN) was reported out of Committee
with a "do pass" recommendation and with new
fiscal notes by the Department of Natural
Resources, Department of Fish and Game and the
University of Alaska.
HOUSE BILL NO. 42
An Act relating to civil liability for certain false or
improper allegations in a civil pleading or for certain
improper acts relating to a civil action; amending Rule
82(b), Alaska Rules of Civil Procedure; and providing
for an effective date.
ROBERT MINTZ, SELF, ANCHORAGE, stated that HB 42 would
prevent frivolous lawsuits by requiring parties to a lawsuit
and their attorneys to be truthful and responsible in their
pleadings. The bill discourages false statements and claims
in litigation and encourages responsibility by all parties
and their attorneys. He added that it would require more
careful and focused preparation of pleadings.
This bill creates an obligation, in statute, for litigants
and attorneys to make reasonable efforts to assure those
claims have a reasonable basis in fact and are valid under
existing law. If the claim is intentionally false, both the
attorney and the party can be assessed damages. Currently,
there is no effective way of holding parties responsible for
frivolous pleadings or claims. Frivolous pleadings and
claims increase the costs of litigation for all the parties
involved in addition to escalating the cost of the judicial
system.
Mr. Mintz commented that HB 42 would require attorneys, as
well as their clients, to research their claims to assure
they are factually supported before filing a lawsuit. The
bill will eliminate "boiler plate" pleadings in lawsuits and
encourages responsible and focused pleadings. "Boiler
plate" pleadings include everything that "anyone could ever
imagine could have happened" rather than focusing on
specific issues that actually did occur. Those extraneous
pleadings are expensive for innocent parties to litigate and
most often are thrown out. They cause one party, and the
court system, to expend significant dollars to pare down to
real issues.
Mr. Mintz continued that many suits are often less expensive
to settle than to litigate, regardless of their merit. The
bill does not affect suits filed in good faith. It would
deter those without merit. A system that allows deceit to
be rewarded must be changed.
Mr. Mintz noted that the bill would assign financial
liability to those whom:
? Intentionally advance a civil pleading containing a false
allegation of material fact;
? File a lawsuit, first determining that it has a
reasonable basis in fact or law;
? Use claims or cross claims to cloud an issue;
? File unsuccessful claims on the hope of finding someone
willing to settle rather than spending the money to
litigate the suit; and
? Sign a civil pleading before making reasonable inquiry to
determine if it is well grounded in fact and warranted by
existing law.
Mr. Mintz concluded that the basic purpose of HB 42 is to
give injured parties effective remedies for bad faith civil
litigation. The bill will only apply to the person lying
and that if the facts find a party has made an intentional,
false statement of material fact.
Co-Chair Mulder asked Mr. Mintz to explain the procedure
established in HB 42. Mr. Mintz first explained that Civil
Rule 11 is the current procedure. These are rules of
procedure that are promulgated by the Supreme Court. The
focus of HB 42 is different from that. It does not impinge
upon the Supreme Court's rule making power. It creates
duties that are owed by people who engage in litigation to
other people who are engaged in litigation. It will create
duties of truthfulness. Civil Rule 11 is discretionary and
allows the judge to fashion a remedy in certain
circumstances.
Co-Chair Mulder asked Mr. Mintz to explain how the process
would function. Mr. Mintz replied that the legislation
would create two remedies. The first, under Section A,
would require the offended party to notify that party that
lied. The bill is designed to self correct the system. He
hoped that it could be corrected during the course of
litigation. If not and person who lied was the successful
party in the litigation, then subsequently, the person that
prevailed could bring a separate action to recover their
full costs.
Mr. Mintz explained that in the context of an affirmative
lie, it would be one of the two ways in which HB 42 could
occur. The other way is during the course of litigation,
and there was a jury instruction, and if it was found that
someone lied and the lie was material to a particular issue
then that person would lose on that issue. There is an
exception to that in cases where public policy is involved.
There, the judge could use monetary damages against the
liar.
Representative J. Davies asked if this discussion was aimed
at Page 2, Subsection (b), Lines 8-12. Mr. Mintz stated
that the reference was to Subsection (c), Lines 15-21, which
applied to Subsection (b). Representative J. Davies
requested clarification that in the case of someone offering
an intentional lie or misstatement of fact, that the
underlining claim would get dismissed. He referenced an
occurrence in a child support case. Co-Chair Mulder stated
that those cases are excluded from these actions. All the
excluded type cases are listed on Page 3, Lines 15-20.
Representative J. Davies countered that the same principle
would apply to other civil cases. A case is decided on
whether or not there is an intentional falsehood. He
understands that there could be a penalty attached, but to
decide the underlining truth of the case on that basis would
be an over-reaction.
Co-Chair Mulder stated that after 8 years of working this
legislation through the House Judiciary Committee,
Subsection (C) had been added to address these concerns.
Mr. Mintz stated that Subsection (C) addresses situations
where more than just liar's interest is at stake. He added
that through Subsection (B), the court is only required to
dismiss the claim or defense to which the false statement
relates and not the entire case. All would not be lost.
Representative J. Davies advised that this legislation is an
"over reaction". He did not understand why the whole
determination would be decided on one issue. He believed
that information would presumably come out in trial.
Co-Chair Mulder responded from the extent that it is
material fact, is the center point from which the case was
determined, and that those persons must be held responsible
for their actions. Representative J. Davies interjected
that Civil Rule 11 does address that point. Co-Chair Mulder
commented that it does not do it effectively. He indicated
that this is a policy statement. Co-Chair Mulder emphasized
that the legislation would elevate the level of conduct
expected when going to court. He questioned if that would
be justified.
Mr. Mintz enumerated his personal experience in a case. He
stated that many of the claims made against him were
frivolous during a time that he was Chairman of Alaska
Housing Finance Corporation (AHFC). The defense case cost
the State over $200 thousand dollars. He emphasized that it
was a grievous waste of money and there was no way there
could be any recourse. HB 42 resulted from that experience.
Co-Chair Mulder made a change to the work draft, 1-LS0246\K,
Ford, 3/21/00,[Copy on File], Page 2, Line 17, after
"another" insert "person or" and make the same change to
Line 18.
Vice Chair Bunde MOVED to adopt the work draft version K
with the above mentioned changes, as the version of the bill
before the Committee. There being NO OBJECTION, it was
adopted.
Vice Chair Bunde asked what would happen if someone lied and
prevailed. He inquired how the statutes on perjury would
interrelate with this legislation. Mr. Mintz replied that
perjury is criminal. The bill only applies to a civil
context. He agreed that a criminal case is held to a higher
standard than a civil case. Mr. Mintz stated that the bill
is a "step in the right direction, but does not fix all the
problems out there".
Representative Williams asked if the legislation applied to
lying under oath. Mr. Mintz explained that the bill
addresses more than lying under oath. It applies to
statements which you know are false. It also applies to
motions and affidavits that are filed in court.
Representative J. Davies asked if the legislation would
apply to cases where a statement had been omitted
intentionally. Mr. Mintz replied that it would apply
equally to denials, which are known to be false, and is
meant to apply to both sides. Representative J. Davies
pointed out that the party would have to lose the case.
Co-Chair Mulder interjected that "this is a two edge sword".
It should focus the discussion more on the points of
difference. Representative J. Davies inquired where that
reference was indicated in the legislation. Mr. Mintz
commented that if what you claim is true and it is denied,
it would be covered in this legislation.
Representative Phillips added that making a false statement
could encompass an omission of fact because not including
all the facts is in of itself, a false statement.
KAREN COWERT, (TESTIFIED VIA TELECONFERENCE), GENERAL
MANAGER, ALASKA SUPPORT INDUSTRY ALLIANCE (THE ALLIANCE),
ANCHORAGE, stated that the Alliance has served as the
statewide non-profit trade organization for businesses which
provide products and services to the oil and gas industry.
Ms. Cowert noted that House Bill 42 would require litigating
parties to research their claims to assure accuracy, or pay
the consequence of suing without just cause. The Alliance
supports such measures.
She commented that Alaska has suffered significant economic
losses as a few individuals successfully circumvent public
processes through litigation. It seems that nearly every
proposal or plan to develop the State's natural resources or
to enhance its infrastructure is met with a lawsuit,
regardless of whether there are reasonable grounds to sue.
She noted that the Alliance believes that many such legal
actions only serve to delay developments that are important
to Alaskans' quality of life and economic well being.
Ms. Cowart pointed out that HB 42 would create an
obligation, in statute, for litigants and attorneys to make
reasonable efforts to ensure their claims have a factual
bearing before filing a lawsuit. The bill would also make
those that filed a frivolous suit responsible for assessed
damages. Furthermore, the bill will assign financial
liability to those who cloud the issue with false or
misleading claims, in hopes of finding a party willing to
settle rather than spend dollars to litigate.
She noted that the Alliance believes that each party in a
lawsuit has a responsibility to present factual and
legitimate information. A system that allows deceit to be
awarded is not right.
PAMELA LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
JUNEAU, testified in support of the proposed legislation.
She stated that the legislation proposes a basic premise
needed to address that intentional lying should not prevail.
She concurred that there needs to be a way to punish people
who base a case on an intentional lie.
Representative Grussendorf observed that in many situations,
the truth is a "fine line". Co-Chair Mulder pointed out
that there is a standard established in the legislation
emphasizing "reasonable" and that it would address that
concern.
MICHAEL LESSMIER, ATTORNEY, STATE FARM INSURANCE, JUNEAU,
stated that State Farm Insurance supports the proposed
legislation as it sets forth a minimal standard that people
need to go through before they undertake a lawsuit. It
clarifies that one makes sure that the case has a reasonable
basis in fact and in law. If it does not, the bill states
that you can not continue. He clarified that those are
protections which have not been present. Additionally, the
bill establishes a "truth provision", which applies only to
a party that intentionally makes a false statement of
material fact. Nothing in the bill is intended to address
the situation where witnesses have a ligitiment difference
of opinion. It is designed to address conduct by a party
which does not meet a reasonable standard of investigation.
He stated that the proposed legislation is "preventative and
curative" in the sense that it will cure a wrong that has
been done.
In response to Co-Chair Mulder, Mr. Lessmier explained that
contained in Section (A), Subsection 2, clarifies that as
long as there is a reasonable inquiry, and you form a
reasonable belief in the existence of facts from which the
claim or defense is made you are protected. You could be
sued only if you don't meet this minimal standard and you
fail to respond to the notice and correct your action in 21
days, and then you lost the case. On the issue in question,
the notice provision is designed to be self-corrective. As
long as there is a reasonable basis in law and fact, the
legislation will not hurt you. The legislation is not
designed to second- guess anything.
Representative J. Davies stated that if it were an obvious
case where someone was lying and it was obvious that it was
done intentionally, then everyone would agree that person
should be punished. He added, however, that he had problems
with the logic. "Life is often messy" and there will always
be "gray" areas where it is difficult to tell the intent of
a person and where the law applies. It is not always easy
to read the statutes to determine if the law applies. That
is why cases go to court so to determine if the law applies.
He believed that the legislation could prevent cases from
forming because of "fear" or "worry" that their view in
relation to how the law applies might be determined to be
incorrect and they then they would be stuck. Representative
J. Davies voiced additional concern with the penalty, which
would dismiss the claim because someone might have
intentionally lied about it.
Mr. Lessmier asked the Committee to consider who are we
really trying to protect. Is it the person who makes a
false statement of fact for purposes of material gain. He
believed that should be discouraged and that the victim
should be protected. He emphasized that was the fundamental
issue of the provision, as it applies only to a party who
intentionally makes false statements of fact. The people
that need to be protected are the ones that are innocent
victims of that conduct. Representative J. Davies stated
that if nine out of ten facts were true, and that the person
was guilty under nine assertions but under the tenth one
they were not guilty, what would happen. He stressed that
it would not be about protecting some innocent victim, but
rather, they were guilty but allowed to "skate" because
someone lied under one assertion.
Mr. Lessmier stated that in a real life situation, the jury
would probably not find that the one fact would be
sufficiently "material" in terms of the context of the
claim. That one fact would probably be viewed as
insignificant. The legislation requires that it be
intentional, false and material. He emphasized that is
important. The message that the legislation is sending is
that people found to fit this conduct are going to be few
because the standard is high.
Mr. Lessmier expressed that nothing in the bill is designed
for a situation where someone takes a position based on
research and thought which is wrong. All that it states is
that you have a "reasonable basis in law". It does not say
you have to win. Representative J. Davies asked that cite.
Mr. Lessmier referenced two provisions, 2(a)(b), which
indicates "reasonable inquiry and forming a reasonable
belief". The next provision that is important stipulates
that nothing is designed from preventing someone from
arguing in good faith that the law should be changed or
extended. This would not apply to someone using the minimal
standard with some research and thought.
Co-Chair Mulder asked who the bill designed to protect. If a
person tells the truth, the bill would protect them. He
stressed that it would be difficult to argue on behalf of
someone that is not telling the truth. Representative J.
Davies reiterated that if the world was black and white, he
would agree with Co-Chair Mulder. However, it is not so.
The proposed legislation could have a "chilling effect" on
those people who do not have a lot of resources and are up
against corporations that do and are sophisticated.
Co-Chair Mulder asserted that the world is black and white
in relationship to truth and fact. The truth is not gray.
If you were the one being taken to court, you would have to
prove why the other person believed that what you said was
untrue. He emphasized that this is a balancing act.
(TAPE CHANGE, HFC 00 - 75, Side 2)
Representative Grussendorf asked how the Department of Law
would operate under the proposed legislation.
SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
stated that the Department recognizes that "things are not
always black and white". While the bill is not directed at
addressing the legitimate differences of opinions between
opponents in civil litigation, it does raise the possibility
that if parties do not agree, in either case, the loser
looses, and that if the winner does not recover their full
compensation, they will then take the next step of pursuing
the second loss against that party for whatever they did not
get the first time around. She pointed out the focus on the
aspect of "intentional lying" addressed in (A)-2 of the
bill. However, (A)-3 provides that a cause of action will
arise if a person participates in a continuation of claim
after a person discovers that the claim or defensive is not
supported by a reasonable basis or valid under applicable
law.
Ms. Cox could foresee situations, in which, after the "dust
settles", the argument is made that the looser has lost.
The law did not apply or the facts did not appear as they
were portrayed to be. They would loose. She foresaw the
provision of (A)-3 to be more of an "open door" than the
intentional lying. Ms. Cox added that is why the Department
has submitted a fiscal note.
Representative Grussendorf voiced concern that the issue
does not get in the way of the defense of the original case.
He looked at the amount of time that the case could consume
and how discouraging that could become. He recommended more
funding for Alaska Legal Services.
Ms. Cox noted that because of the procedure in the bill, in
order to invoke the cases of action, someone would have to
give notice to the opposing party that they should take
corrective action. She noted that corrective action could
cause liability prospects.
Co-Chair Mulder suggested that as a lawyer, it would be
prudent to provide reasonable inquiry to establish whether
your client is telling the truth. Ms. Cox replied that is
true but pointed out to the reference to (A)-3, which states
that if the attorney continues to litigate the case,
maintaining a claim or defense that is not supported by a
reasonable basis applicable by current law, does not mean
that the attorney would not get sued. She stressed that
there would be another layer of intrigue. If it is a
complicated case, it could result in a situation where
competing experts and the reasonableness of facts would be
an issue. She emphasized that this legislation is going to
cost money.
Representative Grussendorf stated that the bill would
protect the attorney who is supposedly telling the truth.
However, the witness would be out of the protection area.
Mr. Lessmier explained that Subsection (B)&(C) do not apply
to the witness. He objected to the comment that the
legislation would create more litigation. He suggested
contrasting what is currently in the system. What exists
now is "nothing". If someone is faced with an allegation
that is frivolous or untrue, there is no protection. The
cost can be high. The proposed legislation provides
something "in between". It requires a notice to correct the
action. If the action is corrected, there will be no
opportunity for a second suite. If the party does not win,
they do not receive a second chance. Actual attorney fees
and cost would have to be paid by the loosing party to any
action created by the bill. Mr. Lessmier stated there are
incentives for this to be "self curing and protective" to
the person that is subject to these claims.
Representative J. Davies asked if the statement that "there
is nothing to defend against" is a true statement. Ms. Cox
responded that could be "called into place". Civil Rule 11
could be used as a possibility for a sanctioning attorney
who is involved in failing to make an inquiry. It is not
frequently invoked.
Ms. Cox noted that Rule 82 provides for partial attorney fee
recovery to prevailing parties and actually includes a
formula for how much the winner gets. There are eight
factors, which allow the Courts to deviate from that
formula. Some of the subsections in Rule 86 allow for
increasing the fee award for certain stipulations including
bad faith conduct.
Civil Rule 56 provides for the standard for granting summary
judgement in the State and has a penalty in 56(G) which
states that if it appears to the satisfaction of the Court,
many of the affidavits presented in support of judgement
motion are presented in bad faith, for the purpose of delay,
the court can then order the party, reasonable expenses and
include reasonable fees. There are civil causes of action
in common law for abusive process and malicious prosecution,
which are more difficult to prove than what currently exists
in legislation.
Co-Chair Mulder asked what was wrong with the current
system. Mr. Lessmier responded that the difficulties with
Civil Rule 11 are remedies that are rarely invoked by a
judge. Remedy under Rule 82 requires a person to litigate
until the end. And then with that, one could only receive a
portion of the costs and attorney fees. There is no
mechanism for self-correction in the current law.
Representative J. Davies asked about the category of
perjury. Additionally, if the case is clearly frivolous,
and not based in law, he asked if the judge had the right to
dismiss the case. Mr. Lessmier commented that even if a
perjury case were aggressively prosecuted, it still would
not protect the people that are victims of this conduct. It
would not apply until after the fact. He did not believe
that the Department of Law often uses their resources to
prosecute these types of cases. Additionally, there is a
standard for judges in ruling on motions for summary and
judgement. The work of the court in those situations is to
look at the facts in the light most favorably to the other
side. The court will not weigh whether one person is telling
the truth or not. The court assumes if person signs an
affidavit, the case will not be dismissed. He emphasized
that it is rare for a court to make a finding that a case if
frivolous.
Ms. Cox disagreed, noting that if there is a dispute of
fact, a summary of judgement will not be granted. If
someone is putting forth-false information, the court will
not weigh the credibility of the respective witnesses.
However, if the case is not founded in the law, it is common
to be able to get dismissal, which does occur frequently.
Mr. Lessmier agreed that if it is not founded or based in
the law, that the courts will dismiss those cases.
Representative G. Davis referenced the number of perjury
cases that have been tried. He asked if there should have
been more. Mr. Lessmier replied that in the 1st Judicial
District, he did not know of a perjury case being tried.
Representative G. Davis asked if the judge could make that
determination and then would it be appealable. Ms. Cox
responded that there are two considerations in that. Rule
82, which is the civil rule that allows the winner to
recover part of their attorney's fees from the looser is the
area which states that "bad faith conduct" on the part of a
looser "enhances the award the winner gets". That would be
the court's call and it is appealable including the award of
fees. Mr. Lessmier clarified that it is appeallable only
under an abuse of discretion standard, which is difficult to
meet.
Representative J. Davies requested that Senator Taylor
testify on the proposed legislation.
SENATOR ROBIN TAYLOR commented that there is "no good side"
to the legislation. He noted that in his own experience as
a judge and attorney, he has seen as much bad faith claims
by people representing insurance carriers. Many more than
those people litigating on behalf of victims. "The
insurance companies are not victims". They end up paying
victims. There is no incentive for a private practitioner
that is handling a case on a contingency fee because "all
that it will do, is to further delay his case". The faster
the case can be gotten to trail is the quicker he will get
his own money back because he is the one paying for the cost
of the case. Senator Taylor reiterated that there would be
no incentive to delay the case. Bringing additional claims
to the ability for settlement or leverage could enhance the
case.
Senator Taylor added that on the defense side, there is no
impediment for defense council to throw everything they can
at case and make motions on each aspect of it. He emphasized
it will happen. On the two sides of litigation, there first
is the attorney that will be paid for all their time. Even
after they loose the motion, they are still going to get
paid. They have no accountability what so ever. On the
other side of that issue, there are people who are paying
their own money to litigate cases on behalf of injured
parties. He questioned how to balance the two. He asked
how to put more backbone into the judiciary system. Senator
Taylor stated that there are all types of remedies, which a
judge has at their disposal to curtain the types of
activities that the bill is trying to touch. He added that
the bill is well motivated, however, with the "huge,
economic disparity" between the benefits flowing from one
side to another, the disparity must be first balanced. He
agreed that one side would be placed at a disadvantage.
Senator Taylor advised that all the testimony in favor of
this bill would come from the insurance industry. Co-Chair
Mulder disagreed, noting the letters of support contained in
member's packets.
Senator Taylor countered that he was referring to
professionals. Co-Chair Mulder interjected that these are
"real people" and he stressed that there is no way that they
can be made "whole". Senator Taylor suggested that is why
Rule 82 needs to be changed. If that rule was changed,
those people could be made whole. When it comes to
professionals within the law, the people that will be seen
are coming from the insurance industry. He emphasized that
private practitioners will not testify in support of this
legislation. He stressed that this bill is a lawyer's
dream. If you have a client big enough that can afford to
litigate on every issue, they not only get to litigate on
that case, but with notice they can litigate on many other
cases which that attorney prevailed on. He provided a
hypothetical situation of going over the speed limit. What
is the truth of `over the speed limit". Each person could
bring in witnesses regarding that fact and your speed. The
jury of twelve people has to determine that information. He
reiterated that fact is determined by the jury and
determined by the preponderance of the evidence. The
evidence could trigger a whole series of additional
litigation.
Senator Taylor agreed that a way to correct the complication
should be attempted. However, he believed that we should do
more to strengthen the methods of remedies within law to
address the vexatious case. The manner that has been
established in the proposed legislation creates an economic
distortion that occurs in real life that can not be
accounted for in the bill.
Co-Chair Mulder disagreed, stating that there is no means
for the common person to adequately defend himself when it
is cheaper to settle out of court. The insurance company
will tell them that. "There is no way to be made whole"
with the cost of attorney fees and everything else. Senator
Taylor interjected that until Rule 82 is changed; nothing
will be made whole. He concluded that the system could use
some adjusting and he supported the effort but warned about
the consequences.
Mr. Mintz responded that the multiplicity of litigation
issue has come up a few times. In truth, it will not be
known without evidence and without trying something new to
see how it works. He believed that HB 42 would work as it
changes the paradigm that we are used to living with in
connection with litigation. He did not think that after HB
42 passes that someone would be as easy or as quick to file
lawsuit to assert a marginal claim. The goal of the
legislation is to raise the bar and make it so that the
marginal claims fall out of the system and only the
substantial claims move forward.
Mr. Mintz stated that when HB 42 action is filed, you would
have to be clear that there is no basis for the suit that
you successfully prevailed in. When filed, you are exposing
yourself to the actual costs and attorneys fees. It would
not be an action that would be taken lightly or done on a
marginal case. He added that the cases where it has cost a
lot of money to defend the claim, those are the cases where
HB 42 action should be allowed.
Co-Chair Mulder asked why not "beef up Rule 82". Mr. Mintz
stated that the real reason is that it would take a two-
thirds vote of the legislature to change a court rule and it
only takes a simple majority to create a new cause of
action.
Representative Grussendorf commented that by the title of
the bill, that would still be required. Mr. Mintz replied
that would occur only for the section that provides for
actual costs and attorneys fees. All the substantive
provisions go into effect for the cause of action. What
would be lost without the two-thirds majority would be the
actual cost and attorney fees.
Vice Chair Bunde MOVED to report CS HB 42 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 42 (FIN) was reported out of Committee with a "no
recommendation" and with new fiscal notes by the Department
of Law and the Alaska Court System.
(TAPE CHANGE, HFC 00 - 76, Side 1)
SENATE BILL NO. 7
An Act relating to the University of Alaska and
university land, and authorizing the University of
Alaska to select additional state land.
Co-Chair Therriault MOVED to ADOPT Amendment #1, 1-
LS0072\W.1, Luckhaupt, 3/21/00. [Copy on File].
Representative J. Davies OBJECTED for the purpose of
discussion.
MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIAULT,
distributed language that would help clarify the amendment.
[Copy on File]. He noted that there had been a question
regarding when the land could be selected and explained it
could be chosen if it was not being used. The additional
language speaks to the role of the municipality. Co-Chair
Therriault clarified that the University and the
municipality would be on the same "footing".
Representative J. Davies questioned the clause in the
addendum that "the University may not select the land".
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY
OF ALASKA, FAIRBANKS, recommended that a comma replace the
semicolon.
Representative J. Davies WITHDREW his OBJECTION to the
amendment. There being NO further OBJECTION, Amendment #1
was adopted.
Co-Chair Therriault WITHDREW Amendment #2, 1-LS0072\W.2,
Luckhaupt, 3/21/00. [Copy on File].
Co-Chair Therriault MOVED to adopt Amendment #3, 1-
LS0072\W.3, Luckhaupt, 3/21/00. [Copy on File]. There
being NO OBJECTION, Amendment #3 was adopted.
Representative J. Davies stated that Amendment #2 would
"fix" the logic of Subsection M. He suggested that the
language in that section does not make sense without the
amendment.
Co-Chair Therriault requested Ms. Redman to explain that
language. Ms. Redman replied that the language that exists
in the draft bill W.2, all conveyances of land come to the
University with the existing easement rights-of-way. Ms.
Redman noted that the University is interested in receiving
reasonable protection.
Vice Chair Bunde speculated that if the amendment were
offered, it would put pressure on the Commissioner of the
Department of Natural Resources to speed up easements on the
right-of-ways.
Representative J. Davies requested to modify Amendment #2 by
placing it in the positive. On Line 3, delete "may not
conveying" and insert "when conveying"; Line 4, delete
"reserves" and insert "shall reserve".
JIM POUND, STAFF, SENATOR ROBIN TAYLOR, noted that language
would work well.
Representative J. Davies MOVED to adopt the amended
Amendment #2. There being NO OBJECTION, it was adopted.
Representative J. Davies MOVED to adopt an amendment on Page
12, Line 19, deleting "may" and inserting "shall". Co-Chair
Therriault OBJECTED.
Representative J. Davies explained that the change would
illustrate the concept of the University "demonstration
forest". He thought that using "may" would leave a
possibility that nothing would happen. If "shall" is used,
it is guaranteed that there will be action.
Co-Chair Mulder asked if Representative J. Davies believed
that the demonstration forest would make money for the
University. Representative J. Davies stated it would. Ms.
Redman argued that she did not know. She believed that the
primary purpose of a demonstration forest would not be to
maximize income but to act as laboratory for forestry
practices.
Co-Chair Mulder understood that the purpose of the bill was
to attempt to make the University "whole" from possible
income generated. He voiced concern that it could become a
"money looser" rather than a "money maker". Representative
J. Davies argued that there has been resistance to
developing the forestlands. He commented that Alaska has
not moved into the modern age of how to manage forests. He
stressed the language change would allow more economic
development.
Vice Chair Bunde complained that "shall" would make for
micro-management. Co-Chair Therriault agreed. Inclusion of
"shall" indicates that the Legislature would like to see
something happen on the land but are not mandating it.
Representative G. Davis pointed out that there are many
"shalls" included in the same section of the bill. He asked
if there would be an opportunity for grants if the
University had established the demonstration project.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Moses, Phillips, J. Davies
OPPOSED: Austerman, Bunde, G. Davis, Foster, Mulder,
Therriault
Representative Moses was not present for the vote.
The MOTION FAILED (4-6).
Ms. Redman noted that the University's fiscal note should be
in sink with Department of Natural Resources. The
University would be spending all non-general funds.
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, interjected that
the Department of Natural Resources will provide a revised
fiscal note indicating interagency receipts.
Representative J. Davies asked the assumption in making the
additional increment of $600 thousand dollars. Ms. Carroll
replied that on bigger sections of land, the cost is less to
survey. She emphasized that the Department will only be paid
for the work that they do.
Representative J. Davies inquired if the legislation was
approved, could an RPL be developed if there was a need.
Co-Chair Therriault agreed, noting that it is important that
the Legislature take a "guess" as to what it is going to be.
Co-Chair Therriault asked if the legislation were to come
into law, how quickly would the University be incurring some
of these costs. Ms. Redman responded that the University
would be able to be back the first year with some small
sections of lands. There has been discussion with some
municipalities of undertaking some shared development. She
anticipated needing the full ten years for the amount of
land.
Co-Chair Therriault recommended that the amount should be
estimated. He questioned if there needed to be a change to
the note. Ms. Redman did not anticipate that, however asked
to check with the University's financial division.
Co-Chair Therriault questioned why the dollar amount did not
match with the Department. Ms. Carroll noted that the note
from the Department should reflect the "House Resources
Committee" version of the bill. Ms. Redman added that the
corrected fiscal notes would be available tomorrow.
Ms. Redman commented that there was nothing in the bill that
would require them to give money to the Department of Fish
and Game. Ms. Redman stated that the Commissioner of
Department of Natural Resources in collaboration with the
Commissioner of Department of Fish and Game would make that
determination.
Ms. Carroll asked for clarification whether it was
anticipated that Department of Natural Resources would be
collecting for the Department of Fish and Game.
DICK MYLIUS, (TESTIFIED VIA TELECONFERENCE), RESOURCE
ASSESSEMENT DEVELOPMENT SECTION of LAND, MINE AND WATER,
DEPARTMENT OF NATURAL RESOUCRS, stated that the Department's
fiscal note did not include Department of Fish and Game
costs. That Department would be reviewing selections from
a wildlife point of view, which was not factored into the
costs for the Department of Natural Resources.
Co-Chair Therriault noted that the fiscal notes would be
adjusted so that the dollar amount was in sink.
Representative Austerman asked to change the Department of
Fish and Game fiscal note to reflect interagency receipt
money coming from the University. Ms. Redman stated that
the University would not be purchasing services from
Department of Fish and Game. Representative Austerman asked
if the Department of Fish and Game fiscal note was
erroneous. Co-Chair Therriault stated that the Department
of Fish and Game would be offering an opinion with
dispositions of State lands. Ms. Carroll believed that
Department of Fish and Game's note was written in reference
to Page 6, Lines 22-25. She believed that it would create a
lot of work.
Representative Phillips suggested that the fiscal note be
changed to interagency receipts to Department of Natural
Resources rather than to the University.
Representative Austerman stated that he did not want to see
more work for the Department without funding. Somewhere
along the way, the Department will need to be paid. Ms.
Redman supported the idea presented by Representative
Phillips. She noted that she did not anticipate the
Department of Fish and Game being impacted, however, the
University would compensate that Department for the seal of
approval on the lands. She recommended that be incorporated
through interagency receipts. Ms. Redman noted that the
Department of Natural Resources fiscal note would be handled
separately.
Representative J. Davies MOVED to report HCS CS SB 7 (FIN)
out of Committee with individual recommendations and with
the attached fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CS SB 7 (FIN) was reported out of Committee with a "do
pass" recommendation and with new fiscal notes by the
Department of Fish and Game, the University of Alaska and
Department of Natural Resources.
HOUSE BILL NO. 361
An Act relating to charges for state services;
requiring that fees levied by resource agencies for
designated regulatory services be based on the actual
and reasonable direct cost of providing the services,
except in the case of certain negotiated or fixed fees;
relating to negotiated or fixed fees of resource
agencies; relating to invoices for designated
regulatory services; establishing a petition process
regarding fees charged by resource agencies for
regulatory services; and providing for an effective
date.
Representative Bunde MOVED to ADOPT the work draft for HB
361, #1-LS1299\I, Kurtz, 3/21/00. There being NO OBJECTION,
it was adopted.
MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT, provided an
overview of the work draft. He noted that there were a few
items which did not make it into the draft.
The first change would be to Page 2, Line 15, the language
"Except as provided in AS 37.10.052(a)" was added. He noted
that the language would provide for an annual review to the
Legislature about statutory changes.
Representative J. Davies questioned if it should be required
annually. Mr. Tibbles stated that this is existing law and
is an annual review required for all agencies.
Mr. Tibbles continued, Page 3, provides a provision to limit
the amount of the fix fee to $250. There was an exception
to the $250 dollar limit if it could be justified as an
actual direct cost. The deletion was requested by the
Department of Environmental Conservation.
Language was added on the ends of Lines 3-7, which require a
review of all fixed fees. On Page 3, Line 9, there was a
deletion of the word "standard" for negotiated agreements.
Language was modified on Lines 11 & 12 regarding negotiated
agreements. Page 3, Subsection c is new. It is replacement
of the petition process established in the statutes.
(TAPE CHANGE, HFC 00 - 76, Side 2)
Co-Chair Therriault explained that the provision had been
submitted by the Department of Environmental Conservation.
Representative J. Davies asked about Page 4, Line 3. Mr.
Tibbles explained that the language was "held over" language
from a procedure that required the regulatory process. The
intent was that it be demonstrated why the Department would
need to justify when they denied the act.
Representative J. Davies questioned if there was distinction
between "served upon" and "provides to". Co-Chair
Therriault pointed out that was a language change.
Mr. Tibbles addressed Page 4, Line 24, the "invoicing
section", noting that the original bill required the
Department to establish a uniform accounting system. That
would have been very expensive and that language was
removed. The goal was to create an invoice that one could
look at to determine if they were being billed for the
actual service that they received. In that section, there
is a new provision which establishes that these requirements
apply to negotiated agreements as well. The language would
give Department of Environmental Conservation and the
permittee the option to negotiate different requirements for
the invoicing.
Mr. Tibbles noted that on Page 5, Lines 6 & 7, language was
added "request that the resource agency review the invoice".
That language was recommended by the Department of
Environmental Conservation. The first "stop review" would
be with Department of Environmental Conservation. If a
person was not happy with that review, then they could go to
the Office of Management and Budget (OMB). On Page 5, Line
17, the petition was removed for a single project fee. All
that remains in that section is a petition for a
modification of a new fixed fee.
Mr. Tibbles referenced Page 6, Line 3, language "under the
following" was added by a request from Department of Natural
Resources. The technical change modified the definition of
direct costs in Subsection (3). Page 3, Line 28, removes
"notice" which will now allow the Department of
Environmental Conservation to charge the permittee for the
cost of public notices.
Mr. Tibbles commented that on Page 7, Lines 15 - 17, another
modification was made at the request of the Department of
Natural Resources to the definition of "fee". There was a
concern that the Joint Pipeline Office would not be able to
charge the full amount negotiated under their leases. That
was never the intent of the bill. Additionally, Subsection
(g) was removed at the request of the Department of Law and
Department of Environmental Conservation. Page 7, Line 20
increases the multiplier for salary and benefits at the
request of the Department of Environmental Conservation.
Mr. Tibbles explained that on Page 8, Subsection (10), the
definition of "standard designated regulatory service"
removed the inclusion list for small-scale mining. The
agency wanted to be able to determine which activities were
more complex.
Representative Grussendorf observed that the Office of
Management and Budget was included in the legislation. He
commented that the Office of Management and Budget does not
have the authority to develop regulations on the appeal
process. He questioned why no fiscal note had been included
from that agency.
Co-Chair Therriault noted that the proposed legislation has
"greatly" lessened OMB's participation. Mr. Tibbles added
that there was a $176 thousand dollar fiscal note submitted
at the last hearing from OMB. He reiterated that the
proposed legislation has reduced their involvement.
Co-Chair Therriault added that the bill would be held in
Committee until the new fiscal notes were received.
Mr. Tibbles reviewed Amendment 1. [Copy on File]. He noted
that the amendment suggests striking the language "this
determination upon request" and inserting "the fixed fees".
On Page 3, Line 22, after "services" new language was added,
"at least one of which is a designated regulatory service".
Representative J. Davies observed that if there was more
than one agency involved then the Office of Management and
Budget would become involved. He believed those would be
more complex issues. Co-Chair Therriault pointed out that
within the Governor's budget there is both OMB and the
Division of Governmental Coordination (DGC). DGC would act
as the coordinator of multi agency functions. He believed
that DGC would handle these issues given their coordination
function.
Representative Grussendorf questioned who would be
responsible to collect the program receipts. Co-Chair
Therriault explained that the unified fee would be a
tabulation of the separate fee amounts. The parts could
then be tracked.
Mr. Tibbles explained that in Amendment #1, Page 4, Line 10,
Subsection c(3) would be deleted and the following sections
would be renumbered. Page 4, Line 25, would insert "AS
37.10.052(b) or (c)" and delete "AS 37.10.052(b)". This
language indicates the new petition for a single fee. Page
5, Line 14, would add language "and AS 37.10.052(d)". Mr.
Tibbles explained that language would move some of the
standards to a different section.
Mr. Tibbles referenced Amendment #1, Page 7, Lines 22 & 26,
stating that section was requested by the Department of
Environmental Conservation. He pointed out that language
would address charges for plan approval. The Department
currently is charging for this service and did not want it
excluded.
Mr. Tibbles referenced Page 8, Line 7, of Amendment #1.
That section of the bill addresses Department of
Environmental Conservation's general fee authority for more
than just the designated regulatory services. Concern
exists with the definition of direct costs used in, AS
37.10.058, which did not apply to other items outside those
services. The amendment would insert "AS 37.10.056".
JANICE ADAIR, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, recommended that approval be
added. She noted that they were referring to "plan
approval" as that is the issue for water and wastewater.
Representative J. Davies asked if there were other kinds of
approval. Ms. Adair responded that they are all "plan
approval" of one sort or another. She believed that it would
be safer to use the broader term.
Representative J. Davies asked if the Department was
satisfied with the last change proposed in the amendment.
Ms. Adair responded that if it does the effect indicated by
Mr. Tibbles, the Department would support it.
Representative J. Davies asked if Ms. Adair could recommend
any additional changes to Amendment #1. Ms. Adair responded
that the Department intends to provide an amendment to
address their remaining concerns.
Co-Chair Therriault MOVED to ADOPT Amendment #1. There
being NO OBJECTION, Amendment #1 was adopted.
KEN FREEMAN, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT CENTER
(RDC), ANCHORAGE, commented that RDC is a statewide, member-
funded, non-profit trade association. The organization's
mission is to grow Alaska's economy through the responsible
development of the state's natural resources. The membership
includes individuals and leading companies from all of
Alaska's basic industries, mining, oil and gas, fisheries,
timber and tourism.
Mr. Freeman noted that in January 1999, RDC was tasked with
building industry-wide consensus on legislation designed to
deal with State agency permit fees. Sealaska Corporation had
taken an earlier lead on the issue with a draft bill known
as the "Permittee Bill of Rights." The concepts articulated
in the "Permittee Bill of Rights" served as the starting
point subsequent discussions.
Mr. Freeman commented that while industry recognizes its
responsibility to pay for the services it receives, the
issue of allocating program costs between the public and the
regulated community remains unresolved. He noted that RDC
applauds the Legislature for its past involvement in the
issue, and appreciates having had the time to design a well
crafted product.
Mr. Freeman advised that HB 361 would accomplish several
important objectives:
? First, it requires the resource agencies to establish a
schedule of fixed fees for relatively simple and
repetitive regulatory activities. These fees must he
based on the actual and reasonable direct cost of
providing the service and cannot include additional
charges such as program overhead. That change is
important for two reasons. It will provide the regulated
community with more predictability in determining the
costs to permit an activity. Also, it would ensure the
person requiring a designated regulatory service will
only pay for the costs associated directly with
providing that service.
? Secondly, recognizing that not all services provided by
the resource agencies lend themselves to fixed fees, the
bill directs the resource agencies to enter into
negotiations with any person requiring a service to
determine the costs of complex or controversial
permitting activities. In the event that negotiations
are unsuccessful, the bill requires the agency to bill
on a strict time and expenses basis for the work. That
system will act as an incentive to both the agency and
the permittee to conduct good-faith negotiations.
? Third, the bill will provide the regulated community
with flexibility through a petition process. Petitions
may be used to request that the agency supplement its
schedule of fixed fees, they may be used to create a
fixed fee for an activity specific to a distinct
economic sector, and they may be used to request a
single project fee for an activity requiring multiple
permits. This type of flexibility will make doing
business in Alaska easier.
? Fourth, the bill requires that any resource agency
providing a designated regulatory service establish a
uniform accounting system capable of producing an
audible invoice. Services billed on a time and expenses
basis will require monthly invoices. Some negotiated
fees will also incorporate the use of invoices. This
requirement makes the costs of providing regulatory
services more transparent.
? Lastly, in the interest of clarification, Mr. Freeman
pointed out two additional details. First, the bill is
written to encompass all of the resource agencies,
Department of Natural Resources, Department of Fish and
Game and Department of Environmental Conservation, on a
program by program basis. Currently, the only programs
included in the bill fall under Department of
Environmental Conservation.
Mr. Freeman concluded noting that the legislation is an
appropriate step toward fulfilling Alaska's promise or being
open and ready for business.
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, commented on
Amendment #1, the change to Page 6, which would sufficiently
addresses the concerns of the Department over large mine
activities.
Co-Chair Therriault asked about the fiscal note. Ms.
Carroll clarified that the note would be lowered to zero.
STEVEN DAUGHERTY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, commented on some of the legal issues which exist in
the bill. He voiced concern with the issue of OMB's
authority. He commented that authority to adopt regulations
or an explicit exemption from the Administrative Procedure
Act (APA) is still needed for fee agreements and the appeal
process. Under Alaska law, if something effects more than
one person, it must be adopted by regulation. The fee
agreement, under the State's Administrative Procedure Act
will be required to be in regulation.
Mr. Daugherty added that in the same section, it is not
clear whether those same fee agreements would be treated as
a binding contract. If they were, there would need to be a
review provided by the Department of Law. He emphasized
that section needs to be clarified. A change would need to
be made on Page 3, and inserted on Page 4, Line 4, "a fee
negotiated under this section is not subject to the
Administrative Procedures Act".
Mr. Daugherty stated that there is a potential problem on
Page 2, where a change was made to the definition of fees.
He noted that Page 7, Line 13, defines fee. He thought the
language insinuated that other than pipeline right of way
leases, other leases would be included. He did not know the
impact of that language and did not believe it was the
intent of the provision. Mr. Daugherty thought that concern
could be addressed on Page 2, Line 10, inserting "fees
associated with the sale of property".
Mr. Daugherty noted another issue of concern was the
interagency charges. That section does not address the
Department of Law's need to be able to charge for services.
Under the new version, interagency charges are only
recoverable as listed on Page 6, Line 25. The Department of
Law charges would not meet those requirements.
(TAPE CHANGE, HFC 00 - 77, Side 1).
Mr. Daugherty recognized that the proposed bill was greatly
improved over the previous version.
Ms. Adair voiced her appreciation to Mr. Tibbles for all his
work. She noted that Mr. Daughtery had indicated a concern
of the Department of Environmental Conservation in
clarifying that the provision regarding negotiations for
fees are not subject to the APA. She believed that a
specific provision included could make that clear.
Ms. Adair indicated concern on Page 3, Line 5, in that the
fee could be based on an estimated reasonable direct cost.
At the end of the four years when the Department has to make
the review, they will need to make changes based on the
average actual costs. The Department will still be required
to do cost accounting for every person involved in the
project. The Department proposes that the flat fee continue
to be based on the estimated average reasonable direct cost.
Co-Chair Therriault interjected that if the first 4 years
were based on the estimated, the information would already
be available. Ms. Adair explained that this would be a
matter of detail. Actual costs are much more detail
oriented than the estimated average cost.
Representative J. Davies asked Ms. Adair for suggested
language to address that concern. Ms. Adair would prefer to
see Line 4, include "estimated average reasonable direct
costs". (Page number inaudible). She added that would have
a significant impact on the fiscal note.
JON TILLINGHAST, ATTORNEY, SEALASKA CORPORATION, LEGAL
COUNCIL TO RESOURCE DEVELOPMENT COUNCIL (RDC), JUNEAU,
provided response to suggestions made by the Department of
Law and Ms. Adair, Department of Environmental Conservation.
He thought that most of the concerns could be addressed
easily. With respect to OMB and writing regulations, he
stated that there would be two things for OMB to do. One
would be to hear appeals on specific invoices. OMB's other
authority would be to set a multi agency fixed fee that will
have some longevity to it. He suggested language to Page 4,
between Lines 16 & 17, "no action by resource agency of the
Office of Management and Budget under this subsection is
subject to the Administrative Procedures Act". He stated
that would provide a "blanket" exemption for anything,
anybody does under that subsection. Mr. Daughtery agreed
that would be sufficient. Mr. Tillinghast stated that the
actual coordinating role would be done by DGC, which is a
subdivision of OMB.
In response to Mr. Daugherty's second concern, Mr.
Tillinghast advised on Page 2, Line 10, it would be
appropriate to state that it would not apply to sales on
leased property.
Mr. Tillinghast advised that the remaining concerns would be
more difficult to address as they enter into policy such as
the Department of Law's concerns that their charges to the
Department of Environmental Conservation would not be paid
by the applicant because they include overhead. The bill
establishes one important public policy and that is that
those expenses should not be charged to the applicant but
instead spread to the entire public. The purpose of the
bill is to change if an agency is charging their overhead.
In response to concerns voiced by Ms. Adair, Mr. Tillinghast
argued that if your estimates, after four years, differ from
your actualized costs, then there is something wrong with
the way you compute your estimates.
Representative J. Davies countered that the point is not
doing the actuals. That data would not be available as it
was billed and was based on the estimates.
Representative Phillips pointed out that if there were
dispute in what was being billed, those would be the
accepted fees. Co-Chair Therriault agreed with
Representative J. Davies that the first four years of
billings are based on estimates. The hours agreed to were
based on estimates.
Mr. Tillinghast observed that even though the fee charged to
the applicant will be based on an estimate, he thought that
the Department would be doing a "reality check" of the
actual records to guarantee that the charge was correct. It
is safe to assume that the acutal numbers will be available
whether or not they are billed to the applicant.
Representative J. Davies disagreed. He stated that it would
not be cost effective to keep track of all the actuals.
Mr. Tillinghast noted that on Page 5, Line 14, that
subsection is the OMB review portion. An invoice would be
scrutinized under a standard and that standard appears in AS
052, which is on Page 4, Lines 17-21. The reason that
Section D is referenced and not Section C, is because
Section c is the multi agency OMB fee and Section (B) is the
agreements. The way that the bill is structured, OMB
does not have any review authority in either instance. By
referencing an additional subsection, it would expand OMB's
review authority. Mr. Tillinghast and was surprised that
OMB would advocate an expansion of authority.
Co-Chair Therriault noted that final action on the bill
would be HELD for further consideration and receipt of the
final fiscal notes.
Representative G. Davis noted that the Department of Law had
recommended a change to Page 7, Line 17, which would affect
the Department of Natural Resources. Ms. Carroll
recommended waiting to make that change until the fiscal
note had moved through the Division.
HB 361 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 5:30 P.M.
H.F.C. 28 3/21/00 p.m.
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