Legislature(1999 - 2000)

03/24/1999 01:06 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE JUDICIARY STANDING COMMITTEE                                                                                     
                   March 24, 1999                                                                                               
                     1:06 p.m.                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Pete Kott, Chairman                                                                                              
Representative Joe Green                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Jeannette James                                                                                                  
Representative Lisa Murkowski                                                                                                   
Representative Eric Croft                                                                                                       
Representative Beth Kerttula                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 29                                                                                                   
Relating to the division of the Ninth Circuit Court of Appeals.                                                                 
                                                                                                                                
     - MOVED CSHJR 29(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 82                                                                                                               
"An Act relating to immunity for certain claims arising out of or                                                               
in connection with the year 2000 date change; and providing for an                                                              
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE                                                                                 
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 18                                                                                                   
Proposing an amendment to the Constitution of the State of Alaska                                                               
relating to an office of administrative hearings.                                                                               
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
GOVERNOR'S APPOINTMENTS                                                                                                         
                                                                                                                                
     -SCHEDULED BUT NOT HEARD                                                                                                   
                                                                                                                                
(* First public hearing)                                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HJR 29                                                                                                                    
SHORT TITLE: ENDORSE FED. CT. OF APP. FOR 12TH CIRCUIT                                                                          
SPONSOR(S): JUDICIARY                                                                                                           
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 3/17/99       492     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/17/99       492     (H)  JUDICIARY                                                                                           
 3/24/99               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
                                                                                                                                
BILL: HB  82                                                                                                                    
SHORT TITLE: IMMUNITY:CLAIMS ARISING FROM Y2K PROBLEMS                                                                          
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG, Dyson, Halcro                                                                          
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/05/99       144     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/05/99       144     (H)  L&C, JUDICIARY                                                                                      
 2/12/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 2/12/99               (H)  HEARD AND HELD                                                                                      
 2/12/99               (H)  MINUTE(L&C)                                                                                         
 2/16/99       228     (H)  COSPONSOR(S): DYSON                                                                                 
 2/26/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 2/26/99               (H)  HEARD AND HELD                                                                                      
 2/26/99               (H)  MINUTE(L&C)                                                                                         
 3/03/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/03/99               (H)  MOVED CSHB 82(L&C) OUT OF COMMITTEE                                                                 
 3/03/99               (H)  MINUTE(L&C)                                                                                         
 3/03/99       350     (H)  COSPONSOR(S): HALCRO                                                                                
 3/05/99       361     (H)  L&C RPT  COMMITTEE SUBSTITUTE(L&C) NT                                                               
                            3DP 3NR                                                                                             
 3/05/99       361     (H)  DP: ROKEBERG, HALCRO, HARRIS;                                                                       
 3/05/99       361     (H)  NR: SANDERS, CISSNA, MURKOWSKI                                                                      
 3/05/99       361     (H)  2 ZERO FISCAL NOTES (LAW, COURT)                                                                    
 3/05/99       361     (H)  REFERRED TO JUD                                                                                     
 3/24/99               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
                                                                                                                                
BILL: HJR 18                                                                                                                    
SHORT TITLE: CONST. AM: ADMINISTRATIVE HEARINGS                                                                                 
SPONSOR(S): REPRESENTATIVES(S) OGAN, Foster, Dyson, Rokeberg                                                                    
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/24/99       300     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/24/99       300     (H)  STA, JUD, FIN                                                                                       
 2/26/99       328     (H)  COSPONSOR(S): FOSTER                                                                                
 3/04/99               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/04/99               (H)  HEARD AND HELD                                                                                      
 3/04/99               (H)  MINUTE(STA)                                                                                         
 3/05/99       377     (H)  COSPONSOR(S): DYSON, ROKEBERG                                                                       
 3/09/99               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/09/99               (H)  SCHEDULED BUT NOT HEARD                                                                             
 3/16/99               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/16/99               (H)  MOVED CSHJR 18(STA) OUT OF COMMITTEE                                                                
 3/16/99               (H)  MINUTE(STA)                                                                                         
 3/17/99       489     (H)  STA RPT  COMMITTEE SUBSTITUTE(STA) NT                                                               
                            4DP 2DNP                                                                                            
 3/17/99       489     (H)  DP: JAMES, COGHILL, WHITAKER, OGAN;                                                                 
 3/17/99       489     (H)  DNP: SMALLEY, KERTTULA                                                                              
 3/17/99       490     (H)  FISCAL NOTE (GOV)                                                                                   
 3/17/99       490     (H)  REFERRED TO JUD                                                                                     
 3/24/99               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
CORY WINCHELL, Legislative Assistant                                                                                            
   to Representative Pete Kott                                                                                                  
Alaska State Legislature                                                                                                        
Capitol Building, Room 118                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-3777                                                                                                      
POSITION STATEMENT:  Provided introduction to HJR 29.                                                                           
                                                                                                                                
JOANNE GRACE, Assistant Attorney General                                                                                        
Natural Resources Section                                                                                                       
Civil Division                                                                                                                  
Department of Law                                                                                                               
1031 West 4th Avenue, Suite 200                                                                                                 
Anchorage, Alaska 99501-1994                                                                                                    
Telephone:  (907) 269-5100                                                                                                      
POSITION STATEMENT:   Testified on HJR 29.                                                                                      
                                                                                                                                
JANET SEITZ, Legislative Assistant                                                                                              
   to Representative Norm Rokeberg                                                                                              
Alaska State Legislature                                                                                                        
Capitol Building, Room 24                                                                                                       
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-4968                                                                                                      
POSITION STATEMENT:  Presented sponsor statement for HB 82.                                                                     
                                                                                                                                
MIKE FORD, Attorney                                                                                                             
Legislative Legal Counsel                                                                                                       
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
130 Seward Street, Suite 409                                                                                                    
Juneau, Alaska 99801-2105                                                                                                       
Telephone:  (907) 465-2450                                                                                                      
POSITION STATEMENT:  Testified on HB 82.                                                                                        
                                                                                                                                
BOB LOEFFLER, Director                                                                                                          
Central Office                                                                                                                  
Division of Mining and Water Management                                                                                         
Department of Natural Resources                                                                                                 
3601 C Street, Suite 800                                                                                                        
Anchorage, Alaska  99503-5935                                                                                                   
Telephone:  (907) 269-8600                                                                                                      
POSITION STATEMENT: Testified on behalf of the Department of                                                                    
                    Natural Resources with concerns about HJR 18.                                                               
                                                                                                                                
DEBORAH VOGT, Deputy Commissioner                                                                                               
Office of the Commissioner                                                                                                      
Department of Revenue                                                                                                           
P.O. Box 110400                                                                                                                 
Juneau, Alaska  99811-0400                                                                                                      
Telephone:  (907) 465-2300                                                                                                      
POSITION STATEMENT: Testified on behalf of the Department of                                                                    
                    Revenue with concerns about HJR 18.                                                                         
                                                                                                                                
TERESA WILLIAMS, Assistant Attorney General                                                                                     
Fair Business Practices Section                                                                                                 
Civil Division (Anchorage)                                                                                                      
Department of Law                                                                                                               
1031 West Fourth Avenue, Suite 200                                                                                              
Anchorage, Alaska  99501-1994                                                                                                   
Telephone:  (907) 269-5100                                                                                                      
POSITION STATEMENT: Testified on behalf of the Department of Law                                                                
                    with concerns about HJR 18.                                                                                 
                                                                                                                                
PAUL GROSSI, Director                                                                                                           
Central Office                                                                                                                  
Division of Worker's Compensation                                                                                               
Department of Labor                                                                                                             
P.O. Box 25512                                                                                                                  
Juneau, Alaska  99802-5512                                                                                                      
Telephone:  (907) 465-2790                                                                                                      
POSITION STATEMENT: Testified on behalf of the Department of Labor                                                              
                    with concerns about HJR 18.                                                                                 
                                                                                                                                
CATHERINE REARDON, Director                                                                                                     
Central Office                                                                                                                  
Division of Occupational Licensing                                                                                              
Department of Commerce and Economic Licensing                                                                                   
P.O. Box 110806                                                                                                                 
Juneau, Alaska  99811-0806                                                                                                      
Telephone:  (907) 465-2534                                                                                                      
POSITION STATEMENT: Testified on behalf of the Division of                                                                      
                    Occupational Licensing, and its 21 licensing                                                                
                    boards, in opposition to HJR 18.                                                                            
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-18, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee                                                                
meeting to order at 1:06 p.m.  Members present at the call to order                                                             
were Representatives Kott, Green, Rokeberg, Croft and Kerttula.                                                                 
Representatives James and Murkowski arrived at 1:17 p.m. and 1:20                                                               
p.m., respectively.                                                                                                             
                                                                                                                                
                                                                                                                                
HJR 29 - ENDORSE FED. CT. OF APP. FOR 12TH CIRCUIT                                                                              
                                                                                                                                
CHAIRMAN KOTT announced the first order of business is HJR 29,                                                                  
Relating to the division of the Ninth Circuit Court of Appeals.                                                                 
                                                                                                                                
CHAIRMAN KOTT called on Cory Winchell to explain the resolution.                                                                
                                                                                                                                
Number 0140                                                                                                                     
                                                                                                                                
CORY WINCHELL, Administrative Assistant to Representative Pete                                                                  
Kott, Alaska State Legislature, stated the joint resolution                                                                     
proposes Senator Murkowski's bill, S.253.  That bill would split                                                                
the Ninth Circuit Court of Appeals into three divisions:  the                                                                   
Northern Division, the Middle Division and the Southern Division.                                                               
They would be comprised of the following:                                                                                       
                                                                                                                                
     Northern Division -                                                                                                        
                                                                                                                                
     Alaska, Idaho, Montana, Oregon, Eastern Washington and                                                                     
     Western Washington;                                                                                                        
                                                                                                                                
     Middle Division -                                                                                                          
                                                                                                                                
     Eastern California, Northern California, Guam, Hawaii,                                                                     
     Nevada and the Northern Mariana Islands; and                                                                               
                                                                                                                                
     Southern Division -                                                                                                        
                                                                                                                                
     Arizona, Central California and Southern California.                                                                       
                                                                                                                                
MR. WINCHELL further noted that district judges would appeal their                                                              
cases to their respective divisions.  The judges would sit in                                                                   
panels, and appeals from the divisions would go to the Circuit                                                                  
Division.  The intent is to make it more representative or                                                                      
indicative of some of the other areas in the Ninth Circuit Court of                                                             
Appeals.  There is a powerhouse in Southern California of legal                                                                 
opinions that contradict some of the tenor in other parts of the                                                                
circuit.  In addition, 82 percent of the appeals to the U.S.                                                                    
Supreme Court from the Ninth Circuit Court of Appeals are                                                                       
overturned.  That is well known in jurisprudence.                                                                               
                                                                                                                                
Number 0352                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether the district courts would                                                              
appeal their cases to their particular division.                                                                                
                                                                                                                                
MR. WINCHELL replied yes.                                                                                                       
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether the judges would sit in                                                                
panels of three within their division, of which two could come from                                                             
that particular division.                                                                                                       
                                                                                                                                
MR. WINCHELL replied yes.  He read from S.253, "(3) ASSIGNMENT OF                                                               
JUDGES - Each regional division shall include from 7 to 11 judges                                                               
of the court of appeals in active status.  A majority of the judges                                                             
assigned to each division shall reside within the judicial                                                                      
districts that are within the division's jurisdiction as specified                                                              
in paragraph (2)...".                                                                                                           
                                                                                                                                
Number 0435                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether the Circuit Division                                                                   
consists of 13 judges - 1 chief judge and 12 circuit judges - of                                                                
which equal numbers would come from the various divisions.                                                                      
                                                                                                                                
MR. WINCHELL replied yes.                                                                                                       
                                                                                                                                
Number 0464                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked Mr. Winchell whether a favorable ruling                                                              
that has been appealed to the Northern Division would have to go                                                                
back to the full Ninth Circuit Court of Appeals.                                                                                
                                                                                                                                
MR. WINCHELL replied yes.  The district court in Alaska would                                                                   
appeal to the Northern Division, and from there appeal to the                                                                   
Circuit Division.  It would only appeal those issues that are                                                                   
divided between the three divisions and any others that are                                                                     
necessary, such as constitutional issues that need to go to the                                                                 
appeal level quickly.                                                                                                           
                                                                                                                                
Number 0556                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked Mr. Winchell whether there would be more                                                             
judges in the three divisions than the total judges in the Circuit                                                              
Division.                                                                                                                       
                                                                                                                                
MR. WINCHELL replied yes.  Each regional division would include                                                                 
from 7 to 11 judges of the court of appeals, and there would be a                                                               
total of 13 judges in the Circuit Division.                                                                                     
                                                                                                                                
Number 0602                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked what has Alaska gained with an appeal to                                                             
the Circuit Division other than one more hearing.                                                                               
                                                                                                                                
MR. WINCHELL replied the Circuit Division would be comprised of                                                                 
judges in equal amounts from each division.  The decision making                                                                
power would be fractured.  He doesn't know whether they would be                                                                
all of the same mind, however.  There would be friction if the                                                                  
decision of the majority runs counter to the Supreme Court.  In                                                                 
addition, there would be a judicial council to overview some of the                                                             
decisions made.  That council would recommend changes to Congress                                                               
and to some of the committees as time goes on.  There would be a                                                                
close eye on the Ninth Circuit Court of Appeals.                                                                                
                                                                                                                                
Number 0688                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether or not each decision made                                                              
within the divisions would be automatically forwarded to the                                                                    
Circuit Division.                                                                                                               
                                                                                                                                
MR. WINCHELL replied he's not exactly sure.  There shouldn't be an                                                              
appeal to the Circuit Division, if all three divisions are in line,                                                             
unless it's right to turn the law over again.                                                                                   
                                                                                                                                
Number 0744                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT stated an appeal from a district court to the                                                                     
division wouldn't end up in the Circuit Division, unless there is                                                               
disparity among the various divisions or other extenuating                                                                      
circumstances.                                                                                                                  
                                                                                                                                
MR. WINCHELL replied ideally yes.  It creates a new strata, a new                                                               
appeals system, within the Ninth Circuit Court of Appeals.                                                                      
                                                                                                                                
Number 0778                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated the en banc proceedings do not apply to                                                             
the court of appeals as a whole, but only to the divisions.  The                                                                
division would, therefore, act as a circuit.  If  three judges from                                                             
the Northern Division rule against or for Alaska, the procedure                                                                 
would be to ask for that whole division to hear it, not the whole                                                               
circuit.  He asked where is the part that authorizes the entire                                                                 
circuit to review differences in en banc proceedings.                                                                           
                                                                                                                                
MR. WINCHELL replied the Circuit Division is empowered to answer                                                                
differences among the three divisions.  It oversees contending                                                                  
points of law or extenuating circumstances, such as constitutional                                                              
issues.                                                                                                                         
                                                                                                                                
Number 0875                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated the Northern Division would hear an                                                                 
issue such as ANILCA (Alaska National Interest Lands Conservation                                                               
Act), and if there is an en banc it would be heard within that                                                                  
division.  It is very unlikely that another portion of the circuit                                                              
would rule on ANILCA since it applies to only Alaska.  That is an                                                               
advantage to Alaska.  Only general issues would it go to the next                                                               
level.  It is an efficiency because the Northern Division would                                                                 
almost always be the last word before the U.S. Supreme Court.                                                                   
                                                                                                                                
MR. WINCHELL stated it does regionalize some issues on en ban                                                                   
proceedings.                                                                                                                    
                                                                                                                                
REPRESENTATIVE CROFT said it regionalizes everything, but the                                                                   
broad, constitutional ideas.  It is a significant change.                                                                       
                                                                                                                                
Number 0975                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT stated Representative Croft is right on track.                                                                    
Alaska would take its cases to the Northern Division and unless                                                                 
there were extenuating circumstances the Circuit Division would not                                                             
even take them up.                                                                                                              
                                                                                                                                
REPRESENTATIVE CROFT noted the last recourse is the U.S. Supreme                                                                
Court, not the Ninth Circuit Court of Appeals as a whole.  It                                                                   
divides up California which has always been the rub in some of                                                                  
these.                                                                                                                          
                                                                                                                                
MR. WINCHELL explained there were several bills on this issue.                                                                  
Some wanted to split the circuit and start a new one, but that was                                                              
too contentious.                                                                                                                
                                                                                                                                
REPRESENTATIVE CROFT asked Mr. Winchell whether the divisions are                                                               
based on population.                                                                                                            
                                                                                                                                
MR. WINCHELL replied they are based on districts.  He's not                                                                     
entirely sure, however.                                                                                                         
                                                                                                                                
Number 1072                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell, as it presently stands, whether                                                               
there are 28 judges in the Ninth Circuit Court of Appeals.                                                                      
                                                                                                                                
MR. WINCHELL replied yes.                                                                                                       
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether it is true that 18 of                                                                  
those 28 judges come from California and only 1 comes from Alaska.                                                              
                                                                                                                                
MR. WINCHELL replied yes.  There is a disparity.                                                                                
                                                                                                                                
CHAIRMAN KOTT asked Mr. Winchell whether it is true that 82 percent                                                             
of the Ninth Circuit Court of Appeals' decisions were overturned by                                                             
the U.S. Supreme Court during the 1994-1995 session.                                                                            
                                                                                                                                
MR. WINCHELL replied yes.  It is the most overturned circuit within                                                             
the United States Court of Appeals.                                                                                             
                                                                                                                                
Number 1137                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT stated it is his understanding that the Ninth Circuit                                                             
Court of Appeals is overwhelmed compared to the other circuits.  It                                                             
has 2,000 more cases on its docket.                                                                                             
                                                                                                                                
MR. WINCHELL said it is very cumbersome to bring an appeal to the                                                               
Ninth Circuit Court of Appeals.                                                                                                 
                                                                                                                                
Number 1189                                                                                                                     
                                                                                                                                
JOANNE GRACE, Assistant Attorney General, Natural Resources                                                                     
Section, Civil Division, Department of Law, testified via                                                                       
teleconference from Anchorage.  The Administration strongly                                                                     
supports S.253.  At any given time, the Department of Law has                                                                   
several cases pending in the circuit.  On average, the Department                                                               
of Law has been a party or amicus from 5 to 10 cases that the court                                                             
decides every year.  The department believes that the court has                                                                 
grown too large in terms of judges and cases that it handles, and                                                               
that it should be split into these divisions.  The Ninth Circuit                                                                
Court of Appeals is the largest in the circuit in terms of                                                                      
territory and population.  It spans nine states and two                                                                         
territories.  It serves a population of 45 million.  It covers a                                                                
land area larger in size than Western Europe.  It serves 15 million                                                             
more people than the next largest circuit and about 20 million more                                                             
than the average of the other courts of appeal.  Since 1973, its                                                                
annual case load has grown from 2,300 to 8,000.  It is too large to                                                             
efficiently and effortlessly resolve cases in a timely manner.                                                                  
This situation will only grow worse in the future.  The population                                                              
that the court serves is expected to increase to 63 million by the                                                              
year 2010, and adding judges to serve the increase would only                                                                   
exacerbate the problems already caused by its size.  With 28 judges                                                             
and 3 serving on any given panel, over 3,276 combinations of panels                                                             
are possible, but in reality since the court uses visiting or                                                                   
senior judges the number of combinations is much higher and will                                                                
increase with the addition of each new judge.  This problem                                                                     
inevitably contributes to conflicting opinions, reduced                                                                         
communication among judges, and inconsistency with court decisions.                                                             
The problems are magnified for the state who's dwarfed by the                                                                   
heavily populated states within the circuit.  Alaskan cases                                                                     
constitute only 2 percent of the court's case load.  Only 12                                                                    
circuit judges were assigned to all of the Alaskan cases published                                                              
in 1997.  Given the relatively few Alaskan cases compared to the                                                                
whole, Alaskan litigants are far less likely to draw panels of                                                                  
judges who are familiar with the state.  This is aggravated by the                                                              
fact that Alaskan cases involve complex federal statutes that the                                                               
judges don't encounter in the other 98 percent of the case loads.                                                               
She cited ANCSA (Alaska Native Claims Settlement Act) and ANILCA as                                                             
examples.  The issues that they have generated have varied                                                                      
tremendously from the interpretation of revenue sharing to the                                                                  
question of Indian country.  Regardless of the well intentions of                                                               
judges, their opinions reveal a lack of understanding of the people                                                             
and places and can seem offensive to the people affected.  The                                                                  
present wait for an oral argument is one year after a briefing is                                                               
complete.  This delay is even longer for Alaska and according to                                                                
the court clerk some are held longer in order to schedule a hearing                                                             
during the summer.  She has a case pending before the court that                                                                
was docketed in October of 1996.  There was an oral argument in                                                                 
December of 1997, and there still hasn't been a decision rendered.                                                              
The judges readily admit that they don't read all the decisions                                                                 
that other judges issue because there are too many.  In summary,                                                                
this type of legislation is sorely needed and would greatly benefit                                                             
Alaska.  The Governor has suggested a few changes to Senator                                                                    
Murkowski's bill.  The state would prefer that the Circuit Division                                                             
was eliminated.  It is not helpful to Alaska because it would still                                                             
allow decisions to be made by a majority of judges who are not from                                                             
the Northern Division.  The state would also prefer that all the                                                                
judges live within the division that they are serving.                                                                          
                                                                                                                                
Number 1680                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT stated that he could agree with both recommendations.                                                             
He asked Ms. Grace to forward her comments in writing to the                                                                    
committee.                                                                                                                      
                                                                                                                                
Number 1692                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Ms. Grace whether taking out the Circuit                                                             
Division would allow the three divisions to operate separately.                                                                 
                                                                                                                                
MS. GRACE replied the state would prefer a separate circuit.  The                                                               
state would prefer that the Northern Division only hears Alaskan                                                                
cases.  The state isn't concerned about the administration of the                                                               
three divisions as one circuit, however.                                                                                        
                                                                                                                                
Number 1737                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated legally they could be three separate                                                                
circuits, but administratively they could keep their offices in one                                                             
place to keep track of staff, for example.                                                                                      
                                                                                                                                
MS. GRACE stated that is the way it is set up now, except for the                                                               
Circuit Division.  She thinks it was a compromise to try to deal                                                                
with the concerns of those who didn't want to split the circuit and                                                             
the concerns of the Northern states who felt that the circuit was                                                               
not serving them.                                                                                                               
                                                                                                                                
CHAIRMAN KOTT closed the meeting to public testimony.                                                                           
                                                                                                                                
Number 1800                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated the two changes mentioned by Ms. Grace                                                              
are positive.  It would make the circuit a harder, separate                                                                     
division.  It would also remove that last step.                                                                                 
                                                                                                                                
CHAIRMAN KOTT stated that requiring three out of three judges to                                                                
reside in their particular division would be even better.                                                                       
                                                                                                                                
Number 1980                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT referred to page 2, lines 14-16, "WHEREAS                                                                  
members of the Court of Appeals for the Ninth Circuit have shown a                                                              
surprising lack of understanding of Alaska's people and geography                                                               
that has resulted in decisions that have often caused the people of                                                             
Alaska unnecessary hardship;".  It is more of an attack on                                                                      
individual decisions.  It is correct the way it is written, but it                                                              
might get the state into a fight that isn't necessary.  He                                                                      
suggested eliminating the phrase, "that has resulted in decisions                                                               
that have often caused the people of Alaska unnecessary hardship".                                                              
                                                                                                                                
CHAIRMAN KOTT concurs with the suggestion.  It is the harshest                                                                  
"whereas" clause in the joint resolution.  He entertained the                                                                   
suggestion as a friendly amendment.  There being no objection, it                                                               
was so adopted.                                                                                                                 
                                                                                                                                
CHAIRMAN KOTT indicated that he would not object to the suggestions                                                             
made by the attorney general's office.                                                                                          
                                                                                                                                
REPRESENTATIVE JAMES said they are good ideas.                                                                                  
                                                                                                                                
Number 2039                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked Ms. Grace whether there has been any                                                             
feedback from Senator Murkowski's office regarding the suggested                                                                
changes.                                                                                                                        
                                                                                                                                
MS. GRACE replied she doesn't know.  If there was, it didn't come                                                               
down to her.                                                                                                                    
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked Mr. Grace when the suggestions were                                                              
sent to Senator Murkowski's office.                                                                                             
                                                                                                                                
MS. GRACE replied at about the same time that he introduced the                                                                 
bill.                                                                                                                           
                                                                                                                                
Number 2090                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI said she is wondering whether he had those                                                             
suggestions when the bill was introduced and whether he chose not                                                               
to incorporate them for whatever reason.  She is curious about the                                                              
ensuing couple of months and whether there has been anything done                                                               
with them.                                                                                                                      
                                                                                                                                
MS. GRACE said it is her understanding that Senator Murkowski did                                                               
not have the suggestions when he introduced the bill, and it was                                                                
thought that they would be considered in committee.                                                                             
                                                                                                                                
REPRESENTATIVE CROFT suggested placing the suggestions in another                                                               
"be it resolved" section of the joint resolution.                                                                               
                                                                                                                                
CHAIRMAN KOTT asked whether there is any objection.  There being                                                                
none, it was so adopted.  The language will be left up to the bill                                                              
drafter.  At the same time, he will have his staff contact Senator                                                              
Murkowski's office to determine whether they will jeopardize his                                                                
bargaining power.  If they do, they will be removed at a later                                                                  
date.                                                                                                                           
                                                                                                                                
Number 2206                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to move HJR 29, as amended, from                                                             
the committee with individual recommendations and the attached                                                                  
fiscal note(s).  There being no objection, CSHJR 29(JUD) was so                                                                 
moved from the House Judiciary Standing Committee.                                                                              
                                                                                                                                
                                                                                                                                
HB 82 - IMMUNITY:  CLAIMS ARISING FROM Y2K PROBLEMS                                                                             
                                                                                                                                
CHAIRMAN KOTT announced the next order of business is HB 82, "An                                                                
Act relating to immunity for certain claims arising out of or in                                                                
connection with the year 2000 date change; and providing for an                                                                 
effective date."                                                                                                                
                                                                                                                                
CHAIRMAN KOTT indicated that CSHB 82(L&C) is before the committee                                                               
(1-LS0398\I).                                                                                                                   
                                                                                                                                
Number 2265                                                                                                                     
                                                                                                                                
JANET SEITZ, Legislative Assistant to Representative Norm Rokeberg,                                                             
Alaska State Legislature, stated HB 82 provides immunity for                                                                    
Alaskan businesses for certain claims arising out of connection                                                                 
with the year 2000 (Y2K) date change.  A lot of money will be                                                                   
spent, not only on addressing the problem, but on lawsuits and                                                                  
Alaskan businesses are no exception to this exposure.  House Bill                                                               
82 says that as-long-as a business goes through certain steps it                                                                
will maintain an action.  This immunity will assist in encouraging                                                              
small businesses to continue or begin to address the Y2K situation.                                                             
                                                                                                                                
Number 2310                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Representative Rokeberg what is a "smart                                                                    
building."                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG replied it is a building that is wired and                                                              
computerized.  The fire systems and alarms are integrated into a                                                                
black box type of computer system.                                                                                              
                                                                                                                                
Number 2386                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that in the bill packet is a copy of                                                              
S.96 and letters of support from a few organizations.  He also has                                                              
a series of amendments.                                                                                                         
                                                                                                                                
TAPE 99-18, SIDE B                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG continued.  He explained the bill.  It sets                                                             
up the methodology of asserting a defense by indicating that a                                                                  
business is not liable for damages arising from the millennium bug.                                                             
Section 1(a)(1)(A) - (F) delineates a list of steps to prepare a                                                                
plan of due diligence.  The way it is drafted indicates that a                                                                  
business would have to do every one of the steps.  It is his                                                                    
contention that it should be amendment to show an example rather                                                                
than a requirement.  Section 1(a)(2) provides a more generic                                                                    
defense.  Therefore, there are two different patterns of                                                                        
reasonableness of what a business has to do.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG further stated that Section 1(b)(1)                                                                     
indicates a business that develops or manufactures software and                                                                 
hardware cannot assert a defense.  A retailer in a chain would not                                                              
be held to the same standards, however, that a hardware or software                                                             
developer would be.                                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG further stated that Section 1 (b)(2)                                                                    
indicates that a defense may not be asserted based on a contract.                                                               
He has an amendment that removes the word "contract" and inserts                                                                
the words "express warranty".  If somebody has warranted by                                                                     
contract to fix a Y2K problem and they don't, they can't assert                                                                 
this defense.                                                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG further stated that Section 1(c) indicates                                                              
that a class action suit can only be for damages of economic loss                                                               
in excess of $50,000.  He suggested that the committee members                                                                  
discuss the figure; it was a recommendation by the Alaska State                                                                 
Chamber of Commerce.  It may be appropriate to raise it to                                                                      
$100,000, for example.  The federal bill has a million dollar                                                                   
threshold.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG further stated that Section 1(d) indicates                                                              
that if there is a civil action the damages would be limited to                                                                 
economic losses only, unless fraud was committed.  In the event of                                                              
fraud, it would revert to the rules of standard common law and the                                                              
rules of the court.  Section 1(d)(2) provides that before an action                                                             
can begin there has to be a curative state.  In other words, there                                                              
has to be a cure provision, mediation then remediation before                                                                   
full-blown litigation.  Section 1(e)(3) defines the phrase "year                                                                
2000 date change".  He has an amendment to change that.                                                                         
                                                                                                                                
Number 0260                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked Representative Rokeberg to address                                                                
the changes to Section 1(a)(1)(A) - (F) that he briefly mentioned.                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG replied he has an amendment to create a                                                                 
substantial efforts standard rather than to require the actual                                                                  
implementation of each element in the bill [(A) - (F)].  The                                                                    
elements then become examples of efforts.                                                                                       
                                                                                                                                
CHAIRMAN KOTT said that is nothing more than an either-or                                                                       
situation.  The "or" seems to be inclusive of "either" because                                                                  
Section 1(a)(2) talks about due diligence.                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG stated there is a choice here because of                                                                
the language "or".  It could be left alone.  He has an amendment to                                                             
change the second standard as well.                                                                                             
                                                                                                                                
Number 0344                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI said the issue of a list was discussed in                                                              
the House Labor and Commerce Standing Committee.  The conventional                                                              
wisdom of the committee at the time was to try and include some                                                                 
structure while still making it clear that there might be other                                                                 
criteria to look to given a standard within an industry.  The                                                                   
language isn't perfect in the committee substitute, but the                                                                     
amendment gets it closer.                                                                                                       
                                                                                                                                
Number 0445                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT closed the meeting to public testimony.                                                                           
                                                                                                                                
Number 0568                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved Amendment 1.  It reads as follows:                                                                
                                                                                                                                
     Page 3:                                                                                                                    
                                                                                                                                
          Delete lines 24-27                                                                                                    
                                                                                                                                
          Insert:  (3)  "year 2000 date change" includes processing                                                             
          date or time data from, into and between calendar year                                                                
          1999 and calendar year 2000, and leap year calculations;                                                              
          in this paragraph, "processing" includes calculating,                                                                 
          comparing, sequencing, displaying and storing."                                                                       
                                                                                                                                
CHAIRMAN KOTT objected for discussion purposes.                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG stated Amendment 1 changes the definition                                                               
of the phrase "year 2000 date change" to start on or about July 1,                                                              
1999 and to extend through the entire year 2000 when these problems                                                             
are expected to crop up.  Since there is controversy about when the                                                             
next century will start - 2000 or 2001 - it is appropriate to adopt                                                             
the amendment for clarification.                                                                                                
                                                                                                                                
CHAIRMAN KOTT removed his objection.  There being no further                                                                    
objection, it was so moved.                                                                                                     
                                                                                                                                
Number 0627                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved Amendment 2 (1-LS0398\I.3, Ford,                                                                  
3/22/99).  It reads as follows:                                                                                                 
                                                                                                                                
     Page 2, line 27:                                                                                                           
                                                                                                                                
          Delete "a contract"                                                                                                   
          Insert "an express warranty"                                                                                          
                                                                                                                                
REPRESENTATIVE CROFT objected.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG stated Amendment 2 is quite an important                                                                
element in the entire bill.  According to correspondence with                                                                   
attorneys, if an action can't be asserted based on a contract then                                                              
it would obviate the entire need for the bill.  If there is a                                                                   
contractual obligation to fix a Y2K bug that is not delivered,                                                                  
there should be a proper course of action to take.                                                                              
                                                                                                                                
Number 0712                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether there can be interference                                                                 
with the right to contract.                                                                                                     
                                                                                                                                
Number 0756                                                                                                                     
                                                                                                                                
MIKE FORD, Attorney, Legislative Legal Counsel, Legislative Legal                                                               
and Research Services, Legislative Affairs Agency, stated he                                                                    
doesn't feel that there is a constitutional problem including this                                                              
provision.  As it is written now, it won't allow someone to use                                                                 
this defense if there is a warranty built in.  That doesn't                                                                     
necessarily rewrite the contract.  It simply provides that in those                                                             
situations this defense is not available.  It reinforces the                                                                    
contract itself.  The federal bill is broader.  It says that the                                                                
contract provision has to be relied on.                                                                                         
                                                                                                                                
Number 0802                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said the selection of the word "express                                                                 
warranty" was his idea after consulting with Mr. Ford.                                                                          
                                                                                                                                
Number 0815                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated it should say, "if a contract has                                                                   
already been negotiated that deals with this, then it should be                                                                 
left to them to handle it."  The word "contract" may be too broad,                                                              
but the word "express warranty" may be too narrow.  He wondered                                                                 
what the federal law says.                                                                                                      
                                                                                                                                
MR. FORD referred the committee members to SECTION 4, "APPLICATION                                                              
OF ACT", in the federal bill.  It reads as follows:                                                                             
                                                                                                                                
     (a)  GENERAL RULE.-This Act applies to any Y2K action                                                                      
     brought in a State or Federal court after February 22,                                                                     
     1999.                                                                                                                      
                                                                                                                                
     (b)  NO NEW CAUSE OF ACTION CREATED.-Nothing in this Act                                                                   
     creates a new cause of action under Federal or State law.                                                                  
                                                                                                                                
     (c)  ACTIONS FOR PERSONAL INJURY OR WRONGFUL DEATH                                                                         
     EXCLUDED.-This Act does not apply to a claim for personal                                                                  
     injury or for wrongful death.                                                                                              
                                                                                                                                
     (d)  WRITTEN CONTRACT CONTROLS.-The provisions of this                                                                     
     Act do not supersede a valid, enforceable written                                                                          
     contract between a plaintiff and a defendant in a Y2K                                                                      
     action.                                                                                                                    
                                                                                                                                
     (e)  PREEMPTION OF STATE LAW.-This Act supersedes State                                                                    
     law to the extent that it establishes a rule of law                                                                        
     applicable to a Y2K action that is inconsistent with                                                                       
     State law.                                                                                                                 
                                                                                                                                
Number 0916                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said it comes closer.  He asked Representative                                                             
Rokeberg whether he would object to using the phrase, "The                                                                      
provisions of this Act do not supersede a valid, enforceable                                                                    
written contract between a plaintiff and a defendant in a Y2K                                                                   
action."                                                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG replied he is concerned because is says "in                                                             
a Y2K action."  Are we talking about a contract to deliver a                                                                    
commodity and then asserting a Y2K defense for the failure to                                                                   
deliver, or are we talking about something that relates to a Y2K                                                                
contractual fix?  He doesn't like the language.                                                                                 
                                                                                                                                
Number 0979                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said:  "I mean.  We're only talking about in                                                               
(a) a specific Y2K thing so, part (b) says, 'The defense in (a) may                                                             
not be asserted', and if you said in (2) to supersede the                                                                       
provisions of a valid, enforceable written contract, it sounds                                                                  
broad, but it's only applying to (a).  The thing in (a) is pretty                                                               
well-defined already.  So, you just say (a)--(a) doesn't apply and                                                              
(a) only applies in these certain Y2K areas anyway.  It wouldn't                                                                
apply to supersede a valid, enforceable written...I don't know why                                                              
particularly written either, but it wouldn't supersede a valid,                                                                 
enforceable contract."                                                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG referred to SECTION 201, "CONTRACTS                                                                     
ENFORCED", of the federal bill.  It reads as follows:                                                                           
                                                                                                                                
     In any Y2K action, any written term or condition of a                                                                      
     valid and enforceable contract between the plaintiff and                                                                   
     the defendant, including limitations or exclusions of                                                                      
     liability and disclaimer of warranty, is fully                                                                             
     enforceable, unless the court determines that the                                                                          
     contract as a whole is unenforceable.  If the contract is                                                                  
     silent with respect to any matter, the interpretation of                                                                   
     the contract with respect to that matter shall be                                                                          
     determined by applicable law in force at the time the                                                                      
     contract was executed.                                                                                                     
                                                                                                                                
Number 1065                                                                                                                     
                                                                                                                                
MR. FORD said he has not had time to analyze this version of the                                                                
federal bill, but there are several provisions that seem to                                                                     
overlap.  This section is sort of the same thing as the application                                                             
section.  It could be the federal style.                                                                                        
                                                                                                                                
Number 1118                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether the state would be preempted                                                              
if the federal bill remains broad.  Section 4(e) of the federal                                                                 
bills says it supersedes state law.                                                                                             
                                                                                                                                
MR. FORD replied the federal law would control because of that                                                                  
provision.  It, of course, depends on the final version of the                                                                  
federal bill.                                                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG said there are certain elements that are                                                                
not preempted that allow for statewide control, such as certain                                                                 
thresholds for class action.  They don't completely overlap.  The                                                               
committee members need to discuss whether they want express                                                                     
warranty to relate to a Y2K type of phenomenon, or whether they                                                                 
want it to relate to a universal contract.  That's the issue.  The                                                              
federal law says in Y2K actions.  Does that have to do with                                                                     
hardware, software, etc., or does that have to do with the chain of                                                             
transactions based on a contract?  In other words, a commodity that                                                             
is transferred from a vender to a vendee, such as a widget.                                                                     
                                                                                                                                
Number 1252                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI said the federal bill defines Y2K action                                                               
as, "To provide civil action commencing in federal or state court                                                               
in which the plaintiff's alleged harm or injury resulted directly                                                               
or indirectly from an actual or potential Y2K failure or a claim or                                                             
defense of a defendant is related directly or indirectly to a                                                                   
natural or potential Y2K failure."                                                                                              
                                                                                                                                
Number 1276                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said the federal bill also allows for a                                                                 
defense of reasonable efforts - SECTION 202, "DEFENSES".  That is                                                               
slightly different than this bill.                                                                                              
                                                                                                                                
Number 1291                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said HB 82 with Amendment 1 defines the                                                                    
state's terms carefully.  He suggested modifying the language to                                                                
say, "The defense in (a) of this section may not be asserted to                                                                 
contradict the provisions of a valid, enforceable contract" [page                                                               
2, line 19].  It sounds broad, but it is tied to the defense in                                                                 
Section 1 (a).                                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG said Representative Croft's suggestion has                                                              
to do with the widget scenario and not the vender-to-vendee                                                                     
scenario.  Does it specifically have to do with hardware/software                                                               
or a typical contractual relationship?  By saying it is a general                                                               
contractual relationship, it is an enforceable contract.  The                                                                   
language in this bill prohibits the use of a defense, while the                                                                 
federal bill allows the use of a defense.                                                                                       
                                                                                                                                
Number 1414                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said the defense only applies to a Y2K date                                                                
change concerning the failure of an electronic computer device.  It                                                             
can't be used to contradict a contract that says it will fix a Y2K                                                              
problem.  It only applies to Section 1(a) which is narrowly                                                                     
defined.                                                                                                                        
                                                                                                                                
Number 1458                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked whether extending an effort to a list of                                                             
litanies would create a potential problem that could be solved much                                                             
easier with a simple statement like Representative Croft suggested.                                                             
A list would inevitably leave something out.  Every year the lists                                                              
in statute get amended.  "It seems to me that the less we depend on                                                             
lists and the more we depend on intent, the better off we're gonna                                                              
be."                                                                                                                            
                                                                                                                                
Number 1510                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said the point is being missed.  The                                                                    
defense in Section 1(a) can't be used in terms of a contractual                                                                 
action, if Section 1(b)(2) is not modified.  The issue is between                                                               
a Y2K hardware/software thing versus a widget.  There is a                                                                      
distinction.                                                                                                                    
                                                                                                                                
Number 1568                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said the distinction is between saying                                                                     
contract in general and a valid, enforceable contract in a Y2K                                                                  
action.  There would be a big loophole if it said, "based on                                                                    
contract none of this applied, and it can't be used to modify the                                                               
terms of a contract."  He agrees it needs to be amendment, but he's                                                             
not sure of the "express warranty" language.  He suggested language                                                             
that says, "somewhere along the lines that it can't be used to                                                                  
contradict what the parties have agreed to."  "You can still get it                                                             
for an action based on contract, as long as it doesn't modify what                                                              
they agreed to."                                                                                                                
                                                                                                                                
Number 1625                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said he agrees with that, but he is                                                                     
concerned about it becoming too ambiguous.  He suggested relying on                                                             
Mr. Ford to come up with language.                                                                                              
                                                                                                                                
Number 1633                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA said everything that Representative                                                                     
Rokeberg has said regarding contracts can be turned around and                                                                  
applied to express warranties.  "I think what you want is to say                                                                
that if they got the exact, written contract on this topic, you                                                                 
know, and they've thought about it ahead of time how they're gonna                                                              
work it out, then you don't want to interfere with that contract.                                                               
They've already thought about it."                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG said he is talking about the terms of a                                                                 
contract that deals with Y2K.                                                                                                   
                                                                                                                                
REPRESENTATIVE KERTTULA said a contract would be dealt with                                                                     
expressly, but it's not just an express warranty.                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG said a defense should be able to be used                                                                
for a widget, but not if there is an agreement to fix it for a Y2K                                                              
problem.  That's the distinction.  He suggest the language, "an                                                                 
express Y2K warranty".  This is the crux of the whole bill.                                                                     
                                                                                                                                
Number 1730                                                                                                                     
                                                                                                                                
MR. FORD said it would be helpful to pull Section 1(b)(2) out of                                                                
the provision and to put a separate subsection that embodies                                                                    
similar language to the federal bill.  It would be clearer and                                                                  
there wouldn't be a hang up on whether it's a defense, claim or                                                                 
counterclaim.                                                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Mr. Ford whether he means warranties                                                              
of Y2K activities or widgets.                                                                                                   
                                                                                                                                
MR. FORD replied he's talking about the provisions in a Y2K action.                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Mr. Ford whether a Y2K action is a                                                                
fact-pattern for the defense or is it something that is talked                                                                  
about in a contract.                                                                                                            
                                                                                                                                
MR. FORD replied, if it isn't contained in a contract, it wouldn't                                                              
be an action based on a contract.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG said that's like putting in an action based                                                             
on express Y2K warranty.                                                                                                        
                                                                                                                                
MR. FORD said it's all fruit, just different kinds.  "We started                                                                
out with a provision that says, if it's a contract--if it's based                                                               
on a contract, you don't get this defense.  If your claim is based                                                              
on some provision in the contract, you don't get this defense.  You                                                             
have to rely on your contract.  The amendment we have before you,                                                               
actually narrows that a bit to express warranty.  Express warranty                                                              
is something in a contract.  Now, what the federal government has                                                               
done here is simply say, well, we're not going to talk about                                                                    
express warranty, we're going to talk about any provision of the                                                                
contract that is rendered unenforceable.  If it's a valid,                                                                      
enforceable contract, that's what you rely on which again is, I                                                                 
think, the same thing you want to do."                                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG said, but the defense can't be asserted in                                                              
the draft of the federal bill.                                                                                                  
                                                                                                                                
MR. FORD said the contracts have to be relied on.                                                                               
                                                                                                                                
CHAIRMAN KOTT laid aside Amendment 2.                                                                                           
                                                                                                                                
Number 1960                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved Amendment 3.  It reads as follows:                                                                
                                                                                                                                
     Page 1, lines 12-13                                                                                                        
                                                                                                                                
          Delete "the following efforts to avoid the damages                                                                    
          claimed in the civil action:"                                                                                         
                                                                                                                                
          Insert "substantial efforts to avoid the damages claimed                                                              
          in the civil action, such as"                                                                                         
                                                                                                                                
     Page 1, line 14:                                                                                                           
                                                                                                                                
          Delete "inventory"                                                                                                    
          Insert "inventorying"                                                                                                 
                                                                                                                                
     Page 2, line 2:                                                                                                            
                                                                                                                                
          Delete "identify"                                                                                                     
          Insert "identifying"                                                                                                  
                                                                                                                                
     Page 2, line 4:                                                                                                            
                                                                                                                                
          Delete "identify"                                                                                                     
          Insert "identifying"                                                                                                  
                                                                                                                                
     Page 2, line 6:                                                                                                            
                                                                                                                                
          Delete "prepare"                                                                                                      
          Insert "preparing"                                                                                                    
                                                                                                                                
     Page 2, line 9:                                                                                                            
                                                                                                                                
          Delete "comply with industry regulations or requirements"                                                             
          Insert "complying with generally accepted practices of a                                                              
          business sector"                                                                                                      
                                                                                                                                
     Page 2, line 12:                                                                                                           
                                                                                                                                
          Delete "develop"                                                                                                      
          Insert "developing"                                                                                                   
                                                                                                                                
CHAIRMAN KOTT objected.                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG said Amendment 3 removes the necessity to                                                               
require every step in provision (A)-(F) before proving reasonable                                                               
efforts.  It also modifies the industry regulations and/or                                                                      
requirements.  There is concern because there really aren't any                                                                 
industry standards in this field.                                                                                               
                                                                                                                                
CHAIRMAN KOTT asked Representative Rokeberg whether he said that                                                                
there are no general accepted standards.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG replied, according to testimony from Scott                                                              
Thorsson (ph), there may be some in the banking industries and                                                                  
certain other areas, but they are rare.                                                                                         
                                                                                                                                
Number 2211                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Mr. Ford whether there is a substantial                                                                     
difference between "generally accepted practices" and "generally                                                                
accepted standards."                                                                                                            
                                                                                                                                
MR. FORD replied some areas do have written standards, but from                                                                 
what he's heard they are just practices in this area.  Yes, there                                                               
could be a difference between a practice and a standard.                                                                        
                                                                                                                                
Number 2256                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated the bill sets up two different paths to                                                             
know whether a business has done the right thing.  One is a list                                                                
and the other is an exercise of general care.  There is the word                                                                
"or" on page 2, line 13.  He likes the dichotomy; they are proper                                                               
options.  To generalize both of them does away with some of that                                                                
balance.                                                                                                                        
                                                                                                                                
Number 2394                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG appreciates Representative Croft's                                                                      
argument.  He has been vacillating back and forth between those two                                                             
things.  The language is disjunctive.  He suggested taking up                                                                   
Amendment 4 as well because it changes the general standard a                                                                   
little bit.  That might help when talking about both of the                                                                     
approaches.                                                                                                                     
                                                                                                                                
TAPE 99-19, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT noted it is unusual to talk about another amendment                                                               
when there is a motion on the floor, but in light of the high                                                                   
confusion he ruled in favor of the request.                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG explained Amendment 4.  It reads as                                                                     
follows:                                                                                                                        
                                                                                                                                
     Page 2, lines 14-6:                                                                                                        
                                                                                                                                
          Delete ", by following generally accepted standards of                                                                
          care and effort in the business activity in which the                                                                 
          business was engaged, exercised due diligence and"                                                                    
                                                                                                                                
          Insert "used"                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG further stated he has a letter that                                                                     
indicates Section 1 (a)(2) sets up three separate standards:  an                                                                
industry standard of care, a due diligence standard, and a                                                                      
reasonable care standard.  There should only be one.  It's nice to                                                              
use the word "due diligence", but the reasonable care standard is                                                               
the appropriate one.  It provides for the general reasonable care                                                               
efforts in order to assert the defense.  It would be up to the                                                                  
courts to decide what is and isn't reasonable when asserting the                                                                
defense.  If Amendment 4 is adopted then Representative Croft's                                                                 
argument is even stronger.                                                                                                      
                                                                                                                                
Number 0184                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated is makes sense to simplify or make                                                                  
Section 1(a)(2) more generic.  He wouldn't object to adopting                                                                   
Amendment 4 and tabling Amendment 3.                                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Mr. Ford whether his analysis is                                                                  
correct.                                                                                                                        
                                                                                                                                
MR. FORD replied he is concerned about getting closer to having                                                                 
standards that are different but substantially closer.  "If you                                                                 
left the first amendment out and left (1) the same, then you have                                                               
a specific laundry list which someone could follow and say, 'hey,                                                               
I do what you told me to do, I can use the defense.'  If they                                                                   
didn't follow that list and you adopted the second amendment which                                                              
changes paragraph (2) then you still have that which is to say,                                                                 
'but, I didn't follow your list but I used reasonable care.'"  It                                                               
is the best of both worlds.                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said he prefers that and thinks that is the                                                             
way to go.                                                                                                                      
                                                                                                                                
Number 0278                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG made a motion to amend Amendment 3 to                                                                   
retain the change to Page 2, line 9 and to delete everything else.                                                              
There being no objection, it was so moved.  It now reads as                                                                     
follows:                                                                                                                        
                                                                                                                                
     Page 2, line 9:                                                                                                            
                                                                                                                                
          Delete "comply with industry regulations or requirements"                                                             
                                                                                                                                
          Insert "complying with generally accepted practices of a                                                              
          business sector"                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG called the question on Amendment 3, as                                                                  
amended.                                                                                                                        
                                                                                                                                
Number 0435                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA referred to Amendment 4 and asked how broad                                                             
of a change is it.                                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG replied it is going from three different                                                                
standards to one.                                                                                                               
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether reasonable care encompasses                                                               
the others.                                                                                                                     
                                                                                                                                
MR. FORD said he doesn't see a difference between due diligence and                                                             
reasonable care.  It says the same thing twice which is always                                                                  
confusing because the court would assume that it means something                                                                
different.                                                                                                                      
                                                                                                                                
REPRESENTATIVE KERTTULA said she feels uncomfortable lessening the                                                              
standard.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG agrees with Representative Kerttula.  It                                                                
also troubles him, but three different standards would allow the                                                                
courts to confuse the issue even more.                                                                                          
                                                                                                                                
REPRESENTATIVE KERTTULA said she assumes that due diligence is                                                                  
within reasonable care.                                                                                                         
                                                                                                                                
Number 0612                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked whether there is any merit in                                                                    
defining some parameters within reasonable care.                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG replied they are in Section 1(a)(1).  He                                                                
wants to leave Section 1(a)(2) in for a didactic kind of                                                                        
instructional thing.                                                                                                            
                                                                                                                                
REPRESENTATIVE MURKOWSKI said (A) - (F) is limiting.  What happens                                                              
if there is a (G).                                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG replied (G) is Section 1(a)(2).                                                                         
                                                                                                                                
REPRESENTATIVE MURKOWSKI replied the bill says reasonable care is                                                               
(A) - (F).                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said a business could deviate from (A) -                                                                
(F) and use Section 1(a)(2).  That's the reason for having it.                                                                  
                                                                                                                                
REPRESENTATIVE MURKOWSKI said, "I just don't want to get locked                                                                 
into those."                                                                                                                    
                                                                                                                                
Number 0642                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked why would there be a deviation.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG replied a small business doesn't always                                                                 
have a contingency plan.                                                                                                        
                                                                                                                                
Number 0671                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said Section 1 (a)(1) is reasonable care, but                                                              
it's not all that could be reasonable.  "I mean, so, it is one                                                                  
avenue that we're gonna sanctify as enough, but I don't think the                                                               
record should be that you always have to do that or there wouldn't                                                              
be any need for (2).  (1) is enough.  Other things may be enough,                                                               
other lesser...other things.  But, it's in the 'or'.  If other                                                                  
things were necessary, you could comply with (1) and still get away                                                             
with..."                                                                                                                        
                                                                                                                                
Number 0722                                                                                                                     
                                                                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG wondered whether defining due diligence in                                                              
Section 1(a)(2) as those things found in the list, but not                                                                      
necessarily those things or other things, would be tighter than                                                                 
reasonable standard.  He's not sure whether that is the direction                                                               
the committee wants to go.                                                                                                      
                                                                                                                                
CHAIRMAN KOTT noted there is a motion on the floor to adopt                                                                     
Amendment 3, as amended.  There being no objection, it was so                                                                   
moved.                                                                                                                          
                                                                                                                                
Number 0785                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved Amendment 4.  There being no                                                                      
objection, it was so moved.                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT withdrew Amendment 5.                                                                                      
                                                                                                                                
Number 0850                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT moved Amendment 6.  It reads as follows:                                                                   
                                                                                                                                
     Page 3, lines 5 & 6                                                                                                        
                                                                                                                                
          Delete "(1) damages may be awarded for economic losses                                                                
          only unless the business against whom the action is                                                                   
          brought committed fraud;"                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG objected.                                                                                               
                                                                                                                                
REPRESENTATIVE CROFT explained Amendment 6 deletes the limitation                                                               
on the categories of damage that can be recovered.  A lot of this                                                               
legislation is tied together with good definitions and holds                                                                    
together a logical relationship to Y2K acts, except for Section                                                                 
1(d)(1).  He doesn't see the reason for a general category of                                                                   
non-economic damages which has already been capped in tort reform                                                               
laws.  It seems like an arbitrary provision for something that has                                                              
already been capped in a more general way.  "Y2K may cause--this is                                                             
the classic one that will get us trapped in unintended                                                                          
consequences.  I don't know all the other consequences of this, in                                                              
my onion, arbitrary provision.  We have caps out there that'll                                                                  
apply to this.  But, to say Y2K by its characteristic means no                                                                  
other--none of these other categories of loss.  I don't see the                                                                 
relationship.  And, I'd let the other caps that we already have in                                                              
general tort reform law apply."                                                                                                 
                                                                                                                                
Number 0984                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said the federal bill takes a different                                                                 
approach.  It provides for tort claims with limitations.  It takes                                                              
a broader look and categorizes contract law, tort law and class                                                                 
action.  It sets a limit on all of those.  He chose not to be as                                                                
expansive.  "I think that the idea here is that the limitation to                                                               
economic loss is one that the whole circumstance of this situation                                                              
whether it's a Y2K issue does not merit any advantages.  Who are                                                                
you trying to punish?  Unless, you're trying to punish a                                                                        
noncompliant kind of guy that sat on his hands.  Why are we just                                                                
not suing for economic losses but--other than damages?  That--that                                                              
becomes, I think, the real issue here."  The reason for the bill is                                                             
to minimize vexatious type of litigation intended to merely enrich                                                              
a litigator.  The resources need to be put into solving the                                                                     
problem, not litigation.  He doesn't want to create a tort claim                                                                
because of an unusual fact-pattern, but he wants to limit the type                                                              
of economic losses recovered.  It's not his intention to entirely                                                               
preclude a tort claim because there is probably some scenario were                                                              
it would be worth it which is why he included the language "fraud".                                                             
                                                                                                                                
Number 1203                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said the reason the federal legislation gets                                                               
through the different caps is because there is no general federal                                                               
tort reform.  "They don't have them if they don't put them in                                                                   
there.  We already have them and we don't need them in here, I                                                                  
believe."  There are unintended consequences with a blanket                                                                     
description.  "If I'm the building manager and Otis Elevator                                                                    
Company sends me a note, we've got this Y2K, here's the embedded                                                                
chip to replace it with, we're providing it for you for free, if                                                                
you don't do this they will fall to the ground and kill people.                                                                 
And, they send me five letters with five chips to do this and I                                                                 
don't, you could get punitive damages there when--when somebody                                                                 
dies on the elevator, and you should.  If--if--if--if the same                                                                  
situation happens with an embedded chip in a medical devise and I                                                               
ignore it as a hospital, I mean, the problem is you can create                                                                  
situations where this--it's appropriate to have these.  And, you                                                                
said the whole point was to get rid of vexatious and frivolous                                                                  
litigation, I mean.  This doesn't do anything about vexatious or                                                                
frivolous litigation, in fact, it hits the meritorious claim, the                                                               
odd, weird, possibly extremely meritorious claim.  We have in other                                                             
areas made these other general caps and--and they aren't in the                                                                 
federal law so if federal law wants 'em they have to put 'em in for                                                             
a specific thing.  We--we don't have to.  We have that luxury that                                                              
we've made that difficult public policy decision on how we should                                                               
cap punitive and non-economics.  And, to just take 'em out here, I                                                              
don't see the point.  It doesn't address frivolous litigation.  It                                                              
does greatly impact--eliminate certain weird, but possible cause of                                                             
actions in very extreme cases and it's in an area where we've                                                                   
already declared a cap and the feds haven't."                                                                                   
                                                                                                                                
Number 1322                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said TITLE III of the federal bill says, "A                                                             
party to a Y2K action making a tort claim may not recover damages                                                               
for economic loss unless--...".  There is a very good argument for                                                              
a limitation, but this doesn't delete tort theory or wrongful                                                                   
deaths and egregious types of harm.  He just doesn't want to open                                                               
the door to unlimited, punitive damages.  On the other hand, a case                                                             
could be made for medical equipment and maybe there needs to be a                                                               
distinction.                                                                                                                    
                                                                                                                                
Number 1384                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA stated there could be willful misconduct,                                                               
extreme recklessness, or death and there wouldn't be any economic                                                               
loss.  They shouldn't be foreclosed on.  She agrees with                                                                        
Representative Croft.  The restrictions are already there.                                                                      
                                                                                                                                
Number 1419                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Representative Croft to remove his motion in                                                                
order for him to take action on putting the bill in a subcommittee.                                                             
                                                                                                                                
Number 1438                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT removed Amendment 6.                                                                                       
                                                                                                                                
CHAIRMAN KOTT assigned the bill to a subcommittee consisting of                                                                 
Representatives Murkowski, Rokeberg and Croft.  He charged the                                                                  
subcommittee with looking at Amendments 2 and 6, and any other                                                                  
ancillary issues that arise.                                                                                                    
                                                                                                                                
                                                                                                                                
HJR 18 - CONST. AM:  ADMINISTRATIVE HEARINGS                                                                                    
                                                                                                                                
Number 1558                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT announced that the next order of business is HJR 18,                                                              
Proposing an amendment to the Constitution of the State of Alaska                                                               
relating to an office of administrative hearings.                                                                               
                                                                                                                                
BOB LOEFFLER, Director, Central Office, Division of Mining and                                                                  
Water Management, Department of Natural Resources, testified via                                                                
teleconference from Anchorage on behalf of the Department of                                                                    
Natural Resources.  He stated that the department has a number of                                                               
concerns about HJR 18.  He cited an example of one of the more                                                                  
controversial permitting decisions the department had, and that                                                                 
was a winter road they approved to the Pogo Mine.  Approximately                                                                
250 people commented on that decision, through two public meetings,                                                             
and the department needed to balance the private rights of the mine                                                             
holders against the potential impacts on those who had cabins and                                                               
used the recreational resources of the area. He pointed out that                                                                
their standard of review is "the best interest of the public," and                                                              
this involves a balancing decision rather than a technical                                                                      
decision.  He felt that their process was quite inclusive, and an                                                               
administrative law hearing would disenfranchise those who are                                                                   
unable to participate.  For a proper balancing, he noted, the                                                                   
department works hard to include all the citizens of the state, and                                                             
he was unsure how that would occur in an administrative law                                                                     
hearing.  He related that a number of their decisions were                                                                      
reasonably technical, and that technical expertise was also an                                                                  
issue.  One of their most recent decisions had to do with fume                                                                  
chemistry, and the project team worked on this issue for two to                                                                 
three months.  He felt it would be difficult to educate an                                                                      
administrative law judge (ALJ) on the technical aspects of fume                                                                 
chemistry.  He noted that a number of the other, more technical,                                                                
divisions of the Department of Natural Resources have similar                                                                   
concerns.                                                                                                                       
                                                                                                                                
Number 1780                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT referred to Mr. Loeffler's comment about the standard                                                             
of review.  He asked, "Would you not agree that that particular                                                                 
standard of review would be somewhat different for every issue, and                                                             
that an administrative law judge, in his capacity, would be                                                                     
required to know that?"                                                                                                         
                                                                                                                                
MR. LOEFFLER indicated that he had no doubt the ALJ would know the                                                              
standard of review.  However, the best interest of the public is a                                                              
typical standard for the Department of Natural Resources.  He                                                                   
agreed it would be different for other agencies.                                                                                
                                                                                                                                
Number 1818                                                                                                                     
                                                                                                                                
DEBORAH VOGT, Deputy Commissioner, Office of the Commissioner,                                                                  
Department of Revenue, testified with concerns about HJR 18.  She                                                               
related that she had a fair amount of experience over the years                                                                 
with state government, and that she was a hearing officer at the                                                                
Department of Revenue for a few years.  She is currently                                                                        
responsible for the formal hearings function at the department, and                                                             
she has experience working with a number of agencies from the                                                                   
Commercial Fisheries Entry Commission and the Department of                                                                     
Transportation and Public Facilities.  She felt this background is                                                              
part of the reason she was chosen to coordinate the state's                                                                     
response to, and position on, this legislation.  She testified that                                                             
the state had two views on HJR 18:  first, that a constitutional                                                                
amendment requiring administrative adjudications to be performed by                                                             
a centralized panel would be dangerous.  On the other hand, there                                                               
is some merit to the idea of a centralized panel for some                                                                       
functions.  The department envisions some problems with a                                                                       
constitutional approach to this legislation,  including a belief                                                                
that the provision, as it is drafted, would make it mandatory for                                                               
all adjudicatory decisions to be made outside the agency charged                                                                
with the primary underlying function.  They understand some people                                                              
argue that the phrase in the proposed amendment "jurisdiction will                                                              
be prescribed by law" means that the legislature can pick and                                                                   
choose which functions go to the centralized panels and which ones                                                              
do not.                                                                                                                         
                                                                                                                                
MS. VOGT pointed out that a constitutional amendment is not needed,                                                             
if the purpose is to simply give the legislature permission to                                                                  
create a centralized panel and assign certain functions to it.  The                                                             
only reason a constitutional amendment would be necessary is if the                                                             
centralized panel was made mandatory, and she stated that making it                                                             
mandatory would foreclose the legislature from ever making a                                                                    
specialized solution in any particular area.  The courts define                                                                 
"administrative hearing" very broadly, she noted, and an example of                                                             
that is the litigation surrounding the Constitutional Budget                                                                    
Reserve.  For example, in a tax matter, the adjudicatory process                                                                
starts as soon as a person objects to an assessment that has been                                                               
issued.  In the Department of Revenue, the assessments get issued                                                               
at a fairly low level;  then, at the time of process, it goes into                                                              
an informal conference.  The formal hearing function for tax                                                                    
matters has been transferred out of the department, but the                                                                     
informal procedure still goes on in the department.  At that time,                                                              
they often catch mistakes that were made, and give the taxpayer an                                                              
opportunity to meet face-to-face with individuals to explain that                                                               
taxpayer's argument.  They read the proposed constitutional                                                                     
amendment to indicate that the early function of the adjudicatory                                                               
process would also go to a centralized panel, and they would not                                                                
have the power to make any kind of an adjudicatory decision on a                                                                
contested matter.                                                                                                               
MS. VOGT noted that the legislature has spent a lot of time over                                                                
the years creating different functions in different departments,                                                                
and HJR 18 would remove a lot of that structure set up for those                                                                
kinds of decisions.  She related that the Department of Revenue                                                                 
handles Permanent Fund Dividend (PFD) appeals, child support                                                                    
enforcement appeals, and appeals in charitable gaming matters, as                                                               
well as representing the department in front of the Office of Tax                                                               
Appeals that was created a couple of years ago.                                                                                 
                                                                                                                                
Number 2026                                                                                                                     
                                                                                                                                
MS. VOGT added, "One of the concerns that I have about moving the                                                               
function out of my agency is management.  Four years ago, when I                                                                
started in this position, and Commissioner Condon started in his                                                                
position, we had about ... 7000 Permanent Fund Dividend matters                                                                 
pending, between informal conference and formal hearing.  Some of                                                               
those matters were very old."  She noted that today there are only                                                              
about 400 matters pending between the two; almost of them are less                                                              
than two months old at informal conference, and all are mostly less                                                             
than six months old.  She expressed pride at having achieved that,                                                              
and she did not believe that could have been done if an outside                                                                 
agency handled all of their appeals.                                                                                            
                                                                                                                                
MS. VOGT also had substantive concerns.  She pointed out that a lot                                                             
of individuals win their informal conferences and their formal                                                                  
hearings, and that is because the hearing or appeals officers are                                                               
properly applying the rules the department has set out.  The                                                                    
department has an overall responsibility for making and                                                                         
implementing those rules, she noted, and taking that function away                                                              
from them would put a hole in the continuity.  She related that she                                                             
learns a lot from those hearings about the way the program is being                                                             
administered, and about issues that could be clarified, made easier                                                             
or changed.  Ms. Vogt and Representative Green worked very hard to                                                              
set up the Office of Tax Appeals, at the request of taxpayers, and                                                              
this is an outside agency that hears the formal hearing level of                                                                
tax appeals.  As the department reads the proposed constitutional                                                               
amendment, that agency would be subsumed in an administrative law                                                               
panel.  One of the driving forces in the way that program developed                                                             
several years ago was the universal agreement that the tax cases                                                                
needed a specialized forum, and tax expertise was important in that                                                             
forum.  That expertise would be lost by sending those cases off to                                                              
a centralized panel.                                                                                                            
                                                                                                                                
Number 2150                                                                                                                     
                                                                                                                                
MS. VOGT summarized by stating, "One size definitely does not fit                                                               
all in administrative hearings."  She felt that it is a mistake to                                                              
try to fit everything under one approach.  Some matters are small                                                               
and can be handled on a very informal basis, and the concern is                                                                 
that a centralized panel would make matters much more formal and                                                                
would be intimidating.  She did agree that some states have had                                                                 
good experiences with centralized administrative law panels, and                                                                
she felt it should be explored, but not mandated by a                                                                           
constitutional amendment.                                                                                                       
                                                                                                                                
Number 2231                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked if there has been any discussion in the years                                                               
past on reviewing the possibilities to work in this fashion.                                                                    
                                                                                                                                
MS. VOGT recalled that there has been, but just in the last couple                                                              
of years.  It has not, however, been looked at from within the                                                                  
Administration.                                                                                                                 
                                                                                                                                
Number 2254                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI wondered if the Administration is looking                                                              
at areas that could be candidates for an administrative law panel                                                               
as a result of the fact that it has been discussed for the past                                                                 
couple of years.                                                                                                                
                                                                                                                                
MS. VOGT felt that they are beginning to do so, but that a lot of                                                               
effort has not gone into that.                                                                                                  
                                                                                                                                
CHAIRMAN KOTT asked, "In your opinion, could you do that without a                                                              
statute change?"  He wondered if statutory authorization would be                                                               
required or if this administrative law panel could be set up just                                                               
through the regulatory process.                                                                                                 
                                                                                                                                
MS. VOGT said, "I would imagine eventually you'd run into reasons                                                               
that you needed a statute."  She did not think it could be                                                                      
accomplished in its entirety through executive order or that type                                                               
of route.                                                                                                                       
                                                                                                                                
Number 2333                                                                                                                     
                                                                                                                                
TERESA WILLIAMS, Assistant Attorney General, Fair Business                                                                      
Practices Section, Civil Division (Anchorage), Department of Law,                                                               
testified via teleconference from Anchorage.  She referred the                                                                  
committee to the March 23, 1999, letter and its attachment,                                                                     
"Analysis of Language of HJR 18," that was sent to Chairman Kott                                                                
from Attorney General Bruce M. Botelho's office by Ms. Williams.                                                                
She said she was going to reiterate Ms. Vogt's testimony that a                                                                 
constitutional amendment is not necessary if the intent of this                                                                 
amendment is to provide discretion for the legislature to                                                                       
centralize a hearing officer function, as that is already an                                                                    
authority the legislature has.  The problem with a constitutional                                                               
amendment is that it is a powerful tool that would have superior                                                                
power to later legislation attempted;  therefore, it would limit                                                                
the legislature's power.  She detailed some of the language in HJR
18 that the Department of Law labeled as problematic.                                                                           
                                                                                                                                
MS. WILLIAMS first referred to "The Office of Administrative                                                                    
Hearings is vested with the POWER TO CONDUCT ADMINISTRATIVE LAW                                                                 
HEARINGS," and explained that term is very broadly interpreted in                                                               
Alaska.  The Alaska Supreme Court has said that administrative                                                                  
adjudicative hearing proceedings begin when one party serves                                                                    
another party a document that sets in motion a regulatory or                                                                    
statutory procedure for the resolution of a dispute.  She pointed                                                               
out that testimony given to the House State Affairs [Standing]                                                                  
Committee pointed out that dispute over a term such as "student                                                                 
loan" is the sort of procedure that sets forth a regulatory process                                                             
for the resolution to dispute.  Under this constitutional                                                                       
amendment, it would go to an ALJ.  Necessarily, the proceedings                                                                 
would become much more formal, and the agency with the                                                                          
responsibility for the program would lose control over the                                                                      
day-to-day practices of the program.  Also, if the Office of                                                                    
Administrative Hearings was established under this language, there                                                              
would be certain working commissions that would lose their primary                                                              
function, and those would include the Alaska Workers' Compensation                                                              
Board, State Board of Parole, all of the licensing boards for                                                                   
occupational licensing, and many others.                                                                                        
                                                                                                                                
TAPE 99-19, SIDE B                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
MS. WILLIAMS next referred to the language that stated "The Office                                                              
of Administrative Hearings is vested with the POWER TO RENDER FINAL                                                             
AGENCY DECISIONS," which is a misnomer, because the decision would                                                              
not, in fact, be a decision by the agency, and may be very contrary                                                             
to the policies of the agency.  There would be all sorts of formal                                                              
disputes within the scope of the proposed amendment, such as tax                                                                
matters, public assistance entitlement, employee relations, state                                                               
land allocation, and a number of others.  The constitutional                                                                    
mandate would include agencies of the legislature and the judicial                                                              
branch, as well as the executive branch.                                                                                        
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
MS. WILLIAMS also noted the clause "THE JURISDICTION OF THE OFFICE                                                              
SHALL BE PRESCRIBED BY LAW."  She indicated that this language                                                                  
does not give the legislature the express authority to exempt                                                                   
agencies or certain levels of proceedings from the constitutional                                                               
mandate.  The Alaska courts hold that the identical language for                                                                
the judiciary does not allow the legislature, by statute, to take                                                               
away judicial powers vested by the constitution in the courts.                                                                  
                                                                                                                                
MS. WILLIAMS noted that the phrase "THE HEAD OF THE OFFICE IS NAMED                                                             
'CHIEF ADMINISTRATIVE LAW JUDGE'" is a new concept for Alaska, as                                                               
Alaska has always used hearing officers, with the understanding                                                                 
that this term is meant to refer to a hearing that is much less                                                                 
formal than an administrative law judge.  Administrative law judges                                                             
are more likely to use hearing chambers and wear robes, and they                                                                
are referred to as "judge" and "your honor."  Alaska administrative                                                             
proceedings are intended to be less threatening to the                                                                          
participants.  In addition, this language contains no provision for                                                             
removal of an administrative law judge for cause which would                                                                    
certainly be an issue in cases of misconduct or gross incompetence.                                                             
                                                                                                                                
Number 0140                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG observed that it was the third item on the list                                                               
of concerns that alarmed him the most, "THE JURISDICTION OF THE                                                                 
OFFICE SHALL BE PRESCRIBED BY LAW."  He also was concerned that                                                                 
this did not give the express authority to the legislature to                                                                   
exempt agencies or certain levels of proceedings.  He asked if                                                                  
there was case law that essentially refers to that particular                                                                   
issue.                                                                                                                          
                                                                                                                                
MS. WILLIAMS confirmed that there was, and she referred to the case                                                             
Rozkydal v. State.  By using identical language in both provisions,                                                             
in light of the previously-existing case law, the court may find                                                                
that the voters intended to have identical results.                                                                             
                                                                                                                                
Number 0203                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN commented that other states have done very well                                                             
with this system; although, he agreed that they did not have to use                                                             
a constitutional amendment.  He asked what a hearing officer should                                                             
do when they are pressured to find for the agency.                                                                              
                                                                                                                                
MS. WILLIAMS confirmed that no other state has a constitutional                                                                 
amendment that creates an office such as the one proposed in HJR
18;  however, the final decision is only made in very few cases.                                                                
The decision becomes a proposed decision, and is referred back to                                                               
the agency.  As far as pressure being placed on a hearing officer,                                                              
Ms. Williams pointed out that that would be inappropriate.  The                                                                 
hearing officer should advise the parties of the attempt to make                                                                
that pressure, and they could certainly avail themselves of various                                                             
protections under state law for employees who are being pressured                                                               
to do something that is unlawful.                                                                                               
                                                                                                                                
REPRESENTATIVE OGAN pointed out that sometimes the pressure might                                                               
not be overt; however, there is certainly pressure to perform for                                                               
the commissioner that you work for.  He asked, "What if a hearing                                                               
officer consistently found more often against ... the commissioner                                                              
he worked for than for him?  There is an inherent conflict of                                                                   
interest."                                                                                                                      
                                                                                                                                
MS. WILLIAMS observed that she has been an attorney in Alaska for                                                               
20 years now, and she has always worked in the field of                                                                         
administrative law.  She related that she has never experienced a                                                               
hearing officer who felt obligated to rule on behalf of a                                                                       
particular party.  The hearing officers that she has known, in                                                                  
various capacities and serving various interests, have issued                                                                   
decisions that they felt to be correct.  If there are examples of                                                               
particular hearing officers who are a problem, Ms. Williams felt                                                                
that this should be looked into closely; however, she is not aware                                                              
of any particular person or agency where that has been a problem.                                                               
                                                                                                                                
REPRESENTATIVE OGAN stated that he sincerely doubts a hearing                                                                   
officer would mention to the attorney general that he/she was                                                                   
feeling pressure to be biased.                                                                                                  
                                                                                                                                
Number 0350                                                                                                                     
                                                                                                                                
PAUL GROSSI, Director, Central Office, Division of Workers'                                                                     
Compensation, Department of Labor, expressed concerns regarding HJR
18 on behalf of his division and the Department of Labor.  One of                                                               
their main concerns, he explained, is expertise in deciding these                                                               
administrative cases.  He also referred to the "one size fits all                                                               
concept" that was previously mentioned.  He testified that HJR 18                                                               
would take away the balanced approach that has been developed over                                                              
the years with the Workers' Compensation Board.  They are                                                                       
concerned, he added, that this legislation would move away from a                                                               
"compact" that exists between labor and industry.                                                                               
                                                                                                                                
MR. GROSSI explained that the [Division of] Workers' Compensation                                                               
is probably one of the earliest quasi-judicial administrative                                                                   
agencies.  It was established around the turn-of-the-century to                                                                 
deal with workplace injuries.  At that time, work-related injuries                                                              
were being dealt with in the courts; consequently, they were tying                                                              
up the courts, causing expense to the employers, and taking a long                                                              
time for employees to get results.  Labor and industry came                                                                     
together and formed an agreement to compact, and legislation was                                                                
passed to deal with workers' injuries by setting up administrative                                                              
agencies.  Both sides had to give up something, and both sides                                                                  
gained something.  The employers gave up the right to defend a case                                                             
because of fault, as [Division of] Workers' Compensation is a                                                                   
no-fault situation.  Employees gave away the right to sue employers                                                             
in court, and formulas were developed for compensating employees                                                                
for wage loss, permanent disabilities, and paying for medical                                                                   
losses. On the other hand, industry received an immunity from being                                                             
sued in court.  Both labor and industry received a faster, more                                                                 
predictable way of dealing with these injuries.                                                                                 
                                                                                                                                
MR. GROSSI noted that Alaska passed legislation that set up a                                                                   
Workers' Compensation Board for dispute cases to be heard.  This                                                                
board consisted of a labor member, usually someone from a labor                                                                 
union, but always someone from the working side of the formula, and                                                             
an industry seat, someone from management or an owner of a company.                                                             
The third member of the panel is the commissioner's designee, and                                                               
that designee is an expert in workers' compensation law.  They feel                                                             
this a very balanced approach: using private-sector volunteers to                                                               
decide the cases, along with someone who is an expert in the legal                                                              
aspects of worker's compensation.  He indicated that there is 100                                                               
years of case law to refer to, and that volumes have been written                                                               
about it.  In Alaska, there are as many as 10 supreme court cases                                                               
a year that deal with workers' compensation.  The case law is                                                                   
extensive and complicated, Mr. Grossi noted, and it requires a                                                                  
certain amount of expertise, but it also requires some sort of                                                                  
input from the private sector, so that a fair decision can be made.                                                             
                                                                                                                                
                                                                                                                                
MR. GROSSI disclosed that there are presently approximately 300 to                                                              
350 cases a year that are decided by the Workers' Compensation                                                                  
Board.  Of that, approximately 70 are appealed to the courts, and                                                               
the board has a very good rate, over 80 percent, of their decisions                                                             
being affirmed by the court.  The department is concerned that this                                                             
law will take away from that success rate, will make their law                                                                  
unconstitutional, will take away from the balanced approach, and                                                                
will eliminate private sector input on their cases.  Similar                                                                    
problems could arise in a number of different agencies within the                                                               
department:  Fishermen's Fund [Advisory and Appeals Council];                                                                   
Alaska Labor Relations Agency; Employment Security Division; and                                                                
the Department of Occupational Safety and Health Administration.                                                                
He mentioned that one of the strongest advocates of this system is                                                              
Edwin Felter (ph), and he believed him to be the head of the                                                                    
National Association of Administrative Law Judges.  Mr. Felter (ph)                                                             
has indicated that there is no state that has not made exceptions                                                               
for certain types of cases, and not all cases are heard by these                                                                
agencies.                                                                                                                       
                                                                                                                                
Number 0671                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT noted that there seems to be some confusion, if HJR
18 were to pass and the voters were to approve it, as to whether or                                                             
not the legislature would have that opportunity to provide for                                                                  
those exemptions for those certain categories that, perhaps, would                                                              
not fit the mold very well.  He asked Mr. Grossi whether the                                                                    
Department of Labor would support the measure, if the legislature                                                               
decided to keep them exempt from it in all their capacity.                                                                      
                                                                                                                                
MR. GROSSI admitted that some of the things their department does                                                               
may fit well with this legislation; however, he would have a                                                                    
difficult time supporting the measure if it had to do with the                                                                  
Workers' Compensation Board.  The reason for that, he explained, is                                                             
because the current system has been developed over a number of                                                                  
years and it works very well.  He did express willingness to                                                                    
discuss it, however.                                                                                                            
                                                                                                                                
Number 0738                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN wondered how long it takes for the Division of                                                              
Workers' Compensation to adjudicate a workers' compensation case.                                                               
                                                                                                                                
MR. GROSSI indicated that it would depend upon the individual case.                                                             
Some cases get heard within 60 days from the date the hearing is                                                                
requested, and others take longer, depending upon what needs to be                                                              
done.                                                                                                                           
                                                                                                                                
REPRESENTATIVE OGAN asked what would be determined a long case, and                                                             
if any have been going on for years.                                                                                            
                                                                                                                                
MR. GROSSI replied that these cases are not usually litigated that                                                              
long, but some cases do go on from the date of injury through when                                                              
the individual goes off of workers' compensation.  It can take some                                                             
time; it depends upon the extent of the injuries.                                                                               
                                                                                                                                
CHAIRMAN KOTT asked Mr. Grossi, "Would you refresh my memory on the                                                             
Workers' Comp[ensation] Boards and the time limitations they have                                                               
to take up a case?"                                                                                                             
                                                                                                                                
MR. GROSSI answered by stating that the vast majority of injuries                                                               
are not litigated.  There are approximately 26,000 to 30,000                                                                    
injuries a year;  of that, maybe 1200 to 1500 come to the Workers'                                                              
Compensation Board for resolution.  If an injury occurs and a                                                                   
medical report is filed along with the bill, the employer either                                                                
pays it or controverts the case within 15 days.  If the employee                                                                
disagrees with the controversion, that employee can then take it                                                                
forward to the Workers' Compensation Board.  That employee can file                                                             
a claim 10 days from that point, and can request a hearing after 20                                                             
days.  If the opposing party does not oppose the hearing, it will                                                               
be set up within 60 days.  If it is opposed, a pre-hearing is                                                                   
scheduled to deal with why it was opposed in the first place.                                                                   
                                                                                                                                
Number 0858                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT had a question for Teresa Williams, who was                                                                
still present on-line from Anchorage.  He asked, "Would we be able                                                              
to continue the Workers' Compensation Board with it's one industry,                                                             
one labor, under this constitutional amendment?"                                                                                
                                                                                                                                
MS. WILLIAMS said no, unless there was authority expressly in the                                                               
legislature and the amendment to exclude an agency.                                                                             
                                                                                                                                
Number 0883                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN wondered if Ms. Williams was basing that answer                                                             
on the case law dealing with judicial power vested by the                                                                       
constitution.                                                                                                                   
                                                                                                                                
MS. WILLIAMS explained that she was basing her answer on the                                                                    
language, "THE JURISDICTION OF THE OFFICE SHALL BE PRESCRIBED BY                                                                
LAW," which she felt was ambiguous as to what it means.  She                                                                    
indicated that this language does not expressly give the power to                                                               
the legislature to exempt an agency or certain level of                                                                         
proceedings.  In addition, this is identical language that has                                                                  
already been interpreted by the courts, and it would be presumed                                                                
that the language was intended to have the same result.                                                                         
                                                                                                                                
REPRESENTATIVE OGAN wondered whether court cases on the judiciary                                                               
were based on the intent of the constitutional convention.                                                                      
                                                                                                                                
MS. WILLIAMS said no, and pointed out that they go to the first                                                                 
line, which says that the power is vested in the judiciary, just as                                                             
in this provision, the power is vested in the Office of                                                                         
Administrative Hearings.  That language is very powerful and cannot                                                             
be limited by the legislature.                                                                                                  
                                                                                                                                
REPRESENTATIVE OGAN said that it was his understanding of the law                                                               
that a record of legislative intent could be built, indicating that                                                             
the legislature can decide who is in and out of this provision.                                                                 
                                                                                                                                
MS. WILLIAMS explained Alaska finds that legislative intent is hard                                                             
to determine and cannot be determined by the statement of a person,                                                             
because the entire legislature votes on a bill.  She pointed out                                                                
that there is nothing concrete that says what legislative intent                                                                
is, especially in this case, when a constitutional amendment would                                                              
need to be voted on by the people.  She suggested that it would be                                                              
preferable if the language were changed to expressly state what is                                                              
intended, rather than having a side-record in which you attempt to                                                              
explain what it means.                                                                                                          
                                                                                                                                
Number 1032                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT observed that the important thing about a                                                                  
constitutional amendment is what the people meant when they voted                                                               
on it, and that it is not as relevant as what the legislature                                                                   
intended when it put it before the people.  He added that the best                                                              
legislative intent in the world might not be (indisc.),                                                                         
particularly if there is clear language that seems to go the other                                                              
way.                                                                                                                            
                                                                                                                                
REPRESENTATIVE OGAN felt that was not consistent with supreme court                                                             
decisions.                                                                                                                      
                                                                                                                                
Number 1080                                                                                                                     
                                                                                                                                
CATHERINE REARDON, Director, Central Office, Division of                                                                        
Occupational Licensing, Department of Commerce and Economic                                                                     
Development, testified in opposition to HJR 18 on behalf of her                                                                 
division, as well as 21 licensing boards that it represents.  Her                                                               
division also administers 16 licensing programs without boards, so                                                              
they make the final decisions directly in those cases.  She                                                                     
mentioned that the Division of Insurance and the Division of                                                                    
Banking, Securities and Corporations, both under the Department of                                                              
Commerce, also had concerns, and they use the same hearing officer                                                              
that the Division of Occupational Licensing does.  She acknowledged                                                             
the sponsor's position that certain agencies or decisions could be                                                              
exempted through statute; however, the Department of Law has a                                                                  
different view.  She stressed that this is a very important issue                                                               
to the licensing boards, who are created for the express purpose of                                                             
making decisions like this.  She echoed that any attempt to have                                                                
the legislature exempt different agencies needs to be very clear in                                                             
any constitutional amendment;  otherwise, boards are being asked to                                                             
support something based on a possibility that the legislature may                                                               
be willing and able to exempt them.  She has based her testimony on                                                             
the assumption that the Office of Administrative Hearings would be                                                              
making all the decisions for Department of Commerce, including the                                                              
licensing boards.                                                                                                               
                                                                                                                                
MS. REARDON declared that she had testified with concerns about the                                                             
original comprehensive bill when it was presented by Representative                                                             
Ogan last year.  One reason that it grew into such a large bill,                                                                
she observed, was because there were references to boards making                                                                
disciplinary decisions and licensing decisions buried within each                                                               
occupation's licensing statute.  If a constitutional amendment like                                                             
this passes and certain agencies need to be exempted, the                                                                       
frustrating and difficult work of making those policy decisions in                                                              
a 100-page bill will still need to be done.  Much of what comes up                                                              
for the hearing officer in occupational licensing involves initial                                                              
decisions, not appeals.  The division gathers evidence and charges                                                              
a professional with incompetence.  Before any action is taken,                                                                  
there is a due process hearing in which the division and the                                                                    
Department of Law present the prosecution case, and the accused                                                                 
professional presents a defense case.  The hearing officer then                                                                 
hears the case and makes the proposed decision to the Board of                                                                  
Professionals.  The individual has the right to appeal to Superior                                                              
Court.                                                                                                                          
                                                                                                                                
MS. REARDON informed the committee that the Department of Commerce                                                              
and its various boards are very concerned that they will be losing                                                              
expert knowledge by going to an independent administrative law                                                                  
hearing.  She gave the example of the medical board, which has five                                                             
physicians and two representatives of the public on it, being able                                                              
to actually decide whether the treatment given by a doctor is                                                                   
competent or not.  In that case, she stressed the value of having                                                               
actual doctors involved in making those decisions.  Even though a                                                               
hearing officer can hear expert witnesses, she did not feel sure                                                                
that would be an adequate replacement for the professional and                                                                  
public input that is present now.                                                                                               
                                                                                                                                
MS. REARDON added that another action coming to a hearing officer                                                               
would be appeals of license denials.  Licensing boards are                                                                      
currently deciding if someone is competent for a license, and this                                                              
often involves very technical decisions about someone's mental                                                                  
health, professional training or problems they have had in other                                                                
states.  She felt that it was valuable having professional peers on                                                             
the board, and that it is a very significant policy decision to                                                                 
change that system.                                                                                                             
                                                                                                                                
MS. REARDON related that the director of the Division of Insurance                                                              
expressed a concern about the cost of training a hearing officer                                                                
who is knowledgeable about insurance law, which is a fairly arcane                                                              
subject.  The Division of Insurance director does not always use                                                                
the department hearing officer.  In some cases, such as insurance                                                               
cases that involve tax issues, they have hired a tax accountant                                                                 
from a large firm to preside, as knowledge in a tax law and                                                                     
accounting is crucial to making the right decision.                                                                             
                                                                                                                                
Number 1438                                                                                                                     
                                                                                                                                
MS. REARDON summarized by stating her belief that this seems to be                                                              
a switch in philosophy about the definition of administrative                                                                   
appeals.  Initially, these hearings have been a chance to ask a                                                                 
department or agency to reconsider, looking carefully at what it is                                                             
doing one more time, before the case moves to court.  By enacting                                                               
HJR 18, the shift would be towards moving into a more formal court                                                              
situation right away.  She testified that administrative hearings                                                               
in her department are already very formal from a legal standpoint,                                                              
using discovery motions, requests to suppress evidence and offer                                                                
evidence, and other legal motions.  She suspected that the original                                                             
vision, 30 to 40 years ago, was to get the two parties in a room to                                                             
just discuss what happened and review the situation.  She said, "I                                                              
think we are probably moving into a situation where it ...                                                                      
basically is court, and you better show up with your attorney."                                                                 
She indicated that she was not surprised that there are lot of                                                                  
hearing officers that would like this provision, and that there are                                                             
number of hearing officers that would like to be judges.  She has                                                               
been requested by hearing officers to provide funding to build a                                                                
courtroom, complete with flags and a seal, for the Department of                                                                
Commerce and Economic Development.                                                                                              
                                                                                                                                
Number 1568                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN referred to an interoffice memo addressed to                                                                
Commissioner William Hensley from 1997.  He read the following into                                                             
the record from that memo:                                                                                                      
                                                                                                                                
     Having worked as a part-time administrative hearing                                                                        
     officer for the Department of Commerce (since a certain                                                                    
     day which I won't disclose ... in the 1980's), there are                                                                   
     a number of observations resulting from the tenure which                                                                   
     may help the section to continue to function in an                                                                         
     efficient and helpful way to the public. ...Before his                                                                     
     departure, Frank Flavin and I discussed many of these                                                                      
     items.  The Hearing Officer section sometimes seems to be                                                                  
     an orphaned child, since it belongs to no one, yet serves                                                                  
     everyone.  It is vitally important that the hearing                                                                        
     officer remain a truly neutral and impartial party.  To                                                                    
     that end, the section should continue to be treated                                                                        
     separately, with its own secretary and offices.  The                                                                       
     officer should not be located within the physical                                                                          
     parameters of the Division of Occupational Licensing,                                                                      
     since the tendency to engage in casual conversation is                                                                     
     too great.                                                                                                                 
                                                                                                                                
     In any new space configuration, the department should                                                                      
     also consider giving the Division of Occupational                                                                          
     Licensing, Boards and Commissions, and the Hearing                                                                         
     Officer section, their own separate hearing and meeting                                                                    
     room.  Since there will now only be one full-time                                                                          
     administrative hearing officer, rather than a full-time                                                                    
     and part-time position, there will, inevitably, be                                                                         
     conflict of interest questions raised.  Although there                                                                     
     should not be many ... it is my recommendation that the                                                                    
     department have one person handle the conflict cases,                                                                      
     rather than signing separate contracts to various                                                                          
     attorneys.  That procedure was tried in [the] early                                                                        
     1980's, resulting in inconsistent results, poorly-written                                                                  
     opinions, lost files, missed hearings, and, in general,                                                                    
     was unsatisfactory.  I would also recommend that any                                                                       
     person who is chosen to do the contract have some                                                                          
     litigation or judicial background, since it is proven                                                                      
     helpful in learning to do hearings...                                                                                      
                                                                                                                                
REPRESENTATIVE OGAN summarized the letter by stating that it brings                                                             
out some interesting points as to how this legislation, HJR 18,                                                                 
came about, addressing general conflicts of interest, neutrality                                                                
and impartiality.                                                                                                               
                                                                                                                                
MS. REARDON commented that she had read this letter approximately                                                               
two years ago, but she does not have perfect memory of it.  The                                                                 
decision to go from one full-time and one part-time hearing officer                                                             
to one hearing officer was based on budget cuts, she explained, and                                                             
that outgoing hearing officer's suggestions should not be taken to                                                              
mean that any of her concerns were actually going on.  Ms. Reardon                                                              
testified that she worked in the division at the time the letter                                                                
was written, and that hearing officer was not housed in the                                                                     
Division of Occupational Licensing; rather, she is reinforcing that                                                             
it should never happen in the future.  The letter was not a request                                                             
for change, but a request that it does not change.  The fact that                                                               
they feel "orphan-like," she emphasized, is a good sign and means                                                               
that the system is clean, because they are being left alone without                                                             
socialization so that they can act impartially.  The letter said                                                                
that they worked for everyone, but were not a specific part of                                                                  
anyone, and Ms. Reardon indicated that is exactly what the goal                                                                 
should be for an impartial hearing officer.                                                                                     
                                                                                                                                
MS. REARDON summarized by stating that she did not recall that                                                                  
hearing officer stating, at any time during that letter, that she                                                               
felt her decisions were influenced, or that there was an attempt to                                                             
influence any of her decisions, by the commissioner's office or any                                                             
of the divisions.  A new hearing officer has been hired since that                                                              
time, she explained, and he had to declare a conflict of interest                                                               
in a couple of cases; however, he simply did not take them and they                                                             
were assigned to contract hearing officers.  There is currently a                                                               
central hearing officer with a secretary that keeps all of the                                                                  
records of what the contract hearing officers are doing at all                                                                  
times.  Ms. Reardon argued that the concern expressed in the                                                                    
letter, regarding having different hearing officers who might not                                                               
be knowledgeable about the process, is exactly what might happen                                                                
with a hearing officer office or agency.                                                                                        
                                                                                                                                
Number 2011                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Ms. Reardon how many boards and commissions                                                                 
would fall under this provision, if the legislature had the option                                                              
of determining whether or not an entity could be replaced.                                                                      
                                                                                                                                
MS. REARDON said there would be 21 statutorily-created licensing                                                                
boards, or all of them, that would fall under this provision,                                                                   
unless a statute was created to exempt specific agencies.                                                                       
                                                                                                                                
Number 2068                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN said, "That is exactly the point of this bill."                                                             
He emphasized that the boards would become regulatory rather than                                                               
adjudicatory.  He quoted Winston Churchill as stating "when you                                                                 
have a lack of separation of powers between the judiciary and                                                                   
executive, you have a tyranny."  While he was not implying that the                                                             
boards are tyrannical, he did liken the present situation to "the                                                               
fox watching the henhouse."                                                                                                     
                                                                                                                                
Number 2152                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT expressed that the bill will be held over at which                                                                
time the committee will take up public testimony again.                                                                         
ADJOURNMENT                                                                                                                     
                                                                                                                                
Number 2210                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT adjourned the House Judiciary Standing Committee                                                                  
meeting at 4:10 p.m.                                                                                                            

Document Name Date/Time Subjects