04/22/2005 02:44 PM House JUD
| Audio | Topic |
|---|---|
| Start | |
| HB257 | |
| HB92 | |
| SB87 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 22, 2005
2:44 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson
Representative John Coghill
Representative Nancy Dahlstrom
Representative Pete Kott
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 257
"An Act relating to a procurement and electronic commerce tools
program for state departments and instrumentalities of the
state; and providing for an effective date."
- MOVED CSHB 257(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 92
"An Act relating to the purchase of interests in corporations,
including limited liability companies, by the University of
Alaska."
- MOVED CSHB 92(JUD) OUT OF COMMITTEE
SENATE BILL NO. 87
"An Act relating to motor vehicle safety belt violations."
- MOVED HCS SB 87(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 129(JUD)
"An Act relating to the wrongful recording of a notice of
pendency of an action relating to title to or right to
possession of real property."
- SCHEDULED BUT NOT HEARD
CS FOR SENATE BILL NO. 143(STA)
"An Act amending the definition of the term 'state agencies' as
it applies under Executive Order No. 113; relating to
information systems in the legislative branch and to the
Telecommunications Information Council; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
CS FOR SENATE BILL NO. 36(JUD)
"An Act relating to absentee ballots."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 257
SHORT TITLE: STATE PROCUREMENT ELECTRONIC TOOLS
SPONSOR(S): JUDICIARY
04/06/05 (H) READ THE FIRST TIME - REFERRALS
04/06/05 (H) JUD, FIN
04/11/05 (H) JUD AT 1:00 PM CAPITOL 120
04/11/05 (H) <Bill Hearing Rescheduled to 4/13>
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
04/13/05 (H) Heard & Held
04/13/05 (H) MINUTE(JUD)
04/18/05 (H) JUD AT 1:00 PM CAPITOL 120
04/18/05 (H) Heard & Held
04/18/05 (H) MINUTE(JUD)
04/22/05 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 92
SHORT TITLE: UNIVERSITY OF ALASKA AND CORPORATIONS
SPONSOR(S): REPRESENTATIVE(S) KELLY
01/21/05 (H) READ THE FIRST TIME - REFERRALS
01/21/05 (H) EDU, HES
04/05/05 (H) EDU AT 11:00 AM CAPITOL 106
04/05/05 (H) Heard & Held
04/05/05 (H) MINUTE(EDU)
04/06/05 (H) HES REFERRAL WAIVED
04/06/05 (H) JUD REFERRAL ADDED AFTER EDU
04/07/05 (H) EDU AT 11:00 AM CAPITOL 106
04/07/05 (H) -- Meeting Canceled --
04/12/05 (H) EDU AT 11:00 AM CAPITOL 106
04/12/05 (H) Moved CSHB 92(EDU) Out of Committee
04/12/05 (H) MINUTE(EDU)
04/14/05 (H) EDU AT 11:00 AM CAPITOL 106
04/14/05 (H) -- Meeting Canceled --
04/18/05 (H) EDU RPT CS(EDU) NT 1DP 5NR
04/18/05 (H) DP: LYNN;
04/18/05 (H) NR: THOMAS, WILSON, GATTO, SALMON,
NEUMAN;
04/18/05 (H) JUD AT 1:00 PM CAPITOL 120
04/18/05 (H) Scheduled But Not Heard
04/19/05 (H) JUD AT 1:00 PM CAPITOL 120
04/19/05 (H) Heard & Held
04/19/05 (H) MINUTE(JUD)
04/22/05 (H) JUD AT 1:00 PM CAPITOL 120
BILL: SB 87
SHORT TITLE: SEAT BELT VIOLATION AS PRIMARY OFFENSE
SPONSOR(S): SENATOR(S) BUNDE
02/02/05 (S) READ THE FIRST TIME - REFERRALS
02/02/05 (S) STA, JUD
02/17/05 (S) STA AT 3:30 PM BELTZ 211
02/17/05 (S) Moved SB 87 Out of Committee
02/17/05 (S) MINUTE(STA)
02/18/05 (S) STA RPT 2DP 2NR
02/18/05 (S) NR: THERRIAULT, HUGGINS
02/18/05 (S) DP: ELTON, WAGONER
03/01/05 (S) JUD AT 8:30 AM BUTROVICH 205
03/01/05 (S) Moved SB 87 Out of Committee
03/01/05 (S) MINUTE(JUD)
03/02/05 (S) JUD RPT 3DP 2NR
03/02/05 (S) DP: SEEKINS, FRENCH, GUESS
03/02/05 (S) NR: THERRIAULT, HUGGINS
03/03/05 (S) TRANSMITTED TO (H)
03/03/05 (S) VERSION: SB 87
03/04/05 (H) READ THE FIRST TIME - REFERRALS
03/04/05 (H) STA, JUD
03/19/05 (H) STA AT 9:30 AM CAPITOL 106
03/19/05 (H) Heard & Held
03/19/05 (H) MINUTE(STA)
04/12/05 (H) STA AT 8:00 AM CAPITOL 106
04/12/05 (H) Moved HCS SB 87(STA) Out of Committee
04/12/05 (H) MINUTE(STA)
04/13/05 (H) STA RPT HCS(STA) 1DP 4DNP 1NR
04/13/05 (H) DP: GRUENBERG;
04/13/05 (H) DNP: GARDNER, LYNN, GATTO, ELKINS;
04/13/05 (H) NR: SEATON
04/22/05 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
VANESSA TONDINI, Staff
to Representative Lesil McGuire
House Judiciary Standing Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an explanation during discussion
of HB 257.
HEATH HILYARD, Staff
to Representative Mike Kelly
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 92, offered a
comment on behalf of the sponsor, Representative Kelly.
MARY E. GREEN, Associate General Counsel
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during discussion of
HB 92.
SENATOR CON BUNDE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 87.
CINDY CASHEN
National Council on Alcoholism and Drug Dependence
Juneau, Alaska
POSITION STATEMENT: Provided comments during discussion of
SB 87.
KEVIN E. QUINLAN, Chief
Safety Advocacy Division
Office of Safety Recommendations and Accomplishments
National Transportation Safety Board (NTSB)
Washington D.C.
POSITION STATEMENT: Provided comments during discussion of
SB 87.
JOAN DIAMOND
Department of Health and Human Services
Municipality of Anchorage (MOA)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
SB 87.
DON SMITH, Administrator
Highway Safety Office
Division of Program Development
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Provided comments during discussion of
SB 87 and responded to a question.
TODD SHARP, Lieutenant
Division of Alaska State Troopers
Department of Public Safety (DPS)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
SB 87 and responded to questions.
ACTION NARRATIVE
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 2:44:36 PM. Representatives
McGuire, Anderson, Coghill, Dahlstrom, Gruenberg, and Gara were
present at the call to order. Representative Kott arrived as
the meeting was in progress.
HB 257 - STATE PROCUREMENT ELECTRONIC TOOLS
2:45:32 PM
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 257, "An Act relating to a procurement and
electronic commerce tools program for state departments and
instrumentalities of the state; and providing for an effective
date." [Before the committee was HB 257, as amended on
4/18/05.]
CHAIR McGUIRE, speaking as chair of the House Judiciary Standing
Committee, sponsor of HB 257, relayed that although a proposed
committee substitute (CS) for HB 257, Version 24-LS0826\Y,
Bannister, 4/21/05, was available for adoption as a work draft,
the committee must also readopt the preferences section of
Conceptual Amendment 1, as amended, to HB 257 - the original
version of the bill - which was adopted at the bill's last
hearing. She explained that Version Y simply extends, for
another year, the sunset provided for in the 2003 legislation
originally authorizing the pilot project.
REPRESENTATIVE GRUENBERG moved to adopt the proposed CS for HB
257, Version 24-LS0826\Y, Bannister, 4/21/05, as the work draft.
There being no objection, Version Y was before the committee.
REPRESENTATIVE GRUENBERG made a motion [to adopt Conceptual
Amendment 1] to "meld into" Version Y [the amendment which had
been adopted to HB 257, that being Conceptual Amendment 1, as
amended with regard to proposed subsection (c) referencing only
proposed subsections (d)-(r), and which prior to being amended
read:
A BILL
FOR AN ACT ENTITLED
"An Act relating to a procurement and electronic
commerce tools program for state departments and
instrumentalities of the state; and providing for an
effective date."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
ALASKA:
* Section 1. AS 36.30 is amended by adding a new
section to article 1 to read:
Sec. 36.30.093. State procurement and electronic
commerce tools program.
(a) The department may enter into a program under
which the department contracts with a person from the
private sector to provide procurement services and to
provide for the delivery and use of electronic
commerce tools. Notwithstanding any other provision
of this chapter, the contract shall be awarded under
AS 36.30.100 - 36.30.265.
(b) Notwithstanding any other provision of this
chapter, all state departments and instrumentalities
of the state may participate in the program authorized
by (a) of this section.
(c) A procurement conducted by the person
selected under (a) of this section is not subject to
this chapter or to AS 36.15. However, the procurement
is subject to (d) - (u) of this section.
(d) A contract based on solicited bids shall be
awarded to the lowest responsive and responsible
bidder after an Alaska bidder preference of five
percent has been applied for evaluation purposes.
(e) If a bidder qualifies as an Alaska bidder and
is offering services through an employment program, a
15 percent cost preference will be applied during
evaluation.
(f) If a bidder is an Alaska bidder and is a
qualifying entity, a ten percent cost preference will
be applied during evaluation.
(g) If a bidder is an Alaska bidder and if 50
percent or more of the bidder's employees at the time
the bid is submitted are persons with disabilities, a
ten percent cost preference will be applied during
evaluation. The contract must contain a promise by
the bidder that the percentage of the bidder's
employees who are persons with disabilities will
remain at 50 percent or more during the contract term.
(h) Insurance-related contracts shall be awarded
to the lowest responsive and responsible bidder after
an Alaska bidder preference of five percent has been
applied during evaluation. In this subsection,
"Alaska bidder" means a person who is an Alaska bidder
and an Alaska domestic insurer.
(f) Alaska products shall be used whenever
practicable in procurements for a state agency.
Recycled Alaska products shall be used when they are
of comparable quality, of equivalent price, and
appropriate for the intended use.
(g) If a bid indicates that the product(s)
being purchased will be recycled Alaska products, a
cost preference of five percent will be applied during
evaluation.
(h) In a project financed by state money in which
the use of timber, lumber, and manufactured lumber
products is required, only timber, lumber, and
manufactured lumber products originating in this state
from local forests shall be used wherever practicable.
(i) When agricultural products are purchased , a
seven percent cost preference will be applied during
evaluation to agricultural products harvested in the
state.
(j) When fisheries products are purchased, a
seven percent cost preference will be applied during
evaluation to fisheries products harvested or
processed within the jurisdiction of the state.
(k) If a bid or offer designates the use of an
Alaska product that is identified in the contract
specifications and designated as a Class I, Class II,
Class III state product under AS 36.30.332, a cost
preference equal to the percentage established for the
class under AS 36.30.332(c) will be applied to the
product during evaluation. The program contractor
shall use the Alaska product preference list, as
described in 3 AAC 92.090(a), as the basis for
establishing the percentage of Alaska product
preference.
(l) If a contractor designates the use of an
Alaska product in a bid or proposal and fails to use
the designated product for a reason within their
control, each payment under the contract shall be
reduced according to the schedule set forth in AS
36.30.330(a).
(m) Except as provided under (q) of this section,
all preferences are cumulative and shall be applied in
the order referenced under (d) - (n) of this section.
(n) A bidder may not receive a preference under
this section under both (d) and (e), (d) and (f), or
(e) and (f) for the same contract.
(o) In order to qualify for a preference under
(e), (f), or (g) of this section, a bidder shall add
value by actually performing, controlling, managing,
and supervising the services provided, or a bidder
shall have sold supplies of the general nature
solicited to other state agencies, governments, or the
general public.
(p) When awarding a contract under competitive
sealed proposals, the program contractor shall
consider the preferences described in this section.
Applicable preferences shall be applied solely to the
cost portion of the proposals during evaluation.
(q) Informal procurements conducted by the
program contractor are subject to the preferences
described in this section.
(r) In this section,
(1) "agency" has the meaning given in AS
36.30.990(1);
(2) "agricultural products" has the meaning
given in AS 36.15.050(g)(1);
(3) "Alaska bidder" has the meaning given in
AS 36.30.170(b);
(4) "Alaska products" has the meaning given
in AS 36.30.338(1);
(5) "contract" has the meaning given in AS
36.30.990(7);
(6) "employment program" has the meaning
given in AS 36.30.990(11);
(7) "instrumentalities of the state" means a
state public corporation, a state enterprise, or
another administrative unit of state government that
handles its procurement and supply management in a
manner that is separate from a department of the
state;
(8) "qualifying entity" has the meaning
given in AS 36.30.170(e)(1)-(4);
(9) "person" has the meaning given in AS
36.30.990(16);
(10) "person with a disability" has the
meaning given in AS 36.30.170(k);
(11) "program contractor" means the
contractor selected by the department to manage the
program;
(12) "recycled Alaska product" has the
meaning given in AS 36.30.338(4).
* Sec. 2. The uncodified law of the State of Alaska
enacted in secs. 2 and 3, ch. 51, SLA 2003, are
repealed.
* Sec. 3. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. Nothing in this Act affects the
validity of actions taken by the Department of
Administration under ch. 51, SLA 2003, before the
effective date of this Act.
* Sec. 4. This Act takes effect immediately under AS
01.10.070(c).
CHAIR McGUIRE indicated that [Conceptual Amendment 1] would put
the bidder preferences back in the bill.
REPRESENTATIVE GARA objected for the purpose of discussion.
CHAIR McGUIRE reiterated that Version Y simply extends the pilot
project, and that [Conceptual Amendment 1] would ensure that the
bidder preferences therein would apply to any contract
authorized by the 2003 legislation.
REPRESENTATIVE GARA said he wants to ensure that [Conceptual
Amendment 1] really does what Chair McGuire intends it to do.
VANESSA TONDINI, Staff to Representative Lesil McGuire, House
Judiciary Standing Committee, Alaska State Legislature,
reiterated that [Conceptual Amendment 1, as amended], which was
brought forth by the administration, had been adopted at the
fill's last hearing for application to the original legislation.
REPRESENTATIVE GARA said he wanted to ensure that [Version Y and
Conceptual Amendment 1] would not expand the current pilot
project to more departments.
CHAIR McGUIRE said [they would not], again reiterating her
belief that [Conceptual Amendment 1] simply adds the bidder
preferences to Version Y. She noted that Alaska Supply Chain
Integrators and other [contractors] object to [Version Y].
REPRESENTATIVE GRUENBERG withdrew his motion [to adopt
Conceptual Amendment 1].
REPRESENTATIVE GRUENBERG then restated the motion, that being to
adopt a new [Conceptual Amendment 1], to "incorporate Section 1
[of Conceptual Amendment 1, as amended,] into this bill.
MS. TONDINI attempted to clarify that [new Conceptual Amendment
1] would incorporate subsections (c)-(r) [of Conceptual
Amendment 1].
REPRESENTATIVE GRUENBERG concurred and, in response to a
question, posited that the drafter would insert [new Conceptual
Amendment 1] in the proper location.
REPRESENTATIVE GARA said he would not hold the bill up but would
instead review the language later to ensure that it did what the
committee intended. He then removed his objection to the motion
[to adopt new Conceptual Amendment 1].
CHAIR McGUIRE stated that [new Conceptual] Amendment 1 was
adopted.
2:50:58 PM
REPRESENTATIVE GRUENBERG turned attention to Section 2 of
[Conceptual Amendment 1, as amended, as it was intended to apply
to the original version of HB 257] and said he didn't think the
committee ought to adopt that provision.
The committee took an at-ease from 2:51 p.m. to 2:52 p.m.
2:52:34 PM
REPRESENTATIVE DAHLSTROM moved to report the proposed CS for HB
257, Version 24-LS0826\Y, Bannister, 4/21/05, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE GARA objected [for the purpose of discussion],
and offered his understanding that [new Conceptual Amendment 1]
would incorporate subsections (c)-(r) [of Conceptual Amendment
1, as amended].
CHAIR McGUIRE, after ascertaining that there were no further
objections to the motion, announced that CSHB 157(JUD) was
reported from the House Judiciary Standing Committee.
HB 92 - UNIVERSITY OF ALASKA AND CORPORATIONS
2:53:20 PM
CHAIR McGUIRE announced that the next order of business would be
HOUSE BILL NO. 92, "An Act relating to the purchase of interests
in corporations, including limited liability companies, by the
University of Alaska." [Before the committee was CSHB 92(EDU).]
CHAIR McGUIRE noted that at the bill's last hearing, the sponsor
had explained the bill and public testimony had been closed.
REPRESENTATIVE GARA said that he still doesn't know what the
concept of "piercing the corporate veil" entails and would like
further explanation regarding why the university should be
exempted from that concept.
CHAIR McGUIRE mentioned that the sponsor's staff has provided
members with a copy, from Westlaw, of a portion of a book by
Stephen B. Presser entitled Piercing the Corporate Veil that
specifically addresses the concept as it pertains to Alaska.
2:55:21 PM
HEATH HILYARD, Staff to Representative Mike Kelly, Alaska State
Legislature, sponsor, offered on behalf of Representative Kelly
that perhaps Ms. Green could better address Representative
Gara's query.
2:55:54 PM
MARY E. GREEN, Associate General Counsel, University of Alaska,
explained:
What the policy of [piercing] the corporate veil was
designed to do was to eliminate what is normally the
rule that a shareholder's assets are free from the
debts of the corporation. And it was designed
basically to take those cases where there had been
fraud, or [where] a corporation sets up a fraud kind
of corporation just to protect the corporation's
assets, or [where] someone does the same thing. That
was the original basis for the rule. The rule in most
parts of the country has a number of different
provisions. ... Generally what it has is that ... a
plaintiff is allowed to pierce the corporate veil and
reach the assets of the shareholder if the subject
corporation had been a mere instrumentality, if there
had been an attempt to perpetrate fraud, accomplish
injustice or a violation of the law.
In Alaska, it's much easier to pierce the corporate
veil because the [Alaska] Supreme Court has adopted [a
rule specifying that] only one of those ... [criteria]
needs to be met. ... It either has to be a mere
instrumentality of the shareholder, or there has to
have been wrongful conduct. One of the things that
the ... [aforementioned portion of the book, Piercing
the Corporate Veil] points out about the Alaska rule
is that ... [Alaska] is among the easiest states in
the union [in which] to pierce [the] corporate veil.
Secondly, the [aforementioned portion of the book]
also points out, toward the end, that it looks like
the [Alaska] Supreme Court is going to an even easier
way to pierce the corporate veil - relying solely on
undercapitalization of the corporation.
MS. GREEN continued:
If that happens, certainly ... any shareholder [who]
invests in a small corporation that doesn't have a lot
of assets is at risk to end up paying for the
liabilities of the corporation. Usually what happens
in small corporations is that the creditors of small
corporations, because they know that the corporation
is normally free to contract and that they can't get
assets [of] the shareholders, ... require guarantees
from the primary people, and so then the shareholder
would be, in fact, liable, [but] with a personal
guarantee. ...
What this bill would do would make it so that the
university [would] ... be free, of course, to contract
just like any other person, to guarantee the debts if
it was appropriate - if not, the university's assets
would be protected by what is a very easy application
[of] piercing the corporate veil. ... As a university,
we need to protect the public's assets in this ...
vast university, and that's the reason that we're
seeking this [change to statute].
CHAIR McGUIRE noted that Black's Law Dictionary defines
corporate veil as, "the legal assumption that the acts of a
corporation are not the actions of its shareholders, so that the
shareholders are exempt from liability for the corporation's
actions."
2:59:54 PM
REPRESENTATIVE GRUENBERG shared his concern that small
businesses who act as suppliers to the university may be left
"holding the bag."
MS. GREEN replied that this is an obvious problem, but
commented, "That's true in every small corporation." She said
that small suppliers can get a personal guarantee from the major
people who are running the corporation in order to avoid the
normal rule that shareholders aren't liable. She commented that
this bill would not change that protection that the small
business owner has to choose not to extend credit to small
corporations.
REPRESENTATIVE GRUENBERG remarked that the [Alaska] Supreme
Court has considered this issue on several occasions and has
enacted a rule that's an expansion of the common law "because
the court realizes that in Alaska we're dealing with some fairly
unsophisticated people and we're dealing with, in many cases,
small people who ... never heard of the corporate veil [and]
don't know much about this." He concluded that the [Alaska]
Supreme Court has essentially said that [a supplier] doesn't
have to get personal guarantees, and if the corporation doesn't
pay its bill, the supplier will be able to go to court to
collect that money. He said: "Here we're letting probably the
biggest shareholder in the whole state, the ... university, off
the hook. The state is in the least equitable position to want
this break. Nobody else gets this break in dealing with small,
undercapitalized corporations. Why should the State of Alaska?"
CHAIR McGUIRE offered her belief that issues must be weighed,
and in this instance, the greater good of allowing the
university to invest in small businesses that might make great
technological advances outweighs [other considerations]. She
commented that this is one way for new small businesses to get
some capital, which is very hard to get in Alaska. She opined
that the university isn't going to invest if it is exposed to
tremendous liability. She continued:
We're not saying that we would allow the university to
be an integral, active player committing wrongdoing
and then shielding them from that wrong. ... What
we're saying is that we're going to allow them to be a
passive investor to provide some of the capital seed
money to grow these companies, but we're not going to
hold them, the entire of the University of Alaska
budget and subsequently the State of Alaska's general
fund, on the hook for it.
3:06:45 PM
REPRESENTATIVE GRUENBERG said that the way that Chair McGuire is
interpreting the bill is more palatable than it would be
otherwise. However, he noted, the way the bill is drafted it is
different. He turned to page 1, line 10, which says that the
corporation is "not considered to be a part of the university
for any purpose," which he surmised is a much broader grant of
immunity than Chair McGuire has stated.
CHAIR McGUIRE noted that perhaps amendments could address that
issue at a later point, and reiterated her understanding of the
bill.
REPRESENTATIVE COGHILL commented, "Just the fact that they are
going to put the full weight of the university behind it as a
project in allowing expertise to go in brings huge ... 'blue-
sky' capital to these projects, and might even be a part of the
responsibility. ..."
CHAIR McGUIRE reiterated that public testimony on HB 92 was
closed.
3:09:33 PM
REPRESENTATIVE GARA, mentioning that he would be offering an
amendment to address his concern, explained that his concern is
that current corporate law says that the shareholder, which
would be the university in this case, is not liable for the
debts or the injuries caused by the corporation unless the
shareholder has committed fraud or is engaged in a wrongful
conduct. He opined that by passing this bill, the legislature
would be saying that the university can engage in fraud and
wrongful conduct without having its assets touched. He
commented, "It's a very weird way to encourage development at
the university," adding that he understands the problem but
doesn't think that this bill is the right solution.
REPRESENTATIVE GARA said he would like to make a conceptual
amendment that clarifies that this bill would not allow the
university to escape liability if it engages in fraud or
wrongful conduct.
MS. GREEN replied that such a change would be fine with the
university.
REPRESENTATIVE GARA made a motion to adopt Conceptual Amendment
1, to retain the parts of the corporate veil rule that prevent
an entity from engaging in fraud or wrongful conduct. There
being no objection, Conceptual Amendment 1 was adopted.
REPRESENTATIVE GRUENBERG noted that Ms. Green was concerned
about the university's exposure based only on the theory that
the small nonprofit business would be a mere instrumentality of
the university. He pondered whether he could craft the bill to
say that.
MS. GREEN said she doesn't think that would be needed because
the [Alaska] Supreme Court has said that there are only two ways
to pierce the corporate veil; one is from fraud or wrongful
conduct and the other is through a mere instrumentality rule.
CHAIR McGUIRE remarked:
The [conceptual amendment] is in. There'll be a CS
that comes back, and what we can do ... is have it
attached with a legal memo that basically certifies
that this amendment completes our goal in this
committee of keeping mere instrumentalities in and
wrongful conduct out.
REPRESENTATIVE GRUENBERG agreed that that would be fine.
REPRESENTATIVE ANDERSON moved to report CSHB 92(EDU), as
amended, out of committee with individual recommendations, the
accompanying zero fiscal note, and the attached letter of
intent.
REPRESENTATIVE GARA objected for the purpose of discussion. He
asked Ms. Green to clarify the reference to "mere
instrumentality."
3:15:13 PM
MS. GREEN explained that there are five to eleven factors in the
"mere instrumentality" portion. She explained:
One is that a parent owns all or most of the capital
stock. Two is that the parent and subsidy
corporations have common directors. Three is that the
corporation finances the subsidy. ... Four is that the
parent subscribes to all the capital stock of the
subsidiary or otherwise causes its incorporation. We
would probably cause the incorporation of any
corporation we were doing. The subsidiary has
inadequate capital, which is likely in these small
startups, or within public policy nonprofits. Parent
pays the salaries and other expenses or losses of the
subsidiary. ... The subsidiary has substantially no
business except with the parent and no assets except
those conveyed to it by the parent.
Chances are the startup that we had would have some
assets from the inventor as well. And not following
corporate form: the parent using the property as its
own and the directors of the subsidiary are not acting
independently in the interest of the subsidiary. But
the problem is that you don't have to have all of
those things met to be ruled a mere instrumentality
and thus have the corporate veil pierced. The
[Alaska] Supreme Court has said that you can have as
little as two, and has suggested that even having low
capitalization is enough.
REPRESENTATIVE GARA removed his objection and asked that Ms.
Green fax that list to the committee. He noted that he still
had some concern about the bill, saying, "I'm not so sure this
is good policy to let people avoid responsibility this way."
REPRESENTATIVE GRUENBERG turned the committee's attention to a
memorandum to Representative Mike Kelly from Legislative Legal
Services dated January 13, 2005, and pointed out one section
that read in part:
With regard to nonprofit corporations, did you have in
mind corporations from other states ...?
REPRESENTATIVE GRUENBERG, remarking that nonprofits from other
states might be governed by the other state's laws, asked if
perhaps the bill should be limited to investments in nonprofits
within the State of Alaska.
MS. GREEN replied: "Certainly the conflicts-of-law question
would arise in a deal with ... out-of-state entities. We will
have these. ... What we will insist on before we enter into such
an agreement is that the law of Alaska applies so that we are
protected." She remarked that the only out-of-state deals the
university will be making are those that promote education and
research, rather than those that pertain to "startups."
3:19:51 PM
CHAIR McGUIRE, noting that there was no longer an objection to
the motion to report CSHB 92(EDU), as amended, from committee,
stated that CSHB 92(JUD) was reported from the House Judiciary
Standing Committee.
SB 87 - SEAT BELT VIOLATION AS PRIMARY OFFENSE
3:21:55 PM
CHAIR McGUIRE announced that the final order of business would
be SENATE BILL NO. 87, "An Act relating to motor vehicle safety
belt violations." [Before the committee was HCS SB 87(STA).]
SENATOR CON BUNDE, Alaska State Legislature, sponsor of SB 87,
said the bill changes Alaska's seatbelt law such that a
violation would be a primary offense. The current "secondary"
law is required for federal funding, he noted, adding that SB 87
simply allows a police officer to stop and ticket a motorist for
not wearing a seatbelt. He said testimony from law enforcement
indicates that SB 87 will not make a change to police practices.
If police want to stop a car, there are any number of reasons
that are much more visible than a seatbelt violation, he said -
for example, a cracked windshield, snow-obscured license plate,
and bad lane changes. He said the fear that the bill will
result in more "preemptive" stops is not logical. National
Highway Safety Administration data indicates that in other
states with this law, the number of stops has not risen, he
noted, but seatbelt usage has - by up to 12 percent. About 84
percent of Alaskans currently use seatbelts, and if usage
increases to 90 percent, the federal government will give the
state $18 million for highway safety [projects], he said.
3:27:13 PM
SENATOR BUNDE said that more importantly, the law will save
lives, and offered his belief that had this bill passed last
year, there would be six or seven Alaskans alive who instead
died from lack of seatbelt use. He said he has heard the
argument that "I always wear my belt - I just don't want to be
told I have to," adding that he has a hard time with that kind
of logic. He said he is guilty of having a libertarian streak,
except when people feel that it is their own business if they
suffer from not wearing their seatbelt. There is a cost to
society, including [a rise in] insurance rates and Medicaid
rates, he declared, adding that although he supports individual
rights, if those rights cost the society, the society has the
right to "offer this minor, minor change." There are already
primary seatbelt laws for passengers and children under 16 in
Alaska now, he added.
SENATOR BUNDE said, "We're going from a primary law in some
instances to a primary law in all instances." He said he had
intended to gather the names of people who suffered due to not
wearing a seatbelt, but it was too emotionally difficult.
However, he did have a man contact him who said he could use his
19-year-old son as an example of one who would still be alive
had he used a seatbelt. Senator Bunde said his bill is really
targeted at that age group; data shows that young adults are the
most likely to not use a seatbelt. "This is a small trade of
individual freedom for a large societal gain," he concluded.
3:33:09 PM
REPRESENTATIVE GRUENBERG asked if points would be assessed and
if one's insurance costs would go up if he/she were ticketed.
SENATOR BUNDE said there was a suggestion to cancel insurance
for anyone involved in an accident who was not wearing a
seatbelt, but such would have resulted in a far more draconian
impact on people's rights. He characterized HCS SB 87(STA) as
fine-tuned, and concluded by indicating that he is amenable to
incorporating a proposed amendment from Representative Gara
[which later became known as Amendment 1], labeled 24-
LS0457\Y.1, Luckhaupt, 4/21/05, which read:
Page 2, following line 7:
Insert a new bill section to read:
"*Sec.3. AS 28.05.095 is amended by adding a new
subsection to read:
(f) In a prosecution under (a) of this section,
the prosecution must show that the peace officer
stopping of detaining the vehicle personally observed
the violation of (a) of the section before stopping or
detaining the vehicle."
3:35:51 PM
CINDY CASHEN, National Council on Alcoholism and Drug
Dependence, after noting that she was recently the executive
director of the Juneau Chapter of Mothers Against Drunk Driving
(MADD), acknowledged that there have been claims that MADD has
taken grant money to lobby for the bill. This is not true, she
said, and explained that MADD has a media campaign called
"Click-it or Ticket" under the National Highway Traffic Safety
Administration, which funnels money through the Alaska Highway
Safety Office. She surmised that it is perhaps through this
campaign that the misperception arises. Another second
accusation she has heard, she relayed, is that if SB 87 were to
become law, MADD would pressure law enforcement to pull people
over. "That's ridiculous," she declared.
3:38:19 PM
KEVIN E. QUINLAN, Chief, Safety Advocacy Division, Office of
Safety Recommendations and Accomplishments, National
Transportation Safety Board (NTSB), said the NTSB is the
nation's crash investigators, and its view is that SB 87 is the
single most important measure that the state could adopt. He
said it is very effective, and noted that military installations
require seatbelt use. He concluded that the bill will have its
greatest impact on the state's youngest drivers.
3:41:33 PM
JOAN DIAMOND, Department of Health and Human Services,
Municipality of Anchorage (MOA), said there is no downside to
SB 87. She relayed that she collects data on injuries for her
department, and her research shows that the benefit of a
seatbelt is that it distributes the force of a collision to the
strongest parts of the body - hips, shoulders, and chest. A
person's head or chest is less likely to strike the steering
wheel or windshield or be thrown out of the vehicle. She said
there is a 79 percent use rate, and the goal is to increase it
to 91 percent. "We are counting on you to pass the primary law
this year," she stated.
3:43:18 PM
DON SMITH, Administrator, Highway Safety Office, Division of
Program Development, Department of Transportation & Public
Facilities (DOT&PF), relayed that he is also the governor's
representative for highway safety, and asked the committee to
imagine an outbreak of a disease in Alaska that killed or maimed
4,500 people. He opined that if this many Alaskans were to die
or be hurt from any one disease in a single year, Alaskans would
demand a vaccine. He noted that the irony is that "we already
have the best vaccine available to reduce the death toll on our
highways, and those are seatbelts." He said 101 people died
last year in crashes, but 54 would have survived if they had
been wearing their seatbelts.
3:44:33 PM
REPRESENTATIVE KOTT asked if there is a statutory definition of
highway.
MR. SMITH indicated that it includes every roadway that is
publicly maintained for vehicular travel.
3:45:32 PM
TODD SHARP, Lieutenant, Division of Alaska State Troopers,
Department of Public Safety (DPS), said SB 87 is about saving
lives, reducing injuries, and keeping people from being ejected
from their vehicles, all of which the Alaska State Troopers
support 100 percent, adding that he has seen the proposed
amendment and is absolutely comfortable with it.
REPRESENTATIVE COGHILL noted that the bill, via Section 3,
repeals [AS 28.05.095(e)], which currently reads:
(e) Notwithstanding any other provision of law, a
peace officer may not stop or detain a motor vehicle
to determine compliance with (a) of this section, or
issue a citation for a violation of (a) of this
section, unless the peace officer has probable cause
to stop or detain the motor vehicle other than for a
violation of (a) of this section.
REPRESENTATIVE COGHILL offered his belief that the standard of
probable cause is going to be reduced. He asked, "When you stop
another vehicle right now, under the probable cause law that we
have right now, what do you have to visually see?" He said he
might offer an amendment to delete Section 3 and leave the
standard of probable cause.
LIEUTENANT SHARP said an officer would have to see and recognize
the violation to make a stop.
REPRESENTATIVE COGHILL questioned whether an officer would be
able to see the violation. "It seems to me ..., if we pass this
law as stated, un-amended, then you really literally could stop
any car you wanted to stop."
LIEUTENANT SHARP said he doesn't see it that way; an officer has
to see and recognize the violation and be able to testify that
the violation was witnessed.
REPRESENTATIVE ANDERSON said he supports [Representative Gara's]
proposed amendment. He asked if a person could be cited for a
seatbelt violation if he or she was pulled over for another
reason.
LIEUTENANT SHARP said he could issue a citation; however, he
would want to be able to witness that that person was not
wearing the seatbelt while the vehicle was being operated. A
person could remove a seatbelt after being stopped, he noted.
3:49:38 PM
REPRESENTATIVE COGHILL reiterated that he would like to delete
Section 3. He opined that the law could be used to stop anybody
at any time for any purpose when an officer may be looking for
other things. "I'm certainly not here to protect people who are
doing wrong things, but it may be just, for example, [that]
somebody has a attitude about me and wants to just stop me."
REPRESENTATIVE GARA said he understands Representative Coghill's
concern, but relayed that the sponsor has satisfied him that
everything is going to be alright under the bill. The proposed
amendment is something that is already implied in the bill, he
said, and suggested stating somewhere else in the bill that
nothing repeals the legal requirement of probable cause.
3:52:52 PM
REPRESENTATIVE COGHILL said that is the heart of his question.
If someone is stopped, there must be probable cause. "As a
primary law, I still think you need to have some reason, and it
seems to me that [current law, AS 28.05.095(e),] does that."
REPRESENTATIVE KOTT asked if a violation will become a moving
violation subject "to points."
LIEUTENANT SHARP said there are no points for this offense, and
offered his belief that it wouldn't be considered a moving
violation.
3:54:36 PM
LIEUTENANT SHARP said he did not know how it would affect
insurance costs.
CHAIR McGUIRE said her car insurance company asked her whether
she wears her seatbelt.
LIEUTENANT SHARP said a passenger could receive a citation.
REPRESENTATIVE ANDERSON pointed out that such is subject to a
fine of only $15.
3:56:38 PM
SENATOR BUNDE said [AS 28.05.095(e)] makes it a secondary
offense, and keeping that provision in statute negates the
intent of the bill. He said pilots don't get in an airplane
without a seatbelt, and there are many more car crashes than
airplane crashes. Seatbelts also keep a driver controlled under
extreme maneuvers, he added, which helps prevent accidents. Do
it for the kids, he concluded.
3:59:50 PM
REPRESENTATIVE GARA made a motion to adopt Amendment 1 [text
provided previously].
REPRESENTATIVE ANDERSON objected for the purpose of discussion.
REPRESENTATIVE GARA said Amendment 1 would require an officer to
see that someone is not wearing a seatbelt before making a stop.
It will protect against a citizen telling on someone else who is
driving without a seatbelt.
REPRESENTATIVE ANDERSON removed his objection.
REPRESENTATIVE GRUENBERG made a motion to amend Amendment 1, to
replace the word "show" with the word "prove". There being no
objection, Amendment 1 was amended.
CHAIR McGUIRE asked whether there were any objections to
Amendment 1, as amended. There being none, Amendment 1, as
amended, was adopted.
REPRESENTATIVE COGHILL said he wants to make sure there is a
violation before an officer stops a vehicle, and asked if
Amendment 1, as amended, did that.
SENATOR BUNDE offered his understanding that there must be
probable cause in order to bring a prosecution.
4:04:08 PM
REPRESENTATIVE GRUENBERG said yes to Representative Coghill's
question.
REPRESENTATIVE GARA said he agrees, but it would not hurt to add
language to the effect that "nothing in this bill reduces the
requirement that an officer have probably cause before they stop
a car."
REPRESENTATIVE GRUENBERG suggested wording it such that a
seatbelt violation is not probable cause for search and seizure;
he then he withdrew that suggestion.
4:05:57 PM
REPRESENTATIVE COGHILL made a motion to adopt Conceptual
Amendment 2, to say, "Nothing in the bill minimizes the need for
establishing probable cause for stopping or detaining a vehicle
for a violation."
REPRESENTATIVE GRUENBERG suggested that that language could be
inserted into AS 28.05.095, and indicated that he supports
Conceptual Amendment 2.
CHAIR McGUIRE asked whether there were any objections to
Conceptual Amendment 2. There being none, Conceptual
Amendment 2 was adopted.
4:06:44 PM
REPRESENTATIVE ANDERSON moved to report HCS SB 87(STA), as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, HCS SB
87(JUD) was reported from the House Judiciary Standing
Committee.
ADJOURNMENT
4:07:12 PM
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 4:07 p.m.
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