Legislature(1995 - 1996)
02/20/1995 01:08 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE February 20, 1995 1:08 p.m. MEMBERS PRESENT Representative Brian Porter, Chairman Representative Joe Green, Vice Chairman Representative Al Vezey Representative Cynthia Toohey Representative David Finkelstein MEMBERS ABSENT Representative Con Bunde Representative Bettye Davis COMMITTEE CALENDAR HB 72: "An Act enacting the Uniform Fraudulent Transfer Act." PASSED OUT OF COMMITTEE * HB 159: "An Act allowing a person under age 21 to be arrested by a peace officer without a warrant for illegal possession, consumption, or control of alcohol; relating to the offenses of driving while intoxicated and failure to submit to a chemical test of breath or blood; and providing for an effective date." HEARD AND HELD HJUD - 02/20/95 *HB 158: "An Act relating to civil actions; amending Alaska Rules of Civil Procedure 49, 68, and 95; amending Alaska Rule of Evidence 702; and providing for an effective date." SCHEDULED BUT NOT HEARD (* First public hearing) WITNESS REGISTER DEBRA PERLMAN, Legislative Counsel National Conference of Commissioners on Uniform State Law Chicago Headquarters Chicago, Illinois Telephone: (312) 915-0195 POSITION STATEMENT: Testified in favor of HB 72 DEBORAH RANDALL, Attorney Law Firm of Davis and Goerig 405 W. 36th Avenue Anchorage, AK 99503 Telephone: (907) 561-4420 POSITION STATEMENT: Testified in favor of HB 72 MARY ELLEN BEARDSLEY, Assistant Attorney General Commercial Section Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, AK 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Testified in favor of HB 72 TOM EVANS, Credit Manager and President International Credit Association of Anchorage 2700 E. Tudor Anchorage, AK 99501 Telephone: (907) 762-8875 POSITION STATEMENT: Testified in favor of HB 72 JERRY WEAVER, Chamber Vice President and Manager, Commercial Lending, National Bank of Alaska and Secretary/Treasurer, Alaska Bankers Association 301 West Northern Lights Boulevard Anchorage, AK 99503 Telephone: (907) 276-1132 POSITION STATEMENT: Testified in favor of HB 72 RON OTTE, Commissioner Department of Public Safety P.O. BOX 111200 Juneau, AK 99811-1200 Telephone: (907) 465-4322 POSITION STATEMENT: Testified in favor of CSHB 159 LOREN JONES, Director Division of Alcoholism and Drug Abuse Department of Health and Social Services P.O. Box 110607 Juneau, AK 99811-0607 Telephone: (907) 465-2071 POSITION STATEMENT: Provided information on CSHB 159 DAVE HERNDON, Executive Director Anchorage Chapter of Mothers Against Drunk Driving (MADD) 130 West International Airport Road Anchorage, AK 99518 Telephone: (907) 522-6233 POSITION STATEMENT: Testified in support of CSHB 159 MICHAEL J. CORKILL, President Alaska Peace Officers Association 1979 Peger Road Fairbanks, AK 99709 Telephone: (907) 451-5316 POSITION STATEMENT: Testified in favor of CSHB 159 JOHN NEWELL, Chief of Police 304 Lake Street, Room 102 Sitka, AK 99835 Telephone: (907) 747-3245 POSITION STATEMENT: Testified in favor of CSHB 159 MARGOT KNUTH, Assistant Attorney General Criminal Division Department of Law P.O. Box 110300 Juneau, AK 99811-0300 Telephone: (907) 465-4037 POSITION STATEMENT: Provided information on CSHB 159 JERRY SHRINER, Special Assistant Office of the Commissioner Department of Corrections P.O. Box 112000 Juneau, AK 99811-2000 Telephone: (907) 465-3376 POSITION STATEMENT: Provided information on CSHB 159 PREVIOUS ACTION BILL: HB 72 SHORT TITLE: UNIFORM FRAUDULENT TRANSFER ACT SPONSOR(S): REPRESENTATIVE(S) PORTER,Bunde JRN-DATE JRN-PG ACTION 01/06/95 39 (H) PREFILE RELEASE 01/16/95 39 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 39 (H) LABOR & COMMERCE, JUDICIARY, FINANCE 01/19/95 91 (H) COSPONSOR(S): BUNDE 02/01/95 (H) L&C AT 03:00 PM CAPITOL 17 02/01/95 (H) MINUTE(L&C) 02/03/95 229 (H) L&C RPT 4DP 3NR 02/03/95 229 (H) DP: ROKEBERG, KUBINA, PORTER, KOTT 02/03/95 229 (H) NR: ELTON, MASEK, SANDERS 02/03/95 229 (H) 2 ZERO FISCAL NOTES(LAW, DCED)2/3/95 02/17/95 (H) JUD AT 01:00 PM CAPITOL 120 02/20/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: HB 159 SHORT TITLE: DWI LAWS/ MINOR IN POSSESSION LAWS SPONSOR(S): REPRESENTATIVE(S) PORTER,Bunde JRN-DATE JRN-PG ACTION 02/06/95 253 (H) READ THE FIRST TIME - REFERRAL(S) 02/06/95 253 (H) JUDICIARY, FINANCE 02/17/95 (H) JUD AT 01:00 PM CAPITOL 120 02/20/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: HB 158 SHORT TITLE: CIVIL LIABILITY SPONSOR(S): REPRESENTATIVE(S) PORTER,Toohey JRN-DATE JRN-PG ACTION 02/06/95 253 (H) READ THE FIRST TIME - REFERRAL(S) 02/06/95 253 (H) JUDICIARY, FINANCE 02/17/95 (H) JUD AT 01:00 PM CAPITOL 120 02/20/95 (H) JUD AT 01:00 PM CAPITOL 120 ACTION NARRATIVE TAPE 95-13, SIDE A Number 000 The House Judiciary Standing Committee was called to order at 1:08 p.m. on Monday, February 20, 1995. A quorum was present. The meeting is on teleconference with Anchorage, Fairbanks, Ketchikan and Sitka. CHAIRMAN BRIAN PORTER stated the following bills would be heard: HB 72, CSHB 159 and HB 158, all of which he was sponsoring. HJUD - 02/20/95 HB 72 - UNIFORM FRAUDULENT TRANSFER ACT CHAIRMAN BRIAN PORTER said this legislation passed the House last year, and also passed in 32 other states. This legislation would update our statutes. He then read the following sponsor statement: "The Uniform Fraudulent Transfer Act (UFTA) provides creditors with a remedy when debtors transfer or hide assets that would otherwise be available to satisfy legitimate debts. HB 72 is modeled after the uniform law adopted by the National Conference of Commissioners on Uniform State Laws. The Attorney General of the State of Alaska is in support of this needed legislation. "Alaska law in this area was adopted in 1949 from the state of Oregon and had received little legislative attention. Yet, many changes in both state and federal law, particularly in the area of bankruptcy, and relationships between creditors and debtors have become more complex. "At this time, Alaska law provides that a conveyance of real or personal property will be void if it was made `with the intent to hinder, delay or defraud creditors.' AS 34.40.010. The existence of this fraudulent intent is a question of fact and the burden of proof is upon the creditor (Summers v. Hagen_P.2d_, No.3961, May 28, 1993). This burden of proof can be extremely hard to prove. UFTA would eliminate the present Alaskan necessity of finding actual intent by a property transferor to hinder, delay or defraud a creditor in many situations where the transferor is obviously transferring assets solely to keep them out of the reach of transferor's creditors. UFTA sets out numerous non-exclusive factors to be considered by the court when determining if the debtor had `actual intent.' "Thirty-two (32) states have adopted UFTA into their laws. Uniformity has become not only a question of law between states, but also between state and federal law. Without uniformity, credit becomes less available, and the credit mechanism is less reliable. The Uniform Fraudulent Transfer Act takes into account the current development in both law and practice in creditor-debtor relationships." Number 080 DEBRA PERLMAN, Legislative Counsel, National Conference of Commissioners on Uniform State Law, Chicago Headquarters, explained that this conference is a 103-year-old organization. It is made up of practicing lawyers, judges, and law professors appointed by the Governors of every state. At Uniform Law Conferences, they come together to draft laws they feel should be adopted on a uniform basis. During the meetings, they have Uniform Law Commissioners sitting around the table, as well as advisors and observers from all over the spectrum; so that the end result is as balanced as possible, in order to achieve uniform adoption throughout the country. The Uniform Fraudulent Transfer Act is a modern version of the Uniform Fraudulent Conveyance Act (UFCA), originally promulgated by the National Conference in 1918. Alaska is not one of the states that had adopted this Act. Alaska probably has some type of Statute of Elizabeth law which was recognized in the 1500s. So Alaska clearly needs to be brought up to date in the area of fraudulent transfers. The intent of the UFTA is the same as the UFCA. It classifies the category of transfers as money owed to creditors. The UFTA would provide creditors with a remedy for the transfers. The Act declares a transfer made while obligations incurred was actual intent to hinder the payment of debt. Failure to notify creditors would be fraudulent. MS. PERLMAN explained, in addition, the transfer made before obligation occurred without adequate consideration, could be fraudulent; whether or not there was actual intent to defraud. You do not necessarily have to have actual intent to defraud or hinder, in order for the transfer to be considered fraudulent. If there is no actual intent, then in order to be considered fraudulent, certain conditions listed in the Act must be met. One example would be if the debtor made a transfer, and as a result of the transfer became insolvent, even before the transfer occurred, then that would be considered a fraudulent transfer. It is just a matter of it being very unfair to creditors for a transfer like this to take place, when the debtor has an obligation to handle the creditor's concerns as well. So there is actual intent, and there is also constructive intent. She said they hoped all 50 states would adopt this legislation. Number 190 REPRESENTATIVE AL VEZEY discussed with Ms. Perlman his concerns about having this type of language in the statutes. He said the language does not address fraudulent transfer that is not intentional. In liquidating hard assets, he would not want the worth of his property determined by someone else. MS. PERLMAN explained that fair market value would be the amount used in selling. She also said this would only become an issue if the creditors did not get paid. REPRESENTATIVE VEZEY argued that if you want to liquidate today, you have to sell for the best price right now, not what you may be able to get six months from now, or six months ago. In Juneau, those can be drastic differences. He had been to court on occasion to establish fair market value, and has no faith in someone else being able to tell him what his assets are worth. Number 310 MS. PERLMAN said the determination is made using the reasonable equivalent of fair market value, which is only one consideration. If the market is such that something cannot actually be sold for fair market value, then it probably would not be considered a fraudulent transfer if someone sold it for a lot less than they could have originally gotten for it. If someone sold a $20,000 car for $15 to their aunt, in order to avoid creditors, then that would most likely be considered a fraudulent transfer; because even for the sheet metal, you can get more than $15 for a car. It really depends on the situation. REPRESENTATIVE VEZEY expressed concerns over the fact that there is no definition of what reasonable equivalent value is. He would like to at least see a disclaimer, saying that if you have an arms length transaction, that would be considered prima facie evidence that there was no intent to defraud. MS. PERLMAN explained they do not want to define this reasonably equivalent value in statute, we want that to be a case-by-case determination. That can be best done by us not getting involved with specifics. Number 410 REPRESENTATIVE VEZEY did not understand why there was 20 lines of statute mitigating circumstances that would describe intent to defraud, but no expansive language on what reasonably equivalent value is. He did not trust the courts to understand his idea of commercial practice. MS. PERLMAN argued the courts do, and have handled reasonably equivalent determinations for 75 or 80 years. REPRESENTATIVE VEZEY asked which factors are used in proving or disproving intent. MS. PERLMAN agreed the language was possibly phrased a little awkwardly. They are saying if it is not reasonably equivalent to the value, then actual intent might be considered. Number 445 DEBRA RANDALL, Attorney, Law Firm of Davis and Goerig, testified via teleconference from Anchorage, and said her main areas were estate planning and probate. Their concerns were over the current actual intent language which goes a step further, including constructive intent, which says you can establish intent. They were worried this would apply not only to present creditors, but also to future creditors. Something they do frequently is establish trust fund accounts for children to go to college. She was concerned that a transfer such as this could be tapped into by a creditor in the future, 10 or 20 years down the road. Maybe future creditors would not be included, but they were worried about the possibility, and wanted the language to reflect that it applies only to present creditors. She said they would delete Section 2 completely. Including future creditors would increase litigation. Their law firm was in favor of this legislation, in general, but they were definitely concerned about future creditors. Number 520 MARY ELLEN BEARDSLEY, Assistant Attorney General, Department of Law, testified via teleconference from Anchorage, representing the Alaska Housing Authority. With regards to future creditors, she gave an example of why she did not think the law should be changed with regard to future creditors. In 1992, Alaska Housing merged with the Public Housing Authority. They have a person living in one of their apartments in Fairbanks who was receiving subsidy through the Housing and Urban Development (HUD) program. It turned out that person had property and other assets he had failed to disclose for 20 years. After they found out about it, they discontinued his subsidy, and are presently suing him for the subsidies he did receive, because his assets exceeded the monetary limit available to receive those subsidies. The lawsuit was filed. They are a future creditor, and have no judgment at this time. During the lawsuit, they obtained a prejudgment writ of attachment which attached a piece of real property in Fairbanks. The defendant then proceeded, after the attachment, after the lawsuit was filed, to deed that property to his brother who had been living out of the state for probably over 40 years. The defendant is claiming the property always belonged to his brother and that he was essentially taking care of the property over the last 40 years. The property was purchased in 1959 by the defendant. All of the property records have always been in his name, and he has always paid the taxes. MS. BEARDSLEY noted as you can see, we are definitely a future creditor, we do not have a judgment, and if we fell under this Act, we could have shown actual intent by using the considerations that are listed on page 3 of the Act, under subsection (b), under 34.41.030, the transfer occurred after the lawsuit was filed. If this Act had been in place, we would have been able to attach that property and get it back, doing whatever was necessary to satisfy the judgment. But now, we do not have the luxury to try to bring that property back in. We believe the transfer was fraudulent, and under the current law, we have to prove the intent. MS. BEARDSLEY continued, for the reason of this example, it is critical to include future creditors in this legislation. This statute sets out a statute of limitations of two to four years, or perhaps even one year, after the transfer is actually found out about. You need to take the whole bill, and not look at it just piecemeal, because right now, the proof of intent can only be determined through circumstantial evidence. She agreed with Ms. Perlman that the reasonable equivalent value should be decided by the court or by a jury. Number 665 TOM EVANS, Credit Manager and President of International Credit Association of Anchorage, testified via teleconference and explained the organization is made up of local credit managers who push for educational legislative reform, and things of that nature. They support HB 72. He said bankruptcies protect debtors' rights, but creditors also have the right to assets that are improperly or unlawfully being transferred in order to keep the assets out of the creditors' hands. This legislation will go a long way in making sure that happens. Number 690 JERRY WEAVER, Chamber Vice President and Manager of Commercial Lending, National Bank of Alaska, testified via teleconference from Anchorage, and stated he is also Secretary/Treasurer for the Alaska Bankers Association, and was speaking for that group. They encouraged passage of HB 72. He felt proving intent to transfer fraudulently was too costly. He felt it necessary for constructive intent to be in there. Number 765 REPRESENTATIVE VEZEY again expressed concerns about a court determining reasonableness of equivalent value. Number 785 MS. BEARDSLEY argued that the statute could not be made narrow, or that would create an arena of unfairness. Reasonableness must be determined by individual circumstances. TAPE 95-13, SIDE B Number 000 REPRESENTATIVE CYNTHIA TOOHEY made the motion to move HB 72 out of committee with the two zero fiscal notes. REPRESENTATIVE VEZEY objected. Number 030 CHAIRMAN PORTER clarified the bill, using the example of estate planning. There is a statute of limitations within the bill itself, which would preclude the 10 - 20 year example. But there has to be some relationship between the transfer and the unpaid debt. If someone set up an estate for their kids, and several years later was found in the position of having a malpractice suit brought against them, there is no way they could go back and say that original trust had been set up in violation of this Act. It could not happen. REPRESENTATIVE DAVID FINKELSTEIN added the sections making that clear are on page 2, (a) and (b). It is not just reasonably equivalent value, it has to be one of these two conditions, and if one of these two conditions is not met, it does not matter whether there is reasonably equivalent value. The first is the business dealings that involve the business undertaken at that time. It says, "... was engaged, or was about to engage...", so it has to be timing. Section (b) has to do with debts that one is able to foresee. REPRESENTATIVE VEZEY said, for the record, that does not address his concerns. Number 080 REPRESENTATIVE FINKELSTEIN said he shared the concerns Representative Vezey had, but the testimony heard seems to indicate the determination of fair value is something that occurs right now under law, and is not significantly changed by this. It is a problem we may not be able to solve, but it does exist under current law. REPRESENTATIVE TOOHEY assumed the court could go back on your record of reasonable transfer for many years and see that you are unreasonably transferring things, as a pattern. REPRESENTATIVE JOE GREEN thought in other tort actions, the court has for years used the average reasonable person. There is a degree of performance, of value that could be looked at as reasonable. While it may not suffice the person who was defrauded, it still should be a matter where the court could arrive at a value that would be "reasonable." CHAIRMAN PORTER requested a roll call vote be taken. Representatives Finkelstein, Toohey, Green, and Porter voted yes. Representative Vezey voted no. The bill passed with a four to one vote. HJUD - 02/20/95 HB 159 - DWI LAWS/MINOR IN POSSESSION LAWS CHAIRMAN PORTER, bill sponsor, introduced the committee substitute for HB 159. This bill basically asks that the third conviction for driving while under the influence (DWI) within a three year period of the first two, should be treated as a class C felony, expanding the ability of the court to sentence the individual to five years. He then read the following sponsor statement: "It is a crime that drunken driving remains a misdemeanor in our state no matter how many times a person is convicted. At some point - a repeat conviction should become a felony. "HB 159 DWI Laws/Minor In Possession provides law enforcement and prosecutors with the tools they need to combat the significant highway safety problems with drunk drivers. This legislation would render drunk driving a felony on the third offense within a five year period and require a minimum sentence of 120 days with a $5000.00 fine upon conviction. "HB 159 also gives the court the option of ordering a person to take Antabuse or a similar drug as a condition of parole or probation. These drugs are intended to prevent the consumption of alcohol. "The most frequent violent crime in the country is drunk driving. A study published by the Alaska Department of Transportation and Public Facilities said alcohol was a factor in 982 accidents statewide in 1993. In the same year, 49 Alaskans died in 37 alcohol-related accidents. "Repeat offenders account for a disproportionate number of fatal accidents, in spite of licenses suspended and jail time served. In fatal accidents in which the driver is drunk, people with a prior conviction for drunk driving are almost five times more likely to be involved than those with no record, according to the National Highway Transportation Safety Administration. "Driving is a privilege granted by the state that can be conditioned upon consent to reasonable terms. HB 159 would give Alaska one of the toughest drunk driving statutes in the nation and send a clear message that Alaskans will no longer tolerate persons who drive drunk." CHAIRMAN PORTER described a case where a minor appearing intoxicated, smelling of alcohol, and having alcohol in his possession, could not be arrested because the officer did not see the teenager consume the alcohol. They could not make an arrest, but this bill would allow them to do so, under probable cause. Number 260 RON OTTE, Commissioner, Department of Public Safety, said they were in support of this bill addressing the issue of the chronic impaired driver. This is an ongoing problem throughout the state. The most current statistics (1993) show there were 42 people who died as a result of impaired drivers. Conceptually, law enforcement is very supportive of anything that is going to deal with this chronic problem. In terms of minors in possession, alcohol with our young people is a very serious problem in this state. It is very difficult for law enforcement finding people who are intoxicated or impaired at parties, and not being able to deal with those issues as quickly and effectively as they used to be able to. Number 305 REPRESENTATIVE GREEN asked Commissioner Otte if increasing the sentence of a third time offender would encourage plea bargaining. The reason he asked is, he visited a court over the interim and every case he witnessed had to do with driving under the influence, all multiple offenders, and every one of them was plea bargained. He was concerned that increasing the penalty would increase the amount of plea bargaining. We would, in effect, be shooting ourselves in the foot. Number 315 COMMISSIONER OTTE said it is frustrating to law enforcement officers on the streets also. The recognition of lack of jail space is a frustrating dilemma. LOREN JONES, Director, Division of Alcoholism and Drug Abuse, Department of Health and Social Services, talked about the drugs available for aiding someone in the prevention of consumption of alcohol. The major drug used is Antabuse. There are two sections in this bill that would allow the courts, as a condition of probation or parole, to order a person to take drugs or a combination of drugs, to prevent the consumption of alcoholic beverages. MR. JONES stated Antabuse is a prescription drug used in conjunction with alcohol treatment. It blocks the normal breakdown of alcohol, causing the adverse reaction in a person who consumes alcohol. The reactions are flushing, throbbing in the head and neck, headache, nausea, vomiting, difficulty in breathing, chest pains, and low blood pressure. Reactions can last anywhere from 30 to 60 minutes to several hours. Because of the severity of the potential reaction, a doctor must prescribe this drug, and the patient must be aware of the reaction it can cause. Persons with allergies to rubber and some pesticides, and persons suffering glaucoma, heart disease or psychosis should not take Antabuse. It should be used with precaution for persons with brain damage, diabetes, epilepsy, liver, or kidney disease. All of these are common among some alcoholics, but may not be as common among drunk drivers, which tend not to have a long history of consumption. The normal course of treatment is to take 50 milligrams of the drug for two weeks, and then a maintenance dose of 250 milligrams each day. Drinking can take place without reaction three to five days after the person stops taking Antabuse. This leaves a lot of time to monitor persons to make sure they are taking the drug, and gives the person time to consider the action they took. Antabuse is not as widely used in drunk driving programs or in treatment programs with this particular population. We made a quick survey of 12 other states' alcohol safety action programs, drunk driving programs and diversion programs, to see if Antabuse or other drugs were used, either under court order or voluntarily. We found this is not a widely held practice in any of the states. The research literature on the effectiveness of Antabuse is somewhat mixed. The drug works best with motivated clients who perceive they have a problem and want to do something about it. It works only when used with some other kind of comprehensive treatment approach. It also seems to work best with married persons, because there is someone there to provide motivation. There are other drugs, but they are experimental and not available in the United States. One recent drug available is called Maltrixon which is not designed to give the person adverse reactions, but deters the craving. Research is still new on this, and testing incomplete. He said they were in support of anything that would help motivate people, especially juveniles to get into treatment. REPRESENTATIVE TOOHEY asked if Mr. Jones had any problem with the biweekly Alcoholics Anonymous (AA) meetings. MR. JONES replied not at all. REPRESENTATIVE FINKELSTEIN asked what the cost was for a prescription for Antabuse. MR. JONES was not sure but thought it was relatively inexpensive, maybe about $1 per day. Number 465 REPRESENTATIVE FINKELSTEIN expressed concerns about what would happen when the person eventually went off of the drug. This drug would only prolong the alcoholic's day of reckoning with the drinking problem. It only insures the person is on the drug while in the custody of the Department of Corrections. CHAIRMAN PORTER said it is intended to allow a person to get out of jail, saving that expense, with some reasonable guarantee there will be no drinking during that period of time while they are under the jurisdiction of the Department of Corrections. After that, all other considerations come into play about how to motivate them to stay off of alcohol, or, if nothing else, to not drive while they are drinking. This bill is not intended to fix that problem. REPRESENTATIVE FINKELSTEIN asked if anyone knows the rate at which a person returns to alcohol after being on this drug, and whether that rate is more or less than someone who has gone through alcohol treatment without this drug. Number 520 MR. JONES said there is some elevation of success statistically, but not a lot different than the person going through treatment without the drug. The drug does not appear to add that much more motivation to stop drinking, to the treatment. It will give the general public a sense that those on probation are remaining sober. Hopefully this is not a false sense. CHAIRMAN PORTER said the clinical research was not dealing only with the population on probation/parole; it deals with the entire group. He felt the motivating factor was to say, "Take this, or you are going back to jail." REPRESENTATIVE VEZEY asked if Mr. Jones was dubious of the value of having court ordered anti-alcohol drug treatment. MR. JONES said from a clinical standpoint, the drug changes the client's sense of motivation, and how the client is to be approached. His dubiousness is just around the legal issues of the court being able to order someone to take a prescription drug. REPRESENTATIVE TOOHEY felt they should not name a particular drug, but should leave it open to allow for new drug treatments that may be forthcoming. Antabuse does have some success, but there is also a definite failure rate to it. Number 580 DAVE HERNDON, Executive Director of the Anchorage Chapter of Mothers Against Drunk Driving (MADD), testified from Anchorage and said they were in full support of this bill. There are a large number of DWI offenders who are simply not getting the message that this is not acceptable behavior. They would support anything that would get the attention of these offenders. He also strongly urged that the language cover all forms of vehicles - land, air, and water. Number 627 CHAIRMAN PORTER noted the bill does cover water and aircraft as well as ground vehicles. MIKE CORKILL, President of the Alaska Peace Officers Association, testified from Fairbanks, and felt this to be a positive piece of legislation. The recidivism rate is a public problem for peace officers as well as citizens. There have been over 4700 DWIs this past year, and out of those, 250 were third offenses. He would support heavy fines, vehicle forfeitures, and a felony on the third offense. JOHN NEWELL, Chief of Police, Sitka, testified via teleconference in support of the bill. He is also the President of the Chiefs of Alaska Association. He is in total support of the effort this bill makes. We should take any steps we can to further this cause. The first change, under subsection (b)1, where it refers to AS 04.16.050, includes the cities that do similarly effective jobs. He agreed with making it a C felony after the third offense in five years. He suggested the change in consistency that would make the fifth offense within five years a $5,000 penalty, and the sixth offense would be a C felony with a 240-day sentence and a $5,000 fine. But under the ten year offense, it would move to 360 days and a $4,000 fine. Under the sixth offense within ten years, the jail time provision is greater under the ten years than under the five. He suggested for the committee's consideration that after the fifth charge of DWI, that person is a serious threat, so the C felony should be attached if under the ten year period. CHAIRMAN PORTER said that had escaped him. He intentionally tried to create a bill that would not give a guy a better break with a felony than with a misdemeanor. On the sixth offense, we let that one slip through. MR. NEWELL also suggested the bill be amended to allow for the permanent fund dividend (PFD) to be attached for paying this fine. He thought the current law allowed for the PFD to pay for incarceration costs but not for fines, and may also be limited to a one year claim. Number 736 REPRESENTATIVE FINKELSTEIN asked what Section A amends. MARGOT KNUTH, Assistant Attorney General, Criminal Division, Department of Law, answered Representative Finkelstein's question. She said there are two statutes: One is the DWI offense, and the other is the refusal offense. Section 8, amends the refusal statute so somebody who refuses to take a breath test, trying to skirt around the DWI offense, will have the same penalty. One refusing to take the breath test is presumed to be a DWI violator. MS. KNUTH then addressed some of the provisions in the bill. Misdemeanors normally must be committed in the presence of the officer in order for there to be an arrest made. A judge has ruled that the misdemeanor offense committed was the act of consuming the alcohol, and that occurred in the time before the officer came upon an obviously inebriated juvenile. There are two other circumstances now, where we allow warrantless arrests. One is for DWI cases, and the other is for domestic violence. In both of those instances, there is another dynamic going on that warrants treatment, even though it is a misdemeanor offense. In a DWI case, you want the person off of the road; it is a matter of protection to the public. In domestic violence you want to be able to intercede, separating the parties right away. In both of those cases, there is a safety issue. The same safety issue exists in minor consuming, because minors who are intoxicated have even poorer judgment than usual. This is an instance where, if an officer can take a juvenile to the police department, the officer can make sure the release is done either to a parent or guardian. It is no help and no goal of the state to be able to issue a citation to an underaged person, and say, "Come to court next Wednesday for minor consuming." What you want with a minor consuming offense, is to be able to intercede at the time, considering it a safety issue. She noted the problem in Alaska is we have remained a .10 state, while some of our western sister states have dropped down to a .08 state. The problem arising from this is that our Alaska Court of Appeals said that a conviction from a .08 jurisdiction is not substantially similar to an Alaska conviction which has to be .10. The court has said you cannot use that conviction the same way you use a prior Alaska conviction. So section 4,(c) and (a) says a prior conviction from a law ordinance that requires a lower level of alcohol in the person's blood or breath than that required in Alaska law, can be counted for a prior conviction. This is the answer to a large problem. Somebody who has a conviction for DWI in any state should be treated as though they have a prior conviction for a DWI. For these persons to be able to take advantage of this loophole, to keep being treated like a first offender in this state, is a disservice to the public and to the individual who needs the type of treatment that is appropriate for repeat offenders. This same change would be appropriate in commercial motor vehicle DWI cases. She thought they should separate the bill out as doing two things. One is that it makes third and subsequent offenders Class C felony offenders. Secondly, it specifies a mandatory minimum sentence for those felony offenses. MS. KNUTH said existing law has a progressive sentencing scheme based on two principles. One, is that more serious conduct should result in a more serious sentence. The other is, even if it is the same conduct repeated, it ought to be treated more seriously on the repeated offenses. TAPE 95-14, SIDE A Number 000 MS. KNUTH continued, explaining that on a second Class C felony offense, there is presumption that the sentence should be two years; three years for the third Class C felony offense, and so on. She said the dilemma in this is the cost to the Department of Corrections when you charge all these people with felonies. The odds of there being funding for another correctional facility is a remote possibility, and some people feel spending the money on rehabilitation would be a more efficient way of resolving the problem. Number 210 REPRESENTATIVE GREEN asked about the possibility of incarceration outside. Number 235 CHAIRMAN PORTER said in making them felons, it does provide for them to be incarcerated outside, while those charged with misdemeanors must stay here. Number 280 REPRESENTATIVE VEZEY asked for clarification. He asked Ms. Knuth if she had ever failed to obtain an indictment out of a grand jury, since a defendant has a constitutional right to indictment by a grand jury only if charged with a felony. MS. KNUTH said she had. Number 300 JERRY SHRINER, Department of Corrections, said in calculating the fiscal note, they did not contemplate that individuals convicted and sentenced under this bill would serve much, if any of that time in prison. The calculations were made on the assumption that these people would be placed in community residential centers, halfway houses, or treatment programs. In evaluating these individuals along with others who pose a much greater threat to the community, they would be placed in less restrictive facilities than would burglars, robbers, et cetera. Some of them will end up in jail, but most of them will not. We do not anticipate needing correctional facilities for all of these people, but would have to expand community residential facilities. More probation officers would be needed also. Regarding the outside transfer issue, these people have such a small amount of time to serve that we would not consider sending them to an outside facility. It would not be economical to pay for the transportation. Number 370 REPRESENTATIVE VEZEY asked about the figures on the fiscal note. MR. SHRINER said it was based on a cost of $107 per day. If they are sent to an outside facility, costs would be $59 per day, plus transportation and medical costs. REPRESENTATIVE TOOHEY made a motion to adopt version C of the work draft. Seeing no objection, the work draft was adopted. She then offered a motion to amend page 1, line 11, after .740, to add "...an ordinance with substantially similar elements or..." CHAIRMAN PORTER explained the intent is to allow convictions for violation of municipal ordinances, dealing with minors consuming, to be considered along with the state statute. He then described Amendment Number 2. In Section (a), for the purpose of previous convictions from other jurisdictions, this would be more likely to be upheld if we use the words "provide for" on line 21 and again on line 29, rather than "require." It does not change the intent, it just makes it a little more specific. REPRESENTATIVE TOOHEY made a motion to move Amendment Number 2. Hearing no objection, it was so ordered. Number 545 REPRESENTATIVE TOOHEY then made the motion to move the bill with the attached fiscal notes and individual recommendations. REPRESENTATIVE FINKELSTEIN was not clear on the ramifications for turning some of these folks, particularly alcoholics, into felons, though they should be kept off of the roads for a while. Still he had concerns about the costs. CHAIRMAN PORTER noted the current law decriminalizing public intoxication was based on the philosophy that alcoholism is a medical problem, and not a crime. Consequently, being drunk in public is a medical problem, and not a crime. This is a step further. We are not putting someone into a felony category for being an alcoholic and drinking. We are, however, if they then get into a car a third time in five years. REPRESENTATIVE FINKELSTEIN's main concern was what we were doing for their reintroduction into society. He was not doubting the appropriateness of the punishment, but the effectiveness of the treatment. CHAIRMAN PORTER said he was under the hope that changing this from a misdemeanor to a felony would get people's attention, perhaps precluding having to do this. He asked the committee for a conceptual agreement to incorporate the amendments into a new committee substitute. This was agreed upon by the committee, with the understanding that all committee members present would see the committee substitute one last time before it was passed out of the House Judiciary Committee. Chairman Porter then restated this third conceptual amendment which would provide that sixth offenses receive the same minimum sentence under a felony conviction as the sixth and subsequent offense for a misdemeanor. Seeing no objection, the conceptual amendment passed. REPRESENTATIVE VEZEY asked if they could request a fiscal note from the court system. CHAIRMAN PORTER said they would. He said his intent was to get the wording put into a committee substitute and put it out to the individual members. He mentioned that since time was out, the HB 158 work session would be held over until Monday. ADJOURNMENT The House Judiciary Committee adjourned at 3:30 P.M.