Legislature(1995 - 1996)

02/20/1995 01:08 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               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.                          
                                                                               
                                                                               

Document Name Date/Time Subjects