Legislature(1995 - 1996)

03/08/1996 01:12 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE JUDICIARY STANDING COMMITTEE                              
                         March 8, 1996                                         
                           1:12 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Brian Porter, Chairman                                         
 Representative Joe Green, Vice Chairman                                       
 Representative Con Bunde                                                      
 Representative Al Vezey                                                       
 Representative Cynthia Toohey                                                 
 Representative David Finkelstein                                              
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Bettye Davis                                                   
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL 493                                                                
 "An Act relating to involuntary commitment for alcoholism or drug             
 abuse."                                                                       
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL 462                                                                
 "An Act relating to the offenses of driving while intoxicated and             
 refusal to submit to a chemical test of breath or blood; amending             
 Rules 6 and 32.1, Alaska Rules of Criminal Procedure; and providing           
 for an effective date."                                                       
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL 536                                                                
 "An Act relating to charitable gaming."                                       
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL 341                                                                
 "An Act establishing a tax court to consider and determine certain            
 taxes and penalties due and collateral matters, and amending                  
 provisions relating to taxpayer challenges to the assessment, levy,           
 and collection of taxes by the state; and providing for an                    
 effective date."                                                              
                                                                               
      - HEARD AND HELD                                                         
                                                                               
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 493                                                               
 SHORT TITLE: INVOLUNTARY COMMITMENT:ALCOHOL/DRUG ABUSE                        
 SPONSOR(S): REPRESENTATIVE(S) IVAN                                            
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 02/09/96      2698    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/09/96      2698    (H)   JUDICIARY, FINANCE                                
 02/23/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 02/23/96              (H)   MINUTE(JUD)                                       
 02/26/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 02/26/96              (H)   MINUTE(JUD)                                       
 03/08/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
                                                                               
                                                                               
 BILL:  HB 462                                                               
 SHORT TITLE: DRUNK DRIVING: EVIDENCE & SENTENCING                             
 SPONSOR(S): REPRESENTATIVE(S) PORTER,Toohey                                   
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 02/02/96      2606    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2606    (H)   TRANSPORTATION, JUDICIARY                         
 02/28/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 02/28/96              (H)   MINUTE(TRA)                                       
 03/06/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 03/06/96              (H)   MINUTE(TRA)                                       
 03/08/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
                                                                               
                                                                               
 BILL:  HB 536                                                               
 SHORT TITLE: CHARITABLE GAMING:PERCENTAGE TO CHARITY                          
 SPONSOR(S): FINANCE                                                           
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 02/29/96      2962    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/29/96      2962    (H)   JUDICIARY                                         
 03/08/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
                                                                               
                                                                               
 BILL:  HB 341                                                               
 SHORT TITLE: TAX APPEALS/ASSESSMENT/LEVY/COLLECTION                           
 SPONSOR(S): REPRESENTATIVE(S) GREEN                                           
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 05/09/95      2042    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 05/09/95      2042    (H)   RES, JUD, FINANCE                                 
 10/24/95              (H)   RES AT  9:00 AM ANCHORAGE LIO                     
 10/24/95              (H)   MINUTE(RES)                                       
 01/19/96              (H)   RES AT  9:00 AM CAPITOL 124                       
 01/19/96              (H)   MINUTE(RES)                                       
 01/24/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 01/24/96              (H)   MINUTE(RES)                                       
 01/26/96      2536    (H)   RES RPT  CS(RES) NT 1DP  4NR  3AM                 
 01/26/96      2537    (H)   DP:  GREEN                                        
 01/26/96      2537    (H)   NR:  OGAN, AUSTERMAN, KOTT, WILLIAMS              
 01/26/96      2537    (H)   AM:  NICHOLIA, DAVIES, LONG                       
 01/26/96      2537    (H)   FISCAL NOTE (COURT)                               
 01/26/96      2537    (H)   ZERO FISCAL NOTE (REV)                            
 01/26/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 01/26/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 01/26/96              (H)   MINUTE(RES)                                       
 01/26/96              (H)   MINUTE(JUD)                                       
 01/29/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 01/29/96              (H)   MINUTE(JUD)                                       
 02/28/96              (H)   JUD AT  3:00 PM CAPITOL 124                       
 02/29/96              (H)   JUD AT  4:00 PM HOUSE FINANCE 519                 
 02/29/96              (H)   MINUTE(JUD)                                       
 03/01/96              (H)   JUD AT  8:00 AM CAPITOL 124                       
 03/06/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 03/08/96              (H)   FIN AT  8:00 AM HOUSE FINANCE 519                 
 03/08/96              (H)   JUD AT  1:00 PM CAPITOL 120                       
 03/08/96              (H)   FIN AT  1:30 PM HOUSE FINANCE 519                 
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 DAN SECKERS, Chairman                                                         
 Tax Committee of the Alaska Oil &                                             
    Gas Association (AOGA)                                                     
 Alaska Tax Counsel for EXXON                                                  
 3301 C Street, Suite 400                                                      
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 564-3776                                                    
 POSITION STATEMENT:  Provided information on HB 341                           
                                                                               
 TOM WILLIAMS                                                                  
 Tax Committee of the Alaska Oil &                                             
    Gas Association                                                            
 Alaska Tax Counsel for BP                                                     
 P.O. Box 196612                                                               
 Anchorage, Alaska  99519-6612                                                 
 Telephone:  (907) 564-5955                                                    
 POSITION STATEMENT:  Provided information on HB 341                           
                                                                               
 DEBORAH VOGT, Deputy Commissioner                                             
 Department of Revenue                                                         
 P.O. Box 110405                                                               
 Juneau, Alaska  99811-0405                                                    
 Telephone:  (907) 465-2300                                                    
 POSITION STATEMENT:  Provided information on HB 341                           
                                                                               
 ROBERT BRIGGS, Assistant Attorney of Law                                      
 Oil, Gas & Mining Section                                                     
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska  99811-0300                                                    
 Telephone:  (907) 465-3600                                                    
 POSITION STATEMENT:  Provided information on HB 341                           
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-31, SIDE A                                                            
 Number 000                                                                    
                                                                               
 CHAIRMAN BRIAN PORTER called the House Judiciary committee meeting            
 to order at 1:12 p.m.  Members present at the call to order were              
 Representatives Green, Toohey, Vezey and Finkelstein.                         
 Representative Bunde arrived at 2:04 p.m.  Representative Davis was           
 absent due to a death in her family.                                          
                                                                               
 HB 341 TAX APPEALS/ASSESSMENT/LEVY/COLLECTION                               
                                                                               
 CHAIRMAN PORTER noted that the first bill for consideration was               
 CSHB 341 and added that a joint hearing took place with the House             
 Judiciary and House Finance Committees already regarding this                 
 legislation.  He asked that the sponsor give an opening statement             
 and a status report as to the legislation in it's present form.  He           
 also asked that the industry representatives and the Department of            
 Revenue representatives come forward to present testimony as well.            
                                                                               
 Number 222                                                                    
                                                                               
 REPRESENTATIVE JOE GREEN as sponsor stated that at the joint                  
 hearing already mentioned Mr. Paul Frankel, a partner of Morrison             
 & Foerester, a New York law office gave a presentation regarding              
 tax court systems.  Mr. Frankel is an international expert on tax             
 appeal and he is very knowledgeable about how these systems work in           
 other states.  Representative Green noted that while there were               
 still some sticking points to this legislation he stated that he              
 was extremely pleased with both the stake holders and the                     
 department for a very cooperative and focused series of meetings.             
 There were still points which hadn't been resolved and he felt as             
 though these could be answered in the House Judiciary Committee               
 hearings.                                                                     
                                                                               
 REPRESENTATIVE GREEN said that the draft before the committee                 
 9LS1129/R dated 3/7/96 was the product to the best of everyone's              
 ability to iron out a myriad of small difficulties encountered and            
 compromises given on both sides, but there are were major sticking            
 points left to resolve.  The bill as drafted incorporates the                 
 institution of a quasi-judicial board established within the                  
 Department of Administration which would act on appeal matters                
 brought before it and the members of this board would be nominated            
 by the governor and confirmed by the legislature.  Representative             
 Green noted that there was a fairly strong difference of opinion on           
 both the board and the makeup of the legislative approval for                 
 confirmation.  Most of the other issues have been resolved.  He               
 added that there are still some very minor points that are being              
 worked out.  Representative Green also mentioned three amendments             
 which he brought to the committee which did not cover points of               
 contention, but oversights relating to wording agreed to in                   
 subcommittee.                                                                 
                                                                               
 Number 491                                                                    
                                                                               
 REPRESENTATIVE AL VEZEY stated that his first question dealt with             
 a two person make-up of this tax court and he personally didn't see           
 that they would need more than this amount of people.  He noted               
 also that it took the majority of the board to dismiss one of these           
 individuals.                                                                  
                                                                               
 REPRESENTATIVE GREEN clarified that this majority would be of the             
 other members.  He noted that this was the case because it takes            
 more than one individual to make up a board.  Whether or not, one,            
 or two or three would be sufficient would certainly depend on the             
 case load and this bill began as establishing a tax court which               
 would handle essentially hydro-carbon type appeals because while              
 these cases don't represent a large number they certainly represent           
 a magnitude dollar wise.  The appeals which are brought before the            
 department, superior court or otherwise are large in regard to the            
 dollar amount.  This tax court system was modified significantly              
 through the efforts of the Department of Revenue.  The governor               
 also introduced a similar bill, but that one covers more situations           
 other than hydro-carbons.  This is mentioned in the opening page of           
 the legislation.  Representative Green added that there may well be           
 more than two legislative law types of judges which are needed to             
 handle this case load.                                                        
                                                                               
 REPRESENTATIVE VEZEY thought that the essence of Mr. Frankel's                
 testimony revolved around the fact that it didn't matter where they           
 created the Board of Tax Appeal as long as it wasn't in the                   
 Department of Revenue.                                                        
                                                                               
 CHAIRMAN PORTER stated that it was his impression that Mr. Frankel            
 said that this panel should not be in the Department of Revenue,              
 but there were varying degrees of comfort which might be felt by              
 everyone involved depending on where else it was placed.                      
                                                                               
 REPRESENTATIVE GREEN also stated that "the further the better" was            
 the concept behind where the court was placed and it was going to             
 be further in the first bill, but they got into a problem in                  
 establishing a tax court which might not have a tax expert                    
 appointed to it.  They then decided to leave it not in the                    
 Department of Revenue, but the Department of Administration.  He              
 then gave a very brief overview of how someone would move through             
 this system.                                                                  
                                                                               
 REPRESENTATIVE GREEN said that the appeals now stay within the                
 Department of Revenue until they go to court.  Under the new system           
 this method allows for an informal hearing within the department              
 and then there would be a formal hearing within the Department of             
 Administration and the case would be heard by a tax expert.  The              
 alternative to this process is that a person can go from an                   
 informal hearing, by-pass the formal review, and then go directly             
 to superior court.  The reason for this is to allow at least some             
 place for a de novo hearing so all the facts can be heard, rather             
 than it stay in the Department of Revenue and finally get to an               
 adjudication where that amount of information be forwarded on to              
 the superior court.  This could create a possible prejudice                   
 situation.                                                                    
                                                                               
 DAN SECKERS, Chairman, Tax Committee of the Alaska Oil and Gas                
 Association (AOGA) and Alaska Tax Counsel for Exxon introduced                
 himself, as well as noted that there were others members of AOGA in           
 attendance from Marathon, Unocal and ARCO was on line from                    
 Anchorage.  He read the following statement into the record:                  
                                                                               
 "AOGA is a trade association whose 19 member companies account for            
 the majority of oil and gas exploration, production,                          
 transportation, refining and marketing activities in the state of             
 Alaska.  We are grateful again for this opportunity to offer our              
 comments, which reflect the unanimous consensus of the Tax                    
 Committee.                                                                    
                                                                               
 The present tax appeals process is, we believe, seriously flawed in           
 practice and denies taxpayers the opportunity to have their tax               
 appeals heard and decided by a truly independent and impartial                
 tribunal.  The draft Judiciary CS for HB 341 would significantly              
 reform this process.  There are nine areas in particular which we             
 would like to address.  In some areas we have reached agreement               
 with the Administration, and in others we have not.                           
                                                                               
 1.  Legislative confirmation.  Unlike the Department of Revenue,            
 AOGA believes it is sound public policy for the Legislature to                
 confirm appointments to the administrative law judge positions.               
 These people may decide cases involving tens or even hundreds of              
 millions of dollars in tax claims.  Surely the Legislature has a              
 proper interest in ensuring that these people are qualified,                  
 capable and fair.                                                             
                                                                               
 AOGA also supports confirmation because it provides taxpayers with            
 an opportunity to comment on a candidate before the decision to               
 appoint him or her becomes final.  This ensures that, in the event            
 someone is named who has demonstrated bias or similar improper                
 conduct in the past, that there will be an opportunity to make                
 people aware of those facts before the appointment becomes final.             
                                                                               
 Finally, AOGA supports confirmation because it prevents an improper           
 influence that the Executive Branch may otherwise have over an                
 administrative law judge if it could hold out the lure of                     
 appointment or reappointment over that person.  We are not saying             
 that this has ever happened, nor that we believe it is likely to              
 happen.  But the point is, it could happen.  By having an                   
 independent body like the Legislature involved, even the                      
 possibility of this happening is removed, since the Executive                 
 Branch would no longer be able to 'deliver' on such a promise on              
 its own.                                                                      
                                                                               
 Under Bradner v. Hammond, 553 P.2d 1 (Alaska 1976), legislative             
 11confirmation is allowed under the 'separations of power' doctrine           
 only to the extent it is specifically authorized under the Alaska             
 Constitution.  AOGA is pleased to see that '9-LS1129\R' dated                 
 3/7/96 (which I will refer to as 'Work Draft R' in the rest of my             
 testimony) includes provisions to ensure that the new                         
 administrative law judges will fall within the scope of allowable             
 legislative confirmation under section 26, Article III of the                 
 Alaska Constitution.                                                          
                                                                               
 2.  Standards of review.  It is important here to emphasize at the          
 outset that AOGA and the Department of Revenue are in fundamental             
 agreement about the standards by which the tax claims made by the             
 Department are to be reviewed.  On questions of fact, both sides              
 agree that disputes about what actually happened should be heard              
 and decided as if there were a clean slate.  This is the heart of             
 what the attorneys call 'trail de novo.'  On questions of law,                
 which most often relate to what a particular statute or regulation            
 means, the administrative law judges will not be bound by the legal           
 positions taken by the Department of Revenue, but will be free to             
 decide for themselves which position or interpretation is best.  On           
 questions where the Department has been legally vested with                   
 discretion, its exercise of that discretion is to be upheld so long           
 as it is has a reasonable basis.                                              
                                                                               
 While both sides endorse these standards of review, it is probably            
 also true that both have concerns about how the last two will work            
 in practice.  Given the broad statutory mandates of the Department            
 to administer, collect and enforce the state's tax laws, taxpayers            
 are concerned that almost any legal question could potentially be             
 characterized as one involving the Department's discretion.  In               
 practice, this would make a dead letter of the 'substitution of               
 judgment' standard for ordinary legal issues, which is something              
 we, as taxpayers, do not believe is appropriate or intended.                  
 Conversely, an unduly narrow reading of when the Department is                
 legally vested with discretion could end up impairing the                     
 Department's proper exercise of the discretion that the Legislature           
 intended it to have, which is something we doubt is either                    
 supported by the Department or intended by your Committee.                    
                                                                               
 Because of the decision about which rule applies is so dependent on           
 the particular circumstances of each individual case, we do not see           
 a way to legislate so as to ensure that the administrative law                
 judges will make the right call in choosing which rule to apply.              
 Instead, we will have to trust the administrative law judges to               
 call balls as balls and strikes as strikes in this area.  However,            
 because the question of which rule is applicable is itself a legal            
 question, the administrative law judges will decide this question             
 for themselves on a case-by-case basis without being bound by the             
 Department's characterization of it.  This gives them the authority           
 to decide independently, which is as far as one can go with                   
 legislation.  Whether they actually exercise that authority in                
 practice will be up to the individuals who are named as the                   
 administrative law judges.                                                    
                                                                               
 There is one change however, that AOGA urges the Committee to make            
 to Work Draft R.  In lines 15-16 on page 4, you should delete the             
 words 'the finding of fact of the informal conference decision are            
 presumed correct unless the taxpayer rebuts the findings' and also            
 delete the semicolon at the end of line 16.  AOGA is pleased to see           
 that this amendment has been introduced already by Representative             
 Green.                                                                        
                                                                               
 3.  Discovery.  AOGA is in partial agreement with the Department of         
 Revenue about the subject of discovery.  The Administration's bill            
 (HB 427) would generally limit discovery to only that information             
 which would actually be admissible in the formal hearing.  AOGA               
 pointed out that there some types of discovery in which it is                 
 impossible to know in advance whether it will yield admissible                
 evidence or not.  For example, a taxpayer should be able to find              
 out whether the State has been taking a consistent position with              
 other taxpayers on an issue or not.  If it has been consistent,               
 then there is no issue, and the answer to the question is                     
 irrelevant and inadmissible.  But if the State has been                       
 inconsistent, then it becomes highly relevant to the question of              
 discrimination against particular taxpayers, or whether the                   
 Department has actually adopted a position on the issue.  There was           
 no disagreement over AOGA's point, nor did AOGA disagree with the           
 Department's concern that open-ended 'fishing expeditions' should             
 be prevented.  As a result of discussions with the Department of              
 Revenue, compromise language was developed on this matter which is            
 satisfactory to both sides.  AOGA is pleased to see that compromise           
 language appears in Work Draft R, beginning with line 28 on page 4            
 and continuing through line 5 on page 5.                                      
                                                                               
 However, the other area regarding discovery is one where AOGA and             
 the Department of Revenue do not agree.  The Department wants to              
 declare inadmissible, as a matter of law, evidence about the                  
 legislative history of bills that did not pass, about regulations             
 that were not adopted, and about other taxpayers.  AOGA                       
 acknowledges that in many cases these types of information may be             
 irrelevant.  But there have been real cases in the past where these           
 types of evidence were in fact highly relevant to issues in the               
 appeal.  It is therefore important not to prevent this information            
 from being discovered and admitted as evidence when it is relevant.           
 The latest language offered by the Department to AOGA still                   
 declares these types of evidence to be irrelevant as a matter of              
 law, even though it then proceeds to authorize the administrative             
 law judges to make exceptions and admit the evidence anyway.  We              
 believe it is completely inappropriate to declare an entire                   
 category of evidence to be irrelevant when in fact everyone knows             
 that sometimes the evidence can in fact be relevant.  Therefore,              
 AOGA cannot endorse the Department's most recent proposal.                    
                                                                               
 We believe the language already in Work Draft R sufficiently                  
 authorizes the administrative law judge to prevent discovery from             
 becoming abusive in tax appeals and thereby lead to greater                   
 efficiency.  Ultimately, one reaches a point in legislation where             
 one has fully enabled people to do the right thing, and thereafter            
 one must trust that those people will actually exercise their                 
 authority and do it.  We believe this is where we are with respect            
 to this area in the subject of discovery.                                     
                                                                               
 4.  Option to go directly to court.  The option of proceeding               
 directly to Superior Court instead of to the new administrative law           
 judges was not something that AOGA had originally proposed.                   
 However, we find merit in this proposal and accordingly endorse it.           
                                                                               
 Although we agree with the Administration that most taxpayers will            
 prefer that tax expertise and procedural rules of the new system of           
 administrative law judges, there may be times when it would be more           
 efficient and expedient to proceed directly to court.  For example,           
 when it is clear that a particular issue will likely be appealed to           
 the Superior Court and beyond, the taxpayer may prefer to proceed             
 directly to court to avoid the time and expense of going first to             
 an administrative law judge and then to court.                                
                                                                               
 Or, if a dispute involves issues that an administrative law judge             
 cannot rule on, such as constitutional issues, it would make much             
 more sense to allow a direct appeal to the forum where those issues           
 can be dealt with.  Otherwise, they could well end up having to be            
 litigated twice - once before the administrative law judge anyway,            
 in order to preserve the right to argue those issues later on                 
 appeal, and then again in court.                                              
                                                                               
 As Mr. Paul Frankel mentioned in his testimony before the joint               
 hearing of the House Judiciary and Finance Committees on February             
 29th, the federal tax system offers taxpayers a choice of forums.             
 Certain states likewise provide such an option (e.g. New Hampshire,           
 Florida, Georgia and Alabama just to name a few).  By making the              
 option available in Alaska, the State is saying to taxpayers that             
 it is committed to ensuring the tax appeal process is fair.  If any           
 taxpayer has a residual concern about the independence of the                 
 administrative law judges, the taxpayer has the other option.  But            
 I would repeat that we expect the option of going directly to court           
 to be one that is used only on an exceptional basis.                          
                                                                               
 Having a choice to go either to an administrative law judge or to             
 court will provide a balance between the two forums and will aid              
 each other in arriving at fair, impartial decisions: one with                 
 technical expertise and the other with judicial wisdom.                       
                                                                               
 5.  Court Rule change.  In an earlier draft of the Judiciary CS,            
 there was a Bill Section stating that the creation of a right to de           
 novo review when a taxpayer elects to go directly to Superior Court           
 is a change in Rule 609(b) of the Alaska Rules of Appellate                   
 Procedure.  AOGA agrees with the legal conclusion, reflected in               
 Work Draft R, that the creation of such a right is a change of                
 substantive tax policy, and therefore does not require a two-thirds           
 vote of each legislative body as would be required in a change of             
 a Court Rule.  In Matanuska-Sustina Borough v. Lum, 538 P.2d 994            
 (Alaska 1975), and Winegardner v. Greater Anchorage Area Borough,           
 534 P.2d 541 (Alaska 1975), the Alaska Supreme Court ruled that the           
 creation of a right to de novo consideration in court is a matter             
 of substantive tax policy, and not one of court procedure.  In both           
 cases the Court upheld a statutory right to de novo consideration             
 in an administrative appeal despite former Appellate Rule 45, which           
 said that court review in administrative appeals would be based on            
 the record below.                                                             
                                                                               
 Appellate Rule 609(b) reflects the general statutory rule under the           
 Administrative Procedures Act. AS 44.62.570, which sets the scope             
 of judicial review for all administrative appeals to which the                
 Administrative Procedures Act applies, does not create a right to             
 de novo consideration in court.  Rather, it says the court 'may'              
 grant trial de novo in whole or in part, which means de novo                  
 consideration is discretionary with the judge.                                
                                                                               
 However, tax appeals currently are not subject to the                         
 Administrative Procedures Act, nor would they be under Work Draft             
 R.  And, as Wingardner and Lum make clear, the Legislature can, by        
 statute, create a substantive right to de novo consideration in               
 certain kinds of administrative appeals, and that right will be               
 upheld even though it may be inconsistent with the Court Rules.               
 Since it is a substantive right that would be created under Work              
 Draft R, and not a change in the courts' internal procedure, a two-           
 thirds vote is not needed and Bill Section 19 should be deleted.              
 Indeed, Rule 609(b) will still apply with perfect force to those              
 administrative appeals that are subject to the Administrative                 
 Procedures Act since, in those, there still won't be a statutory              
 right under the Administrative Procedures Act to de novo                      
 consideration in court.                                                       
                                                                               
 6.  Public proceedings.  AOGA endorses the provisions in Work Draf        
 R to keep confidential the record, proceedings and decision in a              
 tax appeal in front of an administrative law judge until the appeal           
 gets to Superior Court.  This reflects the rule under existing law.           
 The Department of Revenue has proposed that the proceedings be                
 opened at the beginning of the formal hearing process before an               
 administrative law judge, instead of at the end of that process.              
                                                                               
 AOGA sees no reason why, in moving the formal hearing to an                   
 administrative law judge outside of the Department of Revenue,                
 there should be any change to the present rule.  When a case moves            
 to court, the full record bearing on the argument and adjudication            
 of the issues in the case does become public.  In other words, the            
 public cannot watch a tax appeal live and in person as they watched           
 the O.J. Simpson trial on TV.  They have to wait to find out what             
 happened.  But they are not cut off from that information;                    
 eventually they do have access.  Meanwhile, the existing protection           
 of confidentiality as the proceedings unfold allows the                       
 participants to focus on the matters at hand, instead of                      
 grandstanding to a public audience.                                           
                                                                               
 It has been suggested that the public feels uneasy about the                  
 negotiation of large tax settlements in private in the past, and              
 that this public concern justifies opening the tax-appeal process             
 to the public at an earlier stage than the current law provides.              
 However, settlement discussions would still be private and                    
 confidential even if the formal hearing were opened to the public.            
 Even the particular terms of any settlement could still be kept               
 confidential.  In other words, opening the hearings up to the                 
 public isn't a cure to the alleged problem about negotiating tax              
 settlements in private.  Nor is there a cure to this particular               
 problem - if the State wishes to preserve the possibility of having           
 tax settlements in the future, there will have to be a way for them           
 to be negotiated privately and off the record.  Otherwise there               
 simply would not be any settlements.                                          
                                                                               
 7.  Definition of 'de novo'.  AOGA and the Department of Revenue            
 have reached an agreement on the issue of whether a definition of             
 'de novo' should be included in the Bill or not.  Both sides agree            
 that, in the context of this particular legislation, 'de novo'                
 means the standards and procedures for tax appeals that will be               
 heard before the administrative law judges under the Bill.  Since             
 there is only one place that the term is used in the context of               
 administrative law judges, inserting language there to make this              
 clarification will eliminate the need for a definition.  AOGA is              
 pleased to see that such a clarification has been made in lines 11-           
 12 of p. 4 of Work Draft R.                                                   
                                                                               
 8.  Procedure to rebut the presumed production rate at the economic          
 limit for ELF purposes under the production tax.  Bill Section 15,           
 beginning with line 27 on p. 17 of Work Draft R and running through           
 line 7 on p. 18, makes certain amendments to AS 43.55.013(g).                 
 Section 013(g) provides for the rebuttal of a presumption about the           
 rate of gas production at the economic limit for a lease or                   
 property.                                                                     
                                                                               
 AOGA and the Department of Revenue agree that the second sentence             
 in AS 43.55.013(g) should be changed to read as follows:  'The                
 taxpayer may rebut this presumption by providing clear and                    
 convincing evidence of a different monthly production rate at the             
 economic limit for the lease or property.'  This change will ensure           
 that the 'clear and convincing' standard for rebutting this ELF               
 presumption under the present law will continue to apply under the            
 new procedures, both in making the initial showing to the                     
 Department of Revenue and in any subsequent appeal from the                   
 Department's decision based on that showing, regardless whether               
 that appeal goes to an administrative law judge or directly to                
 Superior Court.                                                               
                                                                               
 It is unclear at this time whether any further changes to AS                  
 43.055.0123(g) should be made in light of the procedural changes              
 made elsewhere in the Bill, and AOGA and the Department of Revenue            
 have agreed to study this question further.                                   
                                                                               
 9.  Transition rule. AOGA is in basic agreement with the Department         
 of Revenue that taxpayers who are far advanced in their formal                
 hearings when the Bill becomes law should not be allowed to switch            
 over to the new procedures and start again.  Conversely, they agree           
 with us that taxpayers who are still at a very early stage in their           
 formal hearing proceeding should be allowed to use the new                    
 procedures.                                                                   
                                                                               
 We have been unable to reach agreement with the Department of                 
 Revenue on the precise wording of such a transition rule, and so we           
 offer our own proposal for the Committee's consideration, AOGA                
 recommends striking in its entirety Bill Section 17(a), which                 
 appears in lines 2-15 on p. 19 of Work Draft R, and replace it with           
 a new Bill Section 17(a) that would work as follows:"                         
                                                                               
 MR. SECKERS stated that rather than reading this section into the             
 record, he would characterize it for the committee.  He stated that           
 they were basically trying to establish it so the new bill can be             
 used by any taxpayer who hasn't progressed too far in the system so           
 that just because the bill happens to be enacted on a given date              
 for example, this tax payer should be precluded from having to                
 begin their case again.                                                       
                                                                               
 CHAIRMAN PORTER asked if this should replace Section 17 in this R             
 draft.                                                                        
                                                                               
 MR. SECKERS responded that this was correct.  He went on to add.              
                                                                               
 "There is also a technical change to Work Draft R that AOGA would             
 ask the Committee to make.  At the beginning of line 31 on p. 2, we           
 would ask that you insert the words 'disciplined or' in front of              
 the word 'removed'.  This would treat the chief administrative law            
 judge the same way as the other administrative law judges are                 
 treated in lines 1-3 on p. 3.                                                 
                                                                               
 In conclusion, Mr. Chairman, we in AOGA applaud you and your                  
 Committee for your diligence and hard work in developing the                  
 Committee's CS for HB 341.  We particularly applaud the                       
 subcommittee and their efforts.  We also acknowledge and appreciate           
 the willingness of the Department of Revenue and the Attorney                 
 Generals' Office to meet with us and sincerely try to resolve or at           
 least narrow the areas of disagreement.                                       
                                                                               
 As it has been for a number of years, the reform of Alaska's                  
 present tax-appeals system remains a priority of AOGA and its                 
 members.  We believe that, with the changes outlined earlier, you             
 will have a sound, fair and workable bill that will provide real              
 reform to the tax appeals process.  I can pledge to you that we in            
 AOGA are committed to working with you, with this Legislature and             
 the Administration to ensure that these reforms are enacted.                  
                                                                               
 Once again, thank you for the opportunity to testify."                    
                                                                               
 Number 2000                                                                   
                                                                               
 DEBORAH VOGT, Deputy Commissioner, Department of Revenue was next             
 to testify on CSHB 341.                                                       
                                                                               
 "Mr. Chairman you have before you the product of a great deal of              
 effort on the part of both the administration and the oil industry            
 not to mention Representative Green, to develop legislation that              
 will change the way tax matters are reviewed and appealed.  As you            
 know, this is a subject that were encouraged to give a fresh look             
 to by the industry, and when we did look, we agreed that moving the           
 appeal process out of the Department of Revenue is an idea whose              
 time has come.  The department worked with representatives of the             
 industry to develop legislation that was submitted by the                     
 Governor."                                                                    
                                                                               
 MS. VOGT said she wanted to emphasis that the governor's bill is              
 the result of a long effort of a lot of meetings with people                  
 outside the administration, it's not just the administration's                
 bill, but the result of a lot of compromises on the                           
 administration's part.  Many of the provisions of the bill before             
 the committee are taken from the governor's bill.                             
                                                                               
 "There are, however, a number of very significant differences that            
 have emerged between the bill that the governor submitted and the             
 CS that you have in front of you.  While the administration has               
 agreed to some changes in approach, and to quite a number of more             
 minor changes, we do not agree with the CS in some important ways.            
 I would like to address those differences, first in a general sense           
 and then perhaps at your pleasure after the testimony, by way of              
 actual amendment.                                                             
                                                                               
 First, the CS permits a taxpayer to take its choice between the               
 administrative law judge review established by the bill and going             
 straight to court for a hearing "de novo" at the superior court.              
 This is a very substantial departure from the approach suggested in           
 the Governor's bill and is an idea that was not suggested by the            
 AOGA Tax Committee, in the comments that they provided to the                 
 subcommittee."                                                                
                                                                               
 MS. VOGT noted that AOGA now endorses the idea, but it was not an             
 AOGA idea to begin with.                                                      
                                                                               
 "In our view, providing a taxpayer with the unilateral opportunity            
 to jump out of the process and go to superior court, where the case           
 will be randomly assigned, negates the whole purpose, the whole               
 point of setting up an office of tax appeals.                                 
                                                                               
 Most of you had the pleasure of hearing Mr. Paul Frankel testify              
 last week at the joint Judiciary/Finance Committee meeting.  As you           
 know, Mr. Frankel is a taxpayer advocate with whom the Department             
 of Revenue consulted early in this process.  We asked him to review           
 our current laws and regulations, and advise us on our system.                
                                                                               
 When I first spoke with Paul and asked if he would work with us, he           
 said he'd be happy to work with us, and he told me what he would              
 say.  He said he would say that a tax review system should have               
 three components: First, it should be independent from the taxing             
 agency (the Department of Revenue in this case); second, it should            
 provide the taxpayer with the opportunity to make its case, to have           
 its trial, to present its evidence, before the taxpayer had to pay            
 his taxes (it should be a prepayment forum), and third, tax cases            
 should be heard by tax professionals - by people who are trained in          
 tax, and people who like tax.  Sure enough, that's what he told us            
 when he finished looking over our statutes and regulations and                
 that's what he told the committee last week.  In working with the             
 taxpayers or tax representatives of some of the taxpayers to                  
 develop the governor's bill, we kept those three standards firmly             
 in mind.                                                                      
                                                                               
 The CS does not meet those criteria.  A system that permits a                 
 taxpayer to bypass the administrative law judge and go straight to            
 court for trial is not a system that provides for tax professionals           
 deciding tax cases.  It strikes terror into my heart, as a tax                
 administrator, to think that complex tax cases, involving issues of           
 first impression, might be decided by a superior court judge who is           
 bored silly by tax matters.   Such a decision would be binding on             
 the department, and set precedent for all other taxpayers."                   
                                                                               
 MS. VOGT added that in Mr. Frankel's presentation he emphasized               
 that most of these systems, especially the federal tax court                  
 required pre-payment if the tax payers wanted to go outside of the            
 tax court.  But secondly, if a system was established which had               
 thousands of tax payers who argue the same issues over and over,              
 fisheries business tax for example, she wouldn't mind in these                
 instances if the taxpayers had an option to go directly to court.             
 This would especially be true on a tax case where there are a lot             
 of small tax players who are not going to be arguing over half of             
 the state's general revenue in one year.  She thought the committee           
 should think about non-tax professionals deciding cases of the                
 magnitude they get in Alaska.                                                 
                                                                               
 "There are other problems with the 'straight to court' option.  The           
 taxpayers that we worked with in developing the governor's bill               
 were concerned about the language setting the standards of review.            
 We labored and labored over the language that appears on page 4 of            
 the bill, in Section 43.05.435.  That language is very carefully              
 drafted to provide for the de novo review that the taxpayers desire           
 while being careful not to usurp the policy prerogatives of the               
 Commissioner of Revenue.  However, the 'straight to court' option             
 of the CS provides no such guidance to the superior court judge.              
 There are no standards of review at all set out, if the taxpayer              
 goes straight to court.                                                       
                                                                               
 Apparently under the CS (and this is something they didn't discuss            
 in the committee meeting), the taxpayer could request a jury trial.           
 There is nothing in the legislation that would prohibit a taxpayer            
 from requesting a jury.  I would doubt that there is any place in             
 the United States that a taxpayer can have its tax liability                  
 determined by a jury.  It is a very bad idea.  A tax program needs            
 integrity and predictability, and scholarly attention.                        
                                                                               
 The second major difficulty with the CS is the creation of a board,           
 appointed by the governor and confirmed by the legislature, instead           
 of a hearing officer within the Department of Administration.  The            
 idea of legislative confirmation appeared in AOGA's comments.  We             
 pointed out that it would be unconstitutional to require                      
 confirmation of an Administrative Law Judge (ALJ) within the                  
 Department of Administration; the legislature cannot require                  
 confirmation of a person down within the bowels of an agency.                 
 Their response to this was to suggest the creation of a separate              
 board, which they agreed would meet the constitutional requirements           
 of Alaska's constitution.                                                     
                                                                               
 The taxpayers response to our constitutional comment was to                   
 jettison the idea of an administrative office within the Department           
 of Administration, and to create a whole special board to hear tax            
 appeals.  Since a board cannot be just one person, the draft                  
 provides for 'at least' two members.  Thus, the fiscal impact of              
 the legislation is much higher than the governor's bill envisioned:           
 Two highly paid board members instead of one hearing officer-style            
 ALJ; a full time clerical person instead of half; rent for office             
 space; office machine, furniture, equipment that would have been              
 provided by the Department of Administration.  We have provided a             
 draft revised fiscal note; but she noted that she wasn't sure who's           
 fiscal note this would be.  The fiscal note would be significantly            
 in excess of the fiscal note prepared initially for $125,000 for a            
 hearing officer within the department.                                        
                                                                               
 The taxpayer's concern that is intended to be addressed by                    
 legislative confirmation option is independence.  We agree that the           
 administrative law judge set up by this legislation should be the             
 best available person; should have integrity; should be                       
 independent; should not be either seen as or in fact be a                     
 'political' appointee, appointed to carry out any particular                  
 governor's agenda or Revenue Department's agenda.  But we do not              
 agree that legislative confirmation is the way to accomplish that             
 goal.  To us, legislative confirmation makes the process more               
 political, not less political.   Judges in Alaska are not confirmed         
 by the legislature.  We don't think administrative law judges                 
 should be.                                                                    
                                                                               
 We believe that the tail is wagging the dog here.  We worked hard             
 in the Governor's bill to provide protection for independence --              
 like the ALJ serving for a term of years, and being dismissible               
 only for cause.  If taxpayers are still uncomfortable with the                
 provisions that were drafted in the governor's bill, we would be              
 happy to work to find mutually acceptable protection.  But an                 
 unwieldy and expensive board is the wrong way to go.                          
                                                                               
 The CS creates a hybrid organization without precedent.  Generally,           
 if a commission (like the Limited Entry Commission or the Public              
 Utilities Commission) holds hearings and decides cases, the way it            
 works is that the commissioners hire a hearing officer, who                   
 proposes a decision to the commission, which adopts or rejects it.            
 Here, we would have a two-person commission, with each individual             
 deciding cases.  Our idea was to have a simple little office, with            
 a chief and whoever else that person needed.  But one person would            
 be in charge.  (She noted that she didn't understand how the                  
 Administrative Law Judges would work in terms of discipline, in               
 terms of one person deciding if there were disagreement among the             
 people in the office on how a case should be decided, etc.  The CS            
 provides that the Chief ALJ is dismissible only for cause, but by             
 the Commissioner.  She stated that this was an idea foreign to her.           
 She noted the Permanent Fund Board where the members of the board             
 are subject to dismissal by the Commissioner of the agency to which           
 they are attached.  She noted that Will Condon cannot dismiss Grace           
 Shibel from the Permanent Fund Board.)                                        
                                                                               
 The third major disagreement we have with the CS is that it                   
 provides that proceedings in front of the ALJ (or board) will be              
 behind closed doors.  Although tax hearings are now confidential in           
 the Department of Revenue, we believed, when we drafted the                   
 governor's bill, that the time had come to open the door on these             
 proceedings.  Over the years, there has been a tremendous interest            
 both by the public and by the legislature in the large oil and gas            
 cases.  The department has been hamstrung in talking about these              
 cases, even to the legislature.                                               
                                                                               
 There are strong public policy reasons to let these hearings take             
 place in the sun.  Now, if a tax payer appeals to court from the              
 Department's decision, the court hearing is public.  We believe               
 that when a matter goes out of the department, it should be public.           
 Allowing the sunshine in on these proceedings will allow the world            
 to see if the independence and integrity we all seek is in fact               
 taking place.  (It would provide a measure of accountability which            
 isn't currently there and wouldn't be under the CS).  The                     
 governor's bill set up a system whereby if a taxpayer were                    
 concerned about particularly sensitive trade or competitive                   
 secrets, the taxpayer could request a protective order and certain            
 parts of the proceeding could be protected.  Although I believe               
 that many individual taxpayers either liked or did not oppose the             
 provision as it appeared in the Governor's bill, AOGA will only act           
 if they are unanimous, so one objection can result in a                       
 recommendation of opposition.  However, when quizzed on an                    
 individual basis, most taxpayers would not object to having the               
 proceedings public.  The administration believes these proceedings            
 should be public.                                                             
                                                                               
 Those are the three main concerns that we have with the bill as it            
 is drafted in work draft R.  Other, more minor, matters include our           
 preference that an administrative law judge be in the partially               
 exempt rather than the exempt service.  Exempt positions are                  
 traditionally regarded as political appointments, dismissible at              
 will.  The exempt classification is inconsistent with a desire to             
 shield an ALJ from politics.   (Exempt service goes with the idea             
 of a Board or Commission which the department objects to.)                    
                                                                               
 We are disappointed that taxpayers have failed to concur in part of           
 our recommendation of discovery."                                             
                                                                               
 MS. VOGT stated that they did concur in part of it, but they had              
 drafted language which would make three categories of information             
 irrelevant and inadmissible unless the administrative law judge               
 found that the information should be admitted in the interest of              
 justice and these three are 1) information relating to legislation            
 which hasn't passed, 2) information relating to a regulation which            
 was not adopted and 3) information of a taxpayer, other than the              
 taxpayer who's tax proceeding is at issue.  As to the first two,              
 the court's have held in relation to what the legislature didn't              
 do, that no legal significance can be drawn from the legislature's            
 failure to do something.  As a matter of law most of this                     
 information is irrelevant.  The reason they wanted the provision in           
 the legislation is that the Department of Revenue and the state's             
 lawyers are repeatedly asked for discovery and mountains of                   
 discovery on legislation which is not at issue in whatever tax is             
 being litigated and legislation that in fact may not have passed.             
 She noted that they did recognize that there might occasionally be            
 circumstances in which this type of information should be admitted,           
 for example, the draft CS makes the legislative history on the                
 governor's bill concerning this subject a part of this bill, but              
 even if it didn't pass this information would be relevant in                  
 determining the meaning of Representative Green's bill because they           
 have been joined together.  As to the information of a taxpayer               
 other than the taxpayer at issue, information which taxpayer A                
 gives to taxpayer B is not confidential.  To the extent that one              
 taxpayer agrees to show another taxpayer, this information wouldn't           
 even be covered by the bill.  This concluded Ms. Vogt's testimony.            
                                                                               
 TAPE 96-31, SIDE B                                                            
 Number 354                                                                    
                                                                               
 CHAIRMAN PORTER summarized the major disagreements with this                  
 legislation for clarification.  The first area was legislative                
 confirmation, with a sidebar that deals with the boards and how               
 that board is constituted (whether it would established to deal               
 with a constitutional issue or not), the second, the provision in             
 the draft that allows a taxpayer to go directly to court and                  
 circumvent the informal and formal hearing process, and third,                
 whether the formal hearing should be confidential or not.                     
                                                                               
 CHAIRMAN PORTER first noted that judges in Alaska do run for what             
 is called confirmation by an election of the public.  He recalled             
 that Mr. Frankel had said that legislative confirmation was not               
 that unusual with other states.                                               
                                                                               
 Number 575                                                                    
                                                                               
 TOM WILLIAMS, Tax Committee of the Alaska Oil & Gas Association,              
 Alaska Tax Counsel for BP, said he saw no reason to second guess              
 Mr. Frankel's knowledge and expertise.  He recalled that Mr.                  
 Frankel said that where state's do have confirmation it works                 
 perfectly well and he saw no downside to this procedure.                      
                                                                               
 REPRESENTATIVE GREEN noted that this confirmation would involve one           
 or more members who would act as a tax board.  He noted that they             
 would have something for them to be confirmed to as opposed to an             
 employee within the Department of Administration.                             
 MS. VOGT noted that there was no disagreement here.  If there is a            
 confirmation provision, a board would need to exist.                          
                                                                               
 CHAIRMAN PORTER asked then, within this concept of a board, the               
 notion of an appeal by the board of an individual ALJ's decision              
 seemed to be perplexing and how would this work with a two person             
 board.                                                                        
                                                                               
 MR. WILLIAMS said that it would work much the same way as the                 
 administration proposed in their bill where there would be                    
 circulation of draft opinions between offices of two ALJ's.  They             
 could set a rule if they had a situation of a tie.                            
                                                                               
 Number 626                                                                    
                                                                               
 REPRESENTATIVE DAVID FINKELSTEIN noted that Alaska has                        
 Administrative Judges all over the place and they work in a number            
 of areas.  He said it seemed somewhat artificial not to require               
 confirmation of ALJs and put them on a board, but at the same time            
 retain provisions that they're still essentially part of the                  
 hierarchy and that the Commissioner can get rid of the Chief                  
 Administrative Law Judge and the Chief can get rid of the others.             
 He asked if there were fooling anyone.  He questioned the use of              
 the term "board" even when the usual system for dismissing someone            
 is applied.                                                                   
                                                                               
 MR. WILLIAMS said that the word board is essential because this is            
 what the constitution calls for, it says that a board or commission           
 needs to be established at the head of a quasi-judicial agency.  If           
 there's confirmation, there has to be a board.  The constitution is           
 silent about how this board will operate and make it's decisions.             
 The most immediate paradigm that comes to mind is the APUC, but it            
 doesn't necessarily follow that this is the only way a board would            
 end up making a decision.  There are a number of provisions in the            
 pending legislation where there are collective actions by the                 
 board.  If after five years an income tax is adopted there may well           
 be a lot of tax cases going to this board and the work load may               
 justify having three or four ALJ's and possibly more.  Even small             
 cases considered could have important fundamental principles of law           
 involved.                                                                     
                                                                               
 Number 774                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN said he didn't see the APUC analogy as             
 clearly as Mr. Williams did.                                                  
                                                                               
 MS. VOGT said she understood that individuals in the Department of            
 Law would be looking at this issues and noted that she was bothered           
 by the same aspects.  Boards and commissions are normally quasi-              
 legislative bodies which act with quorums and act on motions, etc.            
 This is a concept so totally different from anything she's seen in            
 government, it's hard to know if this would work or not.                      
                                                                               
 CHAIRMAN PORTER asked Mr. Briggs if an APUC board member and be               
 removed for cause.                                                            
                                                                               
 ROBERT BRIGGS, Assistant Attorney of Law; Oil, Gas & Mining Section           
 Department of Law; said that he couldn't answer this question                 
 because this board question came up so recently, he said they were            
 trying to get a grip on all of the different aspects of this.                 
                                                                               
 Number 895                                                                    
                                                                               
 MR. WILLIAMS noted that in the case of Bradner v. Hammond the               
 Supreme Court pointed out the difference between Section 25, which            
 provides for confirmation and boards and commissions.  In Section             
 25 there is a specific provision that these commissioners serve at            
 the pleasure of the governor.  In Section 26 it says that they can            
 be removed as provided by law.  The court pointed out that this               
 doesn't necessarily mean that they serve at the pleasure of the               
 governor.  The legislature has authority to prescribe how these               
 individuals are removed and by whom.  The fact that APUC Chairman             
 can't remove other members means only that the legislature hasn't             
 legislated this statutory power for them to do so.                            
                                                                               
 REPRESENTATIVE AL VEZEY said he happened to like the idea of                  
 confirmation by the legislature.  He thought that this reduced the            
 politics involved.  He felt they may have created an unnecessary              
 problem for themselves by calling this a board rather than a court.           
 He noted that this situation goes to the problem of keeping this              
 body separate from a department's jurisdiction.  If they give a               
 commissioner the right to dismiss any judge, they haven't got                 
 anything different than what currently exists.                                
                                                                               
 MR. WILLIAMS said that they were in agreement with the                        
 Administration about what cause is regarding removal.  He noted               
 that removal for cause would result as a violation of the code of             
 conduct and such.                                                             
                                                                               
 Number 1100                                                                   
                                                                               
 CHAIRMAN PORTER next opened up the discussion about a taxpayer                
 circumventing the process and go directly to court.  He asked what            
 circumstances did the participants see as an avenue that a taxpayer           
 would want to pursue superior court instead.                                  
                                                                               
 MR. SECKERS said that one case would be on constitutional issues,             
 such as equal protection.   An Administrative Law Judge would not             
 be permitted to decide an issue such as this.                                 
                                                                               
 MS. VOGT said that she didn't agree that an Administrative Law                
 Judge cannot decide whether a certain set of circumstances denies             
 equal protection.  What an Administrative Law Judge cannot do is              
 invalidate a regulation or a statute because of a constitutional              
 challenge.  The administration agrees that there are certain powers           
 that an ALJ doesn't normally have, but they rule all the time on              
 due process under equal protection and constitutional questions.              
                                                                               
 MS. VOGT responded to Chairman Porter's question regarding if a               
 formal hearing was de novo, would the trial be on the record of the           
 formal hearing or would the trial be de novo, she stated that there           
 was confusion in the use of the terms on the record.  On the                  
 record, for purposes of the legislation, means that there is a                
 recording devise, or a court reporter present at the proceedings.             
 The administrative proceeding envisioned by everyone in the                   
 Department of Administration is a proceeding where all evidence               
 presented by the taxpayer can be brought forward.  There were                 
 certain provisions which were agreed upon that if the taxpayer                
 refuses to show any information to the auditors or the informal               
 conferee and then brings everything into the Administrative Law               
 Judge, the ALJ can remand the case to the department if the                   
 department has not had an opportunity to examine the evidence.                
                                                                               
 CHAIRMAN PORTER said he was concerned about the next step, from the           
 formal proceeding, if it was the position of the taxpayer that the            
 ALJ couldn't change the regulation or wasn't correct in their                 
 interpretation of the constitutionality of a regulation what kind             
 of a hearing would the court procedure be, a de novo hearing or a             
 hearing on the record of the informal hearing.                                
                                                                               
 MS. VOGT said that it would be on the record, but the superior                
 court judge is going to substitute their judgment on the questions            
 of law which a constitutional question most certainly is.  Normally           
 what happens when constitutional issues are raised to an ALJ they             
 are simply preserved, to the extent that they are pure                        
 constitutional issues.  It is very rare that pure constitutional              
 issues arise.  If so the administrative proceeding is skipped and             
 the case goes directly to court.  Often what a taxpayer can do is             
 preserve a constitutional question for appeal.                                
                                                                               
 Number 1320                                                                   
                                                                               
 MR. WILLIAMS said that there is a problem when there is an appeal             
 from the Administrative Law Judge to the superior court and it is             
 on the record unless the court exercises it's general discretion              
 itself and retries part of a case.  It may be as an excess of                 
 caution that the taxpayer has to present it's evidence to the ALJ             
 even though it knows that the ALJ won't be able to rule on the                
 question (indisc. - crosstalking with Chairman Porter).  Then this            
 case goes to the superior court and then this judge is faced with             
 the dilemma of either taking the record without being able to judge           
 how the witness's looked and that sort of thing, which is a key               
 element.  Great transcripts can be made and actually the witnesses            
 come off really "crummy" and conversely you can have very good                
 witnesses who make an incoherent transcript.  If the judge decides            
 that these issues will be heard over again, these facts relating              
 constitutional issues will be litigated twice.                                
                                                                               
 REPRESENTATIVE GREEN made the remark that rather than take a chance           
 of having back to back de novo hearings, this would in fact allow             
 a single hearing.  It would then have to be decided if the case               
 would be heard at superior court or a formal hearing within the               
 department.                                                                   
                                                                               
 Number 1411                                                                   
                                                                               
 MS. VOGT noted that she had heard the taxpayer representatives here           
 this afternoon and earlier assert that this superior court avenue             
 would be rarely used.  She had never heard any indication of how              
 they are suppose to know it is rarely used.  It seemed to her that            
 if an ALJ ruled against a taxpayer in a major oil and gas case this           
 is the last time an ALJ would be used.  This would rather be the              
 avenue rarely used.  With the type of Alaska cases, setting up a              
 system where the taxpayer can take their choice of forums does not            
 make good sense.  The constitutional issue referred to was a red              
 herring, if they want to work on making provisions to permit some             
 special treatment for constitutional issues, they might be able to            
 do this.                                                                      
                                                                               
 MR. WILLIAMS stated that the department (indisc. - paper shuffling)           
 to the court on the grounds that there is no specialized tax                  
 expertise in the judiciary.  It might be purely happenstance that             
 someone gets a judge who if familiar with tax law or interested in            
 tax.  This in itself is a concern to them.  In the separate                   
 accounting case which Ms. Vogt referred to, Judge Carlson came out            
 with an opinion upholding the constitutionality of the law which              
 was one and a half pages long.  Half of the page was just the                 
 caption.  This was a case involving $2 billion dollars already                
 collected in the state treasury and $6 billion by the time it                 
 reached the state Supreme Court.  They don't want to go to a forum            
 such as this one where there this type of superficial treatment,              
 unless there is a good compelling reason otherwise.  This is why              
 they feel as though this avenue would be rarely used.                         
                                                                               
 MR. WILLIAMS continued that if an ALJ ruled against them, if it's             
 an opinion which is soundly reasoned and the better the quality of            
 this opinion, the less likely they will say this judge has a bias             
 against them.  If it is a one page opinion as noted, they would be            
 inclined to think that there is very little point in wasting their            
 time with the ALJ process.  It would be a function of the                     
 experience, but it's also a function of who is appointed and                  
 confirmed.  Their preference would be to go with the forum of                 
 expertise.                                                                    
                                                                               
 Number 1587                                                                   
                                                                               
 MR. SECKERS pointed out that if a superior court judge rules                  
 against a taxpayer then it's just as equal that the taxpayer may              
 not want to go there and rather go to the ALJ.  Just because Ms.              
 Vogt says that if an ALJ rules against a taxpayer that they're all            
 going to go superior court could also be true in the opposite.  He            
 said they don't understand what would be the aversion to having               
 this option available.  He said he couldn't see where there would             
 be a fiscal note to the state.  The court is already in existence.            
 Superior courts right now have to hear appeals from a formal                  
 hearing process.  They would have to be competent enough to                   
 understand what the "tax expert" in the ALJ decided on the case.              
 Superior court judges are qualified.  They hear complex cases today           
 and there's no evidence to suggest that their cases are anymore or            
 any less complex than tax cases.  Right now under the procedure               
 provided in legislation someone goes formal, then to a de novo                
 hearing at the ALJ level and then this is appealed to superior                
 court, and then to the Supreme Court.  While it may be true that              
 some of the discovery procedures would be more relaxed in the                 
 court, it seems that this cost comparison would pale to the cost of           
 a de novo for a formal hearing and then an appeal to superior court           
 and consequently an appeal to the Supreme Court.  A lot of the                
 cases that were decided in the past were decided in the superior              
 court in an on the record review, which was a record controlled by            
 the Department of Revenue in it's current hearing process.  This              
 would be a de novo review.  There is no way someone could suggest             
 that the same results, a one page decision would be the product.              
 This would be a very rare exception.                                          
                                                                               
 Number 1732                                                                   
                                                                               
 MR. BRIGGS addressed some of the points made by Mr. Seckers.  One             
 of the features of HB 427 was to create a system for creating a               
 body of precedent of tax law through the ALJ and this provision is            
 in the CS now considered.  The problem with the dual track system             
 created by work draft R is that it is unclear which opinions would            
 be controlling, either the opinion of a superior court judge in a             
 case where a taxpayer has gone directly to superior court, would              
 that control over a decision by an Administrative Law Judge.  This            
 is unclear under the bill.  He thought that the committee members             
 intrinsically understand the importance of stability in the tax law           
 area for this state and the taxpayers.  House Bill 427 was                    
 carefully drafted in consultation with taxpayers to try to set up             
 a system which gives them more stability, more predictability in              
 tax law, but having a dual track system will erode this and de-               
 stabilize the predictability of Alaska's tax laws.                            
                                                                               
 MR. BRIGGS rhetorically asked why it was bad to go to superior                
 court in the first instance and suggested that they talk to a                 
 superior court judge about this.  He would guess that nine out of             
 ten superior court judges would tell them that they would prefer              
 that a tax case be tried at an administrative level first because             
 it would refine the issues, it would narrow the issues and would be           
 a much easier case for them to decide than getting a tax case                 
 plopped on their doorstep in the first instance.  For this reason,            
 the department thinks it's a very bad idea to have this dual track            
 system.                                                                       
                                                                               
 Number 1856                                                                   
                                                                               
 REPRESENTATIVE GREEN stated as they may recall, when Mr. Frankel              
 made his presentation he mentioned that in California, a state with           
 60 times as many people as Alaska, their system provides for a                
 taxpayer to go directly to court rather than the Board of                     
 Equalization.  Apparently it works there and not all case                     
 automatically funnel to the court.  This option is used with                  
 discretion.                                                                   
                                                                               
 REPRESENTATIVE VEZEY asked if they were talking about Section 11 of           
 the bill in relation to an individual opting to go straight to                
 court.  He referred to page 16.  He asked if this provided for an             
 alternate method of adjudication prior to paying the disputed tax.            
 His understanding was that this tax had to be paid before the                 
 appeal can be made.                                                           
                                                                               
 Number 1959                                                                   
                                                                               
 MS. VOGT said that as she understood the language, the taxpayer was           
 required to pay the amount of the tax which is not in dispute and             
 post a bond for the rest.                                                     
                                                                               
 REPRESENTATIVE VEZEY said he saw nothing in the legislation to                
 provide for a jury trial.                                                     
                                                                               
 MR. WILLIAMS stated (indisc. - coughing) if the state sues somebody           
 then the defendant has the right to choose a jury, but if someone             
 brings an original action against the state, the state has the                
 right not to have a jury trial.  Secondly, these will be appeals              
 still even though the proceeding will be a de novo proceeding, the            
 court is acting as an appellate court, not as a (indisc. - cross              
 talking with Representative Vezey).                                           
                                                                               
 REPRESENTATIVE VEZEY asked if it was in statute or court rule that            
 if the state is a defendant it's up to the defendant to request a             
 jury trial.                                                                   
                                                                               
 MR. WILLIAMS remembered that when he was in the AG's office that              
 this was the way it worked then.                                              
                                                                               
 Number 2100                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN asked if they would be agreeable to an             
 amendment to preclude jury trials.                                            
                                                                               
 MR. SECKERS stated that AOGA didn't have a position on this issue             
 at this time.  This was something that they haven't had cause to              
 take up before now.                                                           
                                                                               
 CHAIRMAN PORTER didn't know how they could obtain one.  In response           
 to Representative Finkelstein's reference to the previous                     
 information imparted by Mr. Williams, Chairman Porter noted that              
 they would be sitting in an appeal position and not a court of                
 general jurisdiction.  He stressed that a jury is not required for            
 an appeal procedure.                                                          
                                                                               
 Number 2169                                                                   
                                                                               
 MR. BRIGGS noted that the problem with work draft R as currently              
 proposed is that the language is not clear regarding this de novo             
 trial proceeding.  He suggested that the committee adopts language            
 to clarify this, where there is no right to a jury trial.  He felt            
 as though tax cases shouldn't be tried before a jury.                         
                                                                               
 MR. WILLIAMS noted that in the federal system someone can get a               
 jury trial by paying in the amount of tax disputed instead of going           
 to a tax court.  The assessment is paid and then this person goes             
 to the Court of Claims, not the district court, they sue and then             
 they ask for a jury trial.  This means that plutocrats get to have            
 jury trials and ordinary people don't.  AOGA doesn't have a                   
 position on this, but neither has AOGA been asking for a jury                 
 trial.  This issue came up in the context of appeals where there              
 are no juries.                                                                
                                                                               
 REPRESENTATIVE GREEN and Chairman Porter agreed that the parties              
 should probably work on some language to take care of this                    
 situation of duality.                                                         
                                                                               
 Number 2401                                                                   
                                                                               
 REPRESENTATIVE VEZEY reiterated that in the federal process if                
 someone wants a jury trial they have to go to the court of appeals.           
 His understanding of the federal process is that if someone wants             
 a jury trial, the tax must be paid and then the person sues the               
 federal government in district court and then this person can                 
 request a jury trial.                                                         
                                                                               
 MR. WILLIAMS noted that it used to be the practice and it still               
 might, if a person pays the tax, they had two choices, they could             
 go to district court or to a special U.S. Court of Claims in                  
 Washington, D.C.  If this person goes to the Court of Claims, but             
 only there do they have the right to a jury trial.  In the district           
 court, it used to mean that the person would not get a jury trial.            
                                                                               
 REPRESENTATIVE VEZEY said this was not the advise that he gets from           
 his attorney.  He said it wouldn't be the first time his attorney             
 was wrong.                                                                    
                                                                               
 MR. BRIGGS stated that the committee could decide easily enough one           
 way or another if they wanted to do away with a jury trial                    
 provision.  This would obviate litigation on the point ultimately             
 decided by the Supreme Court.  He urged the committee to call it up           
 or down.                                                                      
                                                                               
 TAPE 96-32, SIDE A                                                            
 Number 254                                                                    
                                                                               
 MR. SECKERS responded to a another general discussion concerning              
 which avenue a taxpayer would choose and what they were allowed to            
 chose under existing systems.  He noted that it seemed to him that            
 if an ALJ ruled on a particular situation under issue A for                   
 example, and another taxpayer took this same issue to superior                
 court and prevailed, whether this tax payer would appeal this                 
 decision to the superior court the judge would be bound by this               
 court anyway and rule in the same way.  There wouldn't be this                
 inconsistency as Mr. Briggs indicated.  Under current law, if the             
 ALJ system is upheld and then the tax payer goes to superior court,           
 if the superior court overturns the ALJ system this is binding on             
 the ALJ.                                                                      
                                                                               
 MR. SECKERS used the example of his company and if they were to               
 litigate an issue that another taxpayer won in superior court and             
 they were involved in this issue with the ALJ and the ALJ ruled               
 against them, they would appeal to the superior court.  They would            
 have their decision because the judge would rule the same way as              
 the prior superior court judge ruled on the same issue at a                   
 different time.                                                               
                                                                               
 Number 287                                                                    
                                                                               
 CHAIRMAN PORTER asked about an example where an informal hearing              
 occurs and the taxpayer prevails.  Six months later another                   
 taxpayer takes a complicated case to superior court, but for                  
 whatever reason the superior court rules on the previous issue                
 before the ALJ and overturns this decision.  He asked what then               
 would prevail.  How would this be resolved, are they guided by the            
 superior court's decision on this issue or by the previous ALJ                
 decision.                                                                     
                                                                               
 MR. SECKERS said it seemed to him that if the superior court has              
 ruled on this exact issue, then it comes up again, the ALJ should             
 be bound by this decision, because if the ALJ rules inconsistent              
 with this same issue and the same laws apply, whoever the losing              
 party is will appeal this decision to superior court.  There                  
 wouldn't be this inconsistency and as Mr. Frankel pointed out there           
 are a number of states which provide this very option.                        
                                                                               
 Number 395                                                                    
                                                                               
 MR. WILLIAMS noted that ordinarily decisions of the superior court            
 aren't precedent even to that judge or other judges of the same               
 court.  It's the appellate courts which have precedent.  Even if              
 the court has acted as an appellate by the first instance, if it's            
 a concern they could specify in the bill that these ALJ decisions             
 have a precedent until (indisc.) the full board of ALJ's, by the              
 Alaska Supreme Court or by legislative enactment.                             
                                                                               
 MS. VOGT thought that this was an important issue and one of the              
 things they were trying to address in the efforts that the                    
 administration has put in, is to develop a spot in which tax law              
 will reside.  It is important that they have a body of tax law that           
 is available to all tax payers so that they can understand and                
 adjust their actions accordingly, both the state and the taxpayers.           
 She felt uncomfortable with the idea that case law would be made              
 simultaneously in two or more forums.  She understood that they'll            
 still get cases which go off into different directions.  At least             
 one body will deal with them all first, the Administrative Law                
 Judge.                                                                        
                                                                               
 Number 580                                                                    
                                                                               
 CHAIRMAN PORTER noted for the record that there was probably still            
 a disagreement in this area which needed work.  The next area to              
 discuss was whether the administrative hearings should be sunshined           
 or not.  He asked about the inconsistency of this concept when                
 settlement hearings would still be confidential.                              
                                                                               
 MS. VOGT noted that there was an entire spectrum of issues which              
 they are asked about time and again, issues they would be able to             
 discuss and read about if the proceedings were public.  Certainly             
 settlements to the extent that the parties wish to keep them                  
 confidential would remain so.  She hoped that more and more matters           
 would go to hearing and be decided.  Almost all of the Alaska tax             
 cases have been settled in the last few years.  The public aspect             
 of proceedings speak to a lot of the concerns which have been                 
 expressed from the taxpayers, in order to require accountability,             
 impartiality and so on.  All of these things are protected if the             
 proceedings are made public.  They would like to see options for              
 portions of some the cases under protective order.                            
                                                                               
 Number 781                                                                    
                                                                               
 MR. WRIGHT said that it was easy to think of this system through              
 oil and gas tax issues, but without going into details of one                 
 particular case settled over separate accounting and production               
 taxes, they paid in settlement $1,400,000,000.00 dollars so they              
 could imagine the claims.  He submitted that in a state this size             
 a two to eight billion dollar cases are going to have exactly the             
 same sensational coverage that they saw with the O.J. Simpson                 
 trial.  He personally thought that BP shouldn't have to go through            
 a circus like that.  These big spectacular cases really would                 
 become circuses rather than good, sound administrative                        
 adjudications.                                                                
                                                                               
 MR. WRIGHT went on to make the point that there are a lot of small            
 tax cases and used the example of a dentist with a professional               
 corporation and this dentist has to pay corporate income tax.  Why            
 should this dentist have all their issues out in the public.  If              
 there is a personal income tax, why should an individual's tax                
 return be ventilated around in the public to have an impartial                
 ruling and the merits of claims made against them.                            
                                                                               
 Number 910                                                                    
                                                                               
 MR. BRIGGS stated that with all due respect to Mr. Williams he                
 disagreed that it was likely that tax cases would generate the kind           
 of publicity the O.J. Simpson trial did.  Mr. Briggs participated             
 in the last phase in the ANS oil royalty litigation.  It was every            
 bit as sophisticated and fully litigated as the O.J. Simpson trial,           
 but did not generate the same type of interest.                               
                                                                               
 MR. BRIGGS also made a second point that Alaska does not have a               
 personal income tax now.  He noted that the state is also concerned           
 about an individual being required to divulge their personal issues           
 to the public as part of litigation.  Mr. Briggs said that this               
 type of issue was not addressed in the legislation because of the             
 lack of an Alaska personal income tax.                                        
                                                                               
 Number 1009                                                                   
                                                                               
 REPRESENTATIVE VEZEY said that if a taxpayer elects to go before a            
 superior court rather than an administrative proceeding, to the               
 best of his knowledge there wouldn't be any question this                     
 information would be public.  He thought that this would be an                
 incentive to use the administrative adjudication channels instead.            
 He tended to agree that tax matters should stay out of the public             
 domain as long as possible.  This could be very intimidating to any           
 person that is required to expose their records to public scrutiny.           
                                                                               
 REPRESENTATIVE FINKELSTEIN stated that in either version of the               
 legislation, with or without an amendment to this there will still            
 be the provision that says, "upon a showing of good cause an                  
 Administrative Law Judge can keep portions of it confidential" and            
 if parts are at issue then these portions can be deleted.  He                 
 reminded everyone that they were in the business of government.               
 There are lots of times they deal with subjects they would rather             
 not have exposed, but that's the price to be paid in dealing with             
 the government.   Another confusing issue was that he thought this            
 information would be made available anyway.                                   
                                                                               
 MR. WILLIAMS responded that taxes aren't optional for BP and                  
 they're not optional for an individual with the IRS.                          
 Confidentiality is a lynch pin to a self-reported, self-assessed              
 taxation system under the United State constitution.  When it is              
 made mandatory for people to disclose the full particulars about              
 their liability, they have protection here.  He didn't feel it was            
 appropriate that someone should have a choice between having one              
 shot at a fair hearing on the claims made against someone with                
 respect to their tax liability or they give up their rights to                
 privacy and confidentiality, etc.  They shouldn't be forced to                
 choose between confidentiality and having the right to petition               
 government for redress of grievances.  Someone shouldn't be put in            
 this position.  This in effect would happen if a case was opened              
 up.  He noted that there is tons of information disclosed, but                
 irrelevant when a case comes to a hearing.  Nonetheless this                  
 information would be exposed to the public domain.                            
                                                                               
 Number 1275                                                                   
                                                                               
 MS. VOGT responded to this irrelevant information as being                    
 discoverable and noted that they worked long and hard on discovery            
 provisions so there wouldn't be tons of stuff produced and in the             
 second place, until it's entered into the record information                  
 doesn't become part of the record.  Just because information is               
 discoverable doesn't mean it will all become part of the public               
 record.  She said she was surprised about the vehemence of the                
 comments here because since last summer since they started working            
 on this legislation and during this time they've heard from most of           
 the taxpayers.   Since proceedings become public at the superior              
 court anyway, it really doesn't matter that much whether they're              
 public at the formal hearing or not and some of the taxpayers are             
 inclined to feel that the accountability and reviewability of                 
 public proceedings is worth something.                                        
                                                                               
 REPRESENTATIVE FINKELSTEIN referred to the legislation which states           
 that once the final decision is released the records become public.           
                                                                               
 Number 1408                                                                   
                                                                               
 MR. WILLIAMS stated that it's true in the superior court forum that           
 discovery is not a part of the record except if copies are filed              
 with the court, but this legislation does not allow for a superior            
 court like forum with an Administrative Law Judge set up.  The ALJ            
 system would be much more involved in the control of discovery.  It           
 is not a foregone conclusion if there is a debate about what should           
 have been produced in discovery that this information will not be             
 in there and off the record.                                                  
                                                                               
 REPRESENTATIVE BUNDE asked if confidentiality would be used as an             
 encouragement to use the Administrative Law Judge.                            
                                                                               
 REPRESENTATIVE GREEN in response asked what purpose does the public           
 gain during the deliberation.  It seemed to him that                          
 confidentiality of cases is best preserved for the litigants.  What           
 public benefit is there to have the record open during litigation.            
                                                                               
 REPRESENTATIVE VEZEY said he couldn't support an administrative               
 proceeding where all the records would become public.  This would             
 give the Department of Revenue the right to take any taxpayer in              
 the state for a hearing and make all their records public                     
 information.  He said there was no way he could vote for something            
 like this.                                                                    
                                                                               
 Number 1568                                                                   
                                                                               
 MS. VOGT stated that the proceedings now are confidential until the           
 taxpayer appeals to court.  If the taxpayer appeals to court                  
 everything becomes public.  The legislation as currently drafted              
 permits the parties to agree to a protective order for any                    
 particularly sensitive information which a taxpayer hopes to keep             
 confidential.  The whole reason this issue became a part of the               
 discussion was a concern by Mr. Briggs.  He clerked for a superior            
 court judge before the last big royalty case was heard.  The                  
 parties involved worried a lot about confidentiality and                      
 proprietary information.  The first thing they did was hammer out             
 an extensive and elaborate protective order procedure by which the            
 producer parties could request that certain parts of the record be            
 closed or sealed, but this was never used.                                    
                                                                               
 Number 1680                                                                   
                                                                               
 MR. BRIGGS said the basis for the suggestion to make the record               
 public was that in the past there has been doubt about the outcome            
 of tax settlements.  People have wanted to know what was at dispute           
 and why settlements were arrived at.  The vision of HB 427 was not            
 that settlements or settlement proceedings would be opened to the             
 public or that proprietary or sensitive information would be made             
 public, the vision was that to the extent the public had any                  
 interest in certain proceedings that they be permitted to attend.             
 Ms. Vogt pointed out the importance of the public being in                    
 attendance during any kind of litigation, this is why civil trials            
 are open to the public so they can watch the proceedings and see              
 how the dispute is resolved.  This was the primary purpose behind             
 this ideal.  The committee must consider whether they think it is             
 sound public policy to adopt this type of proposal.                           
                                                                               
 MR. BRIGGS noted that in drafting this bill they asked themselves             
 what are some of the problems with the way tax disputes are                   
 resolved.  Confidentiality was one example they came up with.  He             
 went on to add that in the Oil and Gas Journal there is a lot of              
 published information about the operation of Oil and Gas companies            
 because this helps them get investors and because they're highly              
 regulated by other public agencies, this information is required to           
 be reported.  He wondered if AOGA's expression of concern was                 
 bonafide.   For small taxpayers who's information is more private,            
 these concerns are real.  He noted that the department was willing            
 to work on language which would address these concerns.                       
                                                                               
 Number 1824                                                                   
                                                                               
 MR. WILLIAMS stated that everyone is aware that price fixing is a             
 crime and it's a violation of the anti-trust statutes.  If Exxon              
 and BP shared their strategy about how they were going to sell                
 North Slope oil to their customers, the Justice Department would be           
 knocking on their door.  If they spread the results of these                  
 strategies in the form of contracts for the sale of North Slope               
 oil, which is relevant to value of oil for production tax purposes            
 in the record, this would result with problems from the Justice               
 Department as well.  This would be the exact sort of situation                
 where they would want a protective order.                                     
                                                                               
 MS. VOGT pointed out that these exact same considerations are at              
 issue in royalty litigation which is not confidential and the                 
 courts find a way to deal with it.                                            
                                                                               
 MR. BRIGGS noted that there was a public perception of doubt about            
 how tax disputes were resolved and that if the tax payers were                
 permitted access to tax proceedings and could observe them, there             
 might be more public confidence about how they were resolved.                 
                                                                               
 Number 1929                                                                   
                                                                               
 REPRESENTATIVE TOOHEY said that tax disputes were not an issue for            
 her and if her taxes were out on the table, she would very                    
 concerned that people in competition with her would have an                   
 advantage to see where she is spending her money.  It's a matter of           
 competition.                                                                  
                                                                               
 REPRESENTATIVE BUNDE noted that there were two things the public              
 wanted to know in relation to these disputes, how much money was              
 asked for and how much was accepted.                                          
                                                                               
 Number 2001                                                                   
                                                                               
 CHAIRMAN PORTER noted that their discussions so far had been good             
 and clear about what the sticking points still are.  He asked that            
 the parties meet to discuss further compromises on these points.              
 He envisioned one more hearing such as this one with public                   
 testimony.  After that he suggested everyone have representatives             
 present while the committee discussed amendments.                             
                                                                               
 Number 2245                                                                   
                                                                               
 REPRESENTATIVE GREEN said that another issue which hadn't been                
 discussed yet was the draft letter of intent regarding the                    
 legislation.  This letter did not have a purpose section in it, but           
 there should be a legislative intent letter to accompany the                  
 legislation.  He asked that he receive feedback on this letter from           
 the interested parties.                                                       
                                                                               
 MS. VOGT noted that the letter of intent drafted by other folks               
 focused so much on the parts of the legislation which they don't              
 agree with, that it would be very hard for them to give some input.           
 ADJOURNMENT                                                                   
                                                                               
 CHAIRMAN PORTER adjourned the meeting at 3:28 p.m.                          
                                                                               

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