Legislature(1997 - 1998)

04/24/1998 01:07 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE JUDICIARY STANDING COMMITTEE                                    
                   April 24, 1998                                              
                     1:07 p.m.                                                 
                                                                               
                                                                               
MEMBERS PRESENT                                                                
                                                                               
Representative Joe Green, Chairman                                             
Representative Con Bunde, Vice Chairman                                        
Representative Brian Porter                                                    
Representative Norman Rokeberg                                                 
Representative Jeannette James                                                 
Representative Ethan Berkowitz                                                 
                                                                               
MEMBERS ABSENT                                                                 
                                                                               
Representative Eric Croft                                                      
                                                                               
COMMITTEE CALENDAR                                                             
                                                                               
HOUSE BILL NO. 324                                                             
"An Act relating to liens for municipal assessments for certain                
utility improvements."                                                         
                                                                               
     - MOVED CSHB 324(L&C) OUT OF COMMITTEE                                    
                                                                               
HOUSE BILL NO. 319                                                             
"An Act relating to an employee's expectation of privacy in                    
employer premises."                                                            
                                                                               
     - HEARD AND HELD                                                          
                                                                               
HOUSE BILL NO. 430                                                             
"An Act relating to noneconomic damages resulting from an                      
automobile accident."                                                          
                                                                               
     - MOVED CSHB 430(JUD) OUT OF COMMITTEE                                    
                                                                               
HOUSE BILL NO. 466                                                             
"An Act relating to violations of state election laws."                        
                                                                               
     - HEARD AND HELD                                                          
                                                                               
* HOUSE BILL NO. 487                                                           
"An Act relating to including the costs of expansion activities and            
political activities in rates of electric cooperatives."                       
                                                                               
     - SCHEDULED BUT NOT HEARD                                                 
                                                                               
(* First public hearing)                                                       
                                                                               
PREVIOUS ACTION                                                                
                                                                               
BILL: HB 324                                                                   
SHORT TITLE: MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS                           
SPONSOR(S): REPRESENTATIVES(S) OGAN, Kohring                                   
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 1/16/98      2061     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 1/16/98      2061     (H)  L&C, JUDICIARY                                     
 2/04/98      2223     (H)  COSPONSOR(S): KOHRING                              
 2/09/98               (H)  L&C AT 3:15 PM CAPITOL 17                          
 2/09/98               (H)  MINUTE(L&C)                                        
 3/30/98      2785     (H)  L&C RPT CS(L&C) NT 3DP 2NR                         
 3/30/98      2785     (H)  DP: COWDERY, RYAN, ROKEBERG; NR:                   
                            KUBINA                                             
 3/30/98      2785     (H)  HUDSON                                             
 3/30/98      2785     (H)  ZERO FISCAL NOTE (DCRA)                            
 3/30/98      2786     (H)  REFERRED TO JUDICIARY                              
 4/15/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
 4/24/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
                                                                               
BILL: HB 319                                                                   
SHORT TITLE: EMPLOYEES: NO EXPECTATION OF PRIVACY                              
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG                                        
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 1/14/98      2040     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 1/14/98      2040     (H)  LABOR & COMMERCE                                   
 1/14/98      2045     (H)  ADDITIONAL REFERRAL TO JUD                         
 3/25/98               (H)  L&C AT 3:15 PM CAPITOL 17                          
 3/27/98      2767     (H)  L&C RPT CS(L&C) 1DP 5NR                            
 3/27/98      2767     (H)  DP: ROKEBERG; NR: COWDERY, SANDERS,                
 3/27/98      2767     (H)  KUBINA, HUDSON, RYAN                               
 3/27/98      2767     (H)  ZERO FISCAL NOTE (LAW)                             
 3/27/98      2768     (H)  REFERRED TO JUDICIARY                              
 4/20/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
 4/20/98               (H)  MINUTE(JUD)                                        
 4/23/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
                                                                               
BILL: HB 430                                                                   
SHORT TITLE: AUTOMOBILE CIVIL LIABILITY                                        
SPONSOR(S): REPRESENTATIVES(S) KOTT, Mulder                                    
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 2/18/98      2353     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 2/18/98      2353     (H)  JUDICIARY, FINANCE                                 
 2/27/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
 2/27/98               (H)  MINUTE(JUD)                                        
 4/24/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
                                                                               
BILL: HB 466                                                                   
SHORT TITLE: CAMPAIGN MISCONDUCT: FALSE INFORMATION                            
SPONSOR(S): STATE AFFAIRS                                                      
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 3/06/98      2542     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 3/06/98      2542     (H)  STATE AFFAIRS, JUDICIARY                           
 3/19/98               (H)  STA AT 8:00 AM CAPITOL 102                         
 3/21/98               (H)  STA AT 10:00 AM CAPITOL 102                        
 3/21/98               (H)  MINUTE(STA)                                        
 3/31/98               (H)  STA AT 8:00 AM CAPITOL 102                         
 3/31/98               (H)  MINUTE(STA)                                        
 3/31/98      2810     (H)  STA RPT 1DP 1DNP 3NR                               
 3/31/98      2810     (H)  DP: HODGINS; DNP: ELTON; NR: JAMES,                
 3/31/98      2810     (H)  IVAN, RYAN                                         
 3/31/98      2810     (H)  ZERO FISCAL NOTE (H.STA)                           
 3/31/98      2810     (H)  REFERRED TO JUDICIARY                              
 4/23/98               (H)  JUD AT 1:00 PM CAPITOL 120                         
                                                                               
WITNESS REGISTER                                                               
                                                                               
DAVID STANCLIFF, Legislative Assistant                                         
  to Representative Scott Ogan                                                 
Alaska State Legislature                                                       
Capitol Building, Room 128                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-2338                                                     
POSITION STATEMENT:  Provided sponsor statement for HB 324.                    
                                                                               
KEVIN JARDELL, Legislative Administrative Assistant                            
  to Representative Joe Green                                                  
Alaska State Legislature                                                       
Capitol Building, Room 118                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-4990                                                     
POSITION STATEMENT:  Answered questions on HB 319.                             
                                                                               
PAMELA LaBOLLE, President                                                      
Alaska State Chamber of Commerce                                               
217 Second Street                                                              
Juneau, Alaska 99801                                                           
Telephone:  (907) 586-2323                                                     
POSITION STATEMENT:  Provided testimony in support of the concept              
                     of HB 319.                                                
                                                                               
JAMES HORNADAY, Legislative Assistant                                          
  to Representative Pete Kott                                                  
Alaska State Legislature                                                       
Capitol Building, Room 204                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-6848                                                     
POSITION STATEMENT:  Presented sponsor statement for HB 430.                   
                                                                               
JOHN GEORGE, Representative                                                    
National Association of Independent Insurers                                   
3328 Fritz Cove Road                                                           
Juneau, Alaska 99801                                                           
Telephone:  (907) 789-0172                                                     
POSITION STATEMENT:  Testified on HB 430.                                      
                                                                               
MICHAEL LESSMEIER, Attorney                                                    
State Farm Insurance Company                                                   
124 West Fifth Street                                                          
Juneau, Alaska 99801                                                           
Telephone:  (907) 586-5912                                                     
POSITION STATEMENT:  Testified on HB 430.                                      
                                                                               
JUANITA HENSLEY, Chief                                                         
Driver Services                                                                
Division of Motor Vehicles                                                     
Department of Administration                                                   
P.O. Box 10200                                                                 
Juneau, Alaska 99811-0200                                                      
Telephone:  (907) 465-4361                                                     
POSITION STATEMENT:  Provided information on HB 430.                           
                                                                               
RUSS WINNER, Attorney                                                          
Winner and Associates, PC                                                      
900 West Fifth Avenue, Suite 700                                               
Anchorage, Alaska 99501                                                        
Telephone:  (907) 277-9521                                                     
POSITION STATEMENT:  Provided information on HB 430.                           
                                                                               
REPRESENTATIVE MARK HODGINS                                                    
Alaska State Legislature                                                       
Capitol Building, Room 110                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-3779                                                     
POSITION STATEMENT:  Sponsor of HB 466.                                        
                                                                               
PAT CARTER, Legislative Assistant                                              
  to Representative Hodgins                                                    
Alaska State Legislature                                                       
Capitol Building, Room 110                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-2283                                                     
POSITION STATEMENT:  Provided information and answered question on             
                     HB 466.                                                   
                                                                               
ACTION NARRATIVE                                                               
                                                                               
TAPE 98-69, SIDE A                                                             
Number 0001                                                                    
                                                                               
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee               
meeting to order at 1:07 p.m.  Members present at the call to order            
were Representatives Green, Bunde, Porter and Rokeberg.                        
Representative James arrived at 1:11 p.m. and Representative                   
Berkowitz arrived at 1:13 p.m.  Representative Croft was excused.              
                                                                               
HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS                               
                                                                               
Number 0025                                                                    
                                                                               
CHAIRMAN GREEN said the committee would hear HB 324, "An Act                   
relating to liens for municipal assessments for certain utility                
improvements."  Before the committee was CSHB 324(L&C).                        
                                                                               
Number 0050                                                                    
                                                                               
DAVID STANCLIFF, Legislative Assistant to Representative Scott                 
Ogan, Alaska State Legislature, presented CSHB 324(L&C) on behalf              
of the prime sponsor, Representative Ogan.  He informed the                    
committee that Representative Ogan had received telephone calls                
from his constituents last year from older citizens in the Valley              
who were not able to hook up, did not want to hook up, and could               
not meet the assessments being levied on them as a result of the               
Enstar gas pipeline projects that have been expanding in the                   
Valley.  He pointed out that they talked to the borough and the                
borough told them that they would like to grant some sort of                   
deference to the older citizens, but they don't have clear                     
statutory to do that.  Representative Ogan introduced this bill                
originally to accomplish that purpose.  He said they started out               
with a conservative approach, which would have affected many local             
improvement districts (LID) in the state with regard to funding and            
bonding.  He explained that the House Labor and Commerce Committee             
changed the approach of the bill to simply enable local governments            
to grant relief, if they so choose, to people who couldn't afford              
the assessment by deferring down the line until the property                   
finally changed hands, and at that time the assessment would be                
satisfied.                                                                     
                                                                               
CHAIRMAN GREEN asked if there would be any possibility that the                
ordinance would be such that there would be interest accrual that              
at the end of this time, ten years from now, the debt would be so              
large that they would automatically have to take over possession of            
a person's house.                                                              
                                                                               
MR. STANCLIFF responded that, absent any legislative direction                 
contrary to that, there is always a possibility that local                     
government may set up a system that does in fact do that.                      
                                                                               
CHAIRMAN GREEN asked if that has ever happened before.                         
                                                                               
MR. STANCLIFF replied it has never happened.  He commented that if             
this committee wants to consider further language to prevent that,             
it would be a policy call.  However, at this point, Representative             
Ogan just wants to gain the authority.  He noted that they received            
a letter from the Older Persons Action Group who initially had                 
concerns with this bill because they thought it applied to property            
taxes, which it does not.  The bill applies specifically to LID                
assessments and the Older Persons Action Group has since asked for             
that letter back and has sent Representative Ogan's office another             
letter supporting HB 324.                                                      
                                                                               
Number 0259                                                                    
                                                                               
REPRESENTATIVE CON BUNDE referred to property taxes stating that at            
some time it could eat up the price of the property.  He said a                
person can get their taxes deferred for a while, but someone has to            
pay.  His concern is that when a development like this is done, the            
money is spread out over all the people who would benefit.  He said            
if the legislature allows the municipalities to exempt a person, it            
would accrue some kind of expense and then the municipalities would            
go back to the legislature saying it's a nonfunded mandate because             
they would tell the municipalities that they have to rebate.                   
                                                                               
CHAIRMAN GREEN said the word "may" probably would avoid that being             
an unfunded mandate.                                                           
                                                                               
REPRESENTATIVE BRIAN PORTER advised the committee that this bill is            
not a mandate, and it is a "may" and it leaves the opportunity for             
the municipalities to set up whatever system they like.  He said he            
would be very surprised if the municipalities picked the option of             
accruing interest.  He said, "I think the more of these kinds of               
things that we can provide, and I'd be happy to add to this the                
local option for senior property tax exemption, but I know that                
that wouldn't probably be appreciated by the sponsor, but those                
kinds of things need to be optional within the cities.  They're the            
ones that are faced with paying those amounts or not having the                
revenue."  He indicated he believes this is a very good proposal.              
                                                                               
REPRESENTATIVE NORMAN ROKEBERG noted that Representative Bunde                 
brought up a point that he thinks can be solved by any deferral of             
the amounts of assessment.  He said there are various different                
devices that a municipality can use, one of which would be to set              
up either a sinking fund inside of the amount of the gross assessed            
area, or they could actually pay that amount to make it equitable              
to the other assessees in the area.  He said then they'll have a               
lien on the property which could go back into the general fund to              
reimbursement them for that whenever that property was alienated               
and the lien follows with the title of the land.  Eventually, at a             
certain point, the municipality would be reimbursed for that                   
amount.  He doesn't think it will create an undo burden because                
there are several financial mechanisms that could be put in place              
to overcome that problem.  He expressed that the bill is narrow in             
scope because it's specifically regarding the property of a primary            
residence.  He indicated this bill is a good one that compromised              
everything and that it should have the support of the committee.               
                                                                               
REPRESENTATIVE JEANETTE JAMES apologized for being late and asked              
if there was a particular situation that prompted the sponsor to               
introduce this legislation.                                                    
                                                                               
MR. STANCLIFF said credit is due to a very thorough and dedicated              
constituent, Katherine Hamilton (ph).  He informed the committee               
she is a long-time Alaskan and that her husband passed away some               
years ago.  She has a modest home, still chops her own wood and                
takes care of herself, and was incensed that she was going to have             
to spend $6,000 because Enstar built a gas line across her property            
and she couldn't afford it.  He explained that they received                   
several telephone calls from other people who couldn't afford the              
assessment up front and the borough informed Representative Ogan's             
office that they had no authority to set up a system to defer or               
deal with indigent people or people in need who asked them to do               
something about it.                                                            
                                                                               
REPRESENTATIVE JAMES referred to the gas line Mr. Stancliff was                
talking about and asked if the gas line was put in by an LID as                
opposed to purchasing any kind of an easement on private property.             
                                                                               
MR. STANCLIFF answered in the affirmative.                                     
                                                                               
REPRESENTATIVE BUNDE said, "I understand this is permissive and                
maybe I can impose on Representative Rokeberg's expertise, but it              
costs "X" amount of dollars to put this in when they assess the                
various people if people pay a prorated share.  If you have some               
people that the municipality opts out, do they raise the prorated              
share for the other people that are affected by this, or does the              
municipality somehow eat the cost and pick it up later?"                       
                                                                               
Number 0725                                                                    
                                                                               
CHAIRMAN GREEN said what he thinks Representative Rokeberg is                  
saying is that there are several options and that might be one.                
They could do it either way they wanted to.                                    
                                                                               
REPRESENTATIVE BUNDE said it's not a nonfunded mandate on the                  
municipality; it's a potential nonfunded mandate on people that                
could be in an LID.                                                            
                                                                               
REPRESENTATIVE JAMES stated that this is a standard procedure that             
she's seen happen in lots of areas.  She commented that the                    
municipalities would be very careful when they did this to be sure             
that the people who know that they have an exemption knows what the            
cost is.                                                                       
                                                                               
REPRESENTATIVE ROKEBERG reiterated that there are several financial            
mechanisms, one of which would be for the (indisc.) pay the money              
out and then (indisc.) for it later, that way any of the other                 
individuals assessed would not have to pay an unallocated share of             
that gross amount under the project.  He said the legislature has              
kind of seeded some authority to the private sector to create these            
LIDs.                                                                          
                                                                               
CHAIRMAN GREEN indicated that his concern about having a proration             
among the other assessees is that you get into sales of those                  
properties, not the one that's not paying.  He stated he thinks it             
would kind of get mired up on payback.                                         
                                                                               
REPRESENTATIVE ROKEBERG said given the recordation system in most              
of the judicial districts and how it works is that this would be a             
lien against the property which would travel with the title, so any            
time there was alienation or sales of that, then there wouldn't be             
a payoff.                                                                      
                                                                               
REPRESENTATIVE ETHAN BERKOWITZ asked when the assessment becomes               
due, when the property ceases to be owned by the resident, who pays            
for it?                                                                        
                                                                               
CHAIRMAN GREEN noted that Representative Rokeberg talked about a               
variety of ways that can be instituted from a partial assessment to            
others, to holding it in reserve, to the municipality holding that             
in abeyance as a lien against the property in future payments.  He             
said there are several different ways that that could be handled,              
and the question that was probably as important or more is, "Does              
that withheld payment accrue interest?"                                        
                                                                               
REPRESENTATIVE BERKOWITZ gave an example that when grandparents                
pass on property to grandchildren, they are not necessarily in a               
position that they can afford the house so they've got to sell the             
family homestead in order to make back taxes.  He said he's seen               
family farms and homes go that way and it seems to him that "too               
bad" is just not the answer they should leave folks with.                      
                                                                               
Number 1132                                                                    
                                                                               
CHAIRMAN GREEN referred to Representative Berkowitz's example and              
said if they didn't have that option, at least they have an option.            
If ten years earlier the grandparents couldn't have paid the                   
assessment, they would have lost the homestead ten years earlier.              
This bill at least defers it until the time that maybe the                     
grandchildren could come up with the money.                                    
                                                                               
REPRESENTATIVE BERKOWITZ said, "If, for example, there's a                     
dispensation for elderly residents so they don't have to pay even              
though they might have the means to pay.  They choose to accept                
this deferral; they pass on.  Then this lien attaches at the same              
time inheritance taxes come due on everything, that's a big sock               
for someone to swallow.  When you're inheriting a $100,000 house               
with $5,000 worth of deferred payments on it, the estate taxes - I             
want to say 40 percent, or something extremely high - so you've got            
to come up with $40,000 to cover the estate tax, plus $5,000 to                
cover this deferred assessment; $45,000 is a sizeable chunk of                 
change even for someone who's not young and getting started."                  
                                                                               
CHAIRMAN GREEN asked Representative Berkowitz what he would suggest            
as a way around the problem he just described.  Just ignore the                
tax?                                                                           
                                                                               
REPRESENTATIVE BERKOWITZ replied that the problem of inheritance               
tax isn't something that the committee can solve, but it's                     
something they shouldn't ignore either.                                        
                                                                               
CHAIRMAN GREEN explained that the CSHB 324 doesn't ignore it, it               
doesn't even address it.  It's talking simply about improvements               
that the person who has the property either is elderly or not                  
capable financially of paying.                                                 
                                                                               
REPRESENTATIVE BERKOWITZ he said if the municipality wants to defer            
the tax, that just passes the tax burden onto someone else.  If the            
municipality wants to excuse the tax, that's something else.  He               
said to excuse a tax burden is a decision the municipality should              
make.  He stressed that inheritance tax isn't something the                    
legislature can "tinker" with, but when both taxes are due                     
simultaneously, it's a problem for a lot of people.                            
                                                                               
Number 1230                                                                    
                                                                               
REPRESENTATIVE JAMES said people who are economically disadvantaged            
and not able to pay the LID certainly aren't going to have an                  
estate that would be having inheritance tax on it.  She stated that            
there's a huge exemption for inheritance tax.  She referenced LIDs             
stating that her understanding is that the cost of that is                     
generally comparable to the improvement on the property, and that's            
the reason people want these kinds of things.  She commented that              
she is not in favor of doing any kind of excusing because you                  
excuse the person who can't pay, but you don't excuse the property             
because the property is improved by the LID.  That's the point of              
having one in the first place.  She stated that the argument to                
excuse them is not a good argument and it is still up to the                   
municipality and this bill can deal with it any way they want to,              
therefore, she doesn't know why the legislature should care.                   
                                                                               
CHAIRMAN GREEN pointed out it has been mentioned in committee on a             
number of occasions that they should not micro-manage municipal                
affairs, which this legislation does not do.  He said it just                  
allows the municipalities to do their own thing.                               
                                                                               
Number 1338                                                                    
                                                                               
REPRESENTATIVE PORTER made a motion to move CSHB 324(L&C) out of               
committee with individual recommendations and the attached zero                
fiscal note.                                                                   
                                                                               
REPRESENTATIVE BERKOWITZ objected.  He said the discussion he has              
heard in committee today seems to combine the elderly and                      
economically disadvantaged, which is not what the legislation says.            
He pointed out that it says "elderly or economically                           
disadvantaged."  He indicated that's why the tax bill that comes               
due upon a person's death is particularly important.  He said the              
legislature does a lot to promote family values, and family                    
properties is an important component.  He said, "And if we're                  
setting up a situation where families are forced to get rid of                 
family property in order to pay back taxes or back assessments, I              
have a hard time reconciling it with the family values we talk                 
about all the time."                                                           
                                                                               
Number 1401                                                                    
                                                                               
CHAIRMAN GREEN stated if the word "and" was put in, then you've got            
to qualify both ways, and that certainly could reduce the number of            
people who either would be economically disadvantaged or are                   
elderly and living....  He said, "You're saying they've got to be              
old and broke, and that may be too high of a standard."                        
                                                                               
REPRESENTATIVE PORTER emphasized that the intent of the bill is not            
being communicated.  He explained that the intent is to forestall              
an economically disadvantaged person or an elderly person who may              
not be at poverty level from losing their property.  He said the               
threshold for inheritance tax is quite high and he doesn't think               
that anyone who would fall under this category would have                      
inheritance tax as a consequence in their estate.  He stated, "If              
they're elderly, they're not going to have a big amount of this                
build up because they're going to die.  If they're disadvantaged,              
then we're going to save their property for them.  It's an LID,                
which isn't a whole lot, which increases the value of the property             
as been discussed, so if you inherit it you should pay that off                
because the value that you just inherited is higher."                          
Representative Porter stressed that the whole idea of the bill is              
to provide a safeguard against a person losing their property.                 
                                                                               
REPRESENTATIVE BERKOWITZ commented that that's admirable, but only             
half of the problem has been solved.                                           
                                                                               
REPRESENTATIVE ROKEBERG pointed out that the threshold for any                 
inheritance tax under the Internal Revenue Code (ph) has been                  
raised to $625,000 and will go up on a ratchet basis in the future             
up to a cap of well over $1 million.  He said anyone who goes over             
that wouldn't need this provision.  He said, "If you have an                   
exemption here, this would be the form of what we talked about in              
terms of you could perceive it as a mandate."  He indicated he                 
doesn't believe that is the message that the sponsor or the                    
committee wants to send.  He referred to Representative James                  
comments about improving the valuation of the property with the                
improvement.  He said it depends on the scope of the improvement,              
the size of the property and other factors that could be variable,             
so it's not necessarily a one-to-one valuation increase.  In total,            
there is an enhancement of the property, which he feels would more             
than not generally offset, in particular, gas lines and utility                
lines.                                                                         
                                                                               
Number 1617                                                                    
                                                                               
CHAIRMAN GREEN asked for a roll call vote on the motion made by                
Representative Porter.  Representatives Bunde, James, Porter,                  
Rokeberg, and Green voted in favor of the motion.  Representative              
Berkowitz voted against it.  Representative Croft was absent.                  
Therefore, CSHB 324(L&C) moved from the House Judiciary Standing               
Committee on a vote of 5-2.                                                    
                                                                               
HB 319 - EMPLOYEES: NO EXPECTATION OF PRIVACY                                  
                                                                               
Number 1638                                                                    
                                                                               
CHAIRMAN GREEN announced the next order of business would be HB
319, "An Act relating to an employee's expectation of privacy in               
employer premises," sponsored by Representative Rokeberg.                      
                                                                               
REPRESENTATIVE ROKEBERG presented to the committee CSHB 319(L&C).              
He said the bill is relatively simple which merely puts in statute             
- to clarify any question about the ability of an employee/employer            
relationship in this contemporary age of electronic commerce,                  
particularly - about the expectations of privacy on the part of an             
employee and employer.  He pointed out that one of the main                    
objectives he had in introducing this bill is to get business                  
enterprises to memorialize policies about their telecommunications             
equipment and other property.  He said that is the custom in many              
instances with many businesses today.  He said on the record is the            
state of Alaska's policy which has set forward many other major                
corporations regarding this type of use of equipment.  He noted                
that the bill was amended in the Labor and Commerce Committee to               
overcome some of the problems that arose out of the testimony.  He             
said the germ of the bill revolved around a lawsuit that occurred              
in the University of Alaska Fairbanks where an employee was accused            
of downloading pornographic materials on a university-owned                    
computer.  As a result, there was a dispute about the expectations             
of privacy between the employee and the employer.  Unfortunately,              
this bill would not have helped in that particular situation                   
because when it was discovered that the employee had the material,             
the material was on his personally-owned zip drive attached to his             
computer on an external basis; not an internal drive.  Strictly                
speaking, it was his property and, therefore, this wouldn't have               
happened.                                                                      
                                                                               
REPRESENTATIVE ROKEBERG noted in the Labor and Commerce Committee              
they took up the issue of the business premises as it related to a             
camp job where an employee may be in a residential setting on                  
company-owned premises.  By using the term "business property" in              
the bill, legislative counsel advised him that HB 319 will exclude             
residential domiciles.  The bill only refers to business equipment             
and business premises.  It's the intention of the bill that it not             
include situations where there is employee housing.  He referred to            
a memorandum from the Division of Legal and Research Services,                 
Legislative Affairs Agency, dated March 25, 1998, regarding any                
issues that revolve around constitutionality.  It seems clear from             
the memorandum that there is no intention to hinder a person's                 
constitutional right of privacy.                                               
                                                                               
Number 1815                                                                    
                                                                               
REPRESENTATIVE BUNDE asked if someone's personal computer equipment            
would not be covered by this bill because it's personal property               
and not employer property.                                                     
                                                                               
REPRESENTATIVE ROKEBERG replied in the affirmative.                            
                                                                               
CHAIRMAN GREEN asked if a person was doing work at home and their              
computer was tied into their place of employment, could they be                
subject to review of their own personal computer.                              
                                                                               
REPRESENTATIVE ROKEBERG replied, "No."                                         
                                                                               
Number 1863                                                                    
                                                                               
REPRESENTATIVE JAMES said she has a severe concern about this issue            
because every year, except for the first year she was in office,               
she has provided her own computer, since the legislature did not               
provide one for her.  She said every year, if she connects to the              
Local Area Network (LAN), she has to have the state do that for                
her.  She informed the committee that last year, legislative                   
counsel made a decision that they would only connect those pieces              
of equipment that were purchased by the state.  She said this year             
she purchased another computer, which she paid for, and purchased              
it through the state so that she could be connected to the LAN and             
have service on her computer.  She said she is very careful because            
she doesn't trust the state and other people to say that anything              
that is on her computer isn't reviewed by the public.  She noted               
there have been extensive hearings on the ethics bill regarding the            
Alaska Public Offices Commission and the State Affairs Committee.              
Representative James pointed out that the State Affairs Committee              
shied away from adding E-mail in to some of the things you can and             
can't do in the state business because it is assumed that people               
will be sending private E-mail messages.  If they included E-mail              
it may be that those messages would be subject to review.  She                 
explained that it's her personal feeling that those things should              
not be subject to review by the state or other government entities.            
She stated, "Certainly, it would have a chilling effect on people              
such as myself, who, in order to have a computer have had to                   
provide my own.  And I think it would be absurd for me not to be               
able to use a computer while I'm here."  She indicated she does not            
know exactly what HB 319 does.  It sounds like the bill says she               
has absolutely no protection whatsoever.  Representative James                 
referred to page 1, subsection (b) noting that the bill indicates              
that some people are excluded from this:  "(b) An elected official             
is not an employee for purposes of this section."  She asked,                  
"What's the reason that we're not?  If we're being paid for with               
state funds, is that the issue?  What is the issue?"                           
                                                                               
Number 1973                                                                    
                                                                               
REPRESENTATIVE ROKEBERG emphasized that he should have made very               
clear to the committee that the bill does provide for a contractual            
agreement to the contrary between an employee and employer to allow            
the employee to maintain that level of privacy.  He said the thrust            
of the bill is absent a contract, to the contrary the employer has             
the right to look at the equipment and premises, which is the                  
property of the employer.  He commented he would think by now that             
this is basic common law, but it's being called into question                  
because of the changing dynamic of the electronic commerce, et                 
cetera.  Therefore, the bill specifically provides for that                    
contract.  He indicated that one of his purposes in the legislation            
was to make sure that there is a policy and/or contract in place               
that specifies the rights of the employees/employers on these                  
issues.  He noted that many companies and corporations have these              
policies and this bill will allow for an individual contract to                
protect those individual rights.  He said he looks at this as a                
protection of privacy on the part of the employee more than                    
anything else.  He believes this is a real positive aspect of the              
bill.                                                                          
                                                                               
REPRESENTATIVE ROKEBERG said this bill does not, in any way, hinder            
our constitutional rights under our constitution.  He referred to              
the provision in subsection (b) regarding "elected official"                   
stating that it was put in there for the very fact pattern                     
Representative James just described.  He said, "It's my                        
understanding ... when we, as members of this legislature, use our             
services here, when we bring our own computers in, we connect to               
the LAN onto the server that is readily available - anytime you're             
on that LAN and that circuit into the server, your data and                    
information can be easily and readily inspected by the Department              
of Administration data processing people."  He stated that it is               
absolutely unsecured.  The only way a person can have a secure line            
in the Capitol Building is if they have a separate dedicated                   
circuit that they can connect to the Web or through another server             
that is not on the state server.  He indicated a person has                    
absolutely no security if they are connected into the state server.            
                                                                               
REPRESENTATIVE ROKEBERG referred to a memorandum from him dated                
March 27, 1998, regarding questions that were asked regarding                  
legislative policy during a Labor and Commerce Committee meeting.              
He pointed out that the members of the Labor and Commerce Committee            
added the exemption of an elected official in the bill.  He said he            
particular doesn't care for this exemption because it gives the                
inclination that elected officials are better than anyone else.  He            
commented that if the Judiciary Committee wanted to take that                  
exemption out of CSHB 319, it wouldn't bother him a bit.                       
                                                                               
Number 2155                                                                    
                                                                               
REPRESENTATIVE PORTER said he had the same reaction regarding the              
exemption of an elected official because legislators would not be              
able to enter into a contract with their employers back home.                  
                                                                               
REPRESENTATIVE ROKEBERG remarked that was the exact discussion they            
had in the Labor and Commerce Committee stating, "Who is our                   
employer?"  He said they don't work for anybody but their                      
constituents, and that is the reason they added that exemption to              
clarify that elected officials are not employees.                              
                                                                               
REPRESENTATIVE JAMES interjected and said she gets her paycheck                
from the state of Alaska.                                                      
                                                                               
REPRESENTATIVE ROKEBERG said he would venture to say that all 60               
legislators would say that they work for the people and not the                
state of Alaska.  He said, "I am not employed by the state of                  
Alaska."                                                                       
                                                                               
REPRESENTATIVE BERKOWITZ referred to the discussion about                      
legislators using their own equipment and said it seems that this              
bill would apply if a person is working for a private corporation              
as well.                                                                       
                                                                               
REPRESENTATIVE ROKEBERG replied, "That's correct and that's why you            
should have a contract allowing you to do such things."                        
                                                                               
REPRESENTATIVE BERKOWITZ asked if this bill applies to telephones              
also.                                                                          
                                                                               
REPRESENTATIVE ROKEBERG said the bill refers to employer equipment             
and premises in the (indisc.).  He said, "If it's personally owned,            
then the title of it belongs to you.  The question then becomes                
what about the data line that you're connecting it to."                        
                                                                               
REPRESENTATIVE BERKOWITZ said his concern with that is his privacy             
is not in the telephone, it's not in the computer; his privacy is              
in the information that's transmitted or stored in one of those                
devices.  And by placing a distinction as to who owns the mechanism            
by which he communicates seems somewhat artificial to him.                     
                                                                               
Number 2240                                                                    
                                                                               
REPRESENTATIVE ROKEBERG said, "For example, even in the case at bar            
now regarding that, the distinction is made and clearly conceited              
that the zip drive is under title to the accused and, therefore, he            
had an expectation of privacy, so you couldn't invade that storage.            
Data storage is the issue in large part, other than direct                     
eavesdropping because so much data now is stored in a memory."                 
                                                                               
CHAIRMAN GREEN said it seems reasonable that if legislators be                 
warned that it is state equipment and they are not allowed to use              
it for personal use.  If they don't have something that is suspect,            
there shouldn't be any problem in making public what they have                 
said.                                                                          
                                                                               
REPRESENTATIVE ROKEBERG pointed out that all legislators'                      
transmissions are monitored constantly.                                        
                                                                               
REPRESENTATIVE BERKOWITZ again referred to telephones.  He said if             
he is on a state telephone or if he's in a private business and                
he's talking on the telephone, the way he reads this bill is that              
he has no expectation of privacy in that conversation.  However, if            
it's his own personal telephone, then he does have an expectation              
of privacy, regardless of the conversation.                                    
                                                                               
REPRESENTATIVE ROKEBERG said a person's protection is in the                   
contract and that's what is positive about this bill.                          
                                                                               
Number 2305                                                                    
                                                                               
REPRESENTATIVE PORTER remarked that Representative Berkowitz has a             
very valid point.  He said the wording of the committee substitute             
(CS) as currently written brings into question what everyone has an            
expectation of privacy on, which includes telephone calls.  He                 
indicated he feels it could be handled very easily with a little               
"blip" that nothing in the bill is intended to preclude the                    
expectation of privacy in telephone conversations.                             
                                                                               
REPRESENTATIVE ROKEBERG stated that it's his understanding in other            
testimony that it is legally permissible to eavesdrop on an                    
employee's telephone communications.  He noted it's a very common              
marketing device, whereas employers listen to sales calls to gage              
performance.  He pointed out that there's no protected right for               
that particular activity.  He said, "If we were to do something                
otherwise, we would be making a mistake.  There's no common law                
right to that when we're talking about business activity."                     
                                                                               
REPRESENTATIVE BERKOWITZ explained that there is an advisement that            
your privacy may not be there.                                                 
                                                                               
REPRESENTATIVE ROKEBERG said he is not absolutely certain about the            
statement he just made regarding privacy in telephone calls, but he            
suspects that there's no constitution or statutory right.  He noted            
there is a common law right of no expectation of privacy on                    
telephonic communications when it's in a business center.                      
                                                                               
Number 2378                                                                    
                                                                               
REPRESENTATIVE JAMES said she is also concerned with privacy in                
telephone calls because before computers there were telephones.                
She said, "Not every telephone conversation that you have, you                 
instituted it.  They call you many times."  She expressed that even            
though we are moving into an age of advanced technology, they have             
to figure out how they are going to deal with these issues and                 
their right to privacy, and what is it that an employee has rights             
of and not rights of.  She said she doesn't want the committee to              
"sweep so big" that they eliminate one of the privacy issues they              
have always had, which is telephone conversations.  She stated that            
she sees the legislature inching and inching away the lack of                  
privacy.  She wants to be sure that the legislature has covered the            
bases and that employees know just exactly what their entitlements             
are.  She pointed out that the contract that is mentioned in the               
bill is a very important part of this issue and should be the                  
result of it.                                                                  
                                                                               
TAPE 98-69, SIDE B                                                             
Number 0001                                                                    
                                                                               
REPRESENTATIVE PORTER said, "There is no expectation of privacy if             
there is no expectation of privacy."  He gave an example to the                
committee that if it is his job to be a telemarketing person, he               
can well presume that his employer will supervise his job and                  
that's what those intersections of communications are.  If he is               
talking to his wife at noon, he has an expectation of privacy and              
it better not be violated.  Under the wording of the CS, there is              
implication that it could be.  He said he wouldn't vote for this               
bill without some qualification of that.                                       
                                                                               
CHAIRMAN GREEN advised Representative Porter that he is exempt the             
way the bill is currently written.                                             
                                                                               
REPRESENTATIVE JAMES interjected and said, "But there are others               
similarly situated that we are here to protect."                               
                                                                               
REPRESENTATIVE ROKEBERG indicated he is not certain about the state            
of the law as it relates to that currently, so he doesn't want to              
make any statements that might mislead the committee.                          
                                                                               
REPRESENTATIVE PORTER noted that they had to get a waiver to                   
monitor prisoner calls out of correctional institutions.                       
                                                                               
REPRESENTATIVE ROKEBERG remarked that may be because it's a public             
facility and reiterated that he is uncertain about this and it's a             
question that needs to be answered correctly, and he is not                    
competent to answer the question.                                              
                                                                               
Number 0065                                                                    
                                                                               
KEVIN JARDELL, Legislative Administrative Assistant to                         
Representative Joe Green, Alaska State Legislature, came before the            
committee to answer questions.  He referred to Representative                  
Porter's comment about getting a waiver to monitor prisoner calls.             
He said most of the law regarding privacy deals with government                
intrusion to private individuals' privacy rights.  In the context              
of private citizen v. private citizen, they are generally                      
trespassing laws, not constitutional privacy rights (indisc.).                 
                                                                               
REPRESENTATIVE BERKOWITZ informed the committee he has been doing              
some research on the issue of privacy and he noted there is a                  
flurry of federal legislation addressing particular                            
telecommunications privacy rights.  He also noted that there is                
legislation addressing medical and surveillance privacy.  There is             
a flurry of discussion as to what the privacy connotations are                 
between private individuals.                                                   
                                                                               
REPRESENTATIVE ROKEBERG stated that is the reason he introduced                
this bill.  He feels it does, in large part, service to the public             
to have these things brought forward.  He said, "This to me, merely            
memorializes what the common law is as far as private enterprise is            
concerned."                                                                    
                                                                               
Number 0185                                                                    
                                                                               
CHAIRMAN GREEN referred to privacy with telephones and asked,                  
according to this bill, if a telephone is owned by the state, and              
he uses it for a private call, is he violating the fact that he's              
not supposed to use state equipment for private use.  He also                  
asked, by services, does that include tying into state lines with              
his own or anybody else's equipment.                                           
                                                                               
REPRESENTATIVE ROKEBERG replied that there is a written policy                 
regarding telephone usage.                                                     
                                                                               
CHAIRMAN GREEN said he does not think it covers the service                    
question he asked about.  He asked if he brought in his own                    
computer and tied into a service line that is owned by the state,              
does that then negate it's his own personal property.                          
                                                                               
REPRESENTATIVE ROKEBERG interjected and said (indisc.) it would.               
They could tap the line if he was in real time not storage time.               
                                                                               
CHAIRMAN GREEN asked for clarification regarding business equipment            
and services and asked, "Does that then make that not private?"                
                                                                               
REPRESENTATIVE ROKEBERG replied that would be his interpretation if            
the service data line would be accessible to the employer, not                 
anybody else.                                                                  
                                                                               
MR. JARDELL said his expectation would be that in most situations              
where an employer has a computer, he would say, "Give me your                  
computer or you're fired.  It's my computer, we own it, I have                 
title to it, and I can seize it anytime I wish and go through it."             
                                                                               
Number 0270                                                                    
                                                                               
REPRESENTATIVE PORTER asked Representative Rokeberg about the                  
definition of "employer" if he is intending to only include public             
employers and not private sector employers.                                    
                                                                               
REPRESENTATIVE ROKEBERG replied, "No."  He said he wanted to                   
include private sector employers.                                              
                                                                               
REPRESENTATIVE BERKOWITZ pointed out that there is no definition of            
"employee."  He asked if that would include interns and volunteers.            
                                                                               
REPRESENTATIVE ROKEBERG replied, "I think the dictionary is                    
adequate."  He said he does not recall why legislative counsel put             
the definition of "employer" in subsection (2) on page 2 of the                
bill.  He said he thinks they wanted to make the distinction that              
included those public officials as well as private.  He commented              
that Representative Berkowitz made a good point on the completeness            
of the definition of "employer."                                               
                                                                               
REPRESENTATIVE PORTER commented there should be some mention of                
private employer in the bill.                                                  
                                                                               
Number 0350                                                                    
                                                                               
REPRESENTATIVE ROKEBERG offered Amendment 1 to CSHB 319(L&C) which             
read:                                                                          
                                                                               
     Page 1, line 11                                                           
                                                                               
          Delete:  "permit"                                                    
                                                                               
          Insert:  "not hinder or obstruct"                                    
                                                                               
     Page 1, line 11                                                           
                                                                               
          Delete:  "to have"                                                   
                                                                               
          Insert:  "from"                                                      
                                                                               
CHAIRMAN GREEN asked if there is an objection.                                 
                                                                               
REPRESENTATIVE BERKOWITZ objected for section purposes.  He said,              
"Imagine in an incidence where the employer wants access to                    
computer records, there's a computer password on it, there's no                
hindrance or obstruction involved, but it seems to me that the                 
employee could rightfully say, 'Have at it, it's yours, I'm not                
helping you get into the computer.'"                                           
                                                                               
REPRESENTATIVE ROKEBERG replied that it's not obstruction, it's at             
least hindering.                                                               
                                                                               
REPRESENTATIVE BERKOWITZ asked Representative Rokeberg how is it               
hindering.  He said, "It's a sin of omission/sin of commission and             
there's no action here.  I'm not obstructing.  I'm just not                    
offering assistance."                                                          
                                                                               
CHAIRMAN GREEN asked Representative Berkowitz if he maintains his              
objection.                                                                     
                                                                               
Number 0445                                                                    
                                                                               
REPRESENTATIVE BERKOWITZ withdrew his objection.                               
                                                                               
CHAIRMAN GREEN said there being no objection, Amendment 1 was                  
adopted.                                                                       
                                                                               
Number 0462                                                                    
                                                                               
REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 2.                   
                                                                               
CHAIRMAN GREEN asked if there is an objection.                                 
                                                                               
REPRESENTATIVE PORTER objected for the purpose of reading it.                  
                                                                               
REPRESENTATIVE BERKOWITZ explained that Amendment 2 changes the                
default.  He said the current default is there's no presumption, no            
expectation of privacy, so he turned it around so that there's an              
expectation of privacy.  He said if there's some kind of                       
contractual agreement, or some kind of agreement or notification,              
then the employer can do what the employer wants to do.                        
                                                                               
Number 0479                                                                    
                                                                               
REPRESENTATIVE ROKEBERG objected.  He said it "flies in the face"              
of what he believes to be the common law, and the administration of            
law.  He indicated that it would change the current law of the                 
state of Alaska.                                                               
                                                                               
REPRESENTATIVE BERKOWITZ explained that the constitution is clear              
that they do have the right of privacy.  He noted that all he is               
doing is ensuring if you want to hurdle that constitutional right              
to privacy, you have to expressly do it and that there's no default            
where you don't have an expectation of privacy.                                
                                                                               
REPRESENTATIVE ROKEBERG said, "This is not a case of long hair,                
this is a case of -- privacy is not in a vacuum as the supreme                 
court says in Jennings.  Those expectations are balanced by                    
reasonableness and to, by statutory act, overturn an entire body of            
common law, I don't think it's appropriate.  On the other hand, by             
putting up sideboards we're being specific about where we want to              
make sure privacy is maintained, that's more -- I think that's a               
better approach to any amendments (indisc.) approach to this."                 
                                                                               
Number 0544                                                                    
                                                                               
REPRESENTATIVE JAMES said she supports the concept that employers              
have a say in what their employees do.  She indicated she worked               
with small employers in the past and she understands how many times            
they are entrapped because many of the small employers are not real            
in tuned with some of the fine lines of our law.  Her concern with             
this piece of legislation is that it says there's no expectation of            
privacy, and that the only way you can get around that is to have              
an agreement.  From her experience with many of the employers that             
she has had is that they lack the ability to get all of the                    
paperwork done because they don't have a particular person who is              
an administrator who can do all those kinds of things.  She                    
indicated it would behoove the committee to try to make the                    
exceptions in the bill that should be automatically accepted.  She             
said she does not know what that language is and she stated she                
would expect the sponsor will provide that information.  She                   
emphasized that she strongly supports that employers, specifically             
private employers, should have some control over their employees.              
                                                                               
REPRESENTATIVE BUNDE stated that it seems like it would be good                
business practice that if employees will be monitored, they should             
be notified when the employer begins doing such.  He indicated he              
likes the notion that an employee has the expectation of privacy               
and then if it doesn't exist, it's the employer's responsibility to            
notify the employee.                                                           
                                                                               
REPRESENTATIVE BERKOWITZ made reference to a document in the                   
committee members' packets from the Department of Administration               
regarding state policy regarding personal use of state office                  
technologies.                                                                  
                                                                               
REPRESENTATIVE ROKEBERG confirmed that there is a state policy and             
also procedures which were adopted by legislative counsel.                     
                                                                               
REPRESENTATIVE BERKOWITZ stated that the state policy adopted is an            
affirmative recognition that a state employee is giving up their               
right to privacy.  The policy is not a default position that you               
have no expectation of privacy.  He said the state contract allows             
a person to give up their rights.                                              
                                                                               
REPRESENTATIVE ROKEBERG explained that the intent of the bill is               
about businesses that don't have huge budgets like government                  
agencies do to draft and memorialize policies, and create these                
types of procedures and various other things.  He said it's about              
small businesses that are trying to make a go of it, which can be              
inundated with law suits, inundated with state laws and procedures             
that create hindrances, hurdles, and obstacles of doing business.              
He said any other change like the amendment Representative                     
Berkowitz has offered is absolutely offensive to him as a small                
business person.                                                               
                                                                               
CHAIRMAN GREEN asked if the objection is maintained.                           
                                                                               
REPRESENTATIVE BERKOWITZ and REPRESENTATIVE PORTER answered in the             
affirmative.                                                                   
                                                                               
CHAIRMAN GREEN asked for a roll call vote on the motion to adopt               
Amendment 2 made by Representative Berkowitz.  Representative                  
Berkowitz voted in favor of the motion.  Representatives Bunde,                
James, Porter, Rokeberg and Green voted against it.  Therefore,                
Amendment 2 failed by a vote of 5-2.                                           
                                                                               
Number 0830                                                                    
                                                                               
REPRESENTATIVE PORTER made a motion to adopt Amendment 3, a                    
handwritten amendment, which read:                                             
                                                                               
     (c) Nothing in this section is intended to eliminate the                  
     expectation of privacy to which an individual is entitled                 
     unless specifically agreed upon by that individual employee.              
                                                                               
     Renumber.                                                                 
                                                                               
CHAIRMAN GREEN objected for the purpose of discussion.                         
                                                                               
REPRESENTATIVE PORTER said the amendment is intended to mean that              
if a person has a job that would require a supervisor to monitor an            
employee's telephone conversations because that's part of their                
job, that expectation of privacy is not there and the employee                 
would concede that's going to happen.  He said, on the other hand,             
no one is entitled to monitor a person's private telephone                     
conversation.                                                                  
                                                                               
REPRESENTATIVE ROKEBERG said he would be happy to look at the CS in            
the context of the whole issue and get back to the committee.  He              
asked what does "entitled" mean in the context of Amendment 3.  He             
indicated he believes the bill is trying to speak to that.  He                 
said, "How this fits in these other areas, I'm not absolutely                  
certain.  Conceptually, I agree with what the intent is, but I'm               
not sure it doesn't defeat the purpose."                                       
                                                                               
REPRESENTATIVE PORTER told the committee he forgot to include that             
Amendment 3 pertains to telephone conversations.                               
                                                                               
REPRESENTATIVE BUNDE stated that he would encourage the Chair to               
suggest that the sponsor provide a new CS, which addresses the                 
issues that were brought up in committee and also that the CS be               
examined from legislative counsel's standpoint, rather than the                
committee trying to do it amendment by amendment.                              
                                                                               
Number 0930                                                                    
                                                                               
REPRESENTATIVE PORTER withdrew his Amendment 3.                                
                                                                               
CHAIRMAN GREEN said he agrees with Representative Bunde's                      
suggestion that CSHB 319(L&C) be held over for further discussion.             
                                                                               
Number 1033                                                                    
                                                                               
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce (ASCC),            
came before the committee to testify.  She advised the committee               
that the ASCC is supportive of the concept of HB 319.  She said                
their concern has been that employers are the ones who are                     
ultimately held responsible if someone does something with the                 
equipment they own, or on the premises that the employer owns or               
provides.  Their concern is if an employer has the responsibility,             
they should have access to whatever is going on or is being done               
with their equipment that would happen that could cause the                    
employer to be responsible.  She indicated that the ASCC supports              
HB 319.  Ms. LaBolle said she was in the Labor and Commerce                    
Committee when they discussed the term, "elected officials."  She              
commented that legislators are not hired, they are elected to serve            
a mandate, and the can be unelected, but they can't be fired.  She             
referred to the term "employer" and said that it could be                      
interpreted by saying what it includes to exclude private employers            
because their interest is in private employers.  She pointed out               
that school boards are elected officials who are the official                  
employers of the school district, which she noted are not listed in            
the bill.                                                                      
                                                                               
CHAIRMAN GREEN told the sponsor, "Perhaps in your definitions, you             
might be able to include something as a definition of 'employee'               
which may wire around this thing about elected officials."                     
                                                                               
REPRESENTATIVE BERKOWITZ asked how private contractors fit into                
this scheme.                                                                   
                                                                               
MS. LaBOLLE asked Representative Berkowitz to be more specific.                
                                                                               
REPRESENTATIVE BERKOWITZ said, "If you hire someone to do a job,               
but don't make them an employee and they're using your premises."              
                                                                               
MS. LaBOLLE replied, "If that contractor is driving your equipment,            
for instance, you're going to be held responsible as the -- for the            
liability of what happens with that equipment, so, doesn't that                
carry through on everything."                                                  
                                                                               
CHAIRMAN GREEN asked, "Well, what if it's a technological type?"               
                                                                               
MS. LaBOLLE asked, "If they do damage (indisc.)?"                              
                                                                               
CHAIRMAN GREEN explained that he wasn't thinking so much about                 
damage, but privacy.                                                           
                                                                               
MS. LaBOLLE indicated that she's looking at it from the employer's             
right to protect themselves by knowing what someone's doing with               
whatever tool, equipment, facility, whatever the employer has                  
provided, that the employer will ultimately be held responsible                
for, because of their being the owner or provider of that tool,                
equipment, device, et cetera.                                                  
                                                                               
CHAIRMAN GREEN said he feels what the committee is hung up on is               
not so much the responsibility of the employer, but the privacy of             
the employee that would allow no interference, no damage, nothing              
like that, or even liability to the employer.  It's just his right             
of privacy in his workplace.  He said that's where they get into               
the problem of services.                                                       
                                                                               
MS. LaBOLLE told the committee in her first job, she was not                   
allowed to make any personal phone calls because she was on company            
time.  She said, "The employer has paid you so much an hour to do              
the work of that employer, and making phone calls on company time,             
even on your own equipment would be a violation of policy."                    
                                                                               
CHAIRMAN GREEN indicated when legislators call their constituents,             
they are actually performing their duty and some people might                  
consider it a private call.                                                    
                                                                               
Number 1463                                                                    
                                                                               
REPRESENTATIVE ROKEBERG pointed out that HB 319 addresses only                 
business equipment, not personal equipment.  If a person has                   
personal equipment, the issue is the service connection, not the               
equipment itself.                                                              
                                                                               
CHAIRMAN GREEN said, "That's right, but the service equipment that             
we have is service to my private equipment."                                   
                                                                               
REPRESENTATIVE ROKEBERG said it's the data line, not the equipment.            
                                                                               
CHAIRMAN GREEN said, "But it's a service, that's the point.  You               
probably should address that.  It's a service provided me to use my            
equipment."                                                                    
                                                                               
REPRESENTATIVE ROKEBERG said, "No, no, the service is the data                 
line.  What service are you talking about?"                                    
                                                                               
CHAIRMAN GREEN said, "Well, the electricity.  I mean, it's held                
that you can't use your own office, for example, in campaigning,               
even if it's on time because of the electricity that's used."                  
                                                                               
REPRESENTATIVE PORTER interjected and said, "That's ethics."                   
                                                                               
REPRESENTATIVE ROKEBERG said, "That's not an issue here, we're                 
talking about the communications and ..."                                      
                                                                               
CHAIRMAN GREEN said, "I know it's ethics, but I'm saying -- the                
point is I'm not saying that that has anything to do with ethics,              
the point is that it is a service."                                            
                                                                               
REPRESENTATIVE ROKEBERG said the electrical plug has nothing to do             
with this bill.                                                                
                                                                               
REPRESENTATIVE PORTER interjected and said "He doesn't think that              
an employer will, under this bill, have access to your computer."              
                                                                               
CHAIRMAN GREEN agreed with Representative Porter and said that's a             
question that needs to be answered.                                            
                                                                               
REPRESENTATIVE ROKEBERG said, "It's clearly prohibited here."                  
                                                                               
CHAIRMAN GREEN said it is not clear because he talked to an                    
attorney who had the same question, therefore, it's not clear.                 
                                                                               
REPRESENTATIVE ROKEBERG replied that it was intended to be clear.              
                                                                               
CHAIRMAN GREEN reiterated that it is not clear and that it needs to            
be addressed.                                                                  
                                                                               
[CSHB 319 was held over for further discussion.]                               
                                                                               
HB 430 - AUTOMOBILE CIVIL LIABILITY                                            
                                                                               
Number 1558                                                                    
                                                                               
CHAIRMAN GREEN announced the next order of business would be HB
430, "An Act relating to noneconomic damages resulting from an                 
automobile accident," sponsored by Representative Kott.                        
                                                                               
JAMES HORNADAY, Legislative Assistant to Representative Pete Kott,             
Alaska State Legislature, came before the committee to testify.  He            
told the committee that HB 430 denies recovery for noneconomic                 
damages, for example, pain and suffering, to those convicted of                
driving while under the influence of intoxicating liquor, or any               
controlled substance and to uninsured motorists who were injured               
while operating a vehicle.  The bill provides one exception:  when             
an uninsured motorist is injured by a subsequently convicted drunk             
driver.  With this one exception, an insurer is not liable for                 
noneconomic damages.  He noted that there is one zero fiscal note              
from the Department of Law.  He pointed out over on the Senate side            
in SB 83, they took out the provisions that involved driving under             
the influence.                                                                 
                                                                               
MR. HORNADAY indicated they attempted to find answers to the                   
questions that were proposed at the last committee meeting.  He                
referred to Representative Berkowitz' question of how many cases               
would this involve in Alaska.  He said they were not able to get               
direct information, but the Anchorage Police Department did provide            
information that in 1997 there were 331 cases of accidents where at            
least one drunk driver was involved.  This figure is up from 1996              
where there were 319 cases.  He referred to another question from              
Representative Berkowitz which was:  "How many uninsured drivers               
got insurance because of the proposition that passed in                        
California?"  He said, by way of review, there was a proposition               
that the people in California overwhelmingly supported, which is               
very similar to this legislation.  He noted that Mr. Jinks of                  
United Service Automobile Association (USAA) advised that it was               
hard to estimate the number because, at the same time, California              
toughened up its insurance before registration procedure, so a lot             
of people did buy insurance, but he could not say which bill was               
the reason.  Another question by Representative Berkowitz was, "How            
much did the insurance rates go down in California?"  He said, "Mr.            
Jinks advised that the rates are falling fast:  mercury reduced                
rates - 25 percent; USAA gave a 15 percent rebate.  State Farm gave            
a dividend as a result and he advises that he was advised by the               
California insurance director that as a result of a change in the              
law, consumers buying personal insurance for automobiles in                    
California should save over $1 billion this year.  This does not               
include the self-insurers like government agencies and large                   
corporations."  He noted that Juanita Hensley from the Division of             
Motor Vehicles raised the issue of whether she would have to                   
suspend licenses for failure to insure if insurance companies                  
withheld payment of economic damages pending a conviction for drunk            
driving.  Mr. Hornaday indicated that Michael Lessmeier, attorney              
for Lessmeier and Winters, responded that the law requires the                 
insurance to pay and that they could not withhold economic damages             
pending the conviction.                                                        
                                                                               
MR. HORNADAY told the committee they should have in their packets              
a revised sponsor statement and several letters supporting the bill            
and one letter in opposition of the bill.  He noted that the bill              
is supported by the Anchorage Police Department.                               
                                                                               
Number 1781                                                                    
                                                                               
JOHN GEORGE, Representative, National Association of Independent               
Insurers, came before the committee to testify.  He noted that the             
legislature has already mandated that everyone has to buy                      
automobile insurance.  The legislature has also passed laws that               
say people may not drive in public intoxicated.  He said, "If                  
you're drunk and you run into somebody, then you still have to pay             
the economic damages, whether they're noneconomic damages and                  
whether they're insured or not.  The bottom line is that we're not             
taking all of the benefits away, we're only saying the noneconomic             
damages.  If you're in violation of law, you don't have insurance              
but you're not at fault, you'll still get your car fixed, you'll               
still get your lost wages, you'll still get all the things that you            
can come up with receipts for, your medical bills.  You just can't             
say, 'And I want half a million dollars in pain and suffering' or              
those types of things."                                                        
                                                                               
MR. GEORGE said, "I think most legislators over their careers have             
heard a lot of constituents say it isn't fair.  'My automobile                 
insurance costs too much and I buy it and then somebody hits me and            
they don't have any insurance and then I still won't collect.'"  He            
noted at the last hearing on HB 430, there were a lot of specific              
questions.  Consequently, he came up with a summary of all of the              
different combinations of the way this can work:  If vehicle "A" is            
stopped at a stop sign, vehicle "B" runs into vehicle "A," vehicle             
"A" is totally at fault at the accident.  If vehicle "A" is sober              
and insured and vehicle "B" is also sober, but uninsured and runs              
into vehicle "A," the driver and passenger in vehicle "A" don't get            
anything because vehicle "B" doesn't have any insurance.  They turn            
to their own first party medical, they turn to their own first                 
party collision coverage, their own uninsured motorist coverage, if            
they've paid extra premium, that's the way they're going to collect            
because the other guy didn't buy the insurance as the law has                  
mandated.  He stated that's really the crux of this bill is the                
fairness of it that if you buy insurance, you're entitled to reap              
the benefits of the entire system.  He said, "If you fail to buy               
insurance to protect the other guy, this is one little slice that              
you're not going to get.  You get the big pie, but you don't get               
this slice."  He said it's inherently fair that people who                     
participate in the insurance system can collect; those who don't               
participate in the insurance system have to pay some sort of                   
penalty and this is their penalty.                                             
                                                                               
Number 2032                                                                    
                                                                               
REPRESENTATIVE BUNDE said his understanding of the bill is to                  
provide penalty for people who don't buy insurance.  He asked, "If             
that's the case, why give them any recovery at all?"  He said,                 
according to Mr. George's testimony, a person can't sue for                    
noneconomic damages, which is a small slice of the pie.  He said,              
"Why not just say you don't have any insurance and you're in a                 
wreck and you don't get any economic damages either?"                          
                                                                               
MR. GEORGE replied that sounds attractive on a limited basis.                  
We're also talking about a draconian measure.  He said it may not              
be totally unfair, but he thinks it's a pretty severe penalty.  He             
explained to the committee that "a noneconomic damage is something             
that you pull a number out of the hat and say, 'my pain is worth               
this much money, or my loss of consortium is worth this much                   
money,' whereas your car, you've got an invoice."  He feels that is            
a material difference.  He said an economic damage is something                
that a person has really lost and, in fact, if the other person was            
negligent, the other person should not be held liable for that.  He            
indicated it's really not a punishment as much as it's an incentive            
to get people to buy insurance.                                                
                                                                               
REPRESENTATIVE BUNDE commented that it sounds like it's very little            
incentive.  He indicated he doesn't think that there are very many             
people who drive that think that maybe they'll get lucky and                   
someone will hit them just hard enough that they will get hurt a               
little bit, but not get killed and they can go to the crap shoot               
and make a buck.  He doesn't see that's a large incentive to go buy            
insurance.  He referred to drunk drivers stating, "If you want                 
incentive, say, you're driving drunk and even though you bought                
insurance, you don't get any recovery.  As it is, the bill is a                
little bit pregnant."                                                          
                                                                               
REPRESENTATIVE BERKOWITZ asked Representative Porter if he thought             
there was a section in the tort reform that passed last year, which            
indicated a person cannot collect if their injuries resulted during            
a violation of a crime.                                                        
                                                                               
REPRESENTATIVE PORTER answered, "Yes, depending how it would apply             
here."                                                                         
                                                                               
REPRESENTATIVE BERKOWITZ asked what if a person is driving while               
intoxicated (DWI) and then hits someone else.                                  
                                                                               
REPRESENTATIVE PORTER asked an unidentified person, "Did we include            
DWI or was it just plain felonies?"                                            
                                                                               
UNIDENTIFIED PERSON replied, "DWI (indisc.)."                                  
                                                                               
REPRESENTATIVE BERKOWITZ asked if the insured DWI person would not             
be covered under the tort reform.                                              
                                                                               
Number 2290                                                                    
                                                                               
MR. HORNADAY said his recollection last year on the drunk driving              
(indisc.) if it contributed to the accident, the person would                  
denied all damages.                                                            
                                                                               
REPRESENTATIVE PORTER said he believes the tort reform indicated               
that if it was a DWI or a felony and that act directly contributed             
to the accident, then a person would be precluded recovery.                    
                                                                               
REPRESENTATIVE BERKOWITZ said, "Okay in the hypothetical that Mr.              
George gave us if driver 'B' was the driver behind, and driver 'A'             
was the driver in front."                                                      
                                                                               
MR. GEORGE said, "'A' is in front."                                            
                                                                               
REPRESENTATIVE BERKOWITZ said, "If driver 'B' is intoxicated and               
gets hurt, then the tort reform would have covered it; he wouldn't             
have collected.  But if driver -- this bill goes to if driver 'A'              
is stopped at a stop sign and is intoxicated ..."                              
                                                                               
REPRESENTATIVE PORTER interjected and said, "And he's hit by                   
another intoxicated driver."                                                   
                                                                               
MR. GEORGE said, "Obviously, if you're not negligent it applies                
different.  If you're in car 'B' and you run into somebody, whether            
you're drunk or not, you're the negligent person, not the guy                  
that's stopped.  So really what we're talking about is a -- this               
affects a non-negligent person who is uninsured, but if the driver             
that hits him is drunk, it removes that.  If you're drunk and hit              
someone, you have to pay the ....                                              
                                                                               
REPRESENTATIVE BERKOWITZ asked what if a person is drunk and gets              
hit and they have no insurance.                                                
                                                                               
MR. GEORGE replied if a person has no insurance and someone runs               
into them, that person cannot collect for pain and suffering,                  
whether you're sober or drunk.                                                 
                                                                               
TAPE 98-70, SIDE A                                                             
Number 0001                                                                    
                                                                               
REPRESENTATIVE BERKOWITZ said "...and we're doing this to punish               
someone for not having insurance, or are we doing this to benefit              
the insurance companies who then pass the savings on to all the law            
abiding and insurance-bind citizens?"                                          
                                                                               
MR. GEORGE agreed.  He explained that any savings the insurance                
company makes by not paying off noneconomic awards, ultimately it              
gets passed back to the people that did buy insurance.  Insurance              
is highly regulated, noting that all rates and policy language have            
to be approved by the director of the Division of Insurance, which             
is based on justifying your overhead, your losses, your expected               
losses, and the rate that you have to collect in order to pay                  
those.  If the losses go down, you can't justify the higher                    
premium, you've got to reduce your premium.  In conclusion, he said            
if losses are reduced, insurance premiums for those that are                   
required by law to buy insurance will go down.                                 
                                                                               
Number 0205                                                                    
                                                                               
MICHAEL LESSMEIER, Attorney, State Farm Insurance Company,                     
testified via teleconference from Anchorage.  He informed the                  
committee he wanted to give them some background.  Since statehood,            
the state of Alaska has had financial responsibility on the books.             
And that responsibility law has required that people who operate               
motor vehicles maintain a certain level of financial responsibility            
and there have been consequences to that.  He said in the mid-'80s,            
the legislature passed a mandatory insurance law, and in that                  
mandatory insurance law was a recognition that driving a motor                 
vehicle carries a certain amount of responsibility.  The issue of              
responsibility relates directly to the potential damage a person               
might cause to someone else.  The theory was that people who are               
responsible enough to have a vehicle and get behind the wheel                  
should be financially responsible, at least to a certain minimal               
level.  In Alaska that level is $50,000 per person and $100,000 per            
accident.  He indicated that there still is a problem with                     
uninsured motorists.  He said, "We have submitted a letter to                  
Representative Kott that gives you the benefit of our experience in            
Alaska, and that experience is that over the past five years the               
ratio of uninsured motorists claims, the bodily injury claims,                 
brought us in the range of approximately 17 to 21 percent.  Over               
the last 10 years that ratio has ranged from a low of 16 percent to            
a high of 23 percent.  Regardless of where you are in the trend,               
there's a problem out there.  And, frankly, there probably is                  
always going to be a problem.                                                  
                                                                               
The issue posed by this legislation is whether we can reduce that              
number because we all pay a subsidy for these people and we pay it             
in two ways.  The first way we pay it, is the people that are                  
driving without insurance, they participate right now fully in a               
liability system that is funded by insurance premiums, but they're             
not paying for this.  What happens is you have people that are                 
participating but not paying, and you have less people that are                
actually financially participating, so we all pay more.  The second            
way we pay a subsidy is everyone of you that has uninsured motorist            
coverage has that coverage at the level of cost that you currently             
incur because of the number of accidents that are caused by                    
uninsured motorists.  And so you pay a subsidy in two ways.                    
                                                                               
We look at this legislation and what we say is it is a simple and              
fair solution to what is a fairly complicated problem.  It is                  
simple in the sense that, 'if a car don't pay, no play.'  If we                
don't pay for the financial responsibility of others, you don't                
deserve to participate in the system.  And that is an issue of                 
fairness, as well.  If I don't (indisc.) that I would pay on that              
issue, is that this provides a significant incentive for people to             
be financially responsible, at least to the minimum limits required            
by the law.  And it doesn't without an enforcement cost on the part            
of the state, and it doesn't without an enforcement cost that has              
to be borne by everybody else that is financially responsible.  It             
is self-effectuating and we think it is a good idea.                           
                                                                               
The last thing I'll say is that State Farm is a mutual company.                
And I know at least one of the companies that Mr. George represents            
is also a mutual company.  What that means is that when our                    
experience is better than we expect it to be, we give money back.              
Last year we gave back $6.6 million dollars to Alaskan                         
policyholders.  We also reduced automobile insurance premiums in               
Alaska by 2.4 percent and there are a lot of different reasons why             
that has occurred.  I think Representative Porter is alluding to               
some of the changes that were made by the legislature.  We think               
that legislation like this is a definite step in the right                     
direction, it is beneficial to our policyholders, and it doesn't               
carry with it a corresponding cost.  And so, we would urge that you            
support it."                                                                   
                                                                               
Number 0561                                                                    
                                                                               
CHAIRMAN GREEN said he understands that California is "no pay, no              
play."                                                                         
                                                                               
MR. LESSMEIER replied it has been for a little over a year.                    
                                                                               
CHAIRMAN GREEN asked what sort of results have happened in                     
California and how much of that has been passed back to the                    
policyholders.                                                                 
                                                                               
MR. LESSMEIER said he can't answer that question directly.  He did             
inform the committee that the latest information they had was the              
California insurance commissioner said that after a year, insurance            
rates have already been lowered by five percent.  He indicated that            
there are so many things going on in California that it's very                 
difficult to look at one piece of the puzzle and say this is the               
reason for the change.  He noted that California historically has              
had some of the highest insurance premiums in the country.  He said            
he believes that trend has changed and for a lot of different                  
reasons, but this is one of them.  He pointed out that one of the              
differences between California's law and Alaska's law is that                  
California's law was passed by an initiative applied to all of the             
cases on the books.  In other words, it had a retroactive effect.              
That is quite significant when you start looking at improvements.              
He said Alaska's law is not retroactive.  He said what is contained            
in HB 430 would apply only to causes of action that improved on or             
after the effective date.  Mr. Lessmeier indicated they think HB
430 is a good idea and that it will have an effective date, but                
it's hard to predict how much.                                                 
                                                                               
CHAIRMAN GREEN said that was the reason he asked the question about            
the results in California because the letter Mr. Lessmeier wrote to            
Representative Kott on March 31, 1998, indicated that California               
has already lowered insurance rates by 5 percent, which made a                 
person believe that it was perhaps because of this.  He noted that             
Mr. Lessmeier indicated there were several other factors involved.             
                                                                               
                                                                               
Number 0753                                                                    
                                                                               
REPRESENTATIVE BUNDE said he is sympathetic to what Mr. Lessmeier              
is trying to do, but he feels he is "nibbling around the edges."               
He referred to his earlier testimony where he stated that if you               
really want incentive, you just remove all damages, not just                   
noneconomic damages.  He explained that it's his impression that               
many people who drive without insurance are relatively                         
unsophisticated people and probably not people of means.  The                  
notion that they're going to sit up and take notice that, "Oh, good            
Lord, if I have an accident and I'm not insured, I won't get                   
noneconomic damages."  He remarked that most people like he just               
described couldn't define what noneconomic damages are.  He asked,             
"Wouldn't we be more effective if we just passed a law that said               
you can't register your motor vehicle until you show proof of                  
insurance?"                                                                    
                                                                               
MR. LESSMEIER said they have, over the years, looked at all kinds              
of different ways to try to ensure that people do carry insurance              
and that is one of them.  "The difficulty with that proposal is                
then what happens is someone picks them up down the road when they             
don't renew it."  He pointed out there are a number of states that             
have spent huge amounts of money trying to create systems to ensure            
that people who drive are all covered by insurance, and none of                
them have been very effective.  He indicated it is one of the best             
ideas they have seen and the reason for that is because it does                
provide an incentive, but it provides an incentive without                     
corresponding cost.  He said there's no cost to the state for doing            
this, and there's no cost to the industry, which is passed along to            
the policyholders to doing this.  He indicated that there are two              
benefits to this.  One, is that you do encourage people to be                  
financially responsible.  The second is you're not eliminating the             
people that feed off the system, but don't pay for it and you're               
reducing the level of claims, which is a benefit as well.  He said             
HB 430 isn't a perfect piece of legislation, but it's a really good            
idea in their view.                                                            
                                                                               
Number 0916                                                                    
                                                                               
REPRESENTATIVE BUNDE indicated the committee has information that              
15-20 percent of the claims were from noninsured motorists, and he             
asked if that is for noneconomic damages or total claims.                      
                                                                               
MR. LESSMEIER replied that it's the ratio of uninsured motorists               
claims to bodily injury claims.  He told the committee almost every            
bodily injury claim he has seen has an economic and a noneconomic              
component.                                                                     
                                                                               
REPRESENTATIVE BUNDE said he doesn't believe that will encourage               
people who don't buy insurance to buy insurance.  It would save the            
insurance companies money because they wouldn't be paying out                  
noneconomic damages to those people.  Regarding mutual companies,              
this may eventually filter back to some savings for the general                
public.                                                                        
                                                                               
MR. LESSMEIER said he thinks everybody recognizes that rates in                
Alaska are probably driven by the mutual companies.  In other                  
words, to the extent that our rates are low, everybody benefits                
because the people that are competing with this are going to have              
to compete with low rates, and he feels that it benefits every                 
Alaskan that has to buy this coverage if they want to comply with              
the law.                                                                       
                                                                               
Number 1033                                                                    
                                                                               
REPRESENTATIVE BERKOWITZ asked if Mr. Lessmeier said 16-23 percent             
of the payout was to uninsured motorists.                                      
                                                                               
MR. LESSMEIER said no.  What he said is that the ratio of uninsured            
motorists claims to bodily injury claims over the past five years              
have ranged from approximately 17 to 21 percent.  Over the last ten            
years, their experience is that the ratio has ranged from a low of             
16 percent to a high of 23 percent.                                            
                                                                               
REPRESENTATIVE BERKOWITZ asked if he could tell how much money that            
amounts to.                                                                    
                                                                               
MR. LESSMEIER replied he could not.                                            
                                                                               
REPRESENTATIVE BERKOWITZ asked, "Would that be more than the 6.6               
million you returned as a 5 percent savings?"                                  
                                                                               
MR. LESSMEIER responded he has no idea what that number is.                    
                                                                               
REPRESENTATIVE BERKOWITZ said he is trying to find ways of lowering            
insurance rates, and said Mr. Lessmeier had indicated that the                 
trend had been downwards recently, and even predating tort reform,             
and asked if he could pinpoint what had inspired those downward                
trends.                                                                        
                                                                               
MR. LESSMEIER said he does not know if he can pinpoint that and                
said there are a number of reasons why.  It might be because the               
driving public is getting older and older people tend to have less             
claims.  He said it's also a reflection, in part, of the changes in            
the law.  It is a reflection, in part, of safer vehicles.  It may              
be a reflection, in part, to highway maintenance, better roads, all            
of those things.  He said this legislation isn't based on any of               
those things he just mentioned.                                                
                                                                               
REPRESENTATIVE BERKOWITZ said his concern is that he doesn't think             
this is the best vehicle for getting people to get insurance by                
passing a law that no one is going to know about until they get                
into an accident.                                                              
                                                                               
MR. LESSMEIER said people already know about the need to be                    
financially responsible.  When a person signs their renewal                    
registration on their motor vehicle, they are certifying under a               
penalty of perjury that they have insurance to meet the minimum                
limits of financial responsibility and that they will maintain                 
their insurance.  He said it's one thing to pass a law, and it's               
another thing to get the word out, but it's easy to get the word               
out.                                                                           
                                                                               
Number 1217                                                                    
                                                                               
JUANITA HENSLEY, Chief, Driver Services, Division of Motor                     
Vehicles, Department of Administration, came before the committee              
to testify.  She informed the committee that the Division of Motor             
Vehicles (DMV) has kept a trend on the number of uninsured                     
motorists that are involved in motor vehicles crashes, and has done            
so for a number of years, especially after the implementation of               
the mandatory insurance law in 1986.  Prior to that law, DMV had a             
21-25 percent uninsured motorist rate, those that are involved in              
motor vehicle crashes without insurance.  After the law went into              
effect, that figure dropped to 7 percent.  Currently, it's                     
averaging between 11 and 13 percent uninsured motorists.  She                  
indicated that she does not know if the 17 to 21 percent of                    
insurance claims that State Farm Insurance Company is paying out is            
a result of uninsured motorists.  She noted, for the record, that              
she supports everyone having insurance.  She also supports the fact            
that the state have stronger driving laws.  She advised that there             
are a number of states that have an insurance database system  that            
DMVs or law enforcement can query, without any additional cost, to             
determine if a person has insurance coverage.  If Alaska had a                 
provision that DMV could turn a person away without registering                
their vehicle until they had insurance, it would reduce the number             
of uninsured motorists.  Ms. Hensley said if Alaska had a database             
- whether the state maintained or if it were contracted out - where            
the insurance companies reported to DMV and DMV queried that prior             
to registering a vehicle, that would allow a mechanism for DMV to              
turn people away until they could show proof of insurance.  She                
indicated that is what DMV would prefer and she believes that the              
number of insurance claims would be reduced.                                   
                                                                               
MS. HENSLEY told the committee that a number of people who are                 
involved in motor vehicle accidents think they are insured, but                
because of conditions outside of their control, they find out later            
that they are not insured.  For example, if a person purchased and             
financed a new car through one of the vehicles corporations, i.e.,             
GMAC, and purchased the lending institution's insurance, that only             
covers the person for comprehensive collision; it doesn't cover the            
person for liability.  She told the committee that she has had to              
suspend several motorists' drivers license because of that one                 
issue.  She said under this bill, the individuals who think they're            
insured are going to get caught because if they are involved in a              
traffic crash, which is not their fault, they cannot file for                  
noneconomic damages.  Ms. Hensley said last year's tort reform bill            
indicated that a drunk driver had to cause the accident or the                 
damage, but under this bill the drunk driver does not have to cause            
it; it is without causation.  Without that causation, they may be              
the victim.  She gave another example to the committee:  If an                 
intoxicated person got into their car and half a block down the                
road realized that they are too drunk to drive so they decided to              
pull over and call a cab from their cell phone.  If the car that is            
pulled over gets hit, they could be convicted of drunk driving.                
This bill would not allow that person to recover noneconomic                   
damages if they are in a wheelchair.  They are not at fault in any             
way, form, or fashion, but they could still be convicted for drunk             
driving.                                                                       
                                                                               
Number 1568                                                                    
                                                                               
REPRESENTATIVE BUNDE referred to Ms. Hensley's testimony regarding             
individuals who believe that they are insured, and later find that             
they are not.  He also referred to Mr. Lessmeier's testimony                   
regarding when a person signs their renewal registration on their              
motor vehicle, they are certifying under a penalty of perjury that             
they have insurance.  He asked Ms. Hensley, "What would your                   
response be to picking up these people who have insurance at the               
time of registration, but then let it lapse?"                                  
                                                                               
MS. HENSLEY replied that that is a problem and there are a number              
of people who have that; however, DMV currently doesn't have a                 
mechanism to go after all of those individuals.  She said the way              
the law is written requires a person to show proof of insurance.               
                                                                               
REPRESENTATIVE BUNDE again referred to people who don't know that              
they don't have insurance and said there is a simple answer to that            
problem.  He referred to page 2, line 3, of HB 430, which reads:               
"...vehicle or operator was not insured as required by AS                      
28.22.011."  He suggested inserting the word "knowingly" between               
"was" and "not" so that this wouldn't be a violation unless a                  
person knowingly was not insured.  He indicated he feels that it is            
appropriate considering there are all sorts of scenarios where a               
person legitimately thinks they are insured and they are not.                  
                                                                               
MS. HENSLEY informed the committee that she has been doing some                
research on uninsured motorists and she came across something the              
other day, which she had brought up in the first hearing regarding             
this legislation.  In that hearing it was brought up, is there a               
possibility that, pending the conviction of a drunk driver, that               
perhaps legitimate claims would not be paid.  She referred to the              
letter from Michael Lessmeier in the committee's packets stating               
that it is against the law for those individuals not to be paid.               
In her research, she came across a court case from Boise, Idaho                
against State Farm Insurance for failure to pay claims in a timely             
manner.  The person that was awarded the claim, the judgment was               
rendered against State Farm Insurance for $9.5 million for failure             
to file claims.  In that court case, it was revealed that there was            
a history, and that's the reason the award was so high.  Ms.                   
Hensley stated that it was a concern of hers that she addressed at             
the first hearing, "Would they fail to pay claims in a timely                  
manner pending the conviction of a drunk driving conviction?"                  
                                                                               
Number 1728                                                                    
                                                                               
RUSS WINNER, Attorney, Winner and Associates, PC, testified via                
teleconference from Anchorage.  He said he thinks that everyone who            
looks at this issue favors mandatory automobile insurance.  He said            
the question is whether this bill is well tailored to further that             
goal.  His view is that HB 430 paints with too broad of brush, and             
it will catch within its feet unattended victims, unattended                   
situations.  He addressed the issue of people who are driving who              
think they have insurance and they don't.  To tell all of those                
people that they will not be able to recover for pain and suffering            
can, in some situations, be a tragic thing to tell them.  Mr.                  
Winner noted that it was mentioned earlier that the taking of pain             
and suffering away is simply a little slice of the recovery - and              
in some situations that is true.  In other situations, depending on            
the individual, their pain and suffering recovery could be all they            
are entitled to.  They could have very serious pain and suffering,             
but if they don't have a job, or if they are an elderly person, or             
it could be a child who is injured and they could be in a                      
wheelchair, their principle recovery would be noneconomic damages.             
They may not be entitled to medical damages, for example, if they              
are Native receiving free medical care and their only probable                 
recovery is pain and suffering.  To take that away is not taking               
away just a little slice.  It's taking away their recovery in a                
situation where they are not at fault and possibly not at fault                
because they innocently thought they had insurance, but they did               
not.                                                                           
                                                                               
CHAIRMAN GREEN said the committee will likely fix that regarding a             
person innocently not knowing that they were not insured.  He then             
asked Mr. Winner if he believes that driving is a right or a                   
privilege.                                                                     
                                                                               
MR. WINNER replied that he could not say off the top of his head.              
He said as he understands it there is a superior court decision                
that addresses that question in the context of child support                   
payments.  He said he believes that the decision was that it's                 
(indisc.).  There isn't a constitutional connection to (indisc.).              
It's not an absolute (indisc.).  He said he doesn't think the                  
answer to that question is a simple one.                                       
                                                                               
CHAIRMAN GREEN said the reason he asked that question is because               
there is a responsibility that people should abide by if they are              
going to take a killing machine on the highway.  He said, "An                  
honest mistake is one thing, but a deliberate violation of the law             
is another."                                                                   
                                                                               
MR. WINNER agreed with Chairman Green and said the punishment                  
should be tailored to the crime.  He said, "If what you have is a              
fairly minor transgression, a transgression nonetheless, and you're            
basically imposing what amounts to a financial capital punishment              
to certain classes of people; that's a fairly harsh result."                   
                                                                               
Number 2013                                                                    
                                                                               
REPRESENTATIVE PORTER made a motion to amend HB 430, page 2, line              
3, adding the word "knowingly" between "was" and "not" so that the             
section would read:  "(2) the owner or operator of a vehicle                   
involved in the accident and the vehicle or operator was knowingly             
not insured as required by AS 28.22.011."                                      
                                                                               
CHAIRMAN GREEN asked if there is an objection to the amendment.                
There being no objection, it was so ordered.                                   
                                                                               
REPRESENTATIVE ROKEBERG made a motion to move HB 430, as amended,              
out of committee, with individual recommendations and the attached             
fiscal note.                                                                   
                                                                               
CHAIRMAN GREEN asked if there is an objection.                                 
                                                                               
REPRESENTATIVE BERKOWITZ objected.                                             
                                                                               
CHAIRMAN GREEN asked for a roll call vote.  Representatives Bunde,             
James, Porter, Rokeberg, and Green voted in favor of moving CSHB
430(JUD).  Representative Berkowitz voted against it.  Therefore,              
CSHB 430(JUD) was moved from the House Judiciary Standing Committee            
by a vote of 5-1.                                                              
                                                                               
HB 466 - CAMPAIGN MISCONDUCT: FALSE INFORMATION                                
                                                                               
Number 2137                                                                    
                                                                               
CHAIRMAN GREEN announced that the last order of business would be              
HB 466, "An Act relating to violations of state election laws,"                
sponsored by Representative Mark Hodgins.                                      
                                                                               
REPRESENTATIVE MARK HODGINS explained that "HB 466 is a campaign               
bill that reforms mud slinging, that reforms bad ads, that reforms             
saying anything you want to say about another person.  You can                 
still do that under [HB] 466, but once you are shown that you have             
-- that you're saying something that is wrong or knowingly false,              
then the wrath of [HB] 466 falls upon you.  And what that does is              
that through [AS] 15.56.110 (indisc.) certain convictions, that                
means that you are not seated for office.  And under [AS] 15.56.115            
'dispositions of cases involving corrupt practice', that means that            
you go to the head of the line in the court system so that the                 
situation is taken care of very quickly.  Anybody can say anything             
they want to, but when shown proof of mistake or deception, they               
must desist or else [HB] 466 grabs them."  He said this bill will              
affect a small cadre of people directly and a very large cadre of              
people indirectly.  He informed the committee that Section 1                   
removes certain things from being a misdemeanor and makes it a                 
felony.  He explained that if a candidate says something about an              
opponent and the opponent tells the other candidate that what they             
are saying is false and has proof it is false, if that candidate               
does not stop saying those false statements, and if they are                   
convicted, they will not be seated for office.  He stated that the             
existing law makes these types of actions a misdemeanor.  He noted             
that there were cases that went to the district attorney and the               
district attorney said that they would not waste their time on                 
these types of cases because it is not a trophy.  They don't get a             
trophy out of it, they get a misdemeanor.  If it's a felony, then              
it's a trophy.  He emphasized that HB 466 will increase the penalty            
from a class A misdemeanor to a class C felony.                                
                                                                               
REPRESENTATIVE BERKOWITZ said he wanted more information on the                
trophy cases that were not pursued.                                            
                                                                               
REPRESENTATIVE HODGINS said there have been cases that were not                
pursued because they were misdemeanors and for political reasons,              
they were not pursued.                                                         
                                                                               
REPRESENTATIVE BERKOWITZ said he would suspect that there were                 
proof problems with the cases Representative Hodgins described and             
that is why he is curious about the cases and what the fact                    
patterns are.                                                                  
                                                                               
REPRESENTATIVE HODGINS replied that the district attorney makes a              
judgment everyday on whether a case has more precedence than                   
another.  They will not take a misdemeanor case if they are clogged            
up with felony cases.                                                          
                                                                               
REPRESENTATIVE BUNDE referred to page 2, Section 2 of HB 430 which             
reads:  "(2) would provoke a reasonable person under the                       
circumstances to a breach of the peace or that a reasonable person             
would construe as damaging to the candidate's reputation for                   
honesty, integrity, or qualification to serve if elected to                    
office."  He said if he called someone a "low-life jerk" which                 
certainly could be considered damaging to a candidate's honesty,               
integrity, or qualification to serve, and asked is he guilty under             
this provision.                                                                
                                                                               
REPRESENTATIVE HODGINS responded it would depend on the courts and             
the district attorney; however, he would have an option of trying              
to prove that he is not.  He told the committee that the law is in             
force now, and the only thing this bill would do is to elevate it              
from a misdemeanor to a felony.                                                
                                                                               
REPRESENTATIVE BUNDE said the point he is trying to make is that               
there is a lot of innuendo, there's a lot of personal opinion, and             
he doesn't believe that would fall under this.  He said the notion             
that this bill would clean up mud slinging is maybe hopeful.                   
                                                                               
REPRESENTATIVE HODGINS stated that HB 430 would clean up some                  
portions of mud slinging where somebody is attacking somebody on               
their record, or their criminal record, and they come forward and              
say they don't have one, that's the portion.  He said, "There's no             
magic pill for this."                                                          
                                                                               
Number 2384                                                                    
                                                                               
REPRESENTATIVE PORTER said, "I thought during your opening remarks             
you alluded to a requirement to notify the issuer of the statement             
that you have a problem with."                                                 
                                                                               
REPRESENTATIVE HODGINS said if a person knowingly goes forward with            
false information, anyone can go forward and say that they didn't              
know the information was false.                                                
                                                                               
REPRESENTATIVE BERKOWITZ referred to Section 2 of HB 430 and said              
if a person said false information about a candidate and it had                
nothing to do with their honesty or integrity and only marginally              
related to their qualifications to serve, it seems that there has              
been no violation of this statute.  He said if a person lied about             
someone's record the way this statute is set up requires an attack             
on the person's character, not on a voting record .... [ends mid-              
speech because of tape change]."                                               
                                                                               
TAPE 98-70, SIDE B                                                             
Number 0001                                                                    
                                                                               
REPRESENTATIVE PORTER referred to subsection (b) on line 26, page              
2 which reads:  "(b) violation of this section is a corrupt                    
practice.  However, notwithstanding AS 15.20.540, only a defeated              
candidate may contest the nomination or election of a person for               
violation of this section."  He said, "You would have to be the                
injured party to go forward.  This complaint driven by the person              
that you have been -- that you have either been attacked or has                
attacked you."                                                                 
                                                                               
REPRESENTATIVE BERKOWITZ said, "But that's not -- what you're                  
saying is you only get hurt if you lose."                                      
                                                                               
REPRESENTATIVE PORTER said that is not the case.  He said, "If you             
can stop a mud slinging campaign from somebody coming forward with             
false information that they know is false, you don't have to lose              
to stop them."                                                                 
                                                                               
REPRESENTATIVE BERKOWITZ remarked that only a defeated candidate               
may contest a nomination or election violating this section.  He               
stated, "What you're saying is if you lose an election, it doesn't             
matter how dirty you got, it's just you lost.  And we're not                   
creating a disincentive to dirty campaigns, you just don't want to             
be the last one left holding the bag, as far as this Act goes."                
                                                                               
Number 0055                                                                    
                                                                               
REPRESENTATIVE HODGINS said, "You don't have to lose to invoke                 
this.  It's a deterrent.  If you know that you are conducting                  
yourself contrary to this statute, that will be a deterrent."  He              
indicated that he has no problem with a campaign that goes forward,            
which is based on factual campaigning.  He does have a problem with            
campaigns that make false accusations that the person knows are                
false.                                                                         
                                                                               
REPRESENTATIVE PORTER explained that quite often the candidate or              
person representing the candidate that violates this provision                 
intentionally does it so close to an election that there is no time            
for a response and that's the game plan they have.  He believes                
that that is why the provision of "a defeated candidate may contest            
the nomination or election" because that's the disincentive for                
that last minute knowingly false smear.  The fact that so many of              
the allegations bring into play "knowing" as opposed to having been            
told, he asked if this is really an attack on their integrity or a             
personal opinion.  He said all of these things make this a very                
troublesome area in the law.  He commented he appreciates what the             
sponsor is trying to get at, but he doesn't think it rises to the              
level of a felony.                                                             
                                                                               
REPRESENTATIVE HODGINS said the fact that if it does change an                 
election, it seems that there wouldn't be a value that would make              
it into a felony.                                                              
                                                                               
CHAIRMAN GREEN told Representative Hodgins the problem he has is               
proving that actually caused the election to change.                           
                                                                               
REPRESENTATIVE HODGINS stated that it would have to be proved that             
a person knowingly supplied false information after they were told             
it was false information.  He said they are not changing anything              
in the bill except for elevating the offense to a felony.  It is               
already in the law.  He explained that all of the committee's                  
arguments about whether this is right or just or not, it's already             
in law.  He said the only thing that happens to a person is that               
they cannot be seated for that seat.                                           
                                                                               
REPRESENTATIVE BUNDE asked if the fact that a candidate is                     
convicted of a felony is what keeps them from being seated.                    
                                                                               
REPRESENTATIVE HODGINS said that is correct.                                   
                                                                               
Number 0223                                                                    
                                                                               
PAT CARTER, Legislative Assistant to Representative Hodgins, Alaska            
State Legislature, came before the committee to provide                        
information.  He briefed the committee on the history on defamation            
laws and explained that it had two purposes:  1) to prevent public             
unrest and 2) to preserve public order.  He said protection is                 
different for elected officials or famous persons than it is for               
private persons.  Defamation of a private individual is thought to             
cause a violent response because not only does it defame that                  
individual, but also his family and anybody else who may be in                 
association with them.  Those exact same issues apply to a public              
person with the exception if it is an elected official.  It not                
only incites concerns for the breech of peace but also the scandal             
in government.  He said, "I think that by allowing what we're                  
talking about here to go back to saying we're trying to cover this             
whole broad spectrum of preventing someone from calling someone a              
low down dirty jerk.  This law won't prevent that.  But if I take              
out a full-page ad saying that you were a child molester and I run             
it five days before the campaign before the election, and I've got             
absolutely no proof of that and I told five people that I was going            
to do it and I was going to fabricate this information, that is a              
class C felony according to this law."                                         
                                                                               
REPRESENTATIVE BUNDE said, "If I'm just following your analogy                 
further so I can understand.  You take out the ad that you know is             
false, but you don't tell anybody, and then the person who is                  
defeated brings this case, that person who is defeated has to prove            
that you knew that was false information.  Or if it's early enough             
before the election, if the person proves to you that's false                  
information, you have to withdraw the ad....  You have -- if a                 
person wants to do this other thing and they're all clever and they            
just don't tell anybody about it, they do it anyway, and then you              
come back and you can't prove it's knowingly and it's already after            
the election, so ..."                                                          
                                                                               
MR. CARTER pointed out that the opponent does not have to prove                
that someone knowingly said false information about them.  The                 
state of Alaska has to do that because it is a crime, and then the             
prosecutor has to see if there is enough information to make a                 
case.                                                                          
                                                                               
REPRESENTATIVE BERKOWITZ asked, "Why did you leave 'initiatives'               
out of this section?"                                                          
                                                                               
MR. CARTER said that was discussed in the House State Affairs                  
Committee and when he researched the origin of the defamation law,             
he found that it was to protect an individual and not the law                  
itself, and defaming an initiative is not likely to invoke a                   
violent response such as it would with an individual.                          
                                                                               
REPRESENTATIVE BERKOWITZ said if the intent of the bill is to                  
protect the process, he suggested including "initiatives" in the               
bill.                                                                          
                                                                               
CHAIRMAN GREEN advised the members that the bill would be held over            
for further discussion.                                                        
                                                                               
ADJOURNMENT                                                                    
                                                                               
Number 0479                                                                    
                                                                               
CHAIRMAN GREEN adjourned the House Judiciary Standing Committee at             
3:35 p.m.                                                                      

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