Legislature(2001 - 2002)

03/22/2002 01:22 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                         March 22, 2002                                                                                         
                           1:22 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Norman Rokeberg, Chair                                                                                           
Representative Jeannette James                                                                                                  
Representative John Coghill                                                                                                     
Representative Kevin Meyer                                                                                                      
Representative Ethan Berkowitz                                                                                                  
Representative Albert Kookesh                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Scott Ogan, Vice Chair                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE JOINT RESOLUTION NO. 24(RLS)                                                                                      
Proposing amendments to the Constitution of the State of Alaska                                                                 
relating to the budget reserve fund.                                                                                            
                                                                                                                                
     - MOVED HCS CSSJR 24(JUD) OUT OF COMMITTEE                                                                                 
                                                                                                                                
HOUSE BILL NO. 385                                                                                                              
"An Act relating to the attorney fees and costs awarded in                                                                      
certain court actions relating to unfair trade practices; and                                                                   
amending Rules 54, 79, and 82, Alaska Rules of Civil Procedure."                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SJR 24                                                                                                                  
SHORT TITLE:AMEND CONSTITUTIONAL BUDGET RESERVE FUND                                                                            
SPONSOR(S): FINANCE                                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                      Action                                                                                 
04/09/01     1013       (S)         READ THE FIRST TIME -                                                                       
                                    REFERRALS                                                                                   
04/09/01     1013       (S)         FIN                                                                                         
04/17/01                (S)         FIN AT 9:00 AM SENATE FINANCE                                                               
                                    532                                                                                         
04/17/01                (S)         Heard & Held                                                                                
04/17/01                (S)         MINUTE(FIN)                                                                                 
04/23/01                (S)         FIN AT 9:00 AM SENATE FINANCE                                                               
                                    532                                                                                         
04/23/01                (S)         Moved Out of Committee                                                                      
04/23/01                (S)         MINUTE(FIN)                                                                                 
04/23/01     1215       (S)         FIN RPT 6DP 3NR                                                                             
04/23/01     1215       (S)         DP: DONLEY, KELLY, GREEN,                                                                   
                                    WILKEN,                                                                                     
04/23/01     1215       (S)         LEMAN, WARD;                                                                                
04/23/01     1215       (S)         NR: AUSTERMAN, HOFFMAN, OLSON                                                               
04/23/01     1216       (S)         FN1: (GOV)                                                                                  
04/30/01                (S)         RLS AT 11:50 AM FAHRENKAMP                                                                  
                                    203                                                                                         
04/30/01                (S)         <Bill Postponed to 5/1/01> --                                                               
                                    Time Change --                                                                              
04/30/01                (S)         RLS AT 4:45 PM FAHRENKAMP 203                                                               
04/30/01                (S)         -- Meeting Canceled --                                                                      
05/01/01                (S)         RLS AT 12:15 PM FAHRENKAMP                                                                  
                                    203                                                                                         
05/01/01                (S)         -- Time Change --                                                                           
05/01/01                (S)         MINUTE(RLS)                                                                                 
05/01/01     1412       (S)         READ THE SECOND TIME                                                                        
05/01/01     1412       (S)         RLS CS ADOPTED UNAN CONSENT                                                                 
05/01/01     1413       (S)         ADVANCED TO 3RD READING                                                                     
                                    FAILED Y14 N6                                                                               
05/01/01     1413       (S)         ADVANCED TO THIRD READING 5/2                                                               
                                    CALENDAR                                                                                    
05/01/01     1401       (S)         RULES TO CAL W/CS 1OR 5/1                                                                   
                                    SAME TITLE                                                                                  
05/01/01     1401       (S)         FN1: (GOV)                                                                                  
05/02/01     1443       (S)         READ THE THIRD TIME CSSJR
                                    24(RLS)                                                                                     
05/02/01     1444       (S)         HELD IN THIRD READING TO 5/3                                                                
                                    CALENDAR                                                                                    
05/03/01     1472       (S)         HELD IN THIRD READING TO 5/4                                                                
                                    CALENDAR                                                                                    
05/04/01     1503       (S)         BEFORE THE SENATE IN THIRD                                                                  
                                    READING                                                                                     
05/04/01     1503       (S)         PASSED Y14 N6                                                                               
05/04/01     1504       (S)         ELLIS NOTICE OF                                                                             
                                    RECONSIDERATION                                                                             
05/05/01     1527       (S)         RECON TAKEN UP - IN THIRD                                                                   
                                    READING                                                                                     
05/05/01     1527       (S)         PASSED ON RECONSIDERATION Y14                                                               
                                    N6                                                                                          
05/05/01     1559       (S)         TRANSMITTED TO (H)                                                                          
05/05/01     1559       (S)         VERSION: CSSJR 24(RLS)                                                                      
05/05/01     1571       (H)         READ THE FIRST TIME -                                                                       
                                    REFERRALS                                                                                   
05/05/01     1571       (H)         JUD, FIN                                                                                    
10/19/01                (H)         JUD AT 11:00 AM Anch LIO Conf                                                               
                                    Rm                                                                                          
10/19/01                (H)         Heard & Held                                                                                
10/19/01                (H)         MINUTE(JUD)                                                                                 
02/04/02                (H)         JUD AT 1:00 PM CAPITOL 120                                                                  
02/04/02                (H)         Heard & Held                                                                                
02/04/02                (H)         MINUTE(JUD)                                                                                 
03/22/02                (H)         JUD AT 1:00 PM CAPITOL 120                                                                  
                                                                                                                                
BILL: HB 385                                                                                                                  
SHORT TITLE:UNFAIR TRADE PRACTICES ATTY FEES/COSTS                                                                              
SPONSOR(S): REPRESENTATIVE(S)CROFT                                                                                              
                                                                                                                                
Jrn-Date   Jrn-Page                      Action                                                                                 
02/06/02     2164       (H)         READ THE FIRST TIME -                                                                       
                                    REFERRALS                                                                                   
02/06/02     2164       (H)         JUD                                                                                         
03/22/02                (H)         JUD AT 1:00 PM CAPITOL 120                                                                  
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DEB DAVIDSON, Staff                                                                                                             
to Senator Dave Donley                                                                                                          
Senate Finance Committee                                                                                                        
Alaska State Legislature                                                                                                        
Capitol Building, Room 506                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  During discussion of SJR 24 responded to                                                                   
questions on behalf of the Senate Finance Committee, sponsor.                                                                   
                                                                                                                                
REPRESENTATIVE ERIC CROFT                                                                                                       
Alaska State Legislature                                                                                                        
Capitol Building, Room 400                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Sponsor of HB 385.                                                                                         
                                                                                                                                
LES S. GARA, Attorney                                                                                                           
1242 West 10th Avenue                                                                                                           
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Testified in support of HB 385.                                                                            
                                                                                                                                
STEVE CONN, Executive Director                                                                                                  
Alaska Public Interest Research Group (AkPIRG)                                                                                  
PO Box 101093                                                                                                                   
Anchorage, Alaska  99510                                                                                                        
POSITION STATEMENT:  Provided comments in support of HB 385.                                                                    
                                                                                                                                
MARIE DARLIN, AARP                                                                                                              
415 Willoughby Avenue                                                                                                           
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified in support of HB 385.                                                                            
                                                                                                                                
PAM LaBOLLE, President                                                                                                          
Alaska State Chamber of Commerce                                                                                                
217 2nd Street                                                                                                                  
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Provided comments in opposition to HB 385.                                                                 
                                                                                                                                
CLYDE (ED) SNIFFIN, JR.                                                                                                         
Assistant Attorney General                                                                                                      
Fair Business Practices Section                                                                                                 
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
1031 West 4th Avenue, Suite 200                                                                                                 
Anchorage, Alaska  99501-1994                                                                                                   
POSITION  STATEMENT:     Testified  in  support  of   HB  385  and                                                              
responded to questions.                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-35, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  NORMAN   ROKEBERG  called  the  House   Judiciary  Standing                                                              
Committee  meeting   to  order  at  1:22  p.m.     Representatives                                                              
Rokeberg, James,  Coghill, and Meyer  were present at the  call to                                                              
order.   Representatives  Berkowitz  and  Kookesh  arrived as  the                                                              
meeting was in progress.                                                                                                        
                                                                                                                                
SJR 24 - AMEND CONSTITUTIONAL BUDGET RESERVE FUND                                                                             
                                                                                                                                
Number 0043                                                                                                                     
                                                                                                                                
CHAIR ROKEBERG  announced that the  first order of  business would                                                              
be  CS  FOR   SENATE  JOINT  RESOLUTION  NO.   24(RLS),  Proposing                                                              
amendments  to the Constitution  of the  State of Alaska  relating                                                              
to the  budget reserve fund.   He noted  that at a  prior hearing,                                                              
the  administration's representative  had  raised  four points  in                                                              
opposition to SJR 24.                                                                                                           
                                                                                                                                
Number 0073                                                                                                                     
                                                                                                                                
DEB  DAVIDSON,  Staff  to  Senator  Dave  Donley,  Senate  Finance                                                              
Committee,  Alaska  State Legislature,  on  behalf  of the  Senate                                                              
Finance Committee,  sponsor, confirmed that those  points had been                                                              
raised  at  the prior  hearing,  and  mentioned that  in  members'                                                              
packets is  a letter of response  to those issues.   To elaborate,                                                              
on the point  that SJR 24 is  a policy change, she  concurred that                                                              
it is, and  noted that this is  intentional.  Under SJR  24, funds                                                              
could be  withdrawn from the  constitutional budget  reserve (CBR)                                                              
fund  with  a majority  vote,  provided  that  they are  used  for                                                              
appropriations from  the general fund (GF).   Currently funds from                                                              
the  CBR can  be used  to  fund any  shortfall  [in] any  program,                                                              
although there is  a three-fourths vote requirement.   With SJR 24                                                              
in effect, for  example, a majority vote could  withdraw CBR funds                                                              
in order to pay  for a shortfall in education funding,  which is a                                                              
GF  program;  however,  in order  pay  to  for  a shortfall  in  a                                                              
program  that  is   funded  entirely  by  program   receipts,  for                                                              
example, CBR  funds could only  be withdrawn with  a three-fourths                                                              
vote.                                                                                                                           
                                                                                                                                
MS.  DAVIDSON,  on  the  point  regarding  the  use  of  the  term                                                              
"unrestricted  general funds",  said that  staff had checked  with                                                              
the  Legal and  Research  Services Division,  Legislative  Affairs                                                              
Agency, and had  been told that there would not be  a problem with                                                              
using that term and  that its use was merely a  policy choice.  On                                                              
the  point regarding  the  possibility  that deleting  the  "sweep                                                              
provision"  without first  eliminating  the liability  to the  CBR                                                              
would cause a problem  with the bond market, she  noted that there                                                              
is  no straight  answer to  this  complex issue.   Basically,  she                                                              
explained,  the debt  owed  to the  CBR  is a  debt  that "we  owe                                                              
ourselves";  therefore,   legally,  getting   rid  of   the  sweep                                                              
provision automatically  gets rid of  the liability.  So  while it                                                              
appears from  an accounting viewpoint,  on paper, as  though there                                                              
is a  liability, it is  merely money that  the state  owes itself.                                                              
She opined  that getting  rid of  the sweep  provision should  not                                                              
cause  any  problem   because  it  would  also  get   rid  of  the                                                              
liability.  She  noted that if, in the future,  any questions were                                                              
raised  by  the bond  market  or  "Wall Street,"  the  legislature                                                              
would  have   several  options   with  which   to  address   those                                                              
questions.                                                                                                                      
                                                                                                                                
MS.  DAVIDSON, on  the  point of  whether SJR  24  would have  any                                                              
effect should  the CBR become  empty in  two years, said  that the                                                              
sponsor  contends  that getting  rid  of  the sweep  provision  is                                                              
still an important  and necessary change because,  otherwise, that                                                              
provision would  still apply regardless  of whether there  was any                                                              
money  in the  CBR.   In response  to questions,  she pointed  out                                                              
that  under  [subsection]  (b),  page  1,  lines  13-16,  "amounts                                                              
available for  appropriation or  appropriated from federal  funds,                                                              
income  of the permanent  fund,  or this budget  reserve fund  may                                                              
not  be considered".    She  said that  the  main  intent of  this                                                              
language is to  ensure that "these same funds  are either included                                                              
or  excluded from  the  amount  available for  appropriation,  and                                                              
appropriated, to make  sure that the comparison was  based on this                                                              
same..."                                                                                                                        
                                                                                                                                
Number 0583                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES interjected  that she  was a  member of  the                                                              
legislature  during  the  implementation   of  the  constitutional                                                              
budget reserve  [fund] and, according  to her recollection  of the                                                              
debate at that  time, the court decision regarding  implementation                                                              
was  different  than  how  the   CBR  was  intended  to  work  and                                                              
different than  what she had in mind  when she voted for  it.  She                                                              
opined  that  there has  been  a  problem  ever since  that  court                                                              
decision  was made.   One  of the  issues  that the  court had  to                                                              
decide was, at what  level of appeal does resulting  money go into                                                              
the CBR;  she noted that  she did not  have any problems  with the                                                              
[decision]  on that  issue.   Another issue,  she explained,  that                                                              
the court  had to decide revolved  around "what was  available for                                                              
appropriations, based  on what last year's budget was,  so that if                                                              
your  current  year's  budget  was  more  than  your  last  year's                                                              
budget, if  you didn't have  enough money  to cover it,  you could                                                              
take  the money  out with a  majority  vote."  She  said that  the                                                              
court determined  that when "you're measuring in  the first place,                                                              
if  you have  enough  money  to cover  the  budget,  they did  not                                                              
include  the  permanent  fund;   and  yet  they  did  include  the                                                              
permanent fund, so  you never would ever get there  as long as you                                                              
had any  money in  the permanent  fund."   However, she  added, at                                                              
the end,  because that money  had to be  paid back  and everything                                                              
was "swept,"  then  the earnings  of the permanent  fund were  not                                                              
included.                                                                                                                       
                                                                                                                                
REPRESENTATIVE    JAMES   opined   that    that   was    a   gross                                                              
[misinterpretation]  of  the  language   in  the  original  ballot                                                              
measure.  "It either  should be counted at one end  and the other,                                                              
or at neither end,"  she added.  She said that  another problem is                                                              
"the payback,"  which is the sweep  provision.  "As we  go forward                                                              
we do need a budget  control or ... slush fund ...;  we need to be                                                              
able to build up  a budget surplus because we never  know what the                                                              
conditions are going  to be," she said.  But the  rules of the CBR                                                              
are so restrictive,  that it is  not going to be the  best vehicle                                                              
for  surpluses  unless  some  changes are  made.    She  remarked,                                                              
however,  that she  is not  convinced that  [SJR 24]  is going  to                                                              
"solve the  problem; it seems  to me like  if we wish to  take the                                                              
money  from  the CBR  rather  than  the  earnings reserve  of  the                                                              
permanent fund, then,  as far as I'm concerned,  we'll always have                                                              
a  [three-fourths] vote."   She  opined  that there  are only  two                                                              
solutions:   "one is to fix  it so we  don't have to pay  it back,                                                              
which ...  solves part of  the problem, ...  and this is  all that                                                              
you've done here."                                                                                                              
                                                                                                                                
Number 0787                                                                                                                     
                                                                                                                                
MS.  DAVIDSON  argued that  in  addition  to repealing  the  sweep                                                              
provision, SJR  24 changes "the phrasing  in how the funds  can be                                                              
withdrawn  with  a  majority  vote,   to  clarify  when  that  may                                                              
happen."   She offered  that the phrasing  in Section  1 specifies                                                              
that  the  federal  funds,  the  permanent  fund,  or  the  budget                                                              
reserve  fund  cannot  be  considered   when  calculating  amounts                                                              
available  for  appropriation  or the  amounts  appropriated,  the                                                              
comparison has been  made level on both sides.   She surmised that                                                              
part of  the problem,  initially, was  that amounts available  for                                                              
appropriation  and amounts actually  appropriated were  defined in                                                              
statute, and the  court found that this was inconsistent  with the                                                              
[Alaska   State]  Constitution.     By  placing   "this"   in  the                                                              
constitution,  she opined,  it  would squarely  set  out what  the                                                              
comparison is.                                                                                                                  
                                                                                                                                
REPRESENTATIVE JAMES  asked whether SJR  24 would be  removing the                                                              
stipulations  pertaining to the  prior year's  budget and,  if so,                                                              
whether that  meant that  the budget  could be  raised and  just a                                                              
majority vote would be needed to access the CBR.                                                                                
                                                                                                                                
MS. DAVIDSON said not entirely, no.  She elaborated:                                                                            
                                                                                                                                
     What  this says  is, ...  if  the amount  that you  were                                                                   
     appropriating   this  year   is  more   than  you   have                                                                   
     available  to appropriate, you  may withdraw funds  from                                                                   
     the CBR up  to the total that was appropriated  the year                                                                   
     before with  a majority vote  - anything more  than that                                                                   
     will  require   the  [three-fourths]  vote  -   and  the                                                                   
     difference  in   that  amount  may  only  be   used  for                                                                   
     appropriations from  the unrestricted general  fund.  As                                                                   
     I said,  for funding  education, if  you needed to  make                                                                   
     up that  difference, you  would be able  to do it  up to                                                                   
     the last  year's level  with the general  fund.   If you                                                                   
     were funding  a shortfall from another funding  source -                                                                   
     something    funded   by    [Alaska   Housing    Finance                                                                   
     Corporation] AHFC  receipts, something like that  - that                                                                   
     would require  a [three-fourths] vote.  So  it restricts                                                                   
      more than the current does [with regard to] what may                                                                      
     be withdrawn....                                                                                                           
                                                                                                                                
REPRESENTATIVE  JAMES remarked that  although she understands  the                                                              
sponsor's intent, if  the public were to be asked  "this question,                                                              
they'd say  no."  She  acknowledged that  there are  some problems                                                              
with "the CBR,"  but opined that [SJR 24] is not  going to resolve                                                              
them.                                                                                                                           
                                                                                                                                
Number 0982                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  asked whether  the  "exceptions to  the                                                              
amount of appropriations  made in the current year  apply to those                                                              
made  in previous  years?"   That  is, if  the  permanent fund  or                                                              
federal  funds had  been used  -  appropriated -  in prior  years,                                                              
does that impact how this mechanism would work?                                                                                 
                                                                                                                                
MS.  DAVIDSON said  that  she didn't  believe  so  because of  the                                                              
addition   of  the  phrase,   "For  purposes   of  applying   this                                                              
subsection,  amounts available for  appropriation or  appropriated                                                              
from federal funds,  income of the permanent fund,  or this budget                                                              
reserve  fund may  not be  considered."   She opined  that if  the                                                              
funds  were appropriated  in the  prior  year, they  would not  be                                                              
considered  in what  was calculated  for the  current year  or for                                                              
the current year's appropriations.                                                                                              
                                                                                                                                
REPRESENTATIVE  BERKOWITZ asked:   "If you  had appropriations  of                                                              
federal  funds in  a  prior year,  and you  needed  to reach  that                                                              
aggregate funding  level, ... what  would the mechanism be  to get                                                              
into the CBR in the current year?"                                                                                              
                                                                                                                                
MS.  DAVIDSON  replied  that that  would  be  the  [three-fourths]                                                              
vote.    The  section in  the  [Alaska  State]  Constitution  that                                                              
allows  appropriations from  the  CBR to  be made  for any  public                                                              
purpose with  a [three-fourths] vote  remains there; that  has not                                                              
changed at all.   "So, if you wanted to use funds  from the CBR to                                                              
make up a  loss of federal funds  or to get to a total,  you could                                                              
do  that;  it  would,  however,  require  a  [three-fourths]  vote                                                              
rather than a majority vote," she said.                                                                                         
                                                                                                                                
REPRESENTATIVE  BERKOWITZ referred  to the  phrase, "For  purposes                                                              
of this subsection,  'unrestricted general fund'  shall be defined                                                              
by law".   He asked  whether the sponsor  had any ideas  regarding                                                              
how "unrestricted general fund" might be defined.                                                                               
                                                                                                                                
MS. DAVIDSON  said that she did  not know whether the  sponsor had                                                              
any specific  definition in  mind regarding "unrestricted  general                                                              
fund".   She  mentioned that  although  currently there  is not  a                                                              
specific  definition  of what  constitutes  "unrestricted  general                                                              
funds", that  phrase is  used in several  statutes.   Referring to                                                              
members' packets,  she pointed  out an example  of a statute  - AS                                                              
37.05.146  - which  specifies items  that "are  not made from  the                                                              
unrestricted general  fund".  She said that it is  her belief that                                                              
"when the  definition came through,  there would  be consideration                                                              
of that, as well as other things."                                                                                              
                                                                                                                                
REPRESENTATIVE   JAMES  opined  that   the  [lack  of   a  current                                                              
definition]  seems to  "give  us a  little  trap here  as to  what                                                              
that's going to  be."  She mentioned that she  considers dividends                                                              
from Alaska Industrial  Development and Export  Authority (AIDEA),                                                              
for  example, to  be  general funds  "when  they  come over,"  but                                                              
acknowledged that they are not counted as such.                                                                                 
                                                                                                                                
Number 1227                                                                                                                     
                                                                                                                                
MS. DAVIDSON  remarked that  if funding is  needed for any  of the                                                              
program  receipts listed  in  AS 37.05.146(b),  a  [three-fourths]                                                              
vote  would be  required to  access  the CBR  because the  statute                                                              
specifically  says that  appropriations  for those  items are  not                                                              
made from the unrestricted  general fund.  She said  that the best                                                              
example  of what  unrestricted general  funds  are currently  used                                                              
for  is  "partially  doing  the  education  funding,"  adding  her                                                              
belief  that revenue  sharing  also  comes from  the  unrestricted                                                              
general  fund.   Thus, although  there  is no  definition of  what                                                              
unrestricted  general funds  are, there  is a  definition of  what                                                              
they are not.                                                                                                                   
                                                                                                                                
REPRESENTATIVE JAMES  indicated that she thought  that funds which                                                              
are  appropriated  would  still  be  general  funds  until  spent,                                                              
although  they  would be  considered  restricted  [funds]  because                                                              
they'd already been appropriated.                                                                                               
                                                                                                                                
CHAIR ROKEBERG,  mentioning that  he had concerns  about drafting,                                                              
referred  to  the  phrase  on  lines  13-15:    "For  purposes  of                                                              
applying this subsection,  amounts available for  appropriation or                                                              
appropriated  from  federal  funds".    He  asked,  "Why  is  that                                                              
disjunctive there?"                                                                                                             
                                                                                                                                
MS.  DAVIDSON offered  that it  is because  of how  lines 5-6  are                                                              
drafted:    "If  the amount  available  for  appropriation  for  a                                                              
fiscal  year   is  not  sufficient   to  fully  fund   the  amount                                                              
appropriated".                                                                                                                  
                                                                                                                                
CHAIR ROKEBERG mentioned  that he does not understand  lines 13-15                                                              
the  way  they  are  drafted;  they  appear  to  essentially  say,                                                              
"amounts available for appropriation may not be considered."                                                                    
                                                                                                                                
REPRESENTATIVE  JAMES  agreed that  the  language  on lines  13-15                                                              
doesn't make sense.                                                                                                             
                                                                                                                                
Number 1394                                                                                                                     
                                                                                                                                
MS. DAVIDSON said  that in her mind, she translated  that language                                                              
to:    "For  applying  this  subsection,   amounts  available  for                                                              
appropriation  [pause] or amounts  appropriated from  [pause] then                                                              
federal  funds,  income  of  the permanent  fund,  or  the  budget                                                              
reserve fund may not be considered."                                                                                            
                                                                                                                                
CHAIR ROKEBERG  remarked that  according to  the way Ms.  Davidson                                                              
spoke regarding her  interpretation of lines 13-15,  it sounded as                                                              
though  there was  a long  pause before  the word  "or", in  which                                                              
case perhaps  some form of punctuation  is needed in  that phrase.                                                              
He said:                                                                                                                        
                                                                                                                                
     To  translate what  I think  the meaning  should be,  it                                                                   
     should  be   that  ...  when  you're   defining  amounts                                                                   
     available  for  appropriations,  you  may  not  consider                                                                   
     federal funds,  income of the permanent fund,  or budget                                                                   
     reserve funds.  Is that what it means?                                                                                     
                                                                                                                                
MS. DAVIDSON replied:                                                                                                           
                                                                                                                                
     Not  only for  when  considering amounts  available  for                                                                   
     appropriation,   but  also   when  considering   amounts                                                                   
     appropriated, because  we compare amounts  available for                                                                   
     appropriation  with amounts  actually appropriated,  and                                                                   
     when you're  considering either one of these  two items,                                                                   
     you  may not  consider federal  funds,  income from  the                                                                   
     permanent fund, or the budget reserve fund.                                                                                
                                                                                                                                
CHAIR ROKEBERG mentioned that "it's not real clear."                                                                            
                                                                                                                                
REPRESENTATIVE JAMES said:                                                                                                      
                                                                                                                                
     I see  the comparison  now, when I  read lines 5  and 6,                                                                   
     because   there's  two  things   there:    there's   the                                                                   
     "available   for   appropriation"    and   "the   amount                                                                   
     appropriated".   So,  I think  that's  what they  meant,                                                                   
     that  for  purposes  of this  subsection,  when  they're                                                                   
     talking  about  - at  the  beginning  of (b)  -  amounts                                                                   
        available for appropriation or appropriated from                                                                        
         federal funds, ... there is an "available for                                                                          
     appropriation" and "amount appropriated".                                                                                  
                                                                                                                                
CHAIR ROKEBERG asked:                                                                                                           
                                                                                                                                
     Would it  be fair to say  that it could be  redrafted to                                                                   
     say,   "For  purposes  of   applying  this   subsection,                                                                   
     amounts  available  for  appropriation  or  appropriated                                                                   
     from  federal  funds  do not  include  income  from  the                                                                   
     permanent fund or this budget reserve"?                                                                                    
                                                                                                                                
Number 1512                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  said she did  not see any connection  at all                                                              
between "that  and federal funds."   "Federal funds are  one thing                                                              
and these other things are something else," she added.                                                                          
                                                                                                                                
CHAIR  ROKEBERG   said,  "You're  right."    He   asked  what  the                                                              
distinction is between "appropriated" and "appropriation".                                                                      
                                                                                                                                
REPRESENTATIVE  JAMES   offered  that  perhaps  the   language  is                                                              
attempting to  address, in one fell  swoop, both of  those amounts                                                              
in that  first sentence, and  that by doing  so, it is  leading to                                                              
confusion.   She mentioned that  there are two measurements:   one                                                              
is, "available for  appropriation", and the other  is, "the amount                                                              
appropriated".    And  they're  saying  that from  either  one  of                                                              
those,  it doesn't  include income  of the permanent  fund  or the                                                              
budget reserve fund," she surmised.                                                                                             
                                                                                                                                
CHAIR ROKEBERG said  he assumes that [amounts]  "appropriated from                                                              
federal funds" should also be excluded.                                                                                         
                                                                                                                                
REPRESENTATIVE JAMES  acknowledged that it should be,  and thus it                                                              
is the  wrong "conjunctive."   She pointed  out, however,  that it                                                              
is  still  necessary  to  say,  "available  for  appropriation  or                                                              
appropriated",  and stop  there, and  then say,  "income from  the                                                              
permanent fund,  or the  budget reserve,  or federal funds  should                                                              
not be considered."                                                                                                             
                                                                                                                                
CHAIR  ROKEBERG  suggested  that  putting a  colon  "there"  would                                                              
work,  although "it's  not  real  good language."    He asked  Ms.                                                              
Davidson whether  he and  Representative James  were on  the right                                                              
track with regard to the meaning of subsection (b).                                                                             
                                                                                                                                
MS. DAVIDSON  said that they  were.  She  suggested that  it might                                                              
help  to say,  "For  the  purposes  of applying  this  subsection,                                                              
amounts available  for appropriation  or amounts appropriated  may                                                              
not consider  federal funds,  income from  the permanent  fund, or                                                              
the budget reserve fund".                                                                                                       
                                                                                                                                
CHAIR ROKEBERG remarked  that if [SJR 24] goes out  to the general                                                              
public,  and the  general public  cannot understand  it, they  are                                                              
not going to vote for it.                                                                                                       
                                                                                                                                
Number 1620                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ asked:   Shouldn't the  "or" on  line 15                                                              
be an "and"?                                                                                                                    
                                                                                                                                
CHAIR ROKEBERG  said:  "I  would think  so, also....   That's what                                                              
I'm  worried about:   it's  either so  poorly drafted  or I  don't                                                              
understand what they're getting at here."                                                                                       
                                                                                                                                
REPRESENTATIVE JAMES  opined that  that sentence [on  lines 13-15]                                                              
needs  to  be  rewritten.    She also  opined  that  it  might  be                                                              
difficult to get "it" into one sentence.                                                                                        
                                                                                                                                
MS. DAVIDSON continued  with her suggested change.   It would say,                                                              
"amounts available  for appropriation or amounts  appropriated may                                                              
not  consider federal  funds,  income of  the  permanent fund,  or                                                              
this budget reserve fund."                                                                                                      
                                                                                                                                
REPRESENTATIVE  JAMES offered  that "does  not consider"  would be                                                              
better than "may not consider".                                                                                                 
                                                                                                                                
CHAIR  ROKEBERG surmised  that because  [the language]  is in  the                                                              
negative, that is why "or" is used rather than "and".                                                                           
                                                                                                                                
REPRESENTATIVE BERKOWITZ  remarked that from a  legal perspective,                                                              
"or" usually means:  any one of these and all of them.                                                                          
                                                                                                                                
CHAIR ROKEBERG surmised, then, that using "or" would be alright.                                                                
                                                                                                                                
Number 1696                                                                                                                     
                                                                                                                                
CHAIR  ROKEBERG made  a motion  to adopt  Conceptual Amendment  1,                                                              
which would, on  line 14, add the word "amounts"  between "or" and                                                              
"appropriated";  add the  words  "should not  consider" after  the                                                              
word "appropriated";  striking "from"; and  then going on  to read                                                              
"federal funds,  income of the  permanent, or this  budget reserve                                                              
fund."   There  being  no objection,  Conceptual  Amendment 1  was                                                              
adopted.                                                                                                                        
                                                                                                                                
Number 1786                                                                                                                     
                                                                                                                                
REPRESENTATIVE MEYER  moved to report  CSSJR 24(RLS),  as amended,                                                              
out  of   committee  with   individual  recommendations   and  the                                                              
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Number 1790                                                                                                                     
                                                                                                                                
REPRESENTATIVE BERKOWITZ objected.                                                                                              
                                                                                                                                
REPRESENTATIVE  JAMES requested  confirmation  that repealing  the                                                              
"sweep  provision"   [of  the   Alaska  State  Constitution],   as                                                              
proposed by Section 2, would also "do away with the debt."                                                                      
                                                                                                                                
MS. DAVIDSON confirmed that it would.                                                                                           
                                                                                                                                
REPRESENTATIVE BERKOWITZ, speaking to his objection, commented:                                                                 
                                                                                                                                
     The  premise  that the  sponsor  repeats over  and  over                                                                   
     again is that  the CBR has somehow led to  leveraging of                                                                   
     the budget,  and I brought  with me our budget  requests                                                                   
     that  we negotiated  with the  majority last  year.   It                                                                   
     came  to a  grand total  of  $9,571,000.   Now, I  don't                                                                   
     know  whether the  majority  helped leverage  it up  the                                                                   
     other  $140  million  -  it   may  well  be  -  but  our                                                                   
     contribution and  use of the CBR is  clearly overstated,                                                                   
     and  to  use  that  as  a  premise  for  advancing  this                                                                   
     constitutional  amendment  seems  a  little flawed.    I                                                                   
     also   have   a  little   difficulty   reconciling   the                                                                   
     sponsor's other  proposed amendment with this.   In that                                                                   
     other   constitutional   amendment,    he   requires   a                                                                   
     supermajority to  get to increased funds, on  the theory                                                                   
     that  if  you  require  a  supermajority,  it  makes  it                                                                   
     harder to  spend more.   And here,  he seems to  suggest                                                                   
     that  if  we have  a  simple  majority, you  can  access                                                                   
     funds and  that will decrease  the budget, and  it seems                                                                   
     that those  are somewhat discordant  notions of  how the                                                                   
     budget works.                                                                                                              
                                                                                                                                
CHAIR ROKEBERG  remarked that  in drawing  on his own  experience,                                                              
with few exceptions,  he does not find Representative  Berkowitz's                                                              
analysis of the situation to be accurate.                                                                                       
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  asked  Chair Rokeberg  whether  he  had                                                              
information  to  the  contrary   regarding  how  much  [the  House                                                              
minority]  negotiated,  which  he   recalled  to  be  roughly  $10                                                              
million.                                                                                                                        
                                                                                                                                
Number 1924                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES said  that  according to  her evaluation  of                                                              
SJR 24  it is very likely  that there would  never be a  time when                                                              
they  could access  the CBR  with  a majority  vote unless  "we're                                                              
going to do a real ramp-down of spending."                                                                                      
                                                                                                                                
CHAIR ROKEBERG argued  that [SJR 24] is "supposed  to encourage it                                                              
more often," since just a majority vote would be required.                                                                      
                                                                                                                                
REPRESENTATIVE  JAMES pointed  out,  however,  that accessing  the                                                              
CBR could only  be done "if the  money that you have  is less than                                                              
last year's  budget, and that's  all the  further you can  go with                                                              
it," otherwise a [three-fourths] vote would be required.                                                                        
                                                                                                                                
REPRESENTATIVE  BERKOWITZ   remarked  that  from   the  minority's                                                              
perspective,  or   at  lease  from  his  perspective,   "this"  is                                                              
somewhat of  a mute argument because  the CBR is going  to be gone                                                              
in  two  years  anyway.    He  reiterated  that  he  is  having  a                                                              
difficult  time  reconciling  SJR  24  with  the  sponsor's  other                                                              
amendment.  He continued:                                                                                                       
                                                                                                                                
     I also  have concerns with  the language here:   there's                                                                   
     loose terms  - we don't know what "unrestricted  general                                                                   
     fund" is.   It's unclear how the mechanism  works.  And,                                                                   
     in the  [Alaska State] Constitution,  I thought  we were                                                                   
     striving   for   clarity  and   simplicity,   and   this                                                                   
     amendment doesn't move us in that direction.                                                                               
                                                                                                                                
CHAIR  ROKEBERG remarked  that in  terms of  clarity, Amendment  1                                                              
has certainly  helped a little bit.   He acknowledged that  in the                                                              
last couple  of years,  with regard  to the [three-fourths]  vote,                                                              
there has  been less difficulty  in working towards  common goals.                                                              
He  noted,  however,   that  he  does  not   share  Representative                                                              
Berkowitz's thoughts  regarding the elimination of the  CBR in two                                                              
years.                                                                                                                          
                                                                                                                                
REPRESENTATIVE BERKOWITZ  asked for an explanation of  why, on the                                                              
one  hand,  a  [simple]  majority  vote  on  the  CBR  would  help                                                              
diminish  spending  while,  on the  other  hand,  a  supermajority                                                              
[vote] on a spending cap is also supposed to diminish spending.                                                                 
                                                                                                                                
REPRESENTATIVE JAMES,  returning to  the motion regarding  SJR 24,                                                              
opined that  the language  in the  resolution is complicated,  and                                                              
therefore she  is sure that the  public will vote "no"  because it                                                              
is not easily  understood.  She  offered that the only  way to fix                                                              
the  CBR is  to repeal  it  and start  over,  making the  language                                                              
specifically  clear  with  regard  to  what  is  intended.    "The                                                              
language in the  original CBR was so strange  and so misunderstood                                                              
[because] of  the way it  was drafted - as  I understand it,  on a                                                              
napkin in the middle  of the night - that that's  what we got, and                                                              
this sounds  like they're trying  to fix something  that's already                                                              
so flawed it can't be fixed," she added.                                                                                        
                                                                                                                                
Number 2108                                                                                                                     
                                                                                                                                
A  roll call  vote  was taken.   Representatives  James,  Coghill,                                                              
Meyer, and  Rokeberg voted  to report  CSSJR 24(RLS),  as amended,                                                              
out of  committee.   Representatives Berkowitz  and Kookesh  voted                                                              
against  it.  Therefore,  HCS CSSJR  24(JUD)  was reported  out of                                                              
the House Judiciary Standing Committee by a vote of 4-2.                                                                        
                                                                                                                                
HB 385 - UNFAIR TRADE PRACTICES ATTY FEES/COSTS                                                                               
                                                                                                                                
Number 2124                                                                                                                     
                                                                                                                                
CHAIR ROKEBERG  announced that  the last  order of business  would                                                              
be HOUSE BILL NO.  385, "An Act relating to the  attorney fees and                                                              
costs awarded  in certain court  actions relating to  unfair trade                                                              
practices;  and amending  Rules 54,  79, and  82, Alaska Rules  of                                                              
Civil Procedure."                                                                                                               
                                                                                                                                
Number 2162                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ moved  to adopt  the proposed  committee                                                              
substitute  (CS)  for  HB  385,  version  22-LS1224\C,  Bannister,                                                              
3/21/02, as  a work draft.   There being  no objection,  Version C                                                              
was before the committee.                                                                                                       
                                                                                                                                
Number 2213                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ERIC  CROFT, Alaska  State  Legislature,  sponsor,                                                              
said that HB 385  does two things.  Section 1  attempts to provide                                                              
a  shield for  consumers  who are  pursuing  their  own claims  by                                                              
precluding them from  having to pay attorney fees  to a prevailing                                                              
defendant unless the  suit is found to be frivolous.   He remarked                                                              
that the fundamental  problem with consumer protection  [cases] is                                                              
the lack  of available  legal counsel  who are  willing to  pursue                                                              
what are essentially small claims.  He elaborated:                                                                              
                                                                                                                                
     When you buy a $100 toaster and it does not work, and                                                                      
       the major corporation that sold it to you does not                                                                       
     give  you any  satisfaction under  the warranty,  you're                                                                   
     in  a difficult  situation  trying to  get  a lawyer  to                                                                   
     pursue that  kind of  claim.  They  will say, "First  of                                                                   
     all,  it will  cost you ...  $5,000 to  pursue this  all                                                                   
     the way through."   And the worst part about  it is, the                                                                   
     major  corporation knows  that,  and they  can tell  you                                                                   
     ... essentially  what they want because very  few people                                                                   
     are going  to have  the ability to  spend $5,000  to get                                                                   
     their $100 toaster fixed.                                                                                                  
                                                                                                                                
REPRESENTATIVE  CROFT  said that  currently,  even  if someone  is                                                              
able to  pursue such a  case, if it gets  thrown out on  some sort                                                              
of technicality,  that person  could be assessed  either all  or a                                                              
large  portion  of the  major  corporation's  attorney  fees.   He                                                              
explained  that in developing  HB 385,  he used  a model  from the                                                              
Civil Rights  Act, which, because  of a lack of  attorneys willing                                                              
to  pursue  such  cases, enabled  private  individuals  to  pursue                                                              
their claims without being assessed attorney fees if they lost.                                                                 
                                                                                                                                
REPRESENTATIVE  CROFT explained  that Section  2 of  HB 385  would                                                              
give the attorney  general the power to collect fees  and put them                                                              
in a  special fund  that would  be used  for "consumer  protection                                                              
defense actions."   He  mentioned that although  Sections 1  and 2                                                              
are severable, he  opined that together, Sections 1  and 2 provide                                                              
a little more  help for individual plaintiffs and  a slightly more                                                              
certain funding stream  for the Office of the  Attorney General so                                                              
that it can pursue [consumer protection] claims.                                                                                
                                                                                                                                
CHAIR ROKEBERG  noted that language  similar to that of  Section 1                                                              
was heard and rejected in a prior legislature.                                                                                  
                                                                                                                                
REPRESENTATIVE   CROFT  remarked   that  the   decisions  of   one                                                              
legislature are not binding on future legislatures.                                                                             
                                                                                                                                
Number 2360                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES mentioned  that  she learned  early on  that                                                              
for less  serious issues,  the best advice  she could  give people                                                              
is  for  them to  stay  out  of court  to  begin  with if  at  all                                                              
possible.   People  who go to  court expecting  to be  compensated                                                              
for  their losses  are bound  to  be disappointed  because of  the                                                              
additional emotional  costs; going to  court is a dart  game.  She                                                              
said that  it is her belief  that if people  are willing to  go to                                                              
court over  an issue, they should  be willing to pay the  price if                                                              
they lose.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  CROFT agreed  that  Representative James's  advice                                                              
is good  advice, but  noted that  this is  unfortunate, since  the                                                              
justice system is  intended to fix "some of these  problems."  The                                                              
reality,  however, is  that there  is  very little  cost-effective                                                              
remedy for small  indignities, he noted.  When an  entity has sold                                                              
a  shoddy piece  of  goods  of a  relatively  low  value, "are  we                                                              
really going to  say that Alaskans have no recourse  to fix that?"                                                              
he asked.   He  said the  corporations that  do so, although  they                                                              
are probably few  in number, know that the disadvantages  of going                                                              
to court are so  big that very few individual  consumers are going                                                              
to do  it; therefore, those corporations  are willing to  sell 100                                                              
defective toasters,  for example,  since 99  of the buyers  aren't                                                              
going to  seek recourse.   He remarked  that although  the justice                                                              
system  works   well  for  resolving   large  injustices,   he  is                                                              
searching  for   a  cost-effective,   relatively  quick   way  for                                                              
ordinary consumers to get risk-free relief for small injustices.                                                                
                                                                                                                                
REPRESENTATIVE  JAMES  pointed  out,  however, that  there  is  an                                                              
inherent risk  to living,  that not everything  can be  fixed, and                                                              
that time is money.                                                                                                             
                                                                                                                                
TAPE 02-35, SIDE B                                                                                                              
Number 2489                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  said whether "it's your own  time or someone                                                              
else's time,"  the amount  of money it's  costing to  pay attorney                                                              
fees and court fees  is only a small part of the  cost of going to                                                              
court."   If it's  a big issue,  she said,  it should  be pursued,                                                              
but if  it's a small issue,  "you just need  to swallow and  go on                                                              
with life."                                                                                                                     
                                                                                                                                
REPRESENTATIVE   BERKOWITZ,  referring   to  the  "100   toasters"                                                              
example, pointed  out that it is  usually not the  single consumer                                                              
who  would  bring the  action  against  the  seller; it  would  be                                                              
someone who  knew that there  were a 100  folks who'd  been ripped                                                              
off  by  a  bad  toaster.    Therefore,  any  problem  that  could                                                              
possibly  be corrected  by the  language in  Section 1  of HB  385                                                              
only exists if one aggregates all of those small indignities.                                                                   
                                                                                                                                
REPRESENTATIVE  COGHILL  asked how  many  suits have  been  deemed                                                              
frivolous.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  CROFT  said  he   does  not  have  any  statistics                                                              
regarding the number  of frivolous suits.  And  although there are                                                              
sanctions  for  frivolous  actions,  he  surmised  that  the  very                                                              
burdens  that Representative  James  spoke of  tend  to keep  many                                                              
[frivolous suits] from being filed.                                                                                             
                                                                                                                                
CHAIR  ROKEBERG  mentioned  that prior  legislation,  which  later                                                              
became law,  contained a  definition of  frivolous.  He  suggested                                                              
that there  has never  been "a finding  of [Civil  Rule 11  of the                                                              
Alaska Rules of Civil Procedure]"                                                                                               
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  argued  to  the contrary  that  if  the                                                              
committee's staff  researched that issue, "she would  come up with                                                              
a long list of Rule 11 cases."                                                                                                  
                                                                                                                                
REPRESENTATIVE  CROFT,  to  summarize,  said that  Section  1  and                                                              
Section 2  reflect two different  approaches.  Section  1 empowers                                                              
individual consumers  to pursue  their own cases,  whereas Section                                                              
2 helps  the  government pursue  consumer protection  cases.   Via                                                              
Section 2,  when the  government wins  consumer protection  cases,                                                              
it would  be allowed  to keep  the fees  and use  them to  further                                                              
consumer  protection  activities.    He  opined that  there  is  a                                                              
problem  that needs  solving, and  to that end,  he observed,  the                                                              
committee  can either keep  both Sections  1 and  2, so  that they                                                              
can work  in tandem, or  keep one of  the sections and  delete the                                                              
other,  depending on  which philosophy  the  committees prefers  -                                                              
individual empowerment  or governmental  [intervention].   He also                                                              
opined  that   Alaskans  are  increasingly  becoming   targets  of                                                              
consumer  fraud, and  the legislature  should  do something  about                                                              
it.                                                                                                                             
                                                                                                                                
REPRESENTATIVE  BERKOWITZ asked  Representative  Croft whether  he                                                              
would characterize [Section 1] as form of privatization.                                                                        
                                                                                                                                
REPRESENTATIVE CROFT  indicated that he would.   He mentioned that                                                              
four  years  ago,  he'd  introduced  legislation  to  provide  the                                                              
Office  of the  Attorney General  with  more funds  with which  to                                                              
pursue  consumer   protection  issues,   but  other   legislators,                                                              
notwithstanding   concerns   regarding    consumer   fraud,   were                                                              
reluctant to support [the increased funding].                                                                                   
                                                                                                                                
Number 2213                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  surmised,  then, that  legislators  who                                                              
generally  support   privatization  as   a  concept   should  feel                                                              
comfortable with Section 1.                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said:  "You would think so."                                                                               
                                                                                                                                
CHAIR ROKEBERG  asked for confirmation that  currently, plaintiffs                                                              
in "these  private  rights of actions  [get]  the costs, by  court                                                              
rule, and full reasonable [attorney] fees."                                                                                     
                                                                                                                                
[An unidentified speaker indicated that was correct.]                                                                           
                                                                                                                                
CHAIR   ROKEBERG   continued,   pointing   out   that   currently,                                                              
defendants are  subject to [Civil Rule  82 of the Alaska  Rules of                                                              
Civil  Procedure];  therefore, there  is  already  an inequity  in                                                              
favor of plaintiffs, since they get full attorney fees.                                                                         
                                                                                                                                
REPRESENTATIVE  CROFT countered  that although  that is a  correct                                                              
analysis, plaintiffs  currently face an unbalanced  field in terms                                                              
of the  difference in  power between an  individual with  a faulty                                                              
toaster and  a major corporation.   He acknowledged  that [Section                                                              
1]  would be  providing an  individual  who sought  redress for  a                                                              
small injustice another tool that the defendant would not have.                                                                 
                                                                                                                                
CHAIR  ROKEBERG  remarked  that [current  statute]  already  gives                                                              
plaintiffs full right  of recovery, which, he opined,  is a pretty                                                              
major concession.                                                                                                               
                                                                                                                                
REPRESENTATIVE  CROFT, after  restating his  opening remarks  that                                                              
there is  a problem that  needs to be  fixed and what  the aspects                                                              
of  that  problem  are,  opined   that  although  current  statute                                                              
provides  some  protection  for  consumers,  it does  not  go  far                                                              
enough.                                                                                                                         
                                                                                                                                
Number 2053                                                                                                                     
                                                                                                                                
LES S. GARA, Attorney, testified via teleconference, and said:                                                                  
                                                                                                                                
     Five   years  ago  we   enacted  the   first  round   of                                                                   
     amendments  to the  "consumer protection"  Act, and  ...                                                                   
     they tried  to make a  fix to what  was a pretty  broken                                                                   
     consumer  protection system.   ... We  took a look  over                                                                   
     the last  five years to  see how well  what we  did five                                                                   
     years  ago  was  working.     We  held  a  consumer  law                                                                   
     conference  in November; it  was attended by  about 100-                                                                   
     125   people.     [Representative]   Dyson  was   there;                                                                   
     [Representative] Croft  was there.  And what  we got out                                                                   
     of  that conference  was  that we  still  had two  major                                                                   
     problems.   Two major  problems that  keep the  consumer                                                                   
     protection  system from working,  and that's what  these                                                                   
     two provision aim to solve.  ...                                                                                           
                                                                                                                                
     This bill  ... is  timely; at a  time when we're  asking                                                                   
     the members  and citizens of the state to  contribute to                                                                   
     possibly help  fund government, I think we  have to find                                                                   
     ways to save  people money at the same time,  and that's                                                                   
     what this  does.  The bill  also saves people  money and                                                                   
     enhances   the   consumer  protection   system   without                                                                   
     impacting   the  budget,   and  I   think  that's   also                                                                   
     important.  We've  really tried to work to  come up with                                                                   
     a better  system that  doesn't impact  the budget.   The                                                                   
     provisions of [HB 385] are well tried and tested.                                                                          
                                                                                                                                
     The  provision  ...  that  currently  allows  plaintiffs                                                                   
     full [attorney]  fees if they  win their consumer  fraud                                                                   
     case, ...  that ... is  called privatizing the  attorney                                                                   
     general's function.   What it  does is, it says  we know                                                                   
     that  ...  the government  isn't  going  to be  able  to                                                                   
     stand up  and help people  when they've been  victimized                                                                   
     by  consumer fraud,  so let's  try and make  it so  that                                                                   
     they can  represent and  help themselves.   And so  five                                                                   
     years  ago we  enacted a  bill that  said plaintiffs  in                                                                   
     consumer  fraud  cases,  if   they  prove  they've  been                                                                   
     defrauded,  can  recover full  [attorney]  fees;  that's                                                                   
     the  only way they're  going to  find private  attorneys                                                                   
     to help them.                                                                                                              
                                                                                                                                
Number 1937                                                                                                                     
                                                                                                                                
MR. GARA:                                                                                                                       
                                                                                                                                
     But  there's still an  impediment.   And the  impediment                                                                   
     is that  when somebody walks  into an attorney's  office                                                                   
     and they say,  "Look, I've been defrauded by  a used car                                                                   
     dealer to the  tune of $800," the attorney's  advise has                                                                   
     to  be to  that person,  "You  know, we  can pursue  the                                                                   
     claim, it's  a really  good claim, but  let me  tell you                                                                   
     this:   If  we lose  the case,  you  might owe  $10,000;                                                                   
     $20,000;  $30,000; $40,000;  $50,000 in [attorney]  fees                                                                   
     to the other  side and there are many ways  you can lose                                                                   
     the  case."  That  other person  just walks  out of  the                                                                   
     office  and says,  "Well that's  an  indignity I'm  just                                                                   
     going  to have  to keep  to  myself."   And that's  what                                                                   
     happens  in these consumer  cases:   they're small,  and                                                                   
     people  are scared out  of going  to court to  vindicate                                                                   
     themselves  and  to  stand   up  against  an  injustice.                                                                   
     They're ...  scared out by the [attorney]  fee provision                                                                   
     in Rule 82.                                                                                                                
                                                                                                                                
     So what  we've done  in this  Section 1  of [HB 385]  is                                                                   
     ...  followed 100  years of  practice  from the  federal                                                                   
     civil  rights  arena.    It's  in  the  title  (indisc.)                                                                   
     that's  been there since  1964; it's  been in the  Civil                                                                   
     Rights  Act ...  since the  1800s.   And  it says  this:                                                                   
     "If you  win your  case, if you  prove that you've  been                                                                   
     wronged,  you do get  full [attorney]  fees, so you  can                                                                   
     go out  and find an attorney;  we're not going  to scare                                                                   
     you  out of court  by saying  if you  lose, you have  to                                                                   
     pay  [attorney]  fees,  except   ...  if  your  case  is                                                                   
     frivolous, you  will be penalized  - you'll have  to pay                                                                   
     full [attorney]  fees to  the other  side."  That's  the                                                                   
     system that  works under the civil rights  statutes, the                                                                   
     system  that works  under a  number of  sort of  states'                                                                   
     and federal  remedial statutes in areas just  like this,                                                                   
     and so this is a system that's worked for a long time.                                                                     
                                                                                                                                
Number 1880                                                                                                                     
                                                                                                                                
MR. GARA continued:                                                                                                             
                                                                                                                                
     It's a  system that I think  we need to enact here:   A,                                                                   
     in order to  stop scaring people out of  standing up for                                                                   
     their rights;  B, because we're never going  to give the                                                                   
     attorney  general's office  enough funding  so that  the                                                                   
     attorney  general's office  will represent consumers  in                                                                   
     all the  cases that are brought  over to their  office -                                                                   
     they just  can't do it  and we don't  have the  money to                                                                   
     do that.   So, if we're  going to have a  private system                                                                   
     that works, this is how we're going to have to do it.                                                                      
                                                                                                                                
     We  tried enacting  half  of the  bill  five years  ago,                                                                   
     which  was   to  just  give  full  [attorney]   fees  to                                                                   
     plaintiffs if  they won their cases.  But  the part that                                                                   
     ...  practitioners  in the  area  say is  still  scaring                                                                   
     people  out of standing  up for  themselves is the  part                                                                   
     that says  that, as an attorney,  you have to  tell your                                                                   
     client, "If  you take this  case and lose, even  if it's                                                                   
     a  good-faith  case,  you might  owe  $10,000;  $20,000;                                                                   
     $30,000;  $40,000 in  [attorney]  fee  penalties."   ...                                                                   
     The  system is  just  not working  very  well with  that                                                                   
     threat in  place, so I think  it's a fair  compromise to                                                                   
     do what  the federal  and state laws  in many areas  do,                                                                   
     which  is   only  impose   [attorney]  fees  against   a                                                                   
     plaintiff,  in these  kinds  of cases,  if  they file  a                                                                   
     frivolous  lawsuit,  and in  that  case they  should  be                                                                   
     penalized.                                                                                                                 
                                                                                                                                
     The  second part,  Section 2,  does this  -- we're in  a                                                                   
     time where we  don't have a lot of money for  things.  I                                                                   
     don't think  anybody would say that  preventing consumer                                                                   
     fraud is  a bad thing; I  don't think anybody  would say                                                                   
     that  having  a  consumer   protection  section  at  the                                                                   
     [Office  of  the  Attorney  General]  is  a  bad  thing.                                                                   
     Those are  good things that  Republicans think  are good                                                                   
     things,  Democrats  think  are  good  things,  everybody                                                                   
     thinks are  good things.  But  how are we going  to fund                                                                   
     a state  consumer protection  agency?   Well, it's  hard                                                                   
     in these  times and we  should do  what many laws  do in                                                                   
     other  areas,   which  is  when  the  state   pursues  a                                                                   
     consumer  fraud claim  and proves  consumer fraud,  they                                                                   
     should  be  able  to  recover   their  full  enforcement                                                                   
     costs.   And that's what Section  2 does.  It  makes the                                                                   
     state whole for their time.                                                                                                
                                                                                                                                
Number 1797                                                                                                                     
                                                                                                                                
MR. GARA:                                                                                                                       
                                                                                                                                
     ...  Where's the  money come  from?  The  money ends  up                                                                   
     coming  from  people who  commit  consumer fraud.    ...                                                                   
     What  better group  of  people are  there  out there  to                                                                   
     fund  a state consumer  protection  section?  So  that's                                                                   
     what Section 2  says:  that the state -  if it prevails,                                                                   
     if it  proves consumer fraud  - is entitled to  be fully                                                                   
     compensated  for its  time  and for  its  efforts.   And                                                                   
     then  what'll  happen  is  that money  will  go  into  a                                                                   
     special account,  and at the  end of the year  you'll be                                                                   
     able to see  how much money has been raised.   You don't                                                                   
     have  to  appropriate it  back  to  the [Office  of  the                                                                   
     Attorney  General],  but  we  do this  in  some  of  the                                                                   
     environmental cases  [and] we do this in  other areas of                                                                   
     law:   you create this special  account just so  you can                                                                   
     ...  see how well  the system  is working,  and you  can                                                                   
     appropriate  the money  anywhere you  want.  But  that's                                                                   
     what that new Section 3 does.                                                                                              
                                                                                                                                
     Places where  this Section  2 system is  in place  - the                                                                   
     federal  environmental  laws  that  have  been  amended,                                                                   
     even   under   what's   been   called   the   Republican                                                                   
     revolution   in  Congress   -  they   still  allow   the                                                                   
     government  to recover  full  [attorney]  fees in  those                                                                   
     cases.   In the  Clayton Act -  that's the federal  sort                                                                   
     of an  antitrust law -  that's what we  do:  we  let the                                                                   
     government  recover  full   [attorney]  fees  when  they                                                                   
     prove  their  cases.   ...  It  should be  no  different                                                                   
     here, and the  extra motivation we have here  is that we                                                                   
     don't have  a lot of money  in the state any more.   And                                                                   
     so if  we're going  to fund  government, we should  have                                                                   
     government  funded in  a way  that's  meaningful and  is                                                                   
     smart,  and I think  it's meaningful  and smart to  have                                                                   
     those  people who  commit consumer  fraud  pay for  this                                                                   
     part of our governmental function.                                                                                         
                                                                                                                                
     ... Representative  James made a  good point; ...  as an                                                                   
     attorney,  I told my  clients ...,  "You know, filing  a                                                                   
     lawsuit in  this state is  like Russian roulette  - it's                                                                   
     a crapshoot."   But one  of the things  that makes  it a                                                                   
     crapshoot  is this  Rule 82  ... that says  if you  lose                                                                   
     your case  you have to  pay the other side's  [attorney]                                                                   
     fees.   And so we  can stop it  from being a  crapshoot.                                                                   
     And when I  say Russian roulette, we have  an even worse                                                                   
     provision  on the books  right now  than that ...;  even                                                                   
     today, if  you win your lawsuit,  you might have  to pay                                                                   
     [attorney]  fees  to  the other  side  ...  [because  of                                                                   
     [Civil   Rule  68   of  the   Alaska   Rules  of   Civil                                                                   
     Procedure].  ...                                                                                                           
                                                                                                                                
MR. GARA concluded:                                                                                                             
                                                                                                                                
     The  thing  is, it  is  a crapshoot,  there  is  Russian                                                                   
     roulette,  and we're  trying  to stop  it  from being  a                                                                   
     crapshoot  and we're  trying  to sort  of minimize  this                                                                   
     Russian roulette  concept in  the law that keeps  people                                                                   
     from  standing up  for their  rights.   If  we don't  do                                                                   
     anything about  it, we're going to make sure  the people                                                                   
     who  make $20,000;  $30,000;  $40,000  a year  [get]  to                                                                   
     absorb the  cost of shoddy  business practices.   That's                                                                   
     not right.   I don't think we should ask  people to keep                                                                   
     bearing those  costs, especially people who live  on the                                                                   
     economic margins;  ... those  are ... really  the people                                                                   
     that  this  bill  helps.    ...  As  we've  watched  ...                                                                   
     [current law]  work, we've seen that there's  still some                                                                   
     somewhat  major  shortcomings,  and  through  experience                                                                   
     and through  what we've learned in the last  five years,                                                                   
     we've  determined  that  these are  the  two  provisions                                                                   
     that  would really  make ...  this  system work  without                                                                   
     costing the state any money.  ...                                                                                          
                                                                                                                                
Number 1570                                                                                                                     
                                                                                                                                
STEVE CONN,  Executive Director,  Alaska Public Interest  Research                                                              
Group (AkPIRG),  testified via  teleconference, and  remarked that                                                              
in  his experience,  change  does  not occur  in  consumer-justice                                                              
laws unless it is  [done in a] bipartisan [manner].   He mentioned                                                              
that  there  are two  barriers  for  the  consumer, and  that  the                                                              
second  one,   as  experienced   by  middle-class  consumers,   is                                                              
addressed by  HB 385.  The first  barrier, he noted, is  that most                                                              
consumers - 99 percent  - are too embarrassed by  being cheated to                                                              
speak out,  particularly  if they are  elderly, because  relatives                                                              
and friends  might take it as a  sign that they are  entering some                                                              
state of dementia.                                                                                                              
                                                                                                                                
MR. CONN, returning  to the second barrier, said  that neither the                                                              
rich  nor  the poor  need  to  worry about  penalties  for  filing                                                              
frivolous  lawsuits, because  the  poor are  "judgment-proof"  and                                                              
the  rich "have  got  deep  enough pockets."    He  said that  the                                                              
people who need  HB 385 "are people like you and  people like me,"                                                              
adding  that  he  defined  the  middle-class  as  those  who  have                                                              
something to  lose but can't  afford to lose  it.  He  opined that                                                              
HB 385 is needed  in order to secure some justice  for the middle-                                                              
class, should  they have  "the guts  enough" to go  to court.   He                                                              
remarked that  the toaster example  is an insult to  the consumers                                                              
that he has  met:  "people really  do suffer major hurts  that hit                                                              
them where  they live, that stop  them from feeding  their family,                                                              
[or] from  getting to  work; this is  serious business  if they're                                                              
going  to  spend  the  time  to   go  to  court  or  even  be  not                                                              
embarrassed enough to talk about their complaint."                                                                              
                                                                                                                                
MR. CONN said  that HB 385 speaks  to something that is  rooted in                                                              
bipartisanism; that  this legislature  has got a  great bipartisan                                                              
movement going  on several  fronts, in  several areas  of consumer                                                              
justice; that  he is  very positive about  this [issue];  and that                                                              
HB   385  emerged   from  the   consumer  roundtable   discussions                                                              
[organized] by  Representatives Dyson and  Croft.  With  regard to                                                              
setting aside  the money won  from judgments for  ongoing consumer                                                              
protection  as  is proposed  by  Section 2  of  HB  385, Mr.  Conn                                                              
commented that "in  olden days," the state "paid  consumer justice                                                              
as they went."   With regard to Section 1 of  HB 385, he commented                                                              
that if people are  willing to take the time and  trouble to go to                                                              
court to say  that they've been cheated, they  mean business, they                                                              
have something  to lose, and they  deserve the shield that  HB 385                                                              
could  provide.   He noted  that such  people are  also acting  on                                                              
behalf of the many  people who won't invest the time  and money or                                                              
who are too embarrassed to speak up.                                                                                            
                                                                                                                                
Number 1312                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES, after  relaying that  her understanding  of                                                              
HB 385  does not comport  with Mr.  Conn's explanation,  asked him                                                              
whether he  is claiming  that plaintiffs who  win are  not awarded                                                              
attorney fees, or  whether he is saying that  the problem revolves                                                              
around the fact that when plaintiffs lose "they have to pay."                                                                   
                                                                                                                                
MR. CONN said:                                                                                                                  
                                                                                                                                
     If  they had  a  sensational case  and  it's handled  by                                                                   
     themselves or  by a good  lawyer, they're going  to win.                                                                   
     But  we're  talking  about  cases  that  are  harder  to                                                                   
     prove.   They're small-money  damages to start  off with                                                                   
     -  so most  attorneys aren't  interested in  them -  and                                                                   
     they're  probably  going  to  be somewhat  back  on  the                                                                   
     statutory/civil  penalties  provided in  the  Act.   And                                                                   
     ...  they  give  it  their  best  shot,  but  they  lose                                                                   
     because,  as you  said earlier,  you don't  know if  you                                                                   
     are going to  win or lose.  But they're not  doing it to                                                                   
     play games  with the  opposition or  to play games  with                                                                   
     the courts;  they're doing  it because they're  outraged                                                                   
     - they're righteously outraged.                                                                                            
                                                                                                                                
REPRESENTATIVE JAMES responded:                                                                                                 
                                                                                                                                
     I have  known cases  of people  who have been  aggrieved                                                                   
     ...  and  they've gone  to  court  and they've  won  and                                                                   
     they're still  stressed out  because the experience  was                                                                   
     so  horrible.   And so  I think that  if we  were to  do                                                                   
     this, what  you're doing  is encouraging more  attorneys                                                                   
     to  convince  them  to  go   to  court.    And  I'm  not                                                                   
     convinced  that  that's  the  thing they  ought  to  do,                                                                   
     because  of  all the  other  kinds of  experiences  that                                                                   
     they can  have and  the net  results when they're  done:                                                                   
     they're still not whole when it's over.                                                                                    
                                                                                                                                
MR. CONN said  a sense of outrage  is satisfied in a  lot of ways.                                                              
Sometimes money will  never compensate, whether one  is the victim                                                              
of  a physical  crime or  a financial  crime;  however, he  noted,                                                              
what  he  has  experienced  is  that for  a  lot  of  people,  the                                                              
satisfaction of  making a crook  stand in the  light of day  has a                                                              
cathartic  effect.    He  also  remarked  that  people  are  often                                                              
emboldened by  the fact that others  have gone forward  with cases                                                              
involving  crimes   against  consumers.    He  opined   that  many                                                              
consumer  fraud  perpetrators  are  not amateurs,  they  are  real                                                              
criminals that commit fraud for a living.                                                                                       
                                                                                                                                
REPRESENTATIVE JAMES  said that her concern is that  it is not the                                                              
plaintiff who  receives the  real benefit  of winning  such cases,                                                              
it is the attorney.                                                                                                             
                                                                                                                                
Number 1088                                                                                                                     
                                                                                                                                
MR.  CONN  remarked   that  there  are  areas  of   the  law  that                                                              
attorneys "won't  touch with  a ten-foot  pole," such  as workers'                                                              
compensation  cases,   in  which  people  just  have   to  do  for                                                              
themselves.   He  mentioned  that consumer  protection  is not  an                                                              
area of  the law  that lends  itself to  "ambulance chasers,"  and                                                              
that  oftentimes  consumers just  need  a little  assistance  from                                                              
lawyers who  are honestly trying to  help and are not  just trying                                                              
to get rich, in order to put their cases forward.                                                                               
                                                                                                                                
REPRESENTATIVE   JAMES  remarked  that   with  [HB   385],  unlike                                                              
legislation  pertaining  to  workers'   compensation,  "the  other                                                              
issues are too broad ... and I'm just not willing to go there."                                                                 
                                                                                                                                
CHAIR  ROKEBERG  asked  Mr.  Conn  whether  he  is  aware  of  any                                                              
instances  occurring in  the last  five years  that would  justify                                                              
"this remedial [legislation]."                                                                                                  
                                                                                                                                
MR. CONN  said yes,  adding that  he has people  call him  all the                                                              
time  who are  angry and  in despair  and who  have tried  without                                                              
success to  get help from  attorneys regarding contractors,  house                                                              
repairers, and roofing specialists, for example.                                                                                
                                                                                                                                
CHAIR ROKEBERG mentioned  that the limit [for]  small claims court                                                              
has been  raised to $10,000; thus,  he surmised, Mr. Conn  must be                                                              
referring to cases in excess of that amount.                                                                                    
                                                                                                                                
MR. CONN indicated that he was not.                                                                                             
                                                                                                                                
CHAIR  ROKEBERG asked,  then,  why folks  didn't  just go  through                                                              
small  claims  court  to  get satisfaction,  since  that  was  the                                                              
proper venue.                                                                                                                   
                                                                                                                                
MR. CONN  argued that  the problem  lies with  the fact  that "the                                                              
other  side  can still  bring  their  attorney into  small  claims                                                              
court" and,  through that attorney,  can "remove that case  out of                                                              
that court."   He noted  that if small  claims court  were limited                                                              
only  to  people   representing  themselves,  "we   might  have  a                                                              
different story," but such is not the state of the law.                                                                         
                                                                                                                                
CHAIR  ROKEBERG  mentioned  that   he  would  like  to  hear  some                                                              
specific cases for which current law is not working.                                                                            
                                                                                                                                
Number 0867                                                                                                                     
                                                                                                                                
MARIE DARLIN, AARP,  mentioned that the AARP was  very involved in                                                              
trying to get  responsibility for consumer protection  placed back                                                              
into the  [Office of the Attorney  General], and was very  glad to                                                              
see support  for doing so because  the AARP had received  a lot of                                                              
complaints  from members and  other folks  asking what  they could                                                              
do in  situations  of consumer  fraud, and  so it  was nice  to be                                                              
able to  finally say, "Call  the attorney general's  office; there                                                              
is somebody  there who  will at  least speak to  you and  give you                                                              
some  advice and  perhaps  help  you out."    In conjunction  with                                                              
that, she said,  the AARP has written  a letter of support  for HB
385, with  the idea  that it will  take [consumer protection]  one                                                              
step further.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JAMES  stated  that  she  certainly  supports  the                                                              
consumer  protection   agency  to  a  greater  extent   than  [the                                                              
legislature]  has  currently  done,  because  that  is  where  the                                                              
responsibility belongs,  since that is where the  expertise is; it                                                              
would be  able to  settle such  cases more  quickly and  with less                                                              
trauma for the [plaintiffs].                                                                                                    
                                                                                                                                
MS. DARLIN  commented:  "But again  we come back to the  fact that                                                              
the rich and  the poor maybe don't  have to worry as  much as some                                                              
of the middle-income-class  people and particularly  some of those                                                              
who may not go into small claims court."                                                                                        
                                                                                                                                
CHAIR ROKEBERG asked  Ms. Darlin whether she knew  of anybody that                                                              
wanted to file a  lawsuit but didn't because he/she  was afraid of                                                              
losing attorney fees.                                                                                                           
                                                                                                                                
MS. DARLIN  said no, she  is not aware  of any specific  instances                                                              
at this  time, but  suggested perhaps that  is because  "there has                                                              
been another place for them to go" to receive help.                                                                             
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  suggested  that perhaps  that  question                                                              
should also be asked of Mr. Conn and Mr. Gara.                                                                                  
                                                                                                                                
CHAIR ROKEBERG  indicated that he  would be doing so  after others                                                              
had a chance to testify.                                                                                                        
                                                                                                                                
Number 0666                                                                                                                     
                                                                                                                                
PAM LaBOLLE,  President,  Alaska State Chamber  of Commerce  ("the                                                              
Chamber"),  remarked  that  the  vast majority  of  businesses  in                                                              
Alaska are small  businesses, and, thus, the vast  majority of the                                                              
Chamber's  members are  small business  owners.   She opined  that                                                              
the premise  upon which HB  385 is based  is that all  business is                                                              
big and  thus can  afford to  absorb the  costs of  "this sort  of                                                              
thing."   She  remarked  that  things  have already  been  changed                                                              
greatly  by "allowing  Rule 82  to not  apply ...  if you are  ...                                                              
found guilty:  you're  going to pay all the attorney  fees."  With                                                              
HB  385, not  only  will  [defendants] have  to  pay  if they  are                                                              
guilty, but  they will  also have  to pay all  of their  own costs                                                              
even  if they  are innocent.   "This  is  just taking  it way  too                                                              
far," she opined.                                                                                                               
                                                                                                                                
MS.  LaBOLLE remarked  that  small business  is  what enables  the                                                              
Alaskan business  world to operate, and that  these are businesses                                                              
which might only  have 5-10 employees.  She said  that it might be                                                              
the  corner  grocer  who's  hauled  into  court  because  somebody                                                              
thinks  the vegetable  scale is  rigged.  It's  not big  business,                                                              
it's not some giant  company like the Proctor &  Gamble Company or                                                              
the General Electric  Company; it's the small companies  in Alaska                                                              
that are going to  be affected by HB 385.   However, regardless of                                                              
whether  it is  small business  or big  business, business  people                                                              
deserve  equal  protection  under  the  law; they  should  not  be                                                              
treated so differently, as is proposed by HB 385.                                                                               
                                                                                                                                
CHAIR ROKEBERG  asked Ms.  LaBolle how  many small business  would                                                              
go  out of  business  if  they were  "slapped  with  a $20,000  or                                                              
$30,000 legal bill."                                                                                                            
                                                                                                                                
MS. LaBOLLE  surmised  that such  costs would  cause a great  many                                                              
small business  to consider  going out of  business, even  if they                                                              
were found innocent.                                                                                                            
                                                                                                                                
REPRESENTATIVE  BERKOWITZ asked  Ms. LaBolle  how she feels  about                                                              
section 2 of HB 385.                                                                                                            
                                                                                                                                
MS. LaBOLLE  said that  her organization does  not like  Section 2                                                              
either.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  noted that  Section  2 merely  provides                                                              
that if the state wins, the state gets full attorney fees.                                                                      
                                                                                                                                
MS. LaBOLLE asked how that differs from current practice.                                                                       
                                                                                                                                
CHAIR  ROKEBERG  posited  that   currently,  the  state,  too,  is                                                              
subject to  Rule 82,  which provides  that prevailing  parties are                                                              
awarded attorney fees according to a scale.                                                                                     
                                                                                                                                
Number 0337                                                                                                                     
                                                                                                                                
CLYDE  (ED)   SNIFFIN,  JR.;  Assistant  Attorney   General;  Fair                                                              
Business   Practices   Section;    Civil   Division   (Anchorage);                                                              
Department   of   Law   (DOL),   testified   via   teleconference,                                                              
confirming   that  currently,   the  state   is  subject   to  the                                                              
limitations  of Rule  82, which  provides that  attorney fees  can                                                              
only be recovered  according to a  specific scale.  He  noted that                                                              
this scale  calls for  a substantial  reduction  in the amount  of                                                              
attorney fees that the state can collect.                                                                                       
                                                                                                                                
REPRESENTATIVE JAMES  pointed out that a big part  of Section 2 is                                                              
the establishment of the separate fund.                                                                                         
                                                                                                                                
CHAIR ROKEBERG opined that there were other problems as well.                                                                   
                                                                                                                                
MS. LaBOLLE indicated  that even having to pay  only 20-30 percent                                                              
of a large legal  bill would still be a huge  financial burden for                                                              
most small  businesses.   In conclusion, she  said that  she would                                                              
like business people to receive equal protection under the law.                                                                 
                                                                                                                                
CHAIR  ROKEBERG mentioned  that  according to  his  reading of  HB
385,  the  separate  fund  has the  potential  to  grow  to  "$680                                                              
million based on the tobacco settlement."                                                                                       
                                                                                                                                
MR.  SNIFFIN  pointed out  that  only  the attorney  fees  portion                                                              
could  have gone into  the separate  fund proposed  by Section  2,                                                              
not the entire settlement.                                                                                                      
                                                                                                                                
TAPE 02-36, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIR ROKEBERG mentioned  he recalled a special  payment for those                                                              
costs that amounted to about $15 million.                                                                                       
                                                                                                                                
MR. SNIFFIN commented  that the DOL supports the  concept embodied                                                              
in  Section  1  of  providing  more  incentive  to  consumers  who                                                              
wouldn't otherwise  bring some  of these  types of small  lawsuits                                                              
against  businesses.   In response  to testimony  from the  Alaska                                                              
State  Chamber of  Commerce representative,  he  pointed out  that                                                              
the  provision of  Section  1 could  benefit  small businesses  as                                                              
well  in that  if larger  companies were  victimizing them,  they,                                                              
too,  might  be  more  inclined   to  pursue  litigation.    Small                                                              
businesses  are  oftentimes the  subject  of predatory  action  by                                                              
other  companies; small  businesses  get scammed  just like  other                                                              
people, he added.                                                                                                               
                                                                                                                                
MR. SNIFFIN  said that  the DOL  primarily supports  Section  2 in                                                              
that  there  is no  provision,  currently,  that would  allow  the                                                              
attorney general  to recover its full  fees.  He remarked  that in                                                              
a lot  of the bigger,  multistate cases  in which the  DOL becomes                                                              
involved, [Section  2] could be  an important settlement  tool for                                                              
the state.  Currently,  because the state cannot make  a claim for                                                              
full attorney  fees, Alaska is not  in as favorable a  position as                                                              
other states  when settling with  large, national companies;  as a                                                              
result, Alaska  is sometimes forced  to negotiate a  lesser amount                                                              
than other states.   He also noted that adopting  a provision such                                                              
as  Section 2  would bring  Alaska  in line  with a  lot of  other                                                              
federal  and state  laws across  the  country that  allow for  the                                                              
full recovery of attorney fees in prevailing situations.                                                                        
                                                                                                                                
MR. SNIFFIN, in  response to questions posed of  other testifiers,                                                              
said  that  the   DOL  has  not  kept  any   statistics  regarding                                                              
consumers who decide  not to go forward with a  lawsuit because of                                                              
the fear  of having  to pay  the opposition's  attorney fees.   He                                                              
said  that a  lot of  consumers come  to his  office seeking  help                                                              
because they can't  afford a lawyer, and he opined  that Section 1                                                              
would  give such people  an opportunity  to pursue  the action  on                                                              
their own.                                                                                                                      
                                                                                                                                
CHAIR ROKEBERG  asked whether  Section 2  would apply  to attorney                                                              
fees from class action lawsuits that the state engages in.                                                                      
                                                                                                                                
MR.  SNIFFIN said  it would  give  the state  more authority  when                                                              
negotiating in such suits.                                                                                                      
                                                                                                                                
REPRESENTATIVE  BERKOWITZ, referring  to  page 1,  line 13,  asked                                                              
Mr. Sniffin for his opinion regarding changing "shall" to "may".                                                                
                                                                                                                                
MR. SNIFFIN said that such a change would be fine with the DOL.                                                                 
                                                                                                                                
Number 0480                                                                                                                     
                                                                                                                                
CHAIR  ROKEBERG  asked  Mr.  Gara  and Mr.  Conn  to  provide  the                                                              
committee with  examples of cases  in which people wanted  to file                                                              
a lawsuit but  didn't because they were afraid  of losing attorney                                                              
fees.                                                                                                                           
                                                                                                                                
MR. GARA said that  he could provide two examples  in which people                                                              
decided  not to  pursue  very valid  consumer  claims:   one  case                                                              
involved an  elderly woman,  and the  other case involved  someone                                                              
who was defrauded  by an insurance  company.  He said  he would be                                                              
happy  to send  the committee  written  testimony regarding  those                                                              
examples.                                                                                                                       
                                                                                                                                
MR. CONN, also in  response to testimony made by  the Alaska State                                                              
Chamber  of Commerce  representative,  said that  it  is not  just                                                              
middleclass retired  people and elderly people who  contact AkPIRG                                                              
for help;  he also  hears from  small entrepreneurs  all the  time                                                              
because they are  getting abused by bigger businesses  like banks,                                                              
insurance  companies,  or  suppliers.     Thus,  contrary  to  the                                                              
Chamber's  testimony,  small  businesses  would also  be  able  to                                                              
benefit from HB 385, he remarked.                                                                                               
                                                                                                                                
CHAIR  ROKEBERG  asked Mr.  Conn  whether  he is  suggesting  that                                                              
commercial  operators  should  take   advantage  of  [HB  385]  in                                                              
commercial transactions.                                                                                                        
                                                                                                                                
MR. CONN  said he  was not suggesting  that.  He  said that  he is                                                              
talking   about   consumer   fraud   perpetrated   against   small                                                              
businesses, which are  also consumers.  For example,  the owner of                                                              
a delivery  service who  gets cheated  by a  big car dealer  could                                                              
have  his/her business  destroyed.   He  noted that  the idea  "of                                                              
putting  small  businesses  on  one side  [and]  setting  them  up                                                              
against consumers is completely nonsensical."                                                                                   
                                                                                                                                
CHAIR  ROKEBERG remarked  that he  has  not heard  from any  small                                                              
business owners who were clamoring for relief.                                                                                  
                                                                                                                                
REPRESENTATIVE   BERKOWITZ  pointed   out  that   Mr.  Conn   just                                                              
mentioned examples of such.                                                                                                     
                                                                                                                                
MR. CONN  confirmed that, noting  that unlike the  Better Business                                                              
Bureau, AkPIRG does  not "process cases"; rather,  he simply tries                                                              
to provide  additional information,  resources, and  encouragement                                                              
to people,  including small business  owners, who call  AkPIRG for                                                              
help.                                                                                                                           
                                                                                                                                
CHAIR ROKEBERG announced that HB 385 would be held over.                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 0693                                                                                                                     
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Judiciary Standing Committee meeting was adjourned at 3:05 p.m.                                                                 

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