Legislature(2003 - 2004)

05/07/2003 01:40 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                          May 7, 2003                                                                                           
                           1:40 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Lesil McGuire, Chair                                                                                             
Representative Tom Anderson, Vice Chair                                                                                         
Representative Jim Holm                                                                                                         
Representative Dan Ogg                                                                                                          
Representative Ralph Samuels                                                                                                    
Representative Les Gara                                                                                                         
Representative Max Gruenberg                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 26                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to  and  limiting appropriations  from  and  inflation-                                                               
proofing the Alaska  permanent fund by establishing  a percent of                                                               
market value spending limit.                                                                                                    
                                                                                                                                
     - MOVED CSHJR 26(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 145                                                                                                              
"An Act  relating to  public interest  litigants and  to attorney                                                               
fees; and amending Rule 82, Alaska Rules of Civil Procedure."                                                                   
                                                                                                                                
     - MOVED CSHB 145(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 244                                                                                                              
"An Act relating  to the Code of Criminal  Procedure; relating to                                                               
defenses,  affirmative defenses,  and  justifications to  certain                                                               
criminal  acts; relating  to rights  of  prisoners after  arrest;                                                               
relating  to  discovery,  immunity from  prosecution,  notice  of                                                               
defenses,  admissibility  of  certain   evidence,  and  right  to                                                               
representation in  criminal proceedings; relating  to sentencing,                                                               
probation,  and discretionary  parole; amending  Rule 16,  Alaska                                                               
Rules of  Criminal Procedure, and  Rules 404, 412, 609,  and 803,                                                               
Alaska Rules of Evidence; and providing for an effective date."                                                                 
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 20                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
repealing the prohibition on dedicated funds.                                                                                   
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 4                                                                                                    
Proposing  an  amendment to  the  Constitution  of the  State  of                                                               
Alaska relating to the duration of a regular session.                                                                           
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE BILL NO. 157                                                                                                              
"An  Act  eliminating  the   Alaska  Public  Offices  Commission;                                                               
transferring  campaign, public  official, and  lobbying financial                                                               
disclosure record-keeping  duties to  the division  of elections;                                                               
relating   to  reports,   summaries,   and  documents   regarding                                                               
campaign,  public official,  and  lobbying financial  disclosure;                                                               
providing  for  enforcement  by the  Department  of  Law;  making                                                               
conforming statutory  amendments; and providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - BILL HEARING POSTPONED                                                                                                   
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 9                                                                                                    
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating to an appropriation limit and a spending limit.                                                                        
                                                                                                                                
     - BILL HEARING POSTPONED                                                                                                   
                                                                                                                                
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 41                                                                                       
"An Act relating  to medical care and crimes  relating to medical                                                               
care, including medical  care and crimes relating  to the medical                                                               
assistance program."                                                                                                            
                                                                                                                                
     - BILL HEARING POSTPONED TO 5/10/03                                                                                        
                                                                                                                                
CS FOR SENATE JOINT RESOLUTION NO. 5(STA)                                                                                       
Urging the  President of  the United States  and the  Congress to                                                               
act  to  ensure  that  federal agencies  do  not  retain  records                                                               
relating  to lawful  purchase or  ownership of  firearms gathered                                                               
through the Brady Handgun Bill instant check system.                                                                            
                                                                                                                                
     - BILL HEARING POSTPONED TO 5/10/03                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HJR 26                                                                                                                  
SHORT TITLE:CONST. AM: PF APPROPS/INFLATION-PROOFING                                                                            
SPONSOR(S): RLS BY REQUEST OF LEG BUDGET & AUDIT BY REQUEST                                                                     
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/17/03     1025       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/17/03     1025       (H)        W&M, JUD, FIN                                                                                
04/22/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
04/22/03                (H)        Heard & Held                                                                                 
                                   MINUTE(W&M)                                                                                  
04/24/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
04/24/03                (H)        Heard & Held                                                                                 
                                   MINUTE(W&M)                                                                                  
04/25/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
04/25/03                (H)        Heard & Held                                                                                 
                                   MINUTE(W&M)                                                                                  
04/29/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
04/29/03                (H)        Heard & Held -- Location                                                                     
                                   Change --                                                                                    
                                   MINUTE(W&M)                                                                                  
04/30/03                (H)        W&M AT 8:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
04/30/03                (H)        Heard & Held                                                                                 
                                   MINUTE(W&M)                                                                                  
05/02/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
                                   519                                                                                          
05/02/03                (H)        Moved CSHJR 26(W&M) Out of                                                                   
                                   Committee                                                                                    
                                   MINUTE(W&M)                                                                                  
05/02/03     1272       (H)        W&M RPT CS(W&M) NT 5DP 1DNP                                                                  
                                   1NR                                                                                          
05/02/03     1272       (H)        DP: HEINZE, MOSES, WILSON,                                                                   
                                   HAWKER,                                                                                      
05/02/03     1272       (H)        WHITAKER; DNP: KOHRING; NR:                                                                  
                                   GRUENBERG                                                                                    
05/02/03     1273       (H)        FN1: (GOV)                                                                                   
05/02/03     1273       (H)        FN2: ZERO(REV)                                                                               
05/06/03                (H)        JUD AT 5:30 PM CAPITOL 120                                                                   
05/06/03                (H)        -- Meeting Canceled --                                                                       
05/07/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
                                                                                                                                
BILL: HB 145                                                                                                                  
SHORT TITLE:ATTY FEES: PUBLIC INTEREST LITIGANTS                                                                                
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/03/03     0359       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/03/03     0359       (H)        JUD, FIN                                                                                     
03/03/03     0359       (H)        FN1: ZERO(LAW)                                                                               
03/03/03     0359       (H)        FN2: INDETERMINATE(ADM)                                                                      
03/03/03     0359       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
04/25/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
04/25/03                (H)        Meeting Postponed to April 28                                                                
04/28/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
04/28/03                (H)        Heard & Held                                                                                 
                                   MINUTE(JUD)                                                                                  
05/02/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
05/02/03                (H)        Bill Hearing Postponed to 5/5                                                                
05/05/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
05/05/03                (H)        <Bill Hearing Postponed>                                                                     
05/06/03                (H)        JUD AT 5:30 PM CAPITOL 120                                                                   
05/06/03                (H)        -- Meeting Canceled --                                                                       
05/07/03                (H)        JUD AT 1:00 PM CAPITOL 120                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ROBERT D. STORER, Executive Director                                                                                            
Alaska Permanent Fund Corporation (APFC)                                                                                        
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented  HJR 26,  which was  sponsored by                                                               
the  House  Rules Standing  Committee  by  request of  the  Joint                                                               
Committee  on  Legislative  Budget  and  Audit  by  request,  and                                                               
responded to questions.                                                                                                         
                                                                                                                                
BOB BARTHOLOMEW, Chief Operating Officer                                                                                        
Alaska Permanent Fund Corporation (APFC)                                                                                        
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Assisted with the presentation of HJR 26                                                                   
and responded to questions.                                                                                                     
                                                                                                                                
LAURIE CHURCHILL                                                                                                                
Nikiski, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HJR 26.                                                                         
                                                                                                                                
CRAIG TILLERY, Assistant Attorney General                                                                                       
Environmental Section                                                                                                           
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 145, responded to                                                                  
questions on behalf of the administration.                                                                                      
                                                                                                                                
BENJAMIN BROWN                                                                                                                  
Legislative Assistant                                                                                                           
Alaska State Chamber of Commerce (ASCC)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 145 and                                                                         
responded to questions.                                                                                                         
                                                                                                                                
DORNE HAWXHURST                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  As a former executive director of Cordova                                                                  
District Fishermen United, testified in opposition to HB 145.                                                                   
                                                                                                                                
ALLEN JOSEPH                                                                                                                    
Association of Village Council Presidents (AVCP)                                                                                
Bethel, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 145 and                                                                      
responded to questions.                                                                                                         
                                                                                                                                
PAUL LAVERTY                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 145.                                                                         
                                                                                                                                
RICH HEIG, General Manager                                                                                                      
Greens Creek Mining Company;                                                                                                    
President                                                                                                                       
Council of Alaska Producers                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 145 and                                                                         
responded to questions.                                                                                                         
                                                                                                                                
ROBERT B. BRIGGS, Staff Attorney                                                                                                
Disability Law Center of Alaska, Inc.                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During discussion of HB 145, provided                                                                      
comments on Version D and responded to questions.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-52, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  LESIL   McGUIRE  called   the  House   Judiciary  Standing                                                             
Committee  meeting  to  order  at   1:40  p.m.    Representatives                                                               
McGuire, Anderson, Ogg,  and Samuels were present at  the call to                                                               
order.  Representatives Holm, Gara,  and Gruenberg arrived as the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
HJR 26 - CONST. AM: PF APPROPS/INFLATION-PROOFING                                                                             
                                                                                                                                
[Contains brief mention of SJR 19 and HJR 3.]                                                                                   
                                                                                                                                
Number 0048                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that the  first order of  business would                                                               
be HOUSE  JOINT RESOLUTION  NO. 26,  Proposing amendments  to the                                                               
Constitution  of the  State of  Alaska relating  to and  limiting                                                               
appropriations from  and inflation-proofing the  Alaska permanent                                                               
fund by  establishing a percent  of market value  spending limit.                                                               
[Before the committee was CSHJR 26(W&M).]                                                                                       
                                                                                                                                
Number 0075                                                                                                                     
                                                                                                                                
ROBERT  D.  STORER,  Executive Director,  Alaska  Permanent  Fund                                                               
Corporation (APFC),  Department of Revenue (DOR),  explained that                                                               
after  years of  study, the  proposed constitutional  amendment -                                                               
HJR  26  -  has  been  requested by  the  Alaska  Permanent  Fund                                                               
Corporation  Board  of  Trustees  ("the Board")  to  ensure  that                                                               
inflation-proofing is  in the Alaska  State Constitution  so that                                                               
all  generations   are  treated  equally.     He  indicated  that                                                               
inflation-proofing  the Alaska  permanent fund  ("the fund")  has                                                               
been a key issue for the  Board since its inception over 20 years                                                               
ago.  He went on to say:                                                                                                        
                                                                                                                                
     The way we propose  to address inflation-proofing is by                                                                    
     limiting  the amount  that can  be appropriated  in any                                                                    
     given  year to  no more  than 5  percent of  the moving                                                                    
     average  of  the fund.    We  call that  "[percent]  of                                                                    
     market value" or "POMV."   And what we are proposing is                                                                    
     [that]  that limit  be based  on  the five-year  moving                                                                    
     average of the fund.                                                                                                       
                                                                                                                                
MR. STORER  indicated that he  next wished  to speak to  five key                                                               
differences between  [POMV] and  the status  quo, and  that these                                                               
differences have been outlined in a document provided in                                                                        
members' packets.  He said:                                                                                                     
                                                                                                                                
     The  [percent] of  market value,  as  I noted  earlier,                                                                    
     offers  constitutional   inflation-proofing  protection                                                                    
     for  the entire  fund.   The status  quo on  inflation-                                                                    
     proofing is  by statute; it comes  after the [permanent                                                                    
     fund  dividend  (PFD)]   and  it  inflation-proofs  the                                                                    
     principal only.   To date,  the legislature  has always                                                                    
     had the  ability and has chosen  to inflation-proof the                                                                    
     fund,  but  that's  not necessarily  the  case  in  the                                                                    
     future.    We're  not  predicting  it;  we  just  think                                                                    
     memorializing it in the  [Alaska State] Constitution is                                                                    
     a very important issue.                                                                                                    
                                                                                                                                
     The  second item  is ...,  as I  noted earlier,  it's a                                                                    
     spending limit:   no more  than 5 percent of  the five-                                                                    
     year moving average  of the fund.  By  ... limiting the                                                                    
     availability of  only taking the  real income -  or the                                                                    
     income  in excess  of inflation  -  the residual  stays                                                                    
     with  the fund,  and  that's  how you  inflation-proof:                                                                    
     you're  not taking  all of  the income,  only the  real                                                                    
     income - or  the income in excess of inflation.   As it                                                                    
     stands  today,  the  status quo,  the  entire  earnings                                                                    
     reserve may be appropriated.                                                                                               
                                                                                                                                
Number 0321                                                                                                                     
                                                                                                                                
     And I can  give you examples where, over  the last four                                                                    
     years, up to 25 percent  of the fund was represented by                                                                    
     the earnings  reserve, so one could  take - appropriate                                                                    
     - 25 percent of the fund  in the heavy days of the bull                                                                    
     market.  Or there's been  a couple [of] times this year                                                                    
     in the,  hopefully, ...  late stages  of a  bear market                                                                    
     where  nothing  was available.    So  think about  that                                                                    
     volatility:   you can appropriate  25 percent  or zero,                                                                    
     depending on what happens.  That's how it now stands.                                                                      
                                                                                                                                
     Markets  are always  volatile.   You talk  about during                                                                    
     volatile markets - and I've  been doing this for a long                                                                    
     time and  I haven't  seen it yet  where there  wasn't a                                                                    
     volatile  market -  it's a  magnitude issue,  and we've                                                                    
     been in ... very volatile  markets.  The POMV approach,                                                                    
     or  what  we're  suggesting, actually  creates  greater                                                                    
     stability than  the current methodology.   We  have had                                                                    
     times where the dividend alone  has been in excess of 5                                                                    
     percent  or,  over  the  next few  years,  it'll  be  3                                                                    
     percent  or potentially  zero.   As I  noted yesterday,                                                                    
     there's still  a 10-percent chance that  there could be                                                                    
     no dividend  [from] the permanent  fund this year.   So                                                                    
     you  get greater  stability and  greater predictability                                                                    
     by doing this methodology.                                                                                                 
                                                                                                                                
MR. STORER continued:                                                                                                           
                                                                                                                                
     Item four. ... When the  permanent fund was created 26-                                                                    
     27 years ago,  it was a world of bonds  only, and bonds                                                                    
     are  very stable;  you buy  them for  income producing,                                                                    
     you  get  the interest  payment  every  year.   And  so                                                                    
     basing  your methodology,  as we  do  now, on  realized                                                                    
     income or the  realized cash flow of  the fund probably                                                                    
     made a lot  of sense.  But that was  a different world.                                                                    
     The fund  currently is [composed]  of about  50 percent                                                                    
     in the equity  markets; ... you buy  more volatility on                                                                    
     a year-to-year [basis],  but you earn a  higher rate of                                                                    
     return by  accepting that volatility.   And so  ... the                                                                    
     current methodology  did make  sense 26 years  ago, but                                                                    
     we think less so right now.                                                                                                
                                                                                                                                
Number 0510                                                                                                                     
                                                                                                                                
     We've spoken  a lot about  why 5 percent;  we've stated                                                                    
     that we  believe the limit,  if you will, of  5 percent                                                                    
     is on  the high end  of doable.   It doesn't  mean that                                                                    
     one has to  appropriate all the 5 percent  in any given                                                                    
     year, but we  want to limit [it] up to  5 percent.  But                                                                    
     we've  looked at  76 years  of data;  we know  that our                                                                    
     asset  allocation and  our statutes  will  allow us  to                                                                    
     achieve, we  believe, a 5  percent real rate  of return                                                                    
     over  time.   We're  very  comfortable  in making  that                                                                    
     statement.     So,  it's  consistent  with   our  asset                                                                    
     allocation and the long-term  philosophy of a permanent                                                                    
     fund.                                                                                                                      
                                                                                                                                
     That  stability really  goes  to  predictability.   And                                                                    
     there is  greater stability  in the  payout methodology                                                                    
     of  using  the moving  average  of  a fund  versus  the                                                                    
     current one.   Year to year  you don't know -  we don't                                                                    
     know -  how much would  be available until ...  the end                                                                    
     of  the day  [on] June  30th.   But if  you accept  our                                                                    
     methodology   as  appropriate,   you  will   have  less                                                                    
     volatility  in  the  payout  and  you  will  know  with                                                                    
     precision what is  available in any given  year.  That,                                                                    
     Madame Chair,  is very briefly  why we think  moving to                                                                    
     the   constitutional   amendment,   memorializing   the                                                                    
     spending limit, is appropriate.                                                                                            
                                                                                                                                
Number 0616                                                                                                                     
                                                                                                                                
BOB BARTHOLOMEW,  Chief Operating Officer, Alaska  Permanent Fund                                                               
Corporation   (APFC),  Department   of   Revenue  (DOR),   turned                                                               
attention  to CSHJR  26(W&M), and  noted that  the House  Special                                                               
Committee on  Ways and  Means, along  with Legislative  Legal and                                                               
Research  Services,   outside  counsel   to  the  APFC,   and  [a                                                               
representative  from] the  attorney general's  office, spent  4-5                                                               
hours working  on the technical  aspects of the  bill's language.                                                               
Therefore, the resulting  language in CSHJR 26(W&M)  was what all                                                               
parties  involved felt  was the  best way  to move  forward.   He                                                               
offered:                                                                                                                        
                                                                                                                                
     In  the  title,  it's  really just  trying  to  make  a                                                                    
     statement of ... why we're  amending the [Alaska State]                                                                    
     Constitution and that [we] basically  want to limit the                                                                    
     appropriations, on  a fiscal-year basis, that  can come                                                                    
     out  of  the permanent  fund.    And the  reason  we're                                                                    
     limiting  the  appropriations  is to  assure  the  real                                                                    
     value of  the fund grows  over time and that  all we're                                                                    
     spending  is the  value  in excess  of  inflation on  a                                                                    
     year-to-year basis so you protect it.                                                                                      
                                                                                                                                
     On  page 1,  line 10,  is  the first  amendment to  the                                                                    
     [Alaska State] constitution.  And  what that's doing is                                                                    
     just  referring to  a new  [subsection] (b)  that we're                                                                    
     going to  add to the  constitution ....  [On]  Line 11,                                                                    
     we're   deleting   the   word  "principal"   from   the                                                                    
     constitution.  And that's been  something that's been a                                                                    
     longstanding --  that people  have understood  that the                                                                    
     permanent fund,  the principal, could not  be spent and                                                                    
     the income could.  The  reason the trustees ... propose                                                                    
     removing  that, and  that  came after  quite  a lot  of                                                                    
     debate  at  the  board  meetings,   is  that  the  word                                                                    
     "principal" -- we believe you  can protect the fund, as                                                                    
     explained on page 2, by the spending limit.                                                                                
                                                                                                                                
     And  the benefit  of removing  the word  "principal" is                                                                    
     basically a  policy decision  of balancing  the benefit                                                                    
     of  assuring that  each  year, there's  going  to be  a                                                                    
     distribution, versus  the risk  that in the  short term                                                                    
     you might  dip into the fund  a little bit if  you have                                                                    
     ... down  years of  income.  So  it's a  balancing, and                                                                    
     they  believed  it's  in  the   best  interest  of  the                                                                    
     permanent  fund, and  the  investment  strategy, if  we                                                                    
     know, on  a year-to-year  basis, how  much is  going to                                                                    
     come  out  of  the  fund  and  that  it's  limited  and                                                                    
     predictable.   Then that helps their  investments; they                                                                    
     know  what to  have  invested, they  know when  they're                                                                    
     going to  have to raise  money ... for the  dividend or                                                                    
     for general government.  So  that's a significant issue                                                                    
     that's had a lot of debate.                                                                                                
                                                                                                                                
Number 0803                                                                                                                     
                                                                                                                                
MR. BARTHOLOMEW continued:                                                                                                      
                                                                                                                                
     And  then  on  lines  13 and  14,  we're  deleting  the                                                                    
     language  from  the  [Alaska State]  Constitution  that                                                                    
     says all income from the  permanent fund will go to the                                                                    
     general  fund except  [as] provided  by law.   And  the                                                                    
     legislature,  since 1982,  has taken  advantage of  the                                                                    
     "provided  by  law",  and  they've  directed  that  all                                                                    
     earnings  would  go  to the  earnings  reserve  in  the                                                                    
     permanent fund.   By deleting  the two  sentences, what                                                                    
     in  effect   happens  is,  all  income   stays  in  the                                                                    
     permanent    fund,   subject    to   the    5   percent                                                                    
     appropriation.   So  ... it's  no  longer necessary  to                                                                    
     direct the income.                                                                                                         
                                                                                                                                
     On page 2  of the resolution, starting on line  2, is a                                                                    
     fairly long sentence  that does two things.   It states                                                                    
     how we intend  to protect the permanent fund  - ... the                                                                    
     goal is to protect the real  value over time - and that                                                                    
     it's  going to  be limited  to a  ... 5-percent  annual                                                                    
     appropriation of  the five-year  average.  But  lines 5                                                                    
     and 6 are a little hard  to read at first go because it                                                                    
     talks  about  [that]  we're going  to  use  the  market                                                                    
     values  on June  30th for  the  first five  of the  six                                                                    
     fiscal years preceding the year  that you want to spend                                                                    
     the money.                                                                                                                 
                                                                                                                                
     And ... that language is in  there ... so that when the                                                                    
     legislature [comes]  into session  in January --  so an                                                                    
     example  this  year:   you've  come  into town,  you're                                                                    
     working  on  the  [fiscal  year  (FY)]  04  budget;  by                                                                    
     looking back an extra year,  it allows you to know [in]                                                                    
     January  exactly what's  available  from the  permanent                                                                    
     fund based on  the spending limit.  So  you'll know, as                                                                    
     soon as [you] start working  on the budget, how much is                                                                    
     available for either  dividends or government purposes,                                                                    
     and  you don't  have to  ask for  estimates, you  don't                                                                    
     have  to ask  for projections.   So,  ... what  we'd be                                                                    
     doing is:   the  FY 04 spending  limit would  have been                                                                    
     based on  [the] year ended  June 30, 2002.   And that's                                                                    
     the main  intent; [it] was  so you knew  exactly what's                                                                    
     available.   It  doesn't have  to be  appropriated, but                                                                    
     there's certainty to the amount.                                                                                           
                                                                                                                                
MR. BARTHOLOMEW concluded:                                                                                                      
                                                                                                                                
     And then  the last  addition is  a temporary  item, and                                                                    
     that's  Section  3.   And  that's  a transitional  item                                                                    
     which  won't become  a permanent  part  of the  [Alaska                                                                    
     State]  Constitution.   It just  [ensures] that  at the                                                                    
     date the voters pass this,  ... all the earnings of the                                                                    
     permanent fund stay in the  permanent fund - there's no                                                                    
     debate about  whether it's general fund  money or other                                                                    
     funds  -  it's  part  of  the  permanent  fund,  to  be                                                                    
     protected.  And  then Section 4 states  that this would                                                                    
     have  to go  to  a  general election  so  that all  the                                                                    
     voters in  Alaska could weigh  in on this change.   And                                                                    
     that would  happen in  November 2004,  and if  that was                                                                    
     successful,  then it'd  be approximately  early January                                                                    
     2005 that the change would take effect.                                                                                    
                                                                                                                                
Number 1018                                                                                                                     
                                                                                                                                
LAURIE CHURCHILL stated that she is opposed to HJR 26.  She went                                                                
on to say:                                                                                                                      
                                                                                                                                
     The  PFD's appropriations  should  not be  limited.   I                                                                    
     believe  the current  funding  formula  should be  left                                                                    
     alone.    Alaska is  experiencing  a  decline in  North                                                                    
     Slope oil production; we're currently  at 50 percent of                                                                    
     what  the North  Slope used  to produce  in the  1980s.                                                                    
     This  decline in  oil production  means  less money  is                                                                    
     being  placed into  the permanent  fund dividend.   I'm                                                                    
     very  concerned  that  the Twenty-Third  [Alaska  State                                                                    
     Legislature] has introduced  596 bills and resolutions,                                                                    
     and  out of  these 596  resolutions and  bills, ...  17                                                                    
     pieces of  PFD legislation  have been introduced.   And                                                                    
     in my personal opinion, only  two of these bills are in                                                                    
     favor of  the citizens  of Alaska,  and I  believe that                                                                    
     SJR  19 and  HJR 3  are the  only ones  that favor  the                                                                    
     citizens  of Alaska.    And I'm  just  asking that  you                                                                    
     please vote no on this ... HJR 26.                                                                                         
                                                                                                                                
CHAIR McGUIRE, after determining that no one else wished to                                                                     
testify, closed public testimony on HJR 26.                                                                                     
                                                                                                                                
REPRESENTATIVE GARA said he had a question about the mechanics                                                                  
of "this proposal."  He elaborated:                                                                                             
                                                                                                                                
     Under POMV, we'll end up  taking 5 percent of the value                                                                    
     of the permanent fund every year  - I hope that a large                                                                    
     part of that  will go to a dividend ....   But how does                                                                    
     this work?   The  concept is that  we're going  to keep                                                                    
     the value of  the permanent fund up  with inflation; in                                                                    
     addition, we're going to stick  a certain percentage of                                                                    
     our oil  royalties into  the permanent  fund so  it can                                                                    
     grow and  stay ahead of  inflation.  I  understand that                                                                    
     part.                                                                                                                      
                                                                                                                                
     But tell  me how the 5  percent payout will keep  us up                                                                    
     with inflation  in, for example, a  very high-inflation                                                                    
     year and  a high-earnings  year ....   And then  how it                                                                    
     will do the same thing  in a very low-earnings year ...                                                                    
     and  low inflation.   So  there are  four factors  that                                                                    
     you'll face in  the real world.  Some  years there will                                                                    
     be  high  inflation;  some  years  there  will  be  low                                                                    
     inflation; some years there will  be great stock market                                                                    
     and real  estate asset returns;  some years  there will                                                                    
     be terrible stock market and  real estate asset returns                                                                    
     - maybe  negative ones.   Can you tell me  what happens                                                                    
     ... in  relation to  keeping the value  of the  fund up                                                                    
     with    inflation    under   those    four    different                                                                    
     circumstances?                                                                                                             
                                                                                                                                
Number 1199                                                                                                                     
                                                                                                                                
MR. STORER remarked that in any given year, as well as in "short                                                                
periods," that's a very real issue.  He elaborated:                                                                             
                                                                                                                                
     If  we looked  over the  last three  years, we  did not                                                                    
     keep up  with inflation  in terms of  the value  of the                                                                    
     fund.  However, we  did continue to inflation-proof the                                                                    
     principal of the fund because  of the discipline that's                                                                    
     been invoked during  the good years.   In short periods                                                                    
     of time  - and I going  to define short as  three, even                                                                    
     five years  - you  may not  achieve the  5-percent real                                                                    
     rate of  return.  Or you  will, if you were  to look at                                                                    
     1998,  ... challenge  why 5  percent; I  don't remember                                                                    
     exactly, but my guess is  we probably earned 10- to 12-                                                                    
     percent  real rate  of return  over the  three to  five                                                                    
     years prior to that.                                                                                                       
                                                                                                                                
     It's the  discipline in  the longer-term  time horizon,                                                                    
     through  the good  and the  bad times,  [that] is  what                                                                    
     really matters.   A  lot of people  focus on  the bear-                                                                    
     market side  of the  equation and  what happens  in the                                                                    
     down years.  I think  one of the [important aspects] of                                                                    
     this is not  getting caught up in what I  will call the                                                                    
     mania of  a bull  market and  think you  can overspend.                                                                    
     It  really is  important to  create that  discipline in                                                                    
     the  good and  bad times.    And that  will ensure  the                                                                    
     maintaining [of]  the purchasing  power ...  over time,                                                                    
     for all generations.                                                                                                       
                                                                                                                                
     I give an example of least  one friend of mine who runs                                                                    
     an endowment fund  in a major university,  and they got                                                                    
     caught  up  in  the  bull market,  and  the  university                                                                    
     started a large capital project  well in excess of what                                                                    
     I'll call,  sort of theoretically,  the 5  percent; now                                                                    
     they're  not able  to sustain  those kinds  of returns,                                                                    
     but  they have  commitments,  based on  the heavy  bull                                                                    
     market, that  they must continue  to make  and overpay.                                                                    
     This creates the  discipline in the good  and bad years                                                                    
     that  allows you  to achieve  the goal.   But  in short                                                                    
     periods  of time,  anything  you  suggested can  happen                                                                    
     where  we could  earn well  in excess  of 5  percent or                                                                    
     well below that 5-percent real  rate of return.  If you                                                                    
     think  about it,  ... [in]  any given  year there's  so                                                                    
     much  volatility that  one could  not predict  that ...                                                                    
     kind of precision  in even [a] one-  to three-year time                                                                    
     horizon.                                                                                                                   
                                                                                                                                
Number 1325                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  said that that  explanation deals  with what                                                               
happens when the stock market does  well and what happens when it                                                               
does  poorly,   but  added  that   he'd  like  a   more  detailed                                                               
explanation  regarding  what  would  happen in  years  with  high                                                               
inflation and in years with low inflation.  He elaborated:                                                                      
                                                                                                                                
     Let's assume we  have an 8-percent return  in the stock                                                                    
     market and on our real  estate holdings in a particular                                                                    
     year.  What  happens ... to the value  of the permanent                                                                    
     fund if, let's say, inflation  is 13 percent that year,                                                                    
     and then  what happens if  inflation is 2  percent that                                                                    
     year?   (Indisc.  - coughing)  assume an  average stock                                                                    
     market  and  real  estate   asset  return,  but  wildly                                                                    
     varying inflation amounts for the year.                                                                                    
                                                                                                                                
MR. STORER replied:                                                                                                             
                                                                                                                                
     You're going  to run into  problems in the  short term.                                                                    
     Could I  use a real-life example,  if I may?   Let's go                                                                    
     back to the  late '70s, where inflation  was quite high                                                                    
     and  continued higher.  ... So,  you wrap  that emotion                                                                    
     into  it and,  in fact,  during probably  the five-year                                                                    
     period  prior to  that, you  did  have barely  positive                                                                    
     returns on  bonds and I  think some - absent  '73-'74 -                                                                    
     ...  positive returns  on equities,  but  you were  not                                                                    
     keeping up with  inflation.  So we would  not have kept                                                                    
     up for probably about a  four- or five-year period, and                                                                    
     you'd say this isn't working.                                                                                              
                                                                                                                                
     What happened  around '82  is, ... we  were still  in a                                                                    
     high-interest-rate environment,  and you  keep fighting                                                                    
     a war  that you've  won.  In  that case,  inflation was                                                                    
     descending and  stayed low  for what  is now  15 years.                                                                    
     We were just  looking ... at our early  returns, and in                                                                    
     the early '80s, there was  one year where the permanent                                                                    
     fund only  ... basically  owned [a] bond  portfolio and                                                                    
     we returned 25  percent.  And I don't  remember, but my                                                                    
     guess is  inflation was  below 6 percent.   And  so, if                                                                    
     you looked  even in that  five-year period, if  ... our                                                                    
     asset  allocation  existed  in that  rising,  horrible,                                                                    
     high-inflationary  environment,  [we   would  have  not                                                                    
     achieved] the goal.                                                                                                        
                                                                                                                                
     If  [we'd] maintained  that discipline,  though, as  we                                                                    
     came  out of  that  environment, and  at  least for  15                                                                    
     years and probably longer [when  the] inflation war was                                                                    
     won,  then I  think we've  achieved an  excess of  a 6-                                                                    
     percent real  rate of return  ever since then.   So, in                                                                    
     short periods,  the answer -  and I'm defining  a short                                                                    
     period in that  case of five years - we  would not have                                                                    
     achieved inflation-proofing.  If  you stayed the course                                                                    
     and   had  that   discipline,  you   would  have   been                                                                    
     successful.                                                                                                                
                                                                                                                                
Number 1463                                                                                                                     
                                                                                                                                
MR. STORER, in response to  a question, replied that according to                                                               
two studies, about  70 percent of endowments  and foundations use                                                               
some sort of  payout methodology that is formula  driven based on                                                               
a  percentage  of market  value.    Most  use a  three-year  time                                                               
horizon, but  many use a  five-year time horizon; the  longer the                                                               
moving average,  the greater  the stability from  year to  year -                                                               
ultimately the payout is the same.   He offered that the proposal                                                               
before the  committee, the 5-percent  limit, is  not inconsistent                                                               
with  the aforementioned  studies.   More important,  however, is                                                               
that it would be consistent  with the fund's asset allocation and                                                               
objectives.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS,  on  the   issue  of  5  percent,  said,                                                               
"Actually it will  be less, as the average goes;  that's what I'm                                                               
reading from the numbers."                                                                                                      
                                                                                                                                
MR. STORER replied:                                                                                                             
                                                                                                                                
     That  is correct.   What  happens is,  you look  at the                                                                    
     payout two ways.  It's  5 percent of a five-year moving                                                                    
     average, and  in a  perfect world  the fund  is growing                                                                    
     every  year, so  that 5  percent  is a  series of  five                                                                    
     smaller and larger.   Usually they take  the snap shot,                                                                    
     then, based  on the  year-end value  of the  end point.                                                                    
     And if  you looked at  that 5-percent payout,  and just                                                                    
     assumed you earned  "8 nominal, 5 real,"  it equates to                                                                    
     more of  a 4.6-4.7  payout versus  the ending  value of                                                                    
     that time period.                                                                                                          
                                                                                                                                
MR.  BARTHOLOMEW noted  that included  in member's  packets is  a                                                               
schedule  that  shows,  "going forward,  if  the  permanent  fund                                                               
achieved its  median 8-percent return, what's  the true effective                                                               
rate of  taking 5  percent of a  five-year average,"  adding that                                                               
it's really 4.6 percent or 4.7 percent.                                                                                         
                                                                                                                                
REPRESENTATIVE SAMUELS asked whether any  other of the 30 percent                                                               
of the funds  referred to in the  aforementioned studies "operate                                                               
the way that  we do," wherein it is not  known what "you're going                                                               
to have in the earnings."                                                                                                       
                                                                                                                                
MR. STORER said  he could not say whether any  of those funds are                                                               
based on realized income, but  surmised that some do shorter time                                                               
horizons and are,  he opined, suffering from  the bigger problems                                                               
brought about by living day to day.                                                                                             
                                                                                                                                
Number 1632                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG   remarked  that  HJR  26   is  a  very                                                               
thoughtful  piece of  legislation and  contains many  dimensions.                                                               
He relayed  that many  have said  to him  that HJR  26 is  a good                                                               
piece of  legislation because it  adopts an  endowment principal.                                                               
However, he  added, all of the  endowments of which he  is aware,                                                               
for example,  university-type endowments, are different  from the                                                               
permanent  fund  in one  key  respect:   those  other  endowments                                                               
generally  only endow  operating expenditures,  rather than  both                                                               
operating expenditures and capital expenditures.                                                                                
                                                                                                                                
REPRESENTATIVE   GRUENBERG  referred   to   the  four   different                                                               
variables  mentioned earlier:    high  inflation, low  inflation,                                                               
good stock market, and bad stock market.  He said:                                                                              
                                                                                                                                
     I would like to focus  on the high-inflation model, and                                                                    
     the fact  that "this" is endowing  capital expenditures                                                                    
     as well as  operating expenditures.  I  could foresee a                                                                    
     circumstance  [of] high  inflation where  a legislature                                                                    
     might  say,  "We foresee  a  period  of high  inflation                                                                    
     coming up;  therefore, what  we want to  do is  buy our                                                                    
     capital   expenditures  now,   while  we   can  do   so                                                                    
     relatively  cheaply, because  a  road will  cost a  lot                                                                    
     more next year and more  even than that the year after,                                                                    
     so what we're going to do  is put our money into assets                                                                    
     that  will  float with  the  inflationary  rate."   And                                                                    
     because you  have a "governor"  or a cap on  the amount                                                                    
     that  can  be  appropriated  in this  bill,  it  has  a                                                                    
     weakness  because it  won't  let  the legislature  deal                                                                    
     with high inflationary rates by  investing in a capital                                                                    
     budget now.  How do you answer that problem?                                                                               
                                                                                                                                
MR. STORER replied:                                                                                                             
                                                                                                                                
     The  one   thing  that  we've   always  said   is,  our                                                                    
     perspective  is  inflation-proofing and  ensuring  that                                                                    
     all generations  are treated equally; ...  the trustees                                                                    
     believe it is not within  their providence [to say] ...                                                                    
     how the  money is spent  or appropriated, and  so we've                                                                    
     stayed away  from that issue.  ... There is a  board of                                                                    
     trustees;   we   have   a  charge   of   --   fiduciary                                                                    
     responsibility is an important [term] ....                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG pointed out,  however, that the issue of                                                               
how the legislature is to  work with the proposed changes, should                                                               
they  be adopted,  is something  that does  need to  be discussed                                                               
now.    "We  have  to   recognize  and  deal  with  that  factual                                                               
possibility," he added.                                                                                                         
                                                                                                                                
Number 1865                                                                                                                     
                                                                                                                                
MR. BARTHOLOMEW surmised  that Representative Gruenberg's example                                                               
is  that of  a future  legislature believing  that it  is in  the                                                               
state's  best interest  to  spend  more, in  the  short term,  on                                                               
capital   expenditures,  because   of   high   inflation.     Mr.                                                               
Bartholomew offered:                                                                                                            
                                                                                                                                
     The   legislature  does   have  numerous   tools;  [for                                                                    
     example]  issuing   debt.     So  you  would   cap  the                                                                    
     distribution from the permanent  fund, but ... it could                                                                    
     fund  debt.   If  you  wanted  to  issue debt  to  take                                                                    
     advantage  of  needing a  large  amount  of money,  you                                                                    
     would have  a stream of  money from the  permanent fund                                                                    
     that you  could commit to  debt retirement.   So that's                                                                    
     just an  angle of  where you could  ... issue  debt and                                                                    
     say,  for the  next  five  years, "I  want  to use  'X'                                                                    
     amount  of the  5 percent  to  retire that  debt."   So                                                                    
     that's just an  example of where, at  least knowing you                                                                    
     have a steady  stream, ... we're not going  to have any                                                                    
     problems  issuing  debt.    And   I'm  not  saying  you                                                                    
     directly link them, but that's just an option.                                                                             
                                                                                                                                
REPRESENTATIVE OGG, after remarking  that language in the [Alaska                                                               
State] Constitution should be clear  and not ambiguous, indicated                                                               
that  he  has  concerns  about  the  language  used  in  proposed                                                               
subsection  (b), which,  he surmised,  defines how  "things" come                                                               
out of the  permanent fund.  He posited that  the first clause of                                                               
subsection (b) is  really just intent language  and therefore not                                                               
mandatory.  He asked that someone  explain to him why this intent                                                               
language ought to be included in the constitution.                                                                              
                                                                                                                                
MR.  BARTHOLOMEW  remarked  that  the  discussion  in  the  House                                                               
Special Committee on Ways and  Means centered on that very issue.                                                               
He relayed  that some people  favored simplifying  subsection (b)                                                               
to say  that appropriations will be  limited to 5 percent  of the                                                               
five-year  average  "with  the  look-back  provision."    Others,                                                               
however,  felt that  because HJR  26 is  proposing to  remove the                                                               
word  "principal",  it  would  be  helpful  if  the  language  in                                                               
subsection  (b) contained  an  explanatory preface,  particularly                                                               
since the proposed  changes would be going before  the voters [if                                                               
the bill passes].                                                                                                               
                                                                                                                                
Number 2057                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  argued,  however, that  although  the  first                                                               
clause in subsection  (b) refers to protecting the  fund from the                                                               
effects of  inflation, it  does not  mention protecting  the fund                                                               
from the  effects of deflation.   In addition, he noted,  it uses                                                               
the terms  "real value"  and "over the  long term",  and although                                                               
these  may be  terms  of  art in  the  accounting and  investment                                                               
fields,  he is  not  aware  that they  currently  have any  legal                                                               
meaning; therefore, he  would like to know how  these terms would                                                               
be defined,  for example, during  an argument before  the supreme                                                               
court.                                                                                                                          
                                                                                                                                
MR. BARTHOLOMEW indicated that there  was discussion in the House                                                               
Special Committee on Ways and  Means regarding the aforementioned                                                               
language's  potential   to  create   an  open  field   for  legal                                                               
challenges.     He  mentioned,  though,   that  there   is  other                                                               
legislation  going   through  the   process  that   outlines  the                                                               
implementation  of this  resolution's  provisions,  and that  the                                                               
Senate  has  discussed  using that  implementing  language  as  a                                                               
vehicle  for statutorily  defining the  aforementioned terms  and                                                               
statutorily  outlining   further  the   criteria  by   which  the                                                               
legislature determines  whether to take  the full 5 percent.   He                                                               
mentioned, additionally,  regarding a definition of  "long term",                                                               
that  the  U.S. Department  of  the  Treasury considers  ten-year                                                               
notes to be long-term securities.                                                                                               
                                                                                                                                
REPRESENTATIVE  OGG mentioned  that  this only  indicates to  him                                                               
that the terms he has concern  with do not already have their own                                                               
legal definition that scholars  or constitutional attorneys could                                                               
point  to and  say that  they  know what  those terms  mean.   He                                                               
observed  that even  if this  legislature does  like the  idea of                                                               
going  along with  what the  Treasury currently  considers to  be                                                               
long term, that decision won't  be binding on future legislatures                                                               
that might  decide they  like some other  definition better.   He                                                               
remarked that  he is not  comfortable with  approaching [language                                                               
destined for] the constitution in this manner.                                                                                  
                                                                                                                                
MR.  BARTHOLOMEW   argued  that   the  "financial   and  economic                                                               
definitions" for  the aforementioned  terms would  be sufficient.                                                               
With  regard to  the term  "real value",  he explained  that this                                                               
means maintaining  purchasing power  even through the  effects of                                                               
inflation.   He relayed that  to the  APFC, "long term"  means 10                                                               
years.   He  pointed to  existing constitutional  language, which                                                               
says, "unless  otherwise provided  by law", as  proof that  it is                                                               
usual to not try to define everything in the constitution.                                                                      
                                                                                                                                
Number 2298                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG asked  what impact HJR 26 would  have today if                                                               
it had been in effect 3 years ago.                                                                                              
                                                                                                                                
MR.  STORER offered  his  belief  that "we'd  be  about the  same                                                               
place."  He elaborated:                                                                                                         
                                                                                                                                
     We went  through a  bull market  where we  were earning                                                                    
     extraordinarily  high  real  rates  of  return  through                                                                    
     about March of about 2000,  and then we started earning                                                                    
     negative  real rates  of return  because  of the  stock                                                                    
     market.   So, the  answer [to] what  is long  term, ...                                                                    
     that is a  term of art; I think it's  sort of ten years                                                                    
     or  longer  [as]  a  decent  benchmark  ....    I'd  be                                                                    
     surprised if  we didn't earn  a 5-percent real  rate of                                                                    
     return, looking back over the last 10 years.                                                                               
                                                                                                                                
MR. BARTHOLOMEW added  that the APFC can show that  over the last                                                               
10 years,  it has earned in  excess of a 5-percent  real [rate of                                                               
return].   And  because the  state, for  the last  three or  five                                                               
years, has  not spent more  than 5  percent of the  fund's market                                                               
value and because  the fund has earned more than  5 percent, both                                                               
the  state and  the fund  would be  in the  exact same  financial                                                               
position they  are in  today.   He noted  that under  the current                                                               
funding formulas,  the legislature could  have spent more  than 5                                                               
percent during those years, but didn't.                                                                                         
                                                                                                                                
REPRESENTATIVE OGG remarked, however:                                                                                           
                                                                                                                                
     My question was trying to focus,  not on so much the 5-                                                                    
     percent  part of  spending  it, but  was  on the  words                                                                    
     "real value" and  "long term" and how  they would apply                                                                    
     in  that particular  situation.   And  "real value"  --                                                                    
     because you're  running through  a period  of (indisc.)                                                                    
     great  growth, the  fund itself  increases in  value to                                                                    
     like $29  billion.   Is that a  "real value"  any more?                                                                    
     And  then it  drops [to  $23 billion].  ... Where  does                                                                    
     "real value" fit in there at that point in time?                                                                           
                                                                                                                                
TAPE 03-52, SIDE B                                                                                                            
Number 2386                                                                                                                     
                                                                                                                                
MR.  STORER said  that he  is  comfortable saying  that the  APFC                                                               
achieved "that  goal, that objective,  during that period."   The                                                               
value of  the fund was just  slightly less than $29  [billion] in                                                               
[the  first part  of]  2000,  and the  subsequent  drop in  value                                                               
occurred  in  three  ways:     payouts  of  over  $2  billion  in                                                               
dividends; subtractions from the earnings  reserve to be put into                                                               
the principal; and the market drop.   He added, "Over the last --                                                               
from  that period,  the first  fiscal year  (indisc.) a  negative                                                               
3.25; second  fiscal year,  negative 2.25;  and I'm  delighted to                                                               
say we're slightly  positive this fiscal year to date  as of last                                                               
night."   Therefore, he  remarked, the drop  in the  fund's value                                                               
was not all due  to the market; in fact, he  added, "we were able                                                               
to  inflation-proof and  meet  the  dividend distribution  during                                                               
that three-year period as well."                                                                                                
                                                                                                                                
MR. BARTHOLOMEW added:                                                                                                          
                                                                                                                                
     When it reached $29 billion,  and the NASDAQ marked had                                                                    
     just  finished a  year of  returning 80  percent, there                                                                    
     was a lot of [questions] of  was that real.  And people                                                                    
     that bought  it at  that time  have learned  it wasn't.                                                                    
     And  so,  the  principal, what  was  protected  against                                                                    
     inflation, back  then, was $21  billion.  So we  had $8                                                                    
     billion  above principal,  and I  think the  market has                                                                    
     told us it wasn't all  real.  The $21 billion, luckily,                                                                    
     is  still real.  ...  If the  market corrected  another                                                                    
     year, the  value of the  fund would go below  that, and                                                                    
     so  "real"  is trying to maintain that  principal ... -                                                                    
     the  purchasing power  of that  principal.   So, as  we                                                                    
     move  forward, that's  what's real  to us.   And  we're                                                                    
     going to have  up years again, and the  fund's going to                                                                    
     grow,  but  it may  grow  faster  than the  sustainable                                                                    
     markets, and we're going to  come back down or ... vice                                                                    
     versa - it could go down and then up.                                                                                      
                                                                                                                                
REPRESENTATIVE OGG  remarked that the foregoing  explanation just                                                               
begs more  questions.  That's  the problem with "real  value", he                                                               
said,   because  according   to   his   interpretation  of   that                                                               
explanation, "real  value" appears to  be tied to the  NASDAQ and                                                               
whatever its  value is.  Or  is it the "real  value" with respect                                                               
to the  value of  Alaska's economy  or the  cost of  real estate?                                                               
The purchasing  power with  regard to real  estate in  Alaska has                                                               
not decreased from $29 billion  down to $23 billion, he observed.                                                               
He  reiterated that  he has  concerns  with how  the terms  "real                                                               
value" and "long  term" will be interpreted.   Why confuse people                                                               
with language like that?                                                                                                        
                                                                                                                                
MR. STORER  mentioned that  he tends to  define "real  value", in                                                               
terms of purchasing power, by  using a Consumer Price Index (CPI)                                                               
as the criteria regarding inflation.                                                                                            
                                                                                                                                
Number 2231                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  indicated that she could  see Representative Ogg's                                                               
point  regarding  the  ambiguity  of  the  aforementioned  terms.                                                               
However,  although such  terms  might typically  be  seen in  the                                                               
intent section of "regular" bills, retaining the first clause of                                                                
the proposed subsection (b) will clarify for the voters the                                                                     
intent of the proposed changes to the constitution.                                                                             
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     My  big fear  is that  we're going  to do  something to                                                                    
     jeopardize the permanent fund, and  I know that POMV is                                                                    
     a  careful  attempt to  not  do  that.   But  it  still                                                                    
     worries me.   If there's one great  decision we've ever                                                                    
     made in this state, I  believe it's the creation of the                                                                    
     permanent fund.   But I  worry about some of  these 10-                                                                    
     year horizons  where, to  an economist,  10 years  is a                                                                    
     short amount  of time, [but] to  legislators, to school                                                                    
     children, 10 years is an  incredibly meaningful part of                                                                    
     their life.                                                                                                                
                                                                                                                                
     And so  I'm worried that  if we  take 5 percent  of the                                                                    
     value  of the  permanent fund  out every  year, and  we                                                                    
     have  one of  these 15-year  difficult periods  for the                                                                    
     stock market, though that's looked  at as a blip on the                                                                    
     screen  by economists,  that's  a  whole generation  of                                                                    
     school children here.  And  I'm wondering whether it is                                                                    
     wise to spend upwards of 5  percent of the value of the                                                                    
     permanent fund when  we might have a  15-year period of                                                                    
     economic downturns.                                                                                                        
                                                                                                                                
REPRESENTATIVE GARA concluded:                                                                                                  
                                                                                                                                
     So, I guess the first question  is, can you tell me ...                                                                    
     how  long have  economic  downturns -  and I'm  talking                                                                    
     about  economic  downturns   which  mean  stock  market                                                                    
     downturns  or level  periods -  how long  have some  of                                                                    
     these  periods  lasted  in  the past?    What  kind  of                                                                    
     periods are  we facing where  we might see  declines in                                                                    
     the  value  of  the   permanent  fund  plus  5  percent                                                                    
     withdrawals from the  value of the permanent  fund?  In                                                                    
     order for me know to  how much we might possibly damage                                                                    
     the  permanent  fund, under  a  proposal  like this,  I                                                                    
     guess I'd like to know  what those timeframes have been                                                                    
     historically.                                                                                                              
                                                                                                                                
Number 2105                                                                                                                     
                                                                                                                                
MR. STORER replied:                                                                                                             
                                                                                                                                
     There are  more up markets  than down markets,  ... and                                                                    
     I'm  talking  about the  stock  market  here, which  is                                                                    
     really the  driver of higher  rates of return.  ... And                                                                    
     so ... in my mind, that  5 percent is a limit; one does                                                                    
     not  have to  take  5  percent, ...  but  it creates  a                                                                    
     discipline  on the  upside. ...  Depending  on how  you                                                                    
     want  to define  the  Depression, ...  there were  four                                                                    
     significant downturns.                                                                                                     
                                                                                                                                
     The Depression  had a several-year downturn.   And then                                                                    
     the stock market went up 50  percent, and then it had a                                                                    
     few more years  of downturn, and then  the stock market                                                                    
     went up  with few down  years after that.   After that,                                                                    
     prior to  what we're experiencing right  now, the worst                                                                    
     years were in  1973 and 1974, and nobody  wanted to own                                                                    
     stock in  1975.   And ...  one could  say that  was the                                                                    
     beginning   of   this   long  run   that   we've   just                                                                    
     experienced.  Now we have -  now, which has gone on for                                                                    
     ... almost exactly three years - this bear market. ...                                                                     
                                                                                                                                
     I found  there were 14  observations where there  was a                                                                    
     negative  year  followed  by  a  positive  year.    The                                                                    
     average rate  of return, when  it turned  positive, was                                                                    
     up 28 percent; that was with  a high of 50 percent, and                                                                    
     that was in  the middle of the Depression, to  a low of                                                                    
     up 4 percent - and I forget  when that was - I think it                                                                    
     might  have  been  in  the   mid-'70s.    And  so,  ...                                                                    
     typically, if you accept that  data, and I do, ... when                                                                    
     you come out of the  bear market, the stock market will                                                                    
     go  up rather  dramatically  because  of the  depressed                                                                    
     prices in the stock market.                                                                                                
                                                                                                                                
Number 2001                                                                                                                     
                                                                                                                                
MR. STORER continued:                                                                                                           
                                                                                                                                
     I'm not  prepared to suggest  that will happen  in this                                                                    
     time, because we  went to such a  high bubble preceding                                                                    
     this -  or high valuation  - that we're more  back into                                                                    
     normal  valuation; so  I'm not  about  to suggest  that                                                                    
     this market  will turn  around and  we'll achieve  a 28                                                                    
     percent or  anything like that.   So, ...  [there were]                                                                    
     four  real  periods of  prolonged  bear  markets.   Two                                                                    
     periods ...  - you could  break it  down - were  in the                                                                    
     Depression,  when we  were  in  a deflationary  period.                                                                    
     One  was  ... in  the  middle  of  the oil  crisis  and                                                                    
     commodity shortages  and inflation and sort  of in that                                                                    
     "guns and  butter" era  ... at the  end of  the Vietnam                                                                    
     war.  And  then the one we're going  through right now,                                                                    
     which  was preceded  by an  extraordinary bull  market.                                                                    
     But most of the time, the stock markets have gone up.                                                                      
                                                                                                                                
REPRESENTATIVE GARA sought to clarify his question:                                                                             
                                                                                                                                
     There have been periods of  time where the stock market                                                                    
     hits a  peak.  It goes  down and it doesn't  reach that                                                                    
     peak  again for  five years,  ten years,  I think  even                                                                    
     sometimes  longer  than  that.    Those  are  the  long                                                                    
     periods  of drought  that I'm  wondering  about.   What                                                                    
     have been the  longest periods of time  where ... [the]                                                                    
     stock  market has  hit its  peak and  then not  reached                                                                    
     that  peak again  - the  longest period  between those.                                                                    
     Because that's the period I'm  worried about, is we hit                                                                    
     a  high  moment  for  the  permanent  fund,  we're  the                                                                    
     legislators  for   the  next  15  years,   [but]  we're                                                                    
     spending 5 percent  of the value of  the permanent fund                                                                    
     in a  long period where we  never get back to  the peak                                                                    
     of the stock market.                                                                                                       
                                                                                                                                
MR. STORER replied:                                                                                                             
                                                                                                                                
     The two  periods that were prolonged,  I can't remember                                                                    
     the years, but  one was during the  Depression, where I                                                                    
     guess it was 1929 was a peak  and I ... think it was 10                                                                    
     or 15  years or maybe  longer that  we came back  up to                                                                    
     that era  in terms  of valuation  of the  stock market.                                                                    
     The other, if I remember  correctly, in the late '60s -                                                                    
     either '66 or  '68 - the "Dow" hit 1,000,  [and] it may                                                                    
     have taken  10 years  for the Dow  to hit  1,000 again.                                                                    
     I'm offering extremes, but those extremes did happen.                                                                      
                                                                                                                                
Number 1899                                                                                                                     
                                                                                                                                
     That  is  also, keep  in  mind,  why we  diversify  our                                                                    
     portfolios.   The  permanent fund  is  only about  half                                                                    
     invested  in equities.   Our  bond  portfolios and  our                                                                    
     real  estate  portfolios  have been  achieving  double-                                                                    
     digit returns  during this last  three years  since ...                                                                    
     That's  why you  don't want  to  get caught  up in  the                                                                    
     mania,  and the  permanent fund  did not,  in terms  of                                                                    
     thinking you're supposed  to put all your  money in the                                                                    
     stock  market, and  we've benefited  from  that in  the                                                                    
     bear market.                                                                                                               
                                                                                                                                
     While  our returns  have  been  negative, they've  been                                                                    
     considerably less than our peer  group out there; we've                                                                    
     been achieving  very high comparative returns.   So ...                                                                    
     you want  to diversify ...  in a manner that  helps you                                                                    
     achieve   you're   goals,   both  in   your   long-term                                                                    
     objectives and  your risk.   That's a risk; we  look at                                                                    
     that modeling every day.                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA   brought  attention   to  Amendment   1,  a                                                               
handwritten amendment which, with original punctuation, read:                                                                   
                                                                                                                                
     At p.2 line 6 after "year."                                                                                                
          c) the Permanent fund Dividend shall equal at                                                                         
     least the greater  of: 1) the Dividend paid  in 2003 or                                                                    
     2004, adjusted for inflation, or;  2) 50% of the amount                                                                    
     stated in  section (b) of  this section, which  ever is                                                                    
     greater.  The Legislature  may issue a Dividend greater                                                                    
     than these amounts in any year.                                                                                            
          d) Concetual [sic] - Sevability [sic] of section                                                                      
     (c)  if  it  results  in  a  ruling,  that  causes  the                                                                    
     Permanent  funds earnings  to  be taxable  by the  U.S.                                                                    
     Internal Revenue Service.                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA, before  offering Amendment  1, pointed  out                                                               
that the line  that contains "or; 2) 50%"  should instead contain                                                               
"or; 2)  a per recipient share  of 50%", and that  subsection (d)                                                               
contains two  misspelled words that should  read "conceptual" and                                                               
"severability".                                                                                                                 
                                                                                                                                
Number 1784                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA made  a motion  to adopt  Amendment 1  [text                                                               
provided previously].                                                                                                           
                                                                                                                                
Number 1782                                                                                                                     
                                                                                                                                
CHAIR McGUIRE objected.                                                                                                         
                                                                                                                                
REPRESENTATIVE    GARA   offered    that   Amendment    1   would                                                               
constitutionalize the dividend.  He said:                                                                                       
                                                                                                                                
     My  worry  is  that  if we  adopt  this  constitutional                                                                    
     amendment, it  might be  seen by some  as a  first step                                                                    
     towards getting rid of the  dividend itself.  And so if                                                                    
     we're going  to authorize the legislature  to spend any                                                                    
     of  the permanent  fund, I  think this  is the  time to                                                                    
     make sure that we enshrine  the dividend in the [Alaska                                                                    
     State]  Constitution  as  well.    So,  this  amendment                                                                    
     enshrines  the  dividend  in the  constitution  so  the                                                                    
     legislature can't get rid of the dividend program.                                                                         
                                                                                                                                
     It  also sets  a  minimum  amount to  be  paid for  the                                                                    
     dividend.   So  this vote  will happen  in November  of                                                                    
     2004  if  this  resolution  passes; I  don't  want  the                                                                    
     dividend  to  go  down lower  [than]  the  most  recent                                                                    
     dividend before the vote comes  along.  So the proposal                                                                    
     is that the dividend shall  never be any lower than the                                                                    
     greater  of the  2003  or 2004  dividend; the  dividend                                                                    
     shall  never be  lower than  a per  recipient share  of                                                                    
     half of  the money  that we take  out of  the permanent                                                                    
     fund.                                                                                                                      
                                                                                                                                
     And just so  members of the committee know,  I spoke to                                                                    
     [Mr.]  Bartholomew; if  projections work  out well,  it                                                                    
     seems like  by 2004 the  dividend might be  about $900,                                                                    
     [and] it  seems this  year, if we  have a  dividend, it                                                                    
     might be about  $1100.  If we pass  this amendment, and                                                                    
     we split the use of  this 5 percent fifty-fifty between                                                                    
     state government  and the dividend, at  fifty-fifty, in                                                                    
     2004,  that   would  be  something  close   to  a  $900                                                                    
     dividend. ... So in that  year, for example, under this                                                                    
     proposal, the dividend would be  higher; it would be no                                                                    
     lower than the prior year's dividend.                                                                                      
                                                                                                                                
     But  the  concept  is  that   we  should  enshrine  the                                                                    
     dividend,  we should  make sure  that  it doesn't  keep                                                                    
     going  down, and  we should  also give  the legislature                                                                    
     the  flexibility  to  issue a  larger  dividend  beyond                                                                    
     that.   But I want to  set minimums.  I'm  just worried                                                                    
     that we're  going to  start losing  the dividend.   The                                                                    
     dividend, I think, does a  very good job of sharing the                                                                    
     wealth  among Alaskans;  there  are  very few  programs                                                                    
     anywhere where  people of  all walks  of life  share in                                                                    
     wealth.                                                                                                                    
                                                                                                                                
     And  I think  it's  become something  that our  economy                                                                    
     relies upon; I think I've  seen [numbers] that show the                                                                    
     drastic affects  upon this economy  if we were  to take                                                                    
     the  dividend  out  of  the economy.    That's  not  to                                                                    
     mention the obvious  uses that many people  use for the                                                                    
     dividend, which  is ... payment of  prescription drugs,                                                                    
     [and] payment for  food and shelter and  clothing.  So,                                                                    
     that's the idea.                                                                                                           
                                                                                                                                
Number 1653                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA continued:                                                                                                  
                                                                                                                                
     There's  a  subsection  (d), which  addresses  a  legal                                                                    
     issue; there  is some argument  back and forth  that if                                                                    
     we  constitutionalize the  dividend,  that somehow  the                                                                    
     IRS  [Internal  Revenue  Service]  might  start  taxing                                                                    
     permanent  fund earnings.   I  don't believe  that that                                                                    
     would happen, I've looked at  the arguments myself, I'm                                                                    
     not  a  scholar  on  the  issue  though,  and  so  what                                                                    
     subsection (d) would do, and  this is a conceptual part                                                                    
     of  this amendment,  ...  [is]  include a  severability                                                                    
     clause  that said  if constitutionalizing  the dividend                                                                    
     caused  the IRS  to  start taxing  the permanent  fund,                                                                    
     then we  would not  go that  route because  we wouldn't                                                                    
     want the permanent fund to be taxed.                                                                                       
                                                                                                                                
     So that  would make  this [subsection] severable.   And                                                                    
     there have  been previous versions of  a POMV amendment                                                                    
     that have  included a severability  clause.   So that's                                                                    
     just  conceptual  for  now,   but  when  the  amendment                                                                    
     passes, then  we'll draft the amendment's  language, as                                                                    
     we'll need to do.                                                                                                          
                                                                                                                                
REPRESENTATIVE SAMUELS  said that  he agrees  with Representative                                                               
Gara regarding  the importance  of the  dividend on  the economy,                                                               
but does  not agree that  HJR 26  gives the legislature  any more                                                               
authorization to appropriate money from  the earnings of the fund                                                               
than it already has.   "We can do that right now,"  he added.  He                                                               
indicated a reluctance to vary  from the framework that the Board                                                               
has proposed.  He opined that  Amendment 1 would muddy the water,                                                               
would  be  divisive,  and  would   do  the  people  of  Alaska  a                                                               
disservice.                                                                                                                     
                                                                                                                                
Number 1444                                                                                                                     
                                                                                                                                
A roll call  vote was taken.  Representative Gara  voted in favor                                                               
of  Amendment  1.     Representatives  Ogg,  Samuels,  Gruenberg,                                                               
Anderson, and McGuire  voted against it.   Therefore, Amendment 1                                                               
failed by a vote of 1-5.                                                                                                        
                                                                                                                                
Number 1431                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG made  a motion to adopt  Amendment 2, to                                                               
delete from  page 2,  lines 2-3, "To  protect the  permanent fund                                                               
from the  effects of inflation  and thereby assure that  the real                                                               
value  of the  permanent fund  will  be preserved  over the  long                                                               
term,";  and   on  page  2,   line  4,  capitalize  the   "a"  in                                                               
"appropriations".   Thus  subsection  (b) would  begin with  "(b)                                                               
Appropriations".   He noted that  the House Special  Committee on                                                               
Ways and Means had a lot of discussion regarding this language.                                                                 
                                                                                                                                
Number 1412                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS objected for the purpose of discussion.                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG said that although he originally liked                                                                 
the language he is proposing to delete, he has since changed his                                                                
mind and would now prefer to have it removed.  He elaborated:                                                                   
                                                                                                                                
     One  reason is  that  there may  be  other reasons  why                                                                    
     appropriations  should  not  exceed  5  percent.    The                                                                    
     protection  of  the ...  permanent  fund  ... from  the                                                                    
     effects  of inflation  may  only be  one  reason.   I'm                                                                    
     going to give you another  reason that's just as valid,                                                                    
     and that  is because  the limitation  on appropriations                                                                    
     is  a spending  limit, and  that in  itself is  another                                                                    
     very good  reason for having  this here.  So  that's my                                                                    
     first reason for wanting to delete it. ...                                                                                 
                                                                                                                                
     The second reason is because we  had a lot of debate in                                                                    
     [House Special Committee on Ways  and Means] on whether                                                                    
     this is  mandatory language or merely  descriptive, and                                                                    
     it caused  a lot of  legal discussion, and I  think the                                                                    
     less  legal  discussion we  have,  and  ambiguity in  a                                                                    
     constitutional provision, the better.                                                                                      
                                                                                                                                
     And the  third reason,  independent reason,  is because                                                                    
     there are very few  constitutional provisions that have                                                                    
     descriptive  language in  them.   And  they asked  this                                                                    
     question of  me ..., "Is  there any other place  in the                                                                    
     constitution with descriptive language?"   And the only                                                                    
     place I  could think  of was our  "right to  bear arms"                                                                    
     amendment, where originally it  said the well regulated                                                                    
     [Militia] being  necessary, et  cetera, et  cetera, and                                                                    
     that caused a lot of  problems with that amendment, and                                                                    
     we had  to amend it to  assure a private right.   So it                                                                    
     really  caused  ...  litigation in  another  state  and                                                                    
     caused us to have to  amend the constitution.  And it's                                                                    
     just much  cleaner not to  have that language in.   And                                                                    
     so  for those  three reasons,  I would  move to  delete                                                                    
     ....                                                                                                                       
                                                                                                                                
CHAIR  McGUIRE said  that  she  tended to  agree  for those  same                                                               
reasons,  as   well  as   for  the   reasons  brought   forth  by                                                               
Representative  Ogg.   She  mentioned that  the  only reason  for                                                               
keeping it in  would be to assist the voters  in interpreting the                                                               
remainder of subsection (b)                                                                                                     
                                                                                                                                
Number 1259                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG noted that  the language he is proposing                                                               
to  delete could  be inserted  in the  voter pamphlet,  which the                                                               
courts typically look to as part of legislative history.                                                                        
                                                                                                                                
MR.   BARTHOLOMEW,  after   noting  that   the  Board   would  be                                                               
comfortable with  either keeping  the aforementioned  language or                                                               
deleting it,  suggested that the  title of  HJR 26 should  not be                                                               
changed,  even  though  it,  too,   contains  some  of  the  same                                                               
language,  since the  proposed constitutional  amendment will  be                                                               
placed, word for word, in the voter pamphlet.                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG said he had  no objection to keeping the                                                               
title the same.                                                                                                                 
                                                                                                                                
CHAIR McGUIRE,  for the benefit  of Representative Holm,  who had                                                               
just joined the  meeting, detailed the changes  being proposed by                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
REPRESENTATIVE SAMUELS [withdrew] his objection to Amendment 2.                                                                 
                                                                                                                                
Number 1123                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA stated that he objected to Amendment 2.                                                                     
                                                                                                                                
REPRESENTATIVE GARA,  regarding failed Amendment 1,  mentioned to                                                               
Representative Holm  that "nobody would let  me constitutionalize                                                               
the dividend."                                                                                                                  
                                                                                                                                
REPRESENTATIVE HOLM indicated that had  he been present, he, too,                                                               
would have voted against Amendment 1.                                                                                           
                                                                                                                                
REPRESENTATIVE GARA,  speaking to  his objection to  Amendment 2,                                                               
said:                                                                                                                           
                                                                                                                                
     I understand  the argument of  the folks who  want this                                                                    
     out  of the  constitutional language.   I  like it.   I                                                                    
     think  courts will  often  look  at legislative  intent                                                                    
     [and] they'll  look at constitutional intent.   I think                                                                    
     it's fine  to have intent  language in a statute  or in                                                                    
     the  constitution as  long as  it doesn't  mess up  the                                                                    
     wording of the statute  or constitution.  The mechanics                                                                    
     of this provision  will be that 5 percent  of the value                                                                    
     of the  permanent fund can  be spent.  It's  clear. ...                                                                    
     So I don't  see that the intent, the  statement that we                                                                    
     want  to protect  the  permanent  fund from  inflation,                                                                    
     harms this at all.                                                                                                         
                                                                                                                                
     ...  I can't  envision  a circumstance  where it  would                                                                    
     interfere  with the  operation  of this  constitutional                                                                    
     amendment, and  I think  it is nice  for the  public to                                                                    
     have an  explanatory statement in the  constitution.  I                                                                    
     think  we do  that  with our  "free  speech" clause;  I                                                                    
     think we do that with  a number of other constitutional                                                                    
     provisions  where  we  have  extra  language  that  the                                                                    
     courts  use for  intent  purposes.   But  at a  minimum                                                                    
     this, I  think, helps  the public also  understand that                                                                    
     they have  the right to  have the permanent  fund, over                                                                    
     the long  term, protected  from inflation.   So, that's                                                                    
     my objection.                                                                                                              
                                                                                                                                
CHAIR McGUIRE  said that this was  a tough issue for  her because                                                               
she agrees  with both sides of  the argument.  She  remarked that                                                               
she wants  HJR 26 to succeed,  both "in its intent"  and with the                                                               
electorate.                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM  noted that  he could see  both sides  of the                                                               
argument, but indicated  that he agrees with the  point that over                                                               
time, the  constitution could become quite  cumbersome because of                                                               
the  addition  of  intent  language.     He  also  suggested  the                                                               
possibility that the current intent  language may no longer apply                                                               
in the future.                                                                                                                  
                                                                                                                                
The committee took an at-ease from 3:04 p.m. to 3:05 p.m.                                                                       
                                                                                                                                
Number 0891                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  asked  whether  the  language  currently  in                                                               
subsection (b)  would prohibit funds from  being appropriated for                                                               
reasons other than the protection  of the permanent fund from the                                                               
effects of inflation.                                                                                                           
                                                                                                                                
MR. BARTHOLOMEW replied:                                                                                                        
                                                                                                                                
     It's my  understanding that  there's no  prohibition to                                                                    
     taking money out of the  permanent fund up to the level                                                                    
     of 5  percent.  So, the  constitutional amendment would                                                                    
     say, up to  5 percent, it's the  power of appropriation                                                                    
     that removes it and there's  no stipulation [as] to why                                                                    
     you  would  take  it  out   or  whether  you  could  or                                                                    
     couldn't.  It's  up to 5 [percent].   It would prohibit                                                                    
     you, for  any reason, above  -- you could not  go above                                                                    
     that 5 [percent].  That's a hard and fast limit.                                                                           
                                                                                                                                
REPRESENTATIVE OGG  pointed out,  however, that the  first clause                                                               
of  subsection  (b)  seemingly  specifies  "To  protect"  as  the                                                               
particular  purpose for  which  funds may  be  appropriated.   He                                                               
asked  whether money  could be  taken out  of the  permanent fund                                                               
without [subsection] (b).                                                                                                       
                                                                                                                                
MR. BARTHOLOMEW explained that since  Section 1 of HJR 26 removes                                                               
the word  "principal" from  the constitution,  lacking subsection                                                               
(b), no  money could be  removed from the permanent  fund because                                                               
the constitution  would then  say that  the permanent  fund could                                                               
only  be  used  for  income-producing [investments].    Thus  the                                                               
permanent fund would grow forever.                                                                                              
                                                                                                                                
REPRESENTATIVE SAMUELS suggested, then,  that by not deleting the                                                               
first   clause  of   subsection   (b),   the  legislature   could                                                               
appropriate  money beyond  the  5-percent limit  if  the goal  of                                                               
protecting the  permanent fund from  the effects of  inflation is                                                               
reached.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG added  that although  he was  not sure,                                                               
that  might  actually  be  the  case.    He  suggested  that  the                                                               
legislature  really doesn't  want to  cause litigation  over this                                                               
issue.                                                                                                                          
                                                                                                                                
CHAIR McGUIRE agreed.                                                                                                           
                                                                                                                                
Number 0635                                                                                                                     
                                                                                                                                
A  roll call  vote  was taken.    Representatives Holm,  Samuels,                                                               
Gruenberg,  Ogg,  and McGuire  voted  in  favor of  Amendment  2.                                                               
Representative  Gara voted  against it.   Therefore,  Amendment 2                                                               
was adopted by a vote of 5-1.                                                                                                   
                                                                                                                                
Number 0574                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS   moved  to  report  CSHJR   26(W&M),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying fiscal  notes.  There being  no objection, CSHJR                                                               
26(JUD)   was  reported   from  the   House  Judiciary   Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
The committee took an at-ease from 3:14 p.m. to 3:25 p.m.                                                                       
                                                                                                                                
HB 145 - ATTY FEES: PUBLIC INTEREST LITIGANTS                                                                                 
                                                                                                                                
[Contains brief mention of HB 86 and SB 97.]                                                                                    
                                                                                                                                
Number 0557                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that the  final order of  business would                                                               
be  HOUSE BILL  NO.  145,  "An Act  relating  to public  interest                                                               
litigants  and to  attorney fees;  and amending  Rule 82,  Alaska                                                               
Rules of Civil Procedure."                                                                                                      
                                                                                                                                
Number 0506                                                                                                                     
                                                                                                                                
CRAIG   TILLERY,   Assistant  Attorney   General,   Environmental                                                               
Section,  Civil Division  (Anchorage), Department  of Law  (DOL),                                                               
having presented  HB 145 on  behalf of the administration  at the                                                               
bill's  last  hearing,  indicated   that  he  was  available  for                                                               
questions.                                                                                                                      
                                                                                                                                
Number 0490                                                                                                                     
                                                                                                                                
BENJAMIN BROWN,  Legislative Assistant,  Alaska State  Chamber of                                                               
Commerce   (ASCC),  noted   that   the  ASCC   is  a   membership                                                               
organization of over 700 small,  medium, and large businesses and                                                               
35 local chambers of commerce.   He stated that the ASCC strongly                                                               
supports HB 145,  which, he opined, will bring  sanity and reason                                                               
back to the  "public interest litigant doctrine."  He  went on to                                                               
say:                                                                                                                            
                                                                                                                                
     As  you   know,  [Madame  Chair  and   members  of  the                                                                    
     committee],  Rule 82  is the  provision  of the  Alaska                                                                    
     Rules  of Civil  Procedure  that governs  the award  of                                                                    
     [attorney]  fees in  civil litigation.   Probably  more                                                                    
     for the edification [of] anyone  who's listening who is                                                                    
     not as  conversant as members  of the  [House Judiciary                                                                    
     Standing  Committee]  are  likely   [to]  be  with  the                                                                    
     English  rule  in  Alaska,  Alaska  is  among  a  small                                                                    
     minority  of jurisdictions  in the  United States  that                                                                    
     actually has the English rule  for [attorney] fees.  In                                                                    
     most  jurisdictions,  it  doesn't matter  who  wins  or                                                                    
     loses, you pay for your  own attorneys.  You could have                                                                    
     costs  awarded, but  costs are  often a  lot less  than                                                                    
     [attorney]  fees  in  most lengthy  and  sizable  civil                                                                    
     litigations.                                                                                                               
                                                                                                                                
     ...  I think  Alaska,  coming late  to  the process  of                                                                    
     developing  its judicial  system,  saw  some wisdom  in                                                                    
     [the  English rule  for attorney  fees], and  I mention                                                                    
     that  as  a  preface  to  my  comments  on  the  public                                                                    
     interest  litigant  doctrine  as an  exception  to  our                                                                    
     version  of  the English  rule.    Our version  of  the                                                                    
     English  rule, under  Rule 82,  which  begins with  the                                                                    
     phrase, "Except as otherwise provided  by law or agreed                                                                    
     to  by   the  parties",   gives  a  certain   range  of                                                                    
     percentages,  from  1 to  20  percent,  in cases  where                                                                    
     there's a monetary judgment recovered.   In cases where                                                                    
     there's no  monetary recovery, the range  is between 20                                                                    
     and 30 percent that one  party or the other can recover                                                                    
     ... of his or her [attorney] fees.                                                                                         
                                                                                                                                
     When  we look  at the  kinds  of cases  that are  often                                                                    
     brought by  public interest  litigants, they  are cases                                                                    
     without monetary  recovery because they're  not brought                                                                    
     for monetary  damages; they're brought  for declaratory                                                                    
     judgments and injunctive relief,  and usually with some                                                                    
     sort of attempt  to effectuate a public  policy and, in                                                                    
     many  cases, to  prevent  a permitted  project or  some                                                                    
     other  development from  going  forward.   Again, as  I                                                                    
     stated a moment  ago, [Rule 82] begins  with the phrase                                                                    
     "Except  as otherwise  provided by",  and the  enabling                                                                    
     statute for Rule 82 is  the one that's being amended by                                                                    
     Section 1  of the  bill:   "[Sec. 09.60.010]  Costs and                                                                  
     attorney fees allowed to a prevailing party".                                                                            
                                                                                                                                
Number 0300                                                                                                                     
                                                                                                                                
MR. BROWN continued:                                                                                                            
                                                                                                                                
     So I take it perforce  as kind of beyond legal argument                                                                    
     that  any other  provision of  law in  [Sec. 09.60.010]                                                                    
     can, without  a court rule  change, effect a  change in                                                                    
     Civil Rule 82.  And the  change that this bill seeks to                                                                    
     effectuate  is  to  narrow  an  exception  to  the  ...                                                                    
     attorney fees rule called  the public interest litigant                                                                    
     doctrine, which  has been  articulated by  the [Alaska]                                                                    
     Supreme  Court   in  a  number  of   cases:    Citizens                                                                  
     Coalition For Tort Reform  v. McAlpine, Anchorage Daily                                                                
     News  v. Anchorage  School District,  and  it comes  up                                                                  
     again and again.                                                                                                           
                                                                                                                                
     It's a  four-part test wherein  the court will  look at                                                                    
     the nature  of ...,  usually, the plaintiff,  who's the                                                                    
     purported  public interest  litigant, and  see if  that                                                                    
     party meets  a pretty stringent  test of "A, B,  C, and                                                                    
     D"  and, on  that basis,  determine whether  or not  to                                                                    
     accord them  public interest litigant  status.   If the                                                                    
     party is so fortunate as  to pass the court's four-part                                                                    
     test,  it can  recover not  20 or  30 percent,  but 100                                                                    
     percent of its  [attorney] fees if it  prevails on even                                                                    
     a  single  issue.     And  there  was   a  case  called                                                                    
     [Matanuska  Electric Association  v. Rewire  The Board]                                                                  
     where   the  court   struck   down   the  doctrine   of                                                                    
     apportioning prevailing  parties - the extent  to which                                                                    
     they prevail -  and if they prevailed in  a few issues,                                                                    
     the courts  said, "Well, then, they  prevailed overall,                                                                    
     and  if they're  a public  interest litigant,  they can                                                                    
     get the whole shebang back."                                                                                               
                                                                                                                                
Number 0179                                                                                                                     
                                                                                                                                
MR. BROWN went on to say:                                                                                                       
                                                                                                                                
     So it's  really a  very strong  exception, to  Rule 82,                                                                    
     that [the] court has crafted  here.  The [ASCC] doesn't                                                                    
     want  to  get  rid  of  the  public  interest  litigant                                                                    
     doctrine;  the  [ASCC]   supports  ...  the  governor's                                                                    
     approach  set out  in House  Bill 145  in a  very, very                                                                    
     limited  number  of  actions:   those  that  appeal  an                                                                    
     administrative agency  decision from the  Department of                                                                    
     Environmental   Conservation    [DEC],   the   [Alaska]                                                                    
     Department of Fish and Game  [ADF&G], or the Department                                                                    
     of  Natural  Resources [DNR],  in  which  one of  those                                                                    
     three  departments  has   made  a  coastal  consistency                                                                    
     determination,   adopted   regulations,  or   made   an                                                                    
     administrative-law   decision   and  allowed   for   an                                                                    
     opportunity for that decision to  be reviewed under the                                                                    
     normal processes of administrative law.                                                                                    
                                                                                                                                
     In those  contexts, when  it's that  kind of  an action                                                                    
     with the state as the defendant,  it's - I think - wise                                                                    
     not  to   allow  the   ...  [Alaska]   Supreme  Court's                                                                    
     exceptional public  interest litigant doctrine  to skew                                                                    
     the scales  and not restrict the  potential recovery to                                                                    
     20  to   30  percent   or  impose  liability   for  the                                                                    
     plaintiff's cost  on the  defendant:   the state.   And                                                                    
     the reason for  that is this:  this will  just make the                                                                    
     court have to return to  the stated language of Rule 82                                                                    
     if  it   really  feels   that  there   are  exceptional                                                                    
     circumstances that justify an  award of greater than 30                                                                    
     percent.   If you  look at Rule  82(b)(3), there  are a                                                                    
     number of  exceptions within Rule  82 that  can achieve                                                                    
     the  same  purposes  as the  public  interest  litigant                                                                    
     doctrine.                                                                                                                  
                                                                                                                                
MR. BROWN, to illustrate this last point, paraphrased from Rule                                                                 
82(b)(3), which, with some formatting changes, read:                                                                            
                                                                                                                                
     (3)  The  court  may  vary   an  attorney's  fee  award                                                                    
     calculated  under subparagraph  (b)(1) or  (2) of  this                                                                    
     rule  if,  upon  consideration of  the  factors  listed                                                                    
     below, the court determines a variation is warranted:                                                                      
     (A) the complexity of the litigation;                                                                                      
     (B) the length of trial;                                                                                                   
     (C) the  reasonableness of the attorneys'  hourly rates                                                                    
     and the number of hours expended;                                                                                          
     (D)  the  reasonableness  of the  number  of  attorneys                                                                    
     used;                                                                                                                      
     (E) the attorneys' efforts to minimize fees;                                                                               
     (F)  the  reasonableness  of the  claims  and  defenses                                                                    
     pursued by each side;                                                                                                      
     (G) vexatious or bad faith conduct;                                                                                        
     (H)  the  relationship  between   the  amount  of  work                                                                    
     performed  and  the  significance  of  the  matters  at                                                                    
     stake;                                                                                                                     
     (I) the  extent to which  a given  fee award may  be so                                                                    
     onerous  to  the  non-prevailing party  that  it  would                                                                    
     deter similarly  situated litigants from  the voluntary                                                                    
     use of the courts;                                                                                                         
     (J)  the  extent to  which  the  fees incurred  by  the                                                                    
     prevailing party suggest that  they had been influenced                                                                    
     by considerations apart  from the case at  bar, such as                                                                    
     a  desire to  discourage claims  by others  against the                                                                    
     prevailing party or its insurer; and                                                                                       
     (K)  other equitable  factors deemed  relevant. If  the                                                                    
     court  varies an  award, the  court  shall explain  the                                                                    
     reasons for the variation.                                                                                                 
                                                                                                                                
TAPE 03-53, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
MR. BROWN, after suggesting that  subparagraphs (F), (I), and (J)                                                               
are  quite important  and germane  to public  interest litigants,                                                               
opined that  when HB 145 is  adopted, it will still  be possible,                                                               
for a  court that  thinks it's necessary,  to treat  someone that                                                               
would otherwise be  a public interest litigant in  a special way.                                                               
Instead of using the four-part  public interest litigant doctrine                                                               
test,  if the  court,  for example,  felt  that subparagraph  (K)                                                               
applied,  it  would simply  have  to  state  its reasons  on  the                                                               
record.   He opined  that HB 145  is a very  good bill  that will                                                               
help bring  a level playing  field back to litigation,  a playing                                                               
field   that  has   been  somewhat   skewed  by   some  attempted                                                               
usurpations  in  recent years  of  the  public interest  litigant                                                               
doctrine.                                                                                                                       
                                                                                                                                
Number 0111                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB 145,  Version  23-GH1064\D,  Luckhaupt,                                                               
4/30/03, as the work draft.   There being no objection, Version D                                                               
was before the committee.                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA,  to Mr.  Brown, said:   "Clearly, this  is a                                                               
political fight, and ... it interests  me that you say the [ASCC]                                                               
supports the  'public interest litigant  rule,' just not  in this                                                               
area of cases  - these natural resource cases.   Am I right about                                                               
that?"                                                                                                                          
                                                                                                                                
MR. BROWN replied:                                                                                                              
                                                                                                                                
     The  [ASCC] supports  Rule 82  [attorney] fees  because                                                                    
     this  modification   of  the   English  rule   puts  an                                                                    
     incentive  into  the   litigation  process  that  makes                                                                    
     people not file frivolous  suits and realize that there                                                                    
     may  be a  downside to  their causing  others to  spend                                                                    
     money  to  defend a  suit  that  is  not likely  to  be                                                                    
     prevailed  upon.    As  far   as  the  public  interest                                                                    
     litigant doctrine,  I think  the [ASCC's]  position is,                                                                    
     is that  Rule 82 ought to  work as Rule 82  in the vast                                                                    
     majority  of   situations,  and  the   public  interest                                                                    
     litigant  doctrine  ought  to be  restricted  to  those                                                                    
     litigants who  are truly pursuing  cases in  the public                                                                    
     interest,  which probably  means that  the state  isn't                                                                    
     going  to be  a  defendant  all of  the  time in  those                                                                    
     cases.                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA,  referring to Mr. Brown's  comment regarding                                                               
"attempted usurpations," said:                                                                                                  
                                                                                                                                
     The  kinds of  cases this  bill would  take out  of the                                                                    
     "public interest  litigant role" rubric are  of a kind,                                                                    
     according   to  [a   Legislative  Legal   and  Research                                                                    
     Services report] that only 19  of those have been filed                                                                    
     since  1993.   None  of  them  have  been found  to  be                                                                    
     frivolous.    So,  what we've  done  is  we've  allowed                                                                    
     people to use  the "public interest rule,"  and just so                                                                    
     members  know, the  public interest  rule says  that if                                                                    
     you  file a  case that  is not  for your  own financial                                                                    
     benefit -  you're not  going to make  money off  of the                                                                    
     case  - we're  going  to encourage  your  right to  ...                                                                    
     access to  the courts by  saying, if you lose  and it's                                                                    
     not a frivolous case,  you're not liable for [attorney]                                                                    
     fees,  and   if  you  win,   you  can   get  reasonable                                                                    
     [attorney] fees  paid to the  people who took  the case                                                                    
     for you.                                                                                                                   
                                                                                                                                
     And so in  the 19 of these cases that  have occurred in                                                                    
     the  last 10  years, I  guess you  have a  problem with                                                                    
     some of  them.  But I  don't know what the  problem is,                                                                    
     because ...  I've seen a  summary of those cases  and I                                                                    
     haven't  seen any  found to  be frivolous  - I  haven't                                                                    
     seen any  found to be  abusive cases.   So how  is this                                                                    
     rule being abused?                                                                                                         
                                                                                                                                
Number 0348                                                                                                                     
                                                                                                                                
MR. BROWN replied:                                                                                                              
                                                                                                                                
     Just   to  clarify,   ...   the   significance  of   an                                                                    
     individual's  potential financial  interest versus  the                                                                    
     public interest is but one  part of the four-part test.                                                                    
     And, indeed, if I'm  not mistaken, the [Alaska] Supreme                                                                    
     Court, in  - it was a  Homer case, a gentleman  who was                                                                    
     concerned about rezoning --  just because an individual                                                                    
     has a potential personal  financial stake does not deny                                                                    
     that person  the potential of  being a  public interest                                                                    
     litigant.   It's possible to have  a personal financial                                                                    
     interest as  well as being  concerned on behalf  of the                                                                    
     broader public  interest.  So that's  the clarification                                                                    
     of what the [four-part] test is.                                                                                           
                                                                                                                                
     Look at the defendants that  are named in this proposed                                                                    
     amendment   ...:       They're   the    Department   of                                                                    
     Environmental   Conservation    [DEC],   the   [Alaska]                                                                    
     Department   of  Fish   and  Game   [ADF&G],  and   the                                                                    
     Department  of Natural  Resources [DNR].   Look  at the                                                                    
     nature  of the  actions being  appealed here:   coastal                                                                    
     consistency  determinations,  adoption  of  regulations                                                                    
     where there  was an opportunity for  public comment and                                                                    
     an opportunity  to seek  administrative review.   Those                                                                    
     are  already public  processes; they  already have  the                                                                    
     benefit  of the  full  panoply  of administrative  law.                                                                    
     Individuals  who have  been able  to  go through  those                                                                    
     processes can go to court  if they're dissatisfied with                                                                    
     the result of those processes.                                                                                             
                                                                                                                                
     If they  go to court and  they prevail, they can  get -                                                                    
     assuming they want declaratory relief  and don't seek a                                                                    
     monetary  judgment -  ...  up to  30  percent of  their                                                                    
     [attorney] fees  back.  That  seems more than  fair and                                                                    
     reasonable to me. ... This  would not have affected the                                                                    
     Rewire  the  Board  case.     But  in  that  case,  the                                                                  
     potential does  exist where someone can  file a laundry                                                                    
     list of  20 alleged  deficiencies in  an administrative                                                                    
     finding.   Were they,  under the  Rewire the  Board ...                                                                  
     holding, to  prevail on  but one of  those 20,  all the                                                                    
     [attorney]  fees  could  be recovered  from  the  other                                                                    
     party.   That potential exists  ... if you look  at the                                                                    
     different cases right now.                                                                                                 
                                                                                                                                
     So even though  ..., on your list of 19  cases with the                                                                    
     state as  the defendant,  you may  not see  a potential                                                                    
     problem, I submit that a  potential problem does exist.                                                                    
     And I  further submit that  Rule 82 goes far  enough to                                                                    
     protect the  interests of litigants, who  don't have to                                                                    
     necessarily  rely  on   the  public  interest  litigant                                                                    
     doctrine,  when  under   [subparagraph]  (K)  they  can                                                                    
     convince  a  judge  that   there  are  other  equitable                                                                    
     factors that  are indeed  relevant that  justify giving                                                                    
     them more than 30 percent  that they would otherwise be                                                                    
     capped at in Rule 82.                                                                                                      
                                                                                                                                
Number 0507                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA suggested that he and Mr. Brown were talking                                                                
past each other.  He said:                                                                                                      
                                                                                                                                
     Let's just be  honest about this:  there  are folks out                                                                    
     here who want to  keep environmental groups from filing                                                                    
     litigation.   And  that's why  this bill  has now  been                                                                    
     limited to natural resource cases  even though in every                                                                    
     one of the years over the  last 10 years, this bill has                                                                    
     tried  to  wipe  out  the   public  interest  rule  for                                                                    
     everybody.   But  now ...  this year's  version of  the                                                                    
     bill  focuses on  natural resource  cases.   So,  we're                                                                    
     going to  allow the public interest  right to everybody                                                                    
     else except  for those who  challenge that  small class                                                                    
     of cases you mentioned.                                                                                                    
                                                                                                                                
     Why is  it not fair to  let people have open  access to                                                                    
     challenge  their government,  [first]?   And  [second],                                                                    
     how can  somebody afford to challenge  their government                                                                    
     in  court if  the case  doesn't involve  money, so  the                                                                    
     person doesn't  have a financial interest  in the case,                                                                    
     and  they're an  average person  who makes,  let's say,                                                                    
     $25,000  a  year  and  they can't  afford  to  hire  an                                                                    
     attorney?    So  you're   somebody  who  believes  that                                                                    
     government  is  doing   something  terrible  -  they're                                                                    
     refusing  to leave  a no-logging  buffer  zone along  a                                                                    
     stream  bank  - and  [you]  feel  that this  stream  is                                                                    
     therefore going to be endangered  and the trout in that                                                                    
     stream are  going to be  endangered, and [you]  want to                                                                    
     go get an attorney.                                                                                                        
                                                                                                                                
     And under current  law, [you] can say  to the attorney,                                                                    
     "If you  win, the state  will pay our  [attorney] fees.                                                                    
     But  under the  rule  you propose,  if  [you] win,  the                                                                    
     state's not  going to  pay [your  attorney] fees.   The                                                                    
     public member is  too poor to pay  the [attorney] fees.                                                                    
     How  do  they  challenge  their  government's  conduct?                                                                    
     That's  the  question.   I  mean,  30 percent  of  your                                                                    
     [attorney] fees isn't a lot  of money if you don't have                                                                    
     a lot of money to start out  with.  So why is that fair                                                                    
     to that person?                                                                                                            
                                                                                                                                
Number 0618                                                                                                                     
                                                                                                                                
MR. BROWN responded:                                                                                                            
                                                                                                                                
     Well, 30  percent as allowed  in Alaska's  English rule                                                                    
     in  Rule  82  is  30  percent more  than  in  the  vast                                                                    
     majority of jurisdictions in  this country and, indeed,                                                                    
     in  the  federal  system.   [Also],  your  hypothetical                                                                    
     conversation  between   a  potential   public  interest                                                                    
     litigant and  his potential attorney  is just that  - a                                                                    
     hypothetical.    I  could  posit   a  number  of  other                                                                    
     hypotheticals ...  that might be less  shining examples                                                                    
     of the  way people go  about doing  this.  And  I'm not                                                                    
     submitting  that it's  about trying  to make  money off                                                                    
     the [attorney]  fees, solely; I think  that people that                                                                    
     bring  these cases  really do  care and  really believe                                                                    
     that they're fighting a noble cause.                                                                                       
                                                                                                                                
     But  I hope  that they've  chosen to  fight that  noble                                                                    
     cause  in the  administrative context,  previously.   I                                                                    
     hope they've  done their best to  convince the decision                                                                    
     makers  in the  agencies at  the [ADF&G,  DNR, or  DEC]                                                                    
     that a certain  decision should be made  a certain way.                                                                    
     I hope that  if that decision hasn't come  out to their                                                                    
     favor  - and  probably  at this  point they've  engaged                                                                    
     counsel, and they're  not going to be able  to use Rule                                                                    
     82 to recover  the cost of that  for the administrative                                                                    
     action  -   but  if  they're  going   to  be  effective                                                                    
     advocates  even in  the  administrative context,  well,                                                                    
     it's likely  that there's  some sort  of representation                                                                    
     involved or they're really learning  a lot and becoming                                                                    
     good pro se advocates for themselves.                                                                                      
                                                                                                                                
     They also  have an  opportunity, at  the administrative                                                                    
     level, for  these types  of cases,  to appeal  and seek                                                                    
     review  within the  administrative agency.   It's  only                                                                    
     when they go to court that  this comes into play.  And,                                                                    
     again, when  they go  to court,  because they've  had a                                                                    
     greater  chance to  avail themselves  of administrative                                                                    
     law  against  the  state,  which  I  submit  is  not  a                                                                    
     presumptively tainted  defendant ...  - we are  all the                                                                    
     State  of  Alaska  -  this   defendant  should  not  be                                                                    
     subjected  to  a punitive  rule  that  places it  at  a                                                                    
     disadvantage.                                                                                                              
                                                                                                                                
     And the level  playing field of Rule  82 affords plenty                                                                    
     of protection for  someone who wants to  pursue what he                                                                    
     or she thinks is a  noble cause after an administrative                                                                    
     decision  has  been rendered.  ...  I'm  sorry if  that                                                                    
     doesn't  answer  your  question, because  I  think  I'm                                                                    
     looking at a different  hypothetical going into it than                                                                    
     you are looking at it going  into it, and I think maybe                                                                    
     that influences what  is fair or unfair when  we get to                                                                    
     the point of someone taking a case to superior court.                                                                      
                                                                                                                                
Number 0755                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA remarked:                                                                                                   
                                                                                                                                
     I've  seen agencies  make terrible  decisions.   That's                                                                    
     the whole  point of the  public interest rule,  is when                                                                    
     an  agency makes  an terrible  decision that  impacts a                                                                    
     community,  a citizen  from  that  community should  be                                                                    
     able  to challenge  it.   But if  they can't  afford to                                                                    
     hire an  attorney and we're  not going to now  let them                                                                    
     recover  their [attorney]  fees  if they  win, I  think                                                                    
     there  are  a lot  of  circumstances,  not just  a  few                                                                    
     circumstances, where bad agency  decisions are going to                                                                    
     remain in effect.   And maybe we have  a different view                                                                    
     as to  how many bad  agency decisions there are,  but I                                                                    
     think there are a lot,  and I don't think that agencies                                                                    
     are always responsive to the public.                                                                                       
                                                                                                                                
MR. BROWN  replied that under  Rule 82(b)(3)(I), a judge  is free                                                               
to  consider the  extent to  which a  given fee  award may  be so                                                               
onerous  to   the  non-prevailing  party  that   it  would  deter                                                               
similarly situated  litigants from  voluntary use of  the courts.                                                               
Even if  HB 145 becomes law,  that provision of the  Alaska Rules                                                               
of Civil  Procedure would still  apply, he concluded,  adding, "a                                                               
good judge ought to be able to  take recourse to that and put the                                                               
reasons for the variation down in  his or her finding, so if it's                                                               
further appealed to  the [Alaska] Supreme Court, they  can take a                                                               
final look at it."                                                                                                              
                                                                                                                                
REPRESENTATIVE GARA  asked Mr. Brown how  many times subparagraph                                                               
(K)  has  been  used  to fully  compensate  someone  for  his/her                                                               
attorney  fees.   "I  mean,  are  you offering  something  that's                                                               
really going to  be used, that really has been  effective, or are                                                               
you offering  something that's  not really going  to be  used and                                                               
hasn't been effective?" he also asked.                                                                                          
                                                                                                                                
CHAIR  McGUIRE  suggested  that  any  response  would  merely  be                                                               
hypothetical,  and that  that provision  of Rule  82 hasn't  been                                                               
used  because the  recourse  of being  awarded  attorney fees  in                                                               
public  interest litigation  has  been available.   She  surmised                                                               
that Mr. Brown is simply  offering that the subparagraphs of Rule                                                               
82(b)(3)  would be  used when  the  current remedy  is no  longer                                                               
available.                                                                                                                      
                                                                                                                                
Number 0868                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     I  disagree, though.   The  public  interest rule  only                                                                    
     applies - only compensates  people for their [attorney]                                                                    
     fees -  in cases  against the state.   There  are times                                                                    
     where  people   file  suits  against   corporations,  I                                                                    
     suppose,  or private  businesses,  where  they have  no                                                                    
     financial  incentive to  do  it.   It  happens all  the                                                                    
     time.   The question is,  has subsection (K)  ever been                                                                    
     used  to their  benefit  to compensate  them for  their                                                                    
     full [attorney] fees.   I don't think it  really has in                                                                    
     more than  one or  two cases.   But if  you know  for a                                                                    
     fact that it  has been a useful tool, I'd  like to hear                                                                    
     the  statistics or  some of  the statistics.   If  not,                                                                    
     then I don't  see how we can we determine  that that is                                                                    
     a useful alternative.                                                                                                      
                                                                                                                                
MR. BROWN responded:                                                                                                            
                                                                                                                                
     I'm not  prepared to provide that  statistical evidence                                                                    
     right now. ...  We can go over what  the four-part test                                                                    
     is.    I don't  know  that  it actually  restricts  the                                                                    
     defendant  to  being the  state  of  Alaska.   I  don't                                                                    
     really know if  I read that as necessary,  and that may                                                                    
     have  been the  case  thus far.   I  do  know that  the                                                                    
     plaintiff   cannot  be   a  governmental   entity;  the                                                                    
     plaintiff  has to  by private  entity.   But, I  guess,                                                                    
     under your logic, we have to  stick with the rule as it                                                                    
     currently exists,  because we  are afraid that  Rule 82                                                                    
     isn't going to do enough.                                                                                                  
                                                                                                                                
     But before the public  interest litigant was created by                                                                    
     the  supreme court,  Rule 82  had  its provisions  that                                                                    
     allow  for this,  and  it was  adopted  by the  supreme                                                                    
     court under the  language of [AS 09.60.010].   So, it's                                                                    
     kind  of an  evolutionary process.   And  I would  hope                                                                    
     that we could  trust our court system  and, indeed, our                                                                    
     legislature,  to work  together to  craft a  reasonable                                                                    
     set of  rules that  will be fair  to everyone  and will                                                                    
     not  increase unnecessary  ... litigation,  but at  the                                                                    
     same  time will  not cause  the  state to  have to  pay                                                                    
     unreasonable fees  for cases that perhaps  ought not to                                                                    
     have  been brought  or so  vigorously litigated  in the                                                                    
     first place.                                                                                                               
                                                                                                                                
Number 0964                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS asked, "Does the [ASCC] feel that a                                                                      
lawsuit should be part of the process on every project?"                                                                        
                                                                                                                                
MR. BROWN  said that  the ASCC  does not want  to see  the courts                                                               
misused.   The administrative  law process  works quite  well, he                                                               
opined, adding  that other pending  legislation will  improve the                                                               
process  even more.   He  suggested that  those proposed  changes                                                               
will  make his  arguments stronger.   He  offered that  under the                                                               
current administrative  permitting process, such a  strong record                                                               
is  created that  the court  is precluded  from trying  to reopen                                                               
issues  when there  is such  a self-contained  record.   The ASCC                                                               
doesn't want an  incentive in the rules that takes  things out of                                                               
the administrative law context that ought not be taken out.                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  surmised:    "So  everyone  should  have                                                               
something in the kitty if you want to go play."                                                                                 
                                                                                                                                
MR. BROWN  indicated that  although he would  not phrase  it that                                                               
way, he did understand Representative Samuels's point.                                                                          
                                                                                                                                
REPRESENTATIVE HOLM, after noting  that Representative Gara spoke                                                               
of  the  right  of  a  litigant  to  recover,  asked  Mr.  Brown:                                                               
"Wherein is it more right for  a person to recover their fees and                                                               
make you  pay for them?   You, as another citizen  of ... Alaska,                                                               
why should you be the one that  has to pay for them for frivolous                                                               
litigation?"                                                                                                                    
                                                                                                                                
                                                                                                                                
MR. BROWN replied:                                                                                                              
                                                                                                                                
     I agree.  And it would  be possible to do away with the                                                                    
     English rule altogether. ... That  would be a draconian                                                                    
     response to  abuses of a  system that allows  one party                                                                    
     to  recover his  or  her [attorney]  fees from  another                                                                    
     party.  We're  not even discussing that here.   We want                                                                    
     to keep the English rule; we  want to keep Rule 82 with                                                                    
     its exceptions for a judge  that really feels that they                                                                    
     need to  be put to  use.  It's the  far-reaching public                                                                    
     interest litigant  doctrine that I think  we're looking                                                                    
     at here,  and trying to  rein it  in, in a  very narrow                                                                    
     number of  cases.  And  I don't think it's  unwise and,                                                                    
     while reasonable minds might disagree,  I think ... - I                                                                    
     hope I'm making a strong  argument - that this is going                                                                    
     to return  things to where  they ought  to be:   in the                                                                    
     center, fair to both sides.                                                                                                
                                                                                                                                
Number 1100                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA raised a point of order.  He said:                                                                          
                                                                                                                                
     The last  question related  to whether  it was  fair to                                                                    
     recover full  [attorney] fees against  another citizen.                                                                    
     This  rule we're  talking about  right now,  the public                                                                    
     interest rule  only applies to cases  against the state                                                                    
      government or state government subdivisions.  That's                                                                      
     the rule.  That's the rule we're talking about.                                                                            
                                                                                                                                
CHAIR McGUIRE stated that Representative  Gara is correct, adding                                                               
that there has been much debate  going back and forth between the                                                               
government and corporations.                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLM  remarked that  he is  merely trying  to make                                                               
the point  that "we are  the government."   In other  words, when                                                               
someone sues the state government, he/she is "suing all of us."                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  sought confirmation that the  intent of                                                               
Version D  is to  require the  court, "if  they apply  the McCabe                                                             
line of  cases," to meet the  requirements of Rule 82(b)(3)  - to                                                               
make the special findings required under it.                                                                                    
                                                                                                                                
MR. BROWN  reminded members  that although  the ASCC  supports HB                                                               
145, it  is not  the bill's  sponsor.  The  ASCC is  hopeful that                                                               
Rule  82 as  written, rather  than as  interpreted by  the courts                                                               
with the  public interest litigant  doctrine, will govern  in the                                                               
future, for  the narrow category  of cases being excepted  via HB                                                               
145.   He  posited that  the  special findings  required by  Rule                                                               
82(b)(3) will  end up being  more appropriate, on  a case-by-case                                                               
basis,  than the  four-part test  for "public  interest litigant"                                                               
status.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG said:                                                                                                  
                                                                                                                                
     One thing does bother me.  Constitutionally, to amend                                                                      
       a [court] rule, the legislature has to have a two-                                                                       
     thirds  majority. ...  It  does seem  to  me that  that                                                                    
     would be required; if [we]  are ... to avoid litigation                                                                    
     and  the attendant  fiscal note,  we probably  ought to                                                                    
     pass this by a two-thirds majority.  Right?                                                                                
                                                                                                                                
MR. BROWN  offered his  belief that  a court  rule change  is not                                                               
necessary because  of the way  the introductory language  to Rule                                                               
82  is  written.    He   suggested  having  others  address  that                                                               
question.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GARA asked  Mr. Brown  if he'd  seen any  written                                                               
opinions on that point.                                                                                                         
                                                                                                                                
MR. BROWN said he had not.                                                                                                      
                                                                                                                                
Number 1381                                                                                                                     
                                                                                                                                
DORNE HAWXHURST said that she could offer a specific case, as                                                                   
opposed to a hypothetical case, that will show why HB 145 should                                                                
be rejected.  She elaborated:                                                                                                   
                                                                                                                                
     In  1995  I  was  the  executive  director  of  Cordova                                                                    
     District Fisherman United [CDFU],  and in that capacity                                                                    
     I  had  the  opportunity   to  participate  with  other                                                                    
     public-interest  appellants  in   the  "Prince  William                                                                    
     Sound  Tanker   Plan"  appeal.    Some   of  the  other                                                                    
     appellants were  the United Fisherman of  Alaska [UFA],                                                                    
     the City of  Cordova, and the Kodiak  Island Borough; a                                                                    
     number  of  individual  fisherman also  appealed.    So                                                                    
     [these] were  not just so-called  environmental groups.                                                                    
     Now, the  issue in  the appeal was  whether or  not DEC                                                                    
     had implemented  the law that this  legislature enacted                                                                    
     in  1990 after  the  [Exxon Valdez]  spill  - that  was                                                                    
     House Bill 567.   The law required the  oil shippers to                                                                    
     have  better oil-spill  plans so  we would  never again                                                                    
     have  to suffer  as  we did  after  the [Exxon  Valdez]                                                                    
     spill.                                                                                                                     
                                                                                                                                
     One of the  most important requirements of  the law was                                                                    
     that    the   oil-spill    plans    had   to    protect                                                                    
     environmentally  sensitive areas  including areas  like                                                                    
     the Copper  River delta, the Copper  River flats, which                                                                    
     are  vital  to  the   health  of  our  state's  fishing                                                                    
     industry.   Now, the reason the  fishermen appealed was                                                                    
     because after  the public comment period  closed on the                                                                    
     tanker  plans, the  DEC removed  the requirements  that                                                                    
     the  oil  companies  identify a  plan  to  protect  the                                                                    
     Copper River  delta, and this  was under  pressure from                                                                    
     the oil  companies.  And, as  Representative Gara said,                                                                    
     this an  example of a  bad agency decision -  using his                                                                    
     words "a bad agency decision."                                                                                             
                                                                                                                                
Number 1473                                                                                                                     
                                                                                                                                
MS. HAWXHURST continued:                                                                                                        
                                                                                                                                
     So  the  fishermen had  to  take  on  DEC and  the  oil                                                                    
     shippers' lawyers  in order to get  the oil-spill plans                                                                    
     to  protect the  delta as  required  by law.   We  also                                                                    
     raised other issues like the  failure of DEC to require                                                                    
     best-available-technology  escorts  for  these  tankers                                                                    
     that were  racing by our backyard.   The administrative                                                                    
     appeal was prohibitively  expensive to most appellants.                                                                    
     The City  of Cordova  withdrew in frustration  over the                                                                    
     expense of the  appeal process and DEC,  as did several                                                                    
     other  appellants.   After three  years  in the  appeal                                                                    
     process, DEC finally decided to  settle with [CDFU] and                                                                    
     the [UFA]  and to require  a plan to protect  the delta                                                                    
     and to require the tanker [tugs].                                                                                          
                                                                                                                                
     So,  although there  were other  issues that  CDFU felt                                                                    
     strongly about,  they decided not  to bear the  cost of                                                                    
     going forward.   The  administrative record  alone, not                                                                    
     including  [attorney]   fees,  cost  $10,000.     So  I                                                                    
     understand that the attorney  general's office has held                                                                    
     the "Prince William Sound Tanker  Plan" case out before                                                                    
     you,  or  at  least  the  Senate  Judiciary  [Standing]                                                                    
     Committee,  as one  reason  to get  rid  of ...  public                                                                    
     interest  litigant status.   I  urge this  committee to                                                                    
     look  at  that  lawsuit  as a  reason  to  keep  public                                                                    
     interest litigant status for suits against DEC.                                                                            
                                                                                                                                
     [The]  DEC's  abuse of  the  process  after the  public                                                                    
     comment period had closed and  its failure to carry out                                                                    
     the law  have cost the  state hundreds of  thousands of                                                                    
     dollars  in litigation  costs, and  has put  the public                                                                    
     and  individual fishermen  through years  of litigation                                                                    
     to finally get DEC to do  the right thing, to carry out                                                                    
     this  legislature's  directive.   Now,  I'm  personally                                                                    
     grateful  to  the  fishermen and  the  individuals  who                                                                    
     continued and caused  DEC to finally abide  by the law.                                                                    
     Alaskan's  who  value  their salmon  fishery  would  be                                                                    
     equally grateful if they knew the facts of the case.                                                                       
                                                                                                                                
     Approving  this bill  is  not going  to  level the  so-                                                                    
     called playing field with other  litigants.  It's going                                                                    
     to block those individuals who  are trying to provide a                                                                    
     public service to our state  by volunteering their time                                                                    
     and money to  see that the laws  are properly enforced.                                                                    
     As  a former  executive  director  of Cordova  District                                                                    
     Fisherman  United  and  as  the  wife  of  a  displaced                                                                    
     Alaskan  fisherman -  displaced by  the [Exxon  Valdez]                                                                    
     spill -  I would ask that  you reject HB 145.   It will                                                                    
     prevent individuals  from being  able to  protect their                                                                    
     (indisc.) from  DEC's abuses and from  seeking to carry                                                                    
     out the laws that ...  this legislature has passed as a                                                                    
     public  service to  Alaskans.   And, as  Mr. Brown  has                                                                    
     said, we  are all the  State of  Alaska.  Thank  you so                                                                    
     much.                                                                                                                      
                                                                                                                                
Number 1574                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA   asked  what  additional   protections  the                                                               
appellants were able to garner from DEC.                                                                                        
                                                                                                                                
MS. HAWXHURST replied:                                                                                                          
                                                                                                                                
     I  most specifically  was concerned,  on behalf  of the                                                                    
     Cordova  fishermen,  with  what  was  proposed  in  our                                                                    
     backyard  with the  ... Copper  River delta  and flats,                                                                    
     and also  the transportation  of the tankers  using the                                                                    
     best available technology.  If  you would like to learn                                                                    
     of the other  benefits that we derived  through this, I                                                                    
     would suggest  that you ask  that of  Nancy Wainwright,                                                                    
     who was our public  interest attorney for this process.                                                                    
     And we were really very grateful  to be able to have an                                                                    
     attorney,  because  we  could   not  get  through  this                                                                    
     otherwise.    We  weren't   even  given  standing,  for                                                                    
     example,  with  the  local coastal  council.    It  was                                                                    
     really unbelievably difficult.                                                                                             
                                                                                                                                
Number 1669                                                                                                                     
                                                                                                                                
ALLEN JOSEPH,  Association of Village Council  Presidents (AVCP),                                                               
stated his  position as being  that HB 145  should not pass.   He                                                               
also mentioned  that he has testified  on this issue in  the past                                                               
and continues to  oppose the idea that  public interest litigants                                                               
should be held  liable for attorney fees when they  sue the state                                                               
for  the benefit  of  the  public.   Government  is not  perfect;                                                               
however, it is  made better when members of the  public point out                                                               
excesses  and  wrongs  that  should   be  corrected.    Sometimes                                                               
lawsuits are needed to get  government's attention; therefore, he                                                               
opined, there  should be an  avenue for  people to sue  the state                                                               
without being penalized.  Public  interest lawsuits are sometimes                                                               
complex and take a long time to  resolve.  As a result, the costs                                                               
can be  enormous.  For that  reason, he said, he  opposes HB 145,                                                               
and suggested that it should not pass.                                                                                          
                                                                                                                                
REPRESENTATIVE GARA asked  Mr. Joseph whether he felt  he had the                                                               
means to hire  an attorney for the purpose of  challenging one of                                                               
the  state's resource  agencies over  a decision  threatening his                                                               
community.                                                                                                                      
                                                                                                                                
MR. JOSEPH  said no, adding  that most  such cases take  years to                                                               
resolve.                                                                                                                        
                                                                                                                                
REPRESENTATIVE GARA  noted that he'd  received a letter  from the                                                               
AVCP in opposition  to HB 145.   He asked Mr. Joseph  if he knows                                                               
people who have  used the "public interest litigant  laws" in the                                                               
past.                                                                                                                           
                                                                                                                                
MR.  JOSEPH  relayed  that  he knew  Willie  Kasayulie  from  the                                                               
village  of  Akiachak   who  sued  the  state   "to  bring  equal                                                               
maintenance  costs for  schools ...  in rural  areas."   He added                                                               
that a lot of people in his area have supported the "police-                                                                    
protection lawsuit" filed against the  state by the Alaska Inter-                                                               
Tribal  Council.     In  addition  to  these   two  examples,  he                                                               
acknowledged that  [members of  his community]  have been  on the                                                               
other end  of public  interest lawsuits such  as the  McDowell v.                                                             
State case regarding  subsistence, and the Alaskans  For a Common                                                           
Language, Inc. v.  Kritz case regarding instituting  English as a                                                             
common language.   He  added, however,  that regardless  of cases                                                               
such as  the latter two,  the AVCP  still feels that  the current                                                               
public interest litigant laws should not be changed.                                                                            
                                                                                                                                
CHAIR  McGUIRE pointed  out  that [Version  D]  would not  affect                                                               
[most] of the types of cases that Mr. Joseph referred to.                                                                       
                                                                                                                                
Number 1899                                                                                                                     
                                                                                                                                
PAUL  LAVERTY said  he would  be testifying  in opposition  to HB                                                               
145.  He  predicted that even though [Version D]  would not apply                                                               
to some  of the types of  cases Mr. Joseph referred  to, once the                                                               
exceptions to the  public interest litigant laws  are carved out,                                                               
it will  open the crack for  other exceptions to be  added in the                                                               
future.   "We're  starting down  a  slippery slope  to widen  the                                                               
prohibition on public  interest lawsuits," he added.   He went on                                                               
to say:                                                                                                                         
                                                                                                                                
     Public  interest  lawsuits  are   our  last  check  and                                                                    
     balance  [that]  private  citizens  can  bring  against                                                                    
     government   actions   that  ...   disregard   [either]                                                                    
     regulations, laws, or  the [Alaska] State Constitution.                                                                    
     I personally  have been involved  as a  public interest                                                                    
     litigant,  and that  resulted in  the [Alaska]  Supreme                                                                    
     Court case  of [Laverty v. Alaska  Railroad Corporation                                                                  
     (12/1/00)  sp-5338].    In  my  particular  case,  what                                                                    
     happened was,  a member of  the administration  for the                                                                    
     railroad  essentially  gave  away  1  million  tons  of                                                                    
     gravel  to a  couple of  developers here  in Anchorage.                                                                    
     And there  was no bidding  on this contract nor  was it                                                                    
     noticed as  a public  notice of  the disposal  of state                                                                    
     resources.                                                                                                                 
                                                                                                                                
     When I  learned about  this action, I  testified before                                                                    
     the  [Board   of  Directors  of  the   Alaska  Railroad                                                                    
     Corporation], brought  it to their attention,  which at                                                                    
     this time  they were  not aware of  because of  the way                                                                    
     the  contract was  written:   it  didn't require  board                                                                    
     approval.    I  asked  them  to  rescind  the  contract                                                                    
     because I didn't  think it was in the  best interest of                                                                    
     the Alaska Railroad [Corporation],  nor was it publicly                                                                    
     noticed like it  should have been.  When  the [Board of                                                                    
     Directors of  the Alaska Railroad Corporation]  took no                                                                    
     action, I sent a letter  to then [Senator] Loren Leman,                                                                    
     Representative  Kay  Brown,  and  Representative  Terry                                                                    
     Martin, bringing the situation to their attention.                                                                         
                                                                                                                                
Number 2029                                                                                                                     
                                                                                                                                
     And at  that point, Representative Martin,  who was the                                                                    
     head  of the  Legislative Budget  and Audit  Committee,                                                                    
     requested  [that  the  Division of  Legislative  Audit]                                                                    
     perform an audit of this  situation.  And the audit ...                                                                    
     resulted  in  a  Report Number  08-4547-9...(indisc.  -                                                                    
     coughing), which upheld some of  the concerns I had, in                                                                    
     that, one, ... this  contract wasn't necessarily in the                                                                    
     best interests  of the Alaska Railroad  Corporation and                                                                    
     it    violated   their    own   internal    procurement                                                                    
     regulations.  And it was  also potentially in violation                                                                    
     of  the  [Alaska]   State  Constitution  that  required                                                                    
     public notice  before disposal  of Alaska  assets could                                                                    
     be conducted.                                                                                                              
                                                                                                                                
MR. LAVERTY continued:                                                                                                          
                                                                                                                                
     After getting that report from  your audit committee, I                                                                    
     again asked Representatives  Martin, Brown, and Senator                                                                    
     Leman to take  some sort of an action and  to "null and                                                                    
     void" that  contract.  And, specifically,  I asked them                                                                    
     in  a  letter to  send  a  report  on [to]  the  Alaska                                                                    
     attorney general's  office to determine whether  or not                                                                    
     ... this was  an actual legal contract.   When that did                                                                    
     not  occur,  I was  finally  forced  to make  a  rather                                                                    
     difficult decision:  whether or  not I wanted to pursue                                                                    
     this  through the  state's legal  system.   And let  me                                                                    
     tell you,  it was  not a simple  decision that  I made,                                                                    
     taking on  the Alaska Railroad Corporation,  given that                                                                    
     I had, at  that time, no financial  resources to pursue                                                                    
     it out of pocket.                                                                                                          
                                                                                                                                
     So, I was  able to find an attorney, and  we argued the                                                                    
     matter  before district  court and  superior court  and                                                                    
     state supreme  court.  And  the [Alaska]  Supreme Court                                                                    
     found that yes,  indeed, the points I had  raised in my                                                                    
     initial  lawsuit   were  valid  and  that   the  Alaska                                                                    
     Railroad [Corporation] did  indeed violate the [Alaska]                                                                    
     State Constitution.                                                                                                        
                                                                                                                                
     So I would just urge  the committee to realize that ...                                                                    
     there's going  to be times ...  when the administration                                                                    
     of the state government may  change and the shoe may be                                                                    
     on the other foot with  regard to decisions handed down                                                                    
     by    these    resource-oversight    commissions    and                                                                    
     departments in the state government,  and that by doing                                                                    
     away with the ability  for public interest litigants to                                                                    
     bring  suit  on some  of  these  actions, [it]  may  be                                                                    
     detrimental in the long run  down the road.  So, again,                                                                    
     I just voice my opposition to House Bill 145 ....                                                                          
                                                                                                                                
Number 2168                                                                                                                     
                                                                                                                                
RICH  HEIG,   General  Manager,  Greens  Creek   Mining  Company;                                                               
President,  Council of  Alaska Producers,  first  noted that  the                                                               
Council of Alaska  Producers is a consortium of  hard rock mining                                                               
companies, both  existing and potential,  that have  interests in                                                               
Alaska.    He indicated  that  the  Council of  Alaska  Producers                                                               
appreciates the  work being  done on  HB 145,  and hopes  that it                                                               
will pass in some form this session.  He went on to say:                                                                        
                                                                                                                                
     We believe  that ... public interest  litigation may be                                                                    
     necessary at  times, we accept  that, but we'd  like to                                                                    
     see a more balanced  field from a legal-fee standpoint.                                                                    
     The  resource industries  are  presently burdened,  and                                                                    
     generally   rightfully   so,  with   extensive   state,                                                                    
     federal,  and local  ...  permitting requirements  ....                                                                    
     The process can take several years.   We have been in a                                                                    
     process   of   acquiring  EIS   [Environmental   Impact                                                                    
     Statement]  at  this point  in  time  at Greens  Creek;                                                                    
     we've been  in the process  for over two years,  and we                                                                    
     just  went  out  for  a  draft -  the  draft  was  just                                                                    
     published ... about two weeks ago.                                                                                         
                                                                                                                                
     The process  also includes ... a  public comment period                                                                    
     - it includes public  hearing opportunities - [and] the                                                                    
     process  includes administrative  review.   So that  is                                                                    
     quite  an  extensive  process  in front  of  us,  as  a                                                                    
     resource industry, as  it is.  The  potential for civil                                                                    
     or  administrative  appeals following  that  permitting                                                                    
     process  -- it's  difficult, it's  time consuming,  and                                                                    
     it's  very  costly,  both  for  the  agencies  and  the                                                                    
     industry, and I'll speak from the industry standpoint.                                                                     
                                                                                                                                
     The real issue  to the industry is  the cost associated                                                                    
     with  prolonged development  stages when  a permit  has                                                                    
     been issued,  and we  go into a  period where  we don't                                                                    
     know where the end of  that time period will be because                                                                    
     of  the  potential for  ...  public  litigation.   Good                                                                    
     projects can  be delayed for extended  periods of time.                                                                    
     The  risk beyond  the  permitting  approval process  is                                                                    
     worrisome to industries; we don't  know when, at times,                                                                    
     we'll  be allowed  to develop  a project  or carry  on,                                                                    
     because we're waiting for an amendment to be approved.                                                                     
                                                                                                                                
Number 2285                                                                                                                     
                                                                                                                                
MR. HEIG concluded:                                                                                                             
                                                                                                                                
     If  this  legislation  has the  opportunity  to  reduce                                                                    
     public -- or reduce costs  of litigation where there is                                                                    
     little chance of the  public interest group prevailing,                                                                    
     ... that's  good.  But  more important to  the agencies                                                                    
     and  to  the  industry  is  the  cost  associated  with                                                                    
     prolonging the  development of [a]  project.   And from                                                                    
     that standpoint, we support ...  HB 145, and we ask and                                                                    
     urge ... you to pass this legislation.  Thank you.                                                                         
                                                                                                                                
MR.  HEIG,   in  response  to   questions,  indicated   that  the                                                               
aforementioned EIS  process that  Greens Creek Mining  Company is                                                               
currently undertaking  has cost approximately $1.5  million; that                                                               
the  overall environmental  costs  are "probably  a million  more                                                               
than  that" because  of ongoing  regulatory requirements  and the                                                               
company's own  environmental standards;  and that  the "footprint                                                               
of Greens  Creek is about  360 acres," which includes  the mining                                                               
site; facilities site; Hawk Inlet  sites; various disposal sites;                                                               
and the roads, which make up about half of the total acreage.                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  Mr. Heig  whether either  of his                                                               
organizations  or  similar  groups  have found  it  necessary  to                                                               
engage in what might be considered public interest litigation.                                                                  
                                                                                                                                
MR. HEIG  indicated that there  was an instance in  the Fairbanks                                                               
area involving  Fairbanks Gold Mining,  Inc., and the  True North                                                               
Project, and  an instance involving  Greens Creek  Mining Company                                                               
that  "hasn't occurred  yet" in  which a  new solid-waste  permit                                                               
from DEC might be challenged via litigation.                                                                                    
                                                                                                                                
TAPE 03-53, SIDE B                                                                                                            
Number 2370                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG surmised  that  if  the latter  occurs,                                                               
then  Greens   Creek  Mining  Company  might   be  dragged  along                                                               
involuntarily, so to speak.                                                                                                     
                                                                                                                                
MR. HEIG  concurred, indicating that  his company  would engender                                                               
legal fees in supporting the agency.   He also indicated that the                                                               
permit in question will be modified as the process unfolds.                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG asked Mr.  Heig whether his organization                                                               
or another  industry group might  find it necessary  to challenge                                                               
an unreasonable governmental agency decision from time to time.                                                                 
                                                                                                                                
MR. HEIG said he did not  know, but surmised that an organization                                                               
itself probably  would not because  of a lack of  funds; however,                                                               
individual companies within such an organization might do so.                                                                   
                                                                                                                                
REPRESENTATIVE GARA  sought confirmation that  the aforementioned                                                               
$1.5  million costs  are related  to current  governmental agency                                                               
requirements  and not  to public  interest  litigation, which  is                                                               
what the legislation addresses.                                                                                                 
                                                                                                                                
MR. HEIG confirmed that the  aforementioned costs are not related                                                               
to public interest litigation.                                                                                                  
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     The other thing I would ask  you about is, ... I wonder                                                                    
     whether  we're giving  away too  many  rights -  giving                                                                    
     away too  many of the  public's rights.  And  there has                                                                    
     to  be a  balance  between  reasonable development  and                                                                    
     reasonable  environmental   protection.     We've  just                                                                    
     passed a bill  in the House the other day  - HB 86; ...                                                                    
     the  purpose  of  the bill  was  to  protect  companies                                                                    
     against  injunction   lawsuits  where   the  injunction                                                                    
     lawsuit wasn't  well-founded, and  so we passed  a bill                                                                    
     that said  if you  file a bad-faith  injunction lawsuit                                                                    
     you're liable for  the damages you cause  to a company.                                                                    
     Is that  not enough?   Are you familiar with  that bill                                                                    
     at all?                                                                                                                    
                                                                                                                                
MR. HEIG said he is not familiar with that legislation.                                                                         
                                                                                                                                
REPRESENTATIVE GARA asked:                                                                                                      
                                                                                                                                
     I suppose if this legislature  were to protect you from                                                                    
     bad-faith  injunction lawsuits,  would  that be  enough                                                                    
     and might  you be able  to tolerate the remainder  - us                                                                    
     allowing  to  continue  this public  interest  rule  in                                                                    
     environmental  cases -  if you  were protected  against                                                                    
     bad-faith injunction lawsuits?"                                                                                            
                                                                                                                                
Number 2178                                                                                                                     
                                                                                                                                
MR. HEIG replied:                                                                                                               
                                                                                                                                
     I have  no problem  with public interest  litigation if                                                                    
     ... there's  a purpose  served, and when  I speak  of a                                                                    
     balanced field, if it minimizes  frivolous suits, if it                                                                    
     minimizes suits where it's being  challenged to take up                                                                    
     time  in  hope  that  the industry  will  fall  by  the                                                                    
     wayside, [then] I would like  to see ..., if the public                                                                    
     litigants lose, that their fees are not recovered.                                                                         
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     I guess I don't know that  we're that far apart.  If we                                                                    
     assured you that  we passed a bill that  said you can't                                                                    
     file bad-faith  injunction lawsuits, and if  we assured                                                                    
     you that if somebody  filed a frivolous public interest                                                                    
     litigant  suit  against  you, you  could  recover  full                                                                    
     [attorney] fees  against them for harassing  you, would                                                                    
     that be  enough?   Could we  leave the  public interest                                                                    
     rule in  effect in  the remainder  of cases  outside of                                                                    
     those contexts?                                                                                                            
                                                                                                                                
MR. HEIG  replied, "The way I  see it, from a  simple standpoint,                                                               
... from a balanced field, is  that if the public litigants lose,                                                               
there should be no funding for  what they've done; they should be                                                               
able to supply their own funding for their legal challenges."                                                                   
                                                                                                                                
REPRESENTATIVE GARA agreed.                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG remarked  that some  of the  legislation that                                                               
the  legislature has  been working  on  is, in  a sense,  passing                                                               
authority to commissioners or  people in administrative positions                                                               
to  waive  local regulations  so  that  they can  make  decisions                                                               
without  the  normal  public  processes.     In  those  types  of                                                               
situations, he asked  of Mr. Heig, if a  governmental agency made                                                               
a decision that  goes against his company and caused  it to raise                                                               
a legal  challenge, for example, because  a future administration                                                               
waived  regulations without  any public  process, would  he still                                                               
feel the same way.                                                                                                              
                                                                                                                                
MR. HEIG declined to speculate.                                                                                                 
                                                                                                                                
Number 1905                                                                                                                     
                                                                                                                                
ROBERT  B.  BRIGGS,  Staff Attorney,  Disability  Law  Center  of                                                               
Alaska,  Inc.,  first  explained  that his  organization  is  the                                                               
agency designated by federal statute,  and by virtue of receiving                                                               
federal grants,  to provide protection and  advocacy services for                                                               
Alaskans with disabilities.  He went on to say:                                                                                 
                                                                                                                                
     One  aspect of  our  services  include legal  services,                                                                    
     which  at times  do include  filing lawsuits  in court.                                                                    
     Often,  we have  disputes  with the  state, over  state                                                                    
     benefits.  Our initial concern  with HB 145 was that it                                                                    
     might apply  to decisions that affect  our clients. ...                                                                    
     A letter by David  Marquez, Assistant Attorney General,                                                                    
     ... dated  April 21, 2003,  signed by Ms.  Deborah Behr                                                                    
     in Mr.  Marquez's name, ... clarifies  that [Version D]                                                                    
     ... is  intended to very  narrowly limit the  effect of                                                                    
     the bill.                                                                                                                  
                                                                                                                                
     The letter contains two  important clarifications.  One                                                                    
     is  that the  bill  clearly  applies to  administrative                                                                    
     appeals as  well as civil  lawsuits initiated  in state                                                                    
     court.   The reason that clarification  is important is                                                                    
     because there  are two aspects of  the "public interest                                                                    
     litigant  exception" as  it is  applied  by the  Alaska                                                                    
     Supreme Court.   First, it  applies as an  exception to                                                                    
     Alaska  Rule of  Civil Procedure  82.   The second  way                                                                    
     that  the doctrine  is applied  is in  deciding how  to                                                                    
     award  costs under  Rule  508 of  the  Alaska Rules  of                                                                    
     Appellate  Procedure;  [those] costs  are  specifically                                                                    
     defined to include [attorney] fees.   So, Mr. Marquez's                                                                    
     letter,   as  interpretation   of   [Version  D]   ...,                                                                    
     clarifies  that  ...  administrative appeals  would  be                                                                    
     covered by  this bill,  as well  as actions  brought in                                                                    
     the first instance in superior court. ...                                                                                  
                                                                                                                                
Number 1709                                                                                                                     
                                                                                                                                
MR. BRIGGS continued:                                                                                                           
                                                                                                                                
     The  letter also  provides  important clarification  as                                                                    
     further amplified  by the colloquy between  the members                                                                    
     of  this  committee  that  the  bill  only  applies  to                                                                    
     decisions  by three  state agencies,  and  in so  doing                                                                    
     clarifies  that  the  bill is  not  intended  to  apply                                                                    
     generally to other public  interest litigation that may                                                                    
     be  brought  against other  agencies  of  the State  of                                                                    
     Alaska  or   other  agencies   of  other   entities  of                                                                    
     government:   municipal entities or  regional entities.                                                                    
     Those are  important clarifications that  the committee                                                                    
     needs to understand as they vote on this bill.                                                                             
                                                                                                                                
     ...  I've been  involved with  debate about  the public                                                                    
     interest litigant exception for  at least the last four                                                                    
     years.    I bring  to  that  debate the  experience  of                                                                    
     having worked as an attorney  for the U.S. Army Corp of                                                                    
     Engineers,  as  an  attorney  in  the  U.S.  attorney's                                                                    
     office as an assistant  attorney general, and I've come                                                                    
     to  understand that  the power  of government,  when an                                                                    
     individual  is litigating  against  the government,  is                                                                    
     quite awesome.   And for  that reason, I think  the ...                                                                    
     Alaska Supreme Court wisely  recognized that in certain                                                                    
     kinds of litigation,  it was important to  have what we                                                                    
     know of as the public interest litigant exception.                                                                         
                                                                                                                                
     With the  important refinements that have  been made by                                                                    
     ...  [Version D],  as explained  by Assistant  Attorney                                                                    
     General  Marquez's letter,  the  Disability Law  Center                                                                    
     [of Alaska] has no objection  to the bill.  However, we                                                                    
     do recognize that  there may be claims  against some of                                                                    
     those agencies;  we think the range  of public interest                                                                    
     litigation   that  might   be  brought   against  those                                                                    
     agencies is likely  to be narrow and  limited.  Anybody                                                                    
     who  advocates on  behalf of  people with  disabilities                                                                    
     must  understand  the  extreme financial  pressure  our                                                                    
     legislature and our state fiscal  system is under.  And                                                                    
     we do  not want to  oppose resource development  in the                                                                    
     state, because  we stand  to benefit  from that  to the                                                                    
     extent general fund revenues are increased.                                                                                
                                                                                                                                
Number 1695                                                                                                                     
                                                                                                                                
MR. BRIGGS added:                                                                                                               
                                                                                                                                
     I do want  to caution the committee,  however - because                                                                    
     I always  want to be  clear about  my views on  bills -                                                                    
     that  in  regulating  this area,  the  committee  comes                                                                    
     close to touching  upon ... a couple  of very sensitive                                                                    
     issues.    One is  the  question  of whether  the  bill                                                                    
     violates  constitutional  protections of  free  speech.                                                                    
     There are  U.S. Supreme  Court opinions which  say that                                                                    
     the  filing of  a  lawsuit  is itself  an  act of  free                                                                    
     speech.     And  I'm  thinking  specifically   of  some                                                                    
     litigation  from the  early 1960s  involving the  NAACP                                                                    
     [National  Association for  the Advancement  of Colored                                                                    
     People].    And  so,  it is  possible  for  someone  to                                                                    
     challenge   this    bill   as    an   attempt    -   an                                                                    
     unconstitutional  attempt  -  to quiet  the  effort  of                                                                    
     certain viewpoints  from being  addressed in  the court                                                                    
     system.                                                                                                                    
                                                                                                                                
     I think the  reason behind this bill  obviously was, as                                                                    
     some  say, "to  level the  playing the  field."   But I                                                                    
     think  the supreme  court recognized,  in adopting  the                                                                    
     public  interest litigant  exception, that  the playing                                                                    
     field was  not level  to begin with,  that in  order to                                                                    
     encourage people  to act as private  attorneys general,                                                                    
     and I think  also as an element of  providing access to                                                                    
     the court,  that it was  necessary to  insulate certain                                                                    
     parties  from  liability  for [attorney]  fees,  should                                                                    
     they lose good-faith claims that  are brought, and that                                                                    
     they should  recover full fees  should they  prevail on                                                                    
     those  claims. ...  I  think ...  the  lawyers on  this                                                                    
     committee  understand  some  of  the  basics  of  those                                                                    
     doctrines.                                                                                                                 
                                                                                                                                
     I  think other  people  have testified  about the  high                                                                    
     cost  of litigation,  and that,  basically, is  why the                                                                    
     public   interest   litigant    exception   is   there:                                                                    
     litigation  costs have  skyrocketed.    And those  high                                                                    
     costs  stand  as a  very  important  impediment to  the                                                                    
     expression of certain ideas in  the court system.  And,                                                                    
     as we have pointed out  in previous testimony on SB 97,                                                                    
     the founders of not only  our U.S. Constitution but our                                                                    
     Alaska  [State] Constitution  wisely  decided that  our                                                                    
     citizens  should  have  three  avenues  of  petitioning                                                                    
     government to redress grievances, not one.                                                                                 
                                                                                                                                
Number 1598                                                                                                                     
                                                                                                                                
MR. BRIGGS said:                                                                                                                
                                                                                                                                
     The first, of  course, is the legislature,  and this is                                                                    
     seeking  to  change the  laws  that  guide us  all,  by                                                                    
     petitioning  our individual  legislators.   The second,                                                                    
     of course, is  the executive branch.  And  the third is                                                                    
     seeking to  resolve a  dispute by  filing an  action in                                                                    
     court.   So  this ...  bill, if  passed, will  have the                                                                    
     effect of  saying that a  certain class of  people, who                                                                    
     are  recognized  by  the  court  as  under  the  public                                                                    
     interest litigant  exception, will  no longer  have the                                                                    
     benefit of that  rule.  I think it  is unfortunate that                                                                    
     this  committee   does  not  have   better  statistical                                                                    
     evidence  to  support  the decision  being  made  here,                                                                    
     because  undoubtedly  there  will be  equal  protection                                                                    
     claims raised  by those who  are adversely  affected by                                                                    
     this bill should it pass.                                                                                                  
                                                                                                                                
     ...  Perhaps some  of you  also have  the data  that is                                                                    
     available,  and it  is very  difficult to  parse.   For                                                                    
     example, the  data from  the attorney  general's office                                                                    
     does not generally give much  description of the nature                                                                    
     of the litigation for which  funding requests are being                                                                    
     asked.   And so it  is very difficult, just  looking at                                                                    
     lists of  that litigation,  to say,  "Okay, this  was a                                                                    
     public  interest  litigant  case, or  it  wasn't,"  or,                                                                    
     "This  was   a  particular  type  of   public  interest                                                                    
     litigant case."   The most definitive data  I have seen                                                                    
     on  this subject  comes from  a legislative  memorandum                                                                    
     which  apparently researched  published cases  that are                                                                    
     reported  in  the  Pacific Reporter,  and  ...  gave  a                                                                  
     description  of the  case, the  name of  the party,  as                                                                    
     well as the amount of [attorney] fees awarded.                                                                             
                                                                                                                                
     The  total  for  a  10-year period  that  was  awarded,                                                                    
     supposedly   under   the   public   interest   litigant                                                                    
     exception,  was $9  million, which  sounds like  a lot.                                                                    
     But in  reality, $4.5 million  of those awards  came in                                                                    
     one case:   the Weiss  case, which was a  mental health                                                                  
     case.   I've  inquired [of]  the executive  director of                                                                    
     the  Alaska  Mental  Health Trust  Authority,  who  has                                                                    
     informed  me that  the ...  [attorney] fees  awarded in                                                                    
     that case were actually done  by settlement, not by any                                                                    
     award  by  a  judge   after  litigation  ...  over  the                                                                    
     entitlement to [attorney] fees.                                                                                            
                                                                                                                                
Number 1472                                                                                                                     
                                                                                                                                
MR. BRIGGS added:                                                                                                               
                                                                                                                                
     So  I'm  not sure  it  is  fair  to include  the  Weiss                                                                  
     [attorney]  fees  in  ... this  mix  here  of  numbers,                                                                    
     partly because  that award was for  interim fees, which                                                                    
     involved a  very large  class action.   And so  I think                                                                    
     the Weiss  case is an  unusual case.   I'm not  sure it                                                                  
     should  be entered  into the  calculus of  deciding ...                                                                    
     who  is  affected  by   the  public  interest  litigant                                                                    
     exception.    But  even  including  it,  this  was  the                                                                    
     breakdown I  came up  with:  7.9  percent of  the cases                                                                    
     reported were  natural resource or  environmental cases                                                                    
     - that  actually surprised me,  given the fact  that we                                                                    
     are   a  ...   state  still   developing  our   natural                                                                    
     resources; 9.5  percent of the  awards were  for civil-                                                                    
     rights  cases,  which  I  classified  as  miscellaneous                                                                    
     civil rights  other than the  Weiss case;  30.4 percent                                                                  
     of the  cases involved elections or  redistricting; and                                                                    
     only 1.8 percent involved miscellaneous other cases.                                                                       
                                                                                                                                
     If you subtract out the  Weiss case, the figures look a                                                                  
     little  more  like the  world  that  I think  is  being                                                                    
     talked about before you today.   If you subtract Weiss,                                                                  
     that leaves  $4.5 million that  has been  awarded under                                                                    
     the public interest litigant exception:   16 percent of                                                                    
     the awards went for  natural resource and environmental                                                                    
     cases; 19 percent to civil  rights cases; 61 percent to                                                                    
     election and  redistricting cases; and 3.6  percent ...                                                                    
     I provide that data simply  because I think you need to                                                                    
     have  some basis  for deciding  how  to treat  somebody                                                                    
     differently if this  bill is to pass and it  is to pass                                                                    
     equal-protection muster.                                                                                                   
                                                                                                                                
     This  body has  debated  the  public interest  litigant                                                                    
     exception a  lot.   I ...  left one  important research                                                                    
     file at  the office, but  I did [spend] some  effort at                                                                    
     looking  back to  see what  previous legislatures  have                                                                    
     done  with regard  to  this exception.    And I  should                                                                    
     point out as  an aside that I sat on  the "Alaska Civil                                                                    
     Rule 82" committee back in  1983, when its revision was                                                                    
     being debated.   And I was  one of those who  felt that                                                                    
     it was  wise for  the Alaska Supreme  Court to  adopt a                                                                    
     notation  in Supreme  Court Order  [(SCO) 1118am]  that                                                                    
     specifically  preserved  the public  interest  litigant                                                                    
     exception.                                                                                                                 
                                                                                                                                
Number 1347                                                                                                                     
                                                                                                                                
MR. BRIGGS went on to say:                                                                                                      
                                                                                                                                
     And  our recommendation  was followed  by the  [Alaska]                                                                    
     Supreme Court, and  if you go look up  [SCO 1118am] you                                                                    
     will see that notation [is]  adopted not as a statement                                                                    
     that it  should be  published as a  notation; [instead]                                                                    
     it is in  fact a separate paragraph of the  [SCO].  And                                                                    
     so,  if you  look  at  the [SCO]  itself,  it says  the                                                                    
     public interest  litigant exception is not  affected by                                                                    
     this rule.   And I say that because  one legal question                                                                    
     here is:   what is a court  rule?  Is it  simply a body                                                                    
     of  rules that  is  contained in  something called  the                                                                    
     Alaska Rules  of Civil Procedure  and the  Alaska Rules                                                                    
     of Appellate Procedure?                                                                                                    
                                                                                                                                
     I  suspect,  although  I have  not  found  [an  Alaska]                                                                    
     Supreme  Court case  to  definitively  state this,  ...                                                                    
     that the  Alaska Supreme  Court would  say, "A  rule is                                                                    
     what we  say is  a rule."   And it  could very  well be                                                                    
     that a court order such  as [SCO 1118am] is [an Alaska]                                                                    
     Supreme  Court  rule  just  as  the  notation  that  is                                                                    
     attached to  the publication of  ... Civil Rule  82 ...                                                                    
     could be  interpreted [that]  it was  intended to  be a                                                                    
     court rule.   I say  that because you've  already heard                                                                    
     from one member of  this committee that perhaps Article                                                                    
     IV, Section 15, of  the [Alaska] State Constitution may                                                                    
     require this  statute to be  passed as a court  rule if                                                                    
     it's to ... survive judicial scrutiny.                                                                                     
                                                                                                                                
     I should point  out that since 1993,  ... every statute                                                                    
     that has  amended Civil Rule  82 has  specifically done                                                                    
     it with a  nod to the Alaska Supreme  Court by specific                                                                    
     court rule amendment adopted  by a two-thirds majority.                                                                    
     I  believe I  heard  early testimony  that ...  because                                                                    
     Civil Rule 82 has at  its beginning a statement, quote,                                                                    
     "Except as  otherwise provided by law",  that therefore                                                                    
     the  [Alaska] Supreme  Court was  somehow signaling  to                                                                    
     the  legislature  that  a two-thirds  majority  was  no                                                                    
     longer required.                                                                                                           
                                                                                                                                
     I've never heard it said,  when I sat through the Civil                                                                    
     Rule 82 debate in 1993,  which resulted in the complete                                                                    
     rule  that  you  see  today  - well,  the  rule  as  it                                                                    
     existed,  it  did  include  the  "Except  as  otherwise                                                                    
     provided by law"  language - I don't  recall any debate                                                                    
     about that subject.   I think it was  just an oversight                                                                    
     by  the committee.    Obviously,  the [Alaska]  Supreme                                                                    
     Court may have thought about  it, and it certainly is a                                                                    
     plausible interpretation.  But,  on the other hand, the                                                                    
     fact that  the public interest litigant  rule has never                                                                    
     been  codified into  Rule 82  may  be further  evidence                                                                    
     that the  Alaska Supreme  Court certainly  intends that                                                                    
     it  continue  to be  viewed  as  a separate  rule  that                                                                    
     cannot be  changed except by  a two-thirds  majority of                                                                    
     this  body.   With that,  I conclude  my testimony  and                                                                    
     will respond to any questions you have.                                                                                    
                                                                                                                                
Number 1179                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG broached the idea of making an                                                                         
amendment that would specify that HB 145 is an indirect court                                                                   
rule amendment.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GARA, speaking to Mr. Briggs, said:                                                                              
                                                                                                                                
     I am aware  of - at least I have  information about - a                                                                    
     case  that involved  a handicapped  Alaskan who  wanted                                                                    
     fair access  to fishing  and hunting  programs.   And I                                                                    
     have  the vaguest  understanding  of the  case, but  it                                                                    
     seems to be  a case that is a  public interest litigant                                                                    
     case that [would]  be precluded if we  passed this bill                                                                    
     -  at least  it would  be  affected if  we passed  this                                                                    
     bill. ...  Was that  a case that  would be  affected by                                                                    
     this bill and what was it?                                                                                                 
                                                                                                                                
MR. BRIGGS replied:                                                                                                             
                                                                                                                                
     I think  the answer  is yes.   I'm  aware of  two cases                                                                    
     involving  Alaskans with  disabilities  that have  been                                                                    
     brought  against public  resource management  agencies.                                                                    
     The  first case  -- and  ... neither  of them  involved                                                                    
     court cases, and so, to  that extent, I guess maybe the                                                                    
     correct answer  to your question  is, because  they did                                                                    
     not proceed along far enough,  they would not have been                                                                    
     affected by this bill.                                                                                                     
                                                                                                                                
     The first case  was a case that our  agency brought; it                                                                    
     was  a  complaint  ...  brought  against  the  [Alaska]                                                                    
     Department  of Fish  and  Game,  seeking relaxation  of                                                                    
     rules against motorized access  to a non-motorized area                                                                    
     in  order to  engage  in, I  believe,  bear hunting  by                                                                    
     someone who  had paraplegia and  wanted to use  a four-                                                                    
     wheeler  to go  into this  area to  engage in  hunting.                                                                    
     And I believe it was  resolved by the department wisely                                                                    
     deciding  that  the  Americans  With  Disabilities  Act                                                                    
     [ADA]  ... or  [Alaska's] anti-discrimination  statutes                                                                    
     might  require   [reasonable]  accommodation   of  this                                                                    
     person's disability,  and so they relaxed  the rule for                                                                    
     that person.                                                                                                               
                                                                                                                                
Number 1001                                                                                                                     
                                                                                                                                
MR. BRIGGS continued:                                                                                                           
                                                                                                                                
     The second  case I'm aware  of was a case  involving an                                                                    
     attorney  here   in  Juneau  named  Mike   Stanley  who                                                                    
     represents  fishermen  in fishing-permit  appeals,  and                                                                    
     ...  I talked  with  him  some about  this  case as  he                                                                    
     developed it.   My understanding  of the case  was that                                                                    
     it was  a commercial  fishing permit applicant  who was                                                                    
     not  given appropriate  credits for  fishing.   I'm not                                                                    
     exactly  sure  of the  particulars,  but  I think  that                                                                    
     there was a  claim that the [ADA]  required, because of                                                                    
     this  fisherman's disability,  some  relaxation of  the                                                                    
     rules  with  regard to  how  his  ... credits  for  [a]                                                                    
     fishing permit  were calculated.   And he  prevailed in                                                                    
     an administrative proceeding on that ADA claim.                                                                            
                                                                                                                                
     So, technically,  neither one  of the cases  would have                                                                    
     been  affected  by this  bill  because  they were  both                                                                    
     resolved  administratively   before  ever   getting  to                                                                    
     court.  But, yes, the reality  is that there ... may be                                                                    
     some   cases   in   the  future,   by   Alaskans   with                                                                    
     disabilities,  ... where  they  want to  assert a  case                                                                    
     against the  [Alaska] Department of Fish  and Game, the                                                                    
     Department  of  Natural  Resources, or  the  Department                                                                    
     Environmental  Conservation.    Now,  the  most  likely                                                                    
     claim  is  going  to be  an  employment  discrimination                                                                    
     claim, which is going to  be claim where the person has                                                                    
     a  personal interest,  and so  that person  is probably                                                                    
     not going  to be viewed  as a public  interest litigant                                                                    
     unless  they  can try  to  create  some claim  that  is                                                                    
     broader than themselves.                                                                                                   
                                                                                                                                
Number 0936                                                                                                                     
                                                                                                                                
MR. BRIGGS concluded:                                                                                                           
                                                                                                                                
     But we  have decided that  because the range  of people                                                                    
     with disabilities  that would  be affected by  the bill                                                                    
     as amended is narrow, we do  not oppose this bill.  And                                                                    
     I apologize  if it's sounds  like I'm making  the brief                                                                    
     for people who  do oppose this bill; I'm  not trying to                                                                    
     do  that.   I  am  trying to  have  this  body make  an                                                                    
     informed decision  that at least  tries to  address the                                                                    
     legal concerns  that I think  a supreme court  is going                                                                    
     to look at when the bill is reviewed.                                                                                      
                                                                                                                                
MR.  BRIGGS,  in  response  to a  question,  clarified  that  the                                                               
Disability Law  Center of Alaska is  neutral on the bill,  and is                                                               
providing  testimony  because,  generally,  the  public  interest                                                               
litigant exception is very important to its clients.  He added:                                                                 
                                                                                                                                
     I can  say [that] I've  seen the  looks in the  eyes of                                                                    
     families when  I say, "You  know, if we take  this case                                                                    
     all  the way,  against  the state,  the  bill could  be                                                                    
     hundreds of thousands of dollars  in legal fees; unless                                                                    
     you're  classified  as   a  public  interest  litigant,                                                                    
     you'll be  liable for  those fees  - you,  your family,                                                                    
     your house."   And that  chills the decision to  file a                                                                    
     lawsuit unless  there is a reasonable  expectation that                                                                    
     we can classify the case  as a public interest litigant                                                                    
     case.                                                                                                                      
                                                                                                                                
CHAIR  McGUIRE, after  ascertaining that  no one  else wished  to                                                               
testify, closed public testimony on HB 145.                                                                                     
                                                                                                                                
Number 0832                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS made  a motion  to adopt  the new  fiscal                                                               
note provided by  the Division of Risk  Management, Department of                                                               
Administration.  There being no objection, it was so ordered.                                                                   
                                                                                                                                
Number 0790                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  made a motion  to adopt Amendment  1, a                                                               
handwritten   amendment,   which   read   [original   punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 2  line 13                                                                                                            
      Sec.  __   AS 09.60.010  is  amended by  adding a  new                                                                    
     subsection to read:                                                                                                        
          (c)  Nothing in this section shall prohibit the                                                                       
     court  from  awarding   a  successful  public  interest                                                                    
     litigant  costs  and   reasonable  attorney's  fees  or                                                                    
     refusing to award any costs  or attorney's fees against                                                                    
     an unsuccessful  public interest litigant if  the court                                                                    
     determines  that  such  an  order  is  warranted  under                                                                    
     Alaska Rule of Civil Procedure 82(b)(3).                                                                                   
                                                                                                                                
Number 0782                                                                                                                     
                                                                                                                                
CHAIR McGUIRE objected.                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG  offered that  Amendment 1  would merely                                                               
stipulate  that the  court should  do as  Mr. Brown  predicted it                                                               
would do,  and after  reading portions of  Amendment 1  out loud,                                                               
said  it will  apply to  both Civil  Rule 82(b)(3)  and Appellate                                                               
Rule 508(e).   He opined  that Amendment 1  would solve a  lot of                                                               
problems  and  give the  court  discretion  as  long as  it  made                                                               
special findings that an award is warranted.                                                                                    
                                                                                                                                
MR. TILLERY  opined that Amendment  1 appears to  be unnecessary,                                                               
and that the administration would not  support it.  He added that                                                               
the language in  Amendment 1 is true for  any litigant regardless                                                               
of whether he/she is a public interest litigant.                                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG  suggested  that if  Amendment  1  does                                                               
nothing else,  then, it  would at least  provide the  public with                                                               
notice that the courts have such authority.                                                                                     
                                                                                                                                
MR.  TILLERY   expressed  opposition  to   including  unnecessary                                                               
language in statute.                                                                                                            
                                                                                                                                
CHAIR McGUIRE indicated that she opposes Amendment 1.                                                                           
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     Under current law,  the court will defer  to the intent                                                                    
     of Rule 82,  which is to award  [attorney] fees against                                                                    
     the party  that loses.   What [Amendment 1] does  is it                                                                    
     tells  the  court  that  it's our  intent  that  it  be                                                                    
     allowed  to  exercise  its   discretion  not  to  award                                                                    
     [attorney] fees  against a citizen  who files  a public                                                                    
     interest case.   If we  don't adopt [Amendment  1], the                                                                    
     courts  will  award   [attorney]  fees  against  public                                                                    
     interest  litigants.    So, without  the  statement  of                                                                    
     intent that  comes with this  ... [amendment],  make no                                                                    
     mistake  about it,  citizens who  file public  interest                                                                    
     cases  will be  held liable  for [attorney]  fees under                                                                    
     Rule  82  -  I  feel  very  confident  in  that  -  for                                                                    
     crippling amounts, potentially.                                                                                            
                                                                                                                                
CHAIR  McGUIRE observed  that that  is the  purpose of  the bill,                                                               
adding, however, that  the courts retain the  discretion to alter                                                               
the award.                                                                                                                      
                                                                                                                                
Number 0308                                                                                                                     
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted  in  favor  of  Amendment   1.    Representatives  Samuels,                                                               
Anderson, Ogg,  Holm, and McGuire  voted against it.   Therefore,                                                               
Amendment 1 failed by a vote of 2-5.                                                                                            
                                                                                                                                
Number 0284                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment  2,  a  handwritten  amendment,  which  read  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     page 2  line 13                                                                                                            
      Sec__  The uncodified law of the State of Alaska is                                                                       
     amended by adding a new section to read:                                                                                   
          Indirect Court Rule Amendment                                                                                 
     Sections  1  and 2  of  this  Act  have the  effect  of                                                                    
     amending  Alaska  Civil  Rule  82  and  therefore  take                                                                    
     effect of they receive  the two-thirds majority vote of                                                                    
     each house required by art.  IV, sec.15 Constitution of                                                                    
     the State of Alaska.                                                                                                       
                                                                                                                                
Number 0254                                                                                                                     
                                                                                                                                
CHAIR McGUIRE objected, and offered  her belief that the language                                                               
in Rule 82,  "Except as otherwise provided by law"  makes a court                                                               
rule  change  and  its   accompanying  two-thirds  majority  vote                                                               
unnecessary.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG recalled  from  Mr. Briggs's  testimony                                                               
that all other statutory changes to  Rule 82 have involved a two-                                                               
thirds majority vote.  He opined  that a court would be likely to                                                               
find  that HB  145  is  an indirect  court  rule amendment,  thus                                                               
requiring  a two-thirds  majority  to pass.    He suggested  that                                                               
adoption   of  Conceptual   Amendment   2   would  avoid   costly                                                               
litigation.                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  predicted that HB  145 would pass by  a two-thirds                                                               
majority anyway.                                                                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG pointed  out, however,  that regardless                                                               
of whether a  bill passes by two-thirds, the issue  of whether to                                                               
adopt a court rule change requires a separate vote.                                                                             
                                                                                                                                
REPRESENTATIVE   GARA   mentioned   that   the   [Alaska   State]                                                               
Constitution says that a court  rule change requires a two-thirds                                                               
vote  from   each  body,  that  that   particular  constitutional                                                               
provision  was taken  from New  Jersey's  constitution, and  that                                                               
there was a  case - John S. Westervelt's Sons  v. Regency, Inc. -                                                             
in  New Jersey  predating  the [Alaska  State] Constitution  that                                                               
interprets New Jersey's constitution  as classifying attorney fee                                                               
awards as  a court rule.   He said  he strongly believes  that HB                                                               
154 is changing a court rule.                                                                                                   
                                                                                                                                
TAPE 03-54, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  said he  is very troubled  by the  fact that                                                               
every time this legislation has come  up in the past - every year                                                               
since 1993  - it  has been  considered a court  rule change.   He                                                               
suggested that  frustration over  the fact that  such legislation                                                               
has not  yet garnered the  required two-thirds majority  vote has                                                               
prompted some  to proffer the  conclusion that a  two-thirds vote                                                               
is  not required  this  time.   "All along,  I  think, we've  all                                                               
believed that a two-thirds vote is  required," he added.  He also                                                               
said:                                                                                                                           
                                                                                                                                
     I think  we're entering dangerous  ground.  I  think to                                                                    
     be  safe we  should include  a statement  that this  is                                                                    
     considered a  court rule change.   I think  we're doing                                                                    
     something very,  very risky by  passing a bill  that at                                                                    
     [the]  least, under  any analysis,  raises a  very fair                                                                    
     chance  that the  courts are  going to  strike the  law                                                                    
     down  two years  from now.   So  the safe  thing to  do                                                                    
     would  be to  consider it  a court  rule change,  and I                                                                    
     support the amendment.                                                                                                     
                                                                                                                                
CHAIR McGUIRE relayed  that a note passed to her  makes the point                                                               
that  in  creating the  public  interest  litigant doctrine,  the                                                               
[Alaska] Supreme  Court could  have prefaced  Civil Rule  82 with                                                               
language mandating a court rule change, but did not do so.                                                                      
                                                                                                                                
Number 0204                                                                                                                     
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted  in  favor  of Conceptual  Amendment  2.    Representatives                                                               
Anderson,  Ogg,  Holm, Samuels,  and  McGuire  voted against  it.                                                               
Therefore, Conceptual Amendment 2 failed by a vote of 2-5.                                                                      
                                                                                                                                
Number 0236                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA then introduced Amendment 3, a handwritten                                                                  
amendment, which read [original punctuation provided]:                                                                          
                                                                                                                                
     P.2 line 3                                                                                                                 
          After "litigant," the rate of attorney's fees                                                                         
     awarded  may  not  exceed  $125/hour.     If  a  public                                                                    
     interest  litigant's case  is deemed  frivolous by  the                                                                    
     court,  full attorney's  fees at  a rate  that may  not                                                                    
     exceed  $125/hr.  may  be   awarded  to  the  defendant                                                                    
     against whom that case was filed.                                                                                          
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     We've  heard some  claim that  people think  the public                                                                    
     interest rule has gone too far.   I don't agree, but in                                                                    
     the  interest   of  drawing  people  from   both  sides                                                                    
     together  on  this one,  at  least  as many  people  as                                                                    
     possible, I  would agree to change  the public interest                                                                    
     rule  to  make  sure  that  we  don't  award  excessive                                                                    
     [attorney]  fees, [and]  I would  agree  to change  the                                                                    
     public interest rule  to make sure that  if people file                                                                    
     frivolous   public  interest   cases,   they  be   held                                                                    
     accountable.   So, what [Amendment  3] does is  it caps                                                                    
     the [attorney fees]  award at $125 an hour.   The going                                                                    
     rate for [attorney] fees is  somewhere between $165 and                                                                    
     $185 an  hour, sometimes more.   There have  been cases                                                                    
     where  people have  requested and  been  awarded up  to                                                                    
     $300  an hour  in cases  the courts  have deemed  to be                                                                    
     especially difficult and for whatever other reasons.                                                                       
                                                                                                                                
     But I  think this  would at least  satisfy a  number of                                                                    
     the concerns  people have made.   It would  satisfy the                                                                    
     concerns  that maybe  there  are  frivolous claims  out                                                                    
     there, though  the report  from [Legislative  Legal and                                                                    
     Research Services] says that  of the 19 public interest                                                                    
     litigant  cases in  natural resource  cases it's  found                                                                    
     over the  last 10 years, not  a single one of  them has                                                                    
     been  found  to  be   frivolous,  and  plaintiffs  have                                                                    
     actually prevailed in 17 of 19 of those cases.                                                                             
                                                                                                                                
     But that's what  the amendment would do;  it would just                                                                    
     limit  the [attorney]  fees award  to something  that I                                                                    
     hope  we  would  all  consider to  be  reasonable,  not                                                                    
     abusing, and  do just  like Representative  Fate's bill                                                                    
     does, which is go another  step towards saying, if your                                                                    
     claim  is frivolous,  we won't  tolerate  it and  we'll                                                                    
     award full  [attorney] fees against  you if you  file a                                                                    
     frivolous  claim.   I hope  this is  a compromise  that                                                                    
     people could live with ... as a reasonable compromise.                                                                     
                                                                                                                                
REPRESENTATIVE GARA,  in response  to a question,  indicated that                                                               
he  would not  oppose additional  language that  would allow  the                                                               
amount  of  $125  to  rise   right  along  with  cost  of  living                                                               
increases.                                                                                                                      
                                                                                                                                
Number 0440                                                                                                                     
                                                                                                                                
CHAIR McGUIRE announced that there is objection to Amendment 3.                                                                 
                                                                                                                                
MR. TILLERY, after  stating that HB 145 is  intended to establish                                                               
a  level  playing field,  surmised  that  Amendment 3  would  not                                                               
accomplish this  goal, and indicated  that the  administration is                                                               
opposed to Amendment 3.                                                                                                         
                                                                                                                                
Number 0537                                                                                                                     
                                                                                                                                
A  roll   call  vote  was  taken.     Representatives  Gruenberg,                                                               
Anderson,  Ogg, Holm,  Samuels, Gara,  and McGuire  voted against                                                               
Amendment 3.  Therefore, Amendment 3 failed by a vote of 0-7.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG said:                                                                                                  
                                                                                                                                
     I think  that the  record shows  that these  cases have                                                                    
     not been  frivolous, they have  been brought  only when                                                                    
     necessary, and that  if this bill passes  it will chill                                                                    
     public interest  litigants.  And  it's only  a question                                                                    
     of time  until the  double-edged sword comes  into play                                                                    
     here, and  I think the real  test - and I've  said this                                                                    
     before -  of litigation  is whether a  bill is  as good                                                                    
     coming at  you as it  is going  with you.   And there's                                                                    
     going to come  a day when industry groups  are going to                                                                    
     be filing public interest  litigation against what they                                                                    
     consider   to   be   bad  regulations   or   regulatory                                                                    
     interpretations, or appealing  agency decisions in this                                                                    
     area.                                                                                                                      
                                                                                                                                
     And the current McCabe rule,  which is the seminal case                                                                  
     in  this area,  the public  interest interpretation  of                                                                    
     Rule 82  - and I  think it's an interpretation  of that                                                                    
     rule -  will protect  whoever is the  successful public                                                                    
     interest  litigant.   And it  may be  the only  way the                                                                    
     public interest can  by protected, so I'm  going to put                                                                    
     a "do not pass."                                                                                                           
                                                                                                                                
Number 0779                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG,  after saying  that the  language on  page 1,                                                               
line 14,  through page 2, line  [2], does not make  sense to him,                                                               
suggested  that perhaps  the "or"  on page  1, line  14, and  the                                                               
"and" on page 2, line 1, should be switched with each other.                                                                    
                                                                                                                                
Number 0801                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  objected  to this  suggestion  [which  was  later                                                               
treated as Amendment  4].  She posited that  the current language                                                               
has a  broader scope, with  the intent being to  encourage people                                                               
to participate in the public  process instead of seeking recourse                                                               
via a lawsuit.                                                                                                                  
                                                                                                                                
MR.  TILLERY  added that  [Amendment  4]  would make  a  dramatic                                                               
change from what is intended.  He elaborated:                                                                                   
                                                                                                                                
     There are  sort of three  decisions that can  come down                                                                    
     from ... any one of  those three agencies that would be                                                                    
     affected  by this  bill.   One  of those  is a  coastal                                                                    
     consistency   determination.     Another  one   is  the                                                                    
     adoption of  regulations.   And a  third is  a decision                                                                    
     for which  there was an  opportunity for the  public to                                                                    
     comment  to   the  agency   before  the   final  agency                                                                    
     decision, and  administrative review.  It's  not enough                                                                    
     that  ... the  public simply  is able  to comment,  but                                                                    
     that  it also  must  have an  opportunity  to seek  the                                                                    
     administrative   review   for  that   third   category.                                                                    
     Conversely,  those  (indisc.)  public comment  to  seek                                                                    
     administrative review aren't  necessarily implicated in                                                                    
     the first  two.   And an  example might  be regulations                                                                    
     where  there's a  tremendous amount  of public  comment                                                                    
     and   so    forth,   but   there    isn't   necessarily                                                                    
     administrative review.                                                                                                     
                                                                                                                                
MR. TILLERY  said that  although the current  language in  HB 145                                                               
might be  difficult to read, it  is intended that there  be those                                                               
three distinct instances.   In response to  further questions, he                                                               
said  that all  three instances  have an  opportunity for  public                                                               
comment, though  not all have  the possibility  of administrative                                                               
review.  What  is intended is that any one  of the three agencies                                                               
may  either make  a coastal  consistency  determination, adopt  a                                                               
regulation,  or   make  a  decision   for  which  there   was  an                                                               
opportunity for the public to  comment and an opportunity to seek                                                               
administrative   review.     Again,  both   public  comment   and                                                               
administrative review  are not necessarily  going to  accompany a                                                               
coastal   consistency  determination   or  the   adoption  of   a                                                               
regulation.                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE suggested  that it  could be  looked at  thus:   a                                                               
coastal  consistency   determination  is   "A";  adoption   of  a                                                               
regulation  is   "B";  and  an  agency   decision  that  includes                                                               
opportunities for  both public comment and  administrative review                                                               
is "C."                                                                                                                         
                                                                                                                                
MR. TILLERY agreed with that summation.                                                                                         
                                                                                                                                
REPRESENTATIVE  OGG remarked  that  the current  language in  the                                                               
bill could  have been  clearer, adding that  his main  concern is                                                               
that the bill not be  interpreted to mean that the aforementioned                                                               
decisions could be made without some form of public process.                                                                    
                                                                                                                                
Number 1118                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG then withdrew [Amendment 4].                                                                                 
                                                                                                                                
REPRESENTATIVE  OGG   indicated  that  as  a   harvester  of  the                                                               
resources of  the state,  he is very  concerned about  the issues                                                               
being  raised by  HB 145.    Although the  bill may  be aimed  at                                                               
curtailing lawsuits  by large environmental  groups with  lots of                                                               
funding, the public interest litigant  exception is essential for                                                               
the "little  guy," the average  harvester of  Alaska's resources.                                                               
Referring to Ms. Hawxhurst's example,  he indicated that although                                                               
he, too,  would like  to see  organizations such  as "Greenpeace"                                                               
prevented from attacking  some of the decisions  made by Alaska's                                                               
resource management  agencies, it  is also important  for average                                                               
citizens - the  harvesters of Alaska's resources - to  be able to                                                               
seek  redress  from  those  agencies   via  the  public  interest                                                               
litigant exception.   He opined that  HB 145 will not  affect the                                                               
large environmental organizations, which  have the money to bring                                                               
suits  against  state  agencies;  instead,  it  will  impinge  on                                                               
Alaska's  individual  resource  harvesters, who  don't  have  the                                                               
financial wherewithal to challenge bad agency decisions.                                                                        
                                                                                                                                
CHAIR  McGUIRE expressed  understanding  of Representative  Ogg's                                                               
position.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  HOLM  said  that  he, too,  as  one  involved  in                                                               
agriculture, is  cognizant of the fact  that there is a  need for                                                               
the  public   interest  litigant  exception  in   order  to  keep                                                               
government  from   "taking  our  land  through   these  types  of                                                               
processes where  they classify it  and don't allow us  to utilize                                                               
those properties that we own."   He opined, however, that passage                                                               
HB 145 will serve the greater  good because "we cannot afford, in                                                               
the state  of Alaska, to  be locked up  by groups that  come from                                                               
other places  of the  country purely for  the purpose  of locking                                                               
the state of Alaska up."                                                                                                        
                                                                                                                                
Number 1497                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     I've  worked   against  this  bill   before  I   was  a                                                                    
     legislator, and  I'm going to  speak against  it today.                                                                    
     It's  a bill  that's shown  up almost  every year,  and                                                                    
     it's a  bill that's  troubled me  more than  almost any                                                                    
     other  legislation  every  year.   We  should  let  the                                                                    
     public challenge  its government,  but this  bill works                                                                    
     to  prevent the  public  from being  able to  challenge                                                                    
     their government.   It's the wrong way to go.   Our job                                                                    
     is to protect the public,  but this ... [bill protects]                                                                    
     the  government, and  it does  so  in an  irresponsible                                                                    
     way.                                                                                                                       
                                                                                                                                
     ... I see  a trend, this year, to closing  the doors to                                                                    
     public  access.   This is  one example  of where  we're                                                                    
     closing  the doors.   I  believe  - and  I respect  the                                                                    
     opinions on the other side,  but there's a bill to make                                                                    
     it  harder for  people to  file initiatives  - ...  DEC                                                                    
     just  adopted ...  or  is in  the  process of  adopting                                                                    
     pesticide rules and  they held no public  hearing.  And                                                                    
     I'm  wondering where  we're  going,  where we're  going                                                                    
     other than  to a  place where the  public has  no input                                                                    
     any more  - or less input.   And I think  more input is                                                                    
     better.                                                                                                                    
                                                                                                                                
     ...  Let's look  at  the objective  facts.  ... We  can                                                                    
     "demagogue"  this   issue  and  talk   about  frivolous                                                                    
     environmental lawsuits,  but we had  [Legislative Legal                                                                    
     and Research  Services] do some  work for us,  and they                                                                    
     found  [that]  over the  last  10  years, ...  in  this                                                                    
     environmental area that we're  trying to regulate [via]                                                                    
     this bill,  only 19 of [these  public interest litigant                                                                    
     cases]  ... have  been filed.   [And]  17 of  them were                                                                    
     found to  be cases where  the plaintiff was  right, and                                                                    
     the plaintiffs weren't  just environmental groups, they                                                                    
     were  fishermen,  they  were subsistence  users,  [and]                                                                    
     they were Native Alaskans.                                                                                                 
                                                                                                                                
     The record  just doesn't substantiate the  claim by the                                                                    
     attorney  general's   office  that  ...,   "The  public                                                                    
     interest   rule   has,"   quote,  "led   to   increased                                                                    
     litigation and  suits without merit," end  quote.  It's                                                                    
     a  nice statement,  but it  is  divorced from  reality.                                                                    
     We've uncovered no  cases without merit in  the last 10                                                                    
     years  in this  area.   And  not only  is the  attorney                                                                    
     general's office  wrong in  claiming that  there's been                                                                    
     in  increase   in  litigation   over  the   years,  our                                                                    
     Legislative Affairs Agency did  some research and said,                                                                    
     between 1993  and 1997, 11  of these cases  were filed,                                                                    
     and in  the most recent  five years, only 8  cases were                                                                    
     filed.                                                                                                                     
                                                                                                                                
Number 1631                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA continued:                                                                                                  
                                                                                                                                
     So actually,  there's been a  decrease in this  kind of                                                                    
     litigation.   Has it  bankrupted the state?   No.   The                                                                    
     awards to the fishermen's  groups and the Native Groups                                                                    
     and  the conservation  groups, and  whoever the  people                                                                    
     are who  filed these  19 cases over  the last  10 years                                                                    
     have  averaged  about  $60,000   a  [year]  ....    Not                                                                    
     millions of  dollars.   So, $600,000  over the  last 10                                                                    
     years.  So I think  the fears that exist aren't related                                                                    
     to  [the] reality  [that]  exists.   Let  me just  talk                                                                    
     about who we're going to  close the courthouse doors to                                                                    
     and why we're going to close the courthouse doors.                                                                         
                                                                                                                                
     As an attorney, I know  people have come into my office                                                                    
     and I've told them that we  have a very onerous rule in                                                                    
     this  state that  says if  you file  a lawsuit  and you                                                                    
     lose,  even  if it  was  a  good-faith lawsuit,  you're                                                                    
     going to  be on the  hook for  20 percent of  the other                                                                    
     side's [attorney]  fees.  And  many people  have looked                                                                    
     at me and  said, "I can't afford that; I  would like to                                                                    
     pursue my claims, I have  a valid claim, my rights have                                                                    
     been trampled  on perhaps,  but I  can't take  the risk                                                                    
     that I lose, and maybe  on a technicality I'll lose and                                                                    
     I'll owe the other side  20 percent of their [attorney]                                                                    
     fees."                                                                                                                     
                                                                                                                                
     Well,  that's what  the public  interest rule  does, it                                                                    
     says, if you have a  true matter of public interest, if                                                                    
     your not filing  the case to make money, if  you have a                                                                    
     true matter of  public interest and you  lose, but it's                                                                    
     a  good-faith  claim,  you don't  owe  your  government                                                                    
     [attorney]  fees.   It opens  the  courthouse doors  to                                                                    
     people who don't  have money, and that's  a good thing.                                                                    
     And I  think ironically  this bill recognizes  that's a                                                                    
     good  thing  because  it's only  trying  to  close  the                                                                    
     courthouse doors in natural resource  cases.  It leaves                                                                    
     them open in other cases, and that's a good thing.                                                                         
                                                                                                                                
Number 1682                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA went on to say:                                                                                             
                                                                                                                                
     But I  wonder why it's picked  natural resources cases,                                                                    
     since the  facts don't substantiate that  any people in                                                                    
     natural  resources  litigation  have abused  this  rule                                                                    
     over  the   years.  ...  We're   going  to   close  the                                                                    
     courthouse  doors   to  people  -  fishermen   who  are                                                                    
     dissatisfied with  an oil  spill contingency  plan that                                                                    
     the state  has approved.   Let's say  the state  does a                                                                    
     bad job  and allows  oil companies to  adopt a  bad oil                                                                    
     spill contingency plan, one  that endangers our fishing                                                                    
     streams  and our  fishing waters,  and a  public member                                                                    
     says, "I don't think  that contingency plan follows the                                                                    
     law or is strong enough."                                                                                                  
                                                                                                                                
     Well,  before that  person  can sue,  if  we pass  this                                                                    
     bill,  they're going  to have  to dare  to look  [Exxon                                                                    
     Mobil Corporation]  in the eye  and say, "If I  lose my                                                                    
     suit, I'm  going to pay  20 percent of  your [attorney]                                                                    
     fees."  It's a lot of  money; I think they're not going                                                                    
     to do  it.   It's a  case they  would file  against the                                                                    
     state,  but it  would be  protracted litigation,  and I                                                                    
     think it would  cost them too much to take  the risk of                                                                    
     paying 20 percent of the state's [attorney] fees.                                                                          
                                                                                                                                
     If  you're a  fisherman,  and you  say,  "You know,  my                                                                    
     fishing  streams are  best protected  if I  have a  ...                                                                    
     150-foot  no-logging buffer  along my  fishing stream,"                                                                    
     and DNR  says, "Well,  I'm only  going allow  a 50-foot                                                                    
     buffer along  the fishing stream."   And  the fisherman                                                                    
     wants to  challenge DNR's determination,  because we've                                                                    
     now  moved [the  Division of  Habitat and  Restoration]                                                                    
     over to DNR;  that fisherman is going to  have to reach                                                                    
     in his  pocket and  say, "If  I lose  this case,  can I                                                                    
     afford  to pay  20  percent of  the state's  [attorney]                                                                    
     fees?"  I think their answer is going to be no.                                                                            
                                                                                                                                
Number 1757                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA concluded:                                                                                                  
                                                                                                                                
     So  I think  this  is a  bad rule.  ...  This bill  has                                                                    
     failed  in   prior  years   because  every   year  it's                                                                    
     portrayed as  -- the public interest  rule is portrayed                                                                    
     as a  rule that  only Democrats or  conservationists or                                                                    
     people  that  the  majority doesn't  like  files  these                                                                    
     suits.  But  then all of a sudden  the Republicans come                                                                    
     marching in, and  they say, "No, we've  used the public                                                                    
     interest  rule too."    And in  fact,  people from  all                                                                    
     walks of life have used this public interest rule.                                                                         
                                                                                                                                
     The  subsistence  case that  has  gotten  us into  this                                                                    
     situation   where  we   are   today,   that  held   our                                                                    
     subsistence  law  unconstitutional  10 years  ago,  was                                                                    
     filed by  people who had  a quite conservative  view on                                                                    
     the  issue  that  they  filed  on.   They  won.    They                                                                    
     probably wouldn't have  been able to do  it without the                                                                    
     public interest  rule.   And I  respect that  they took                                                                    
     the case and they  challenged government, I don't agree                                                                    
     with the result, but I  respect their right to do that.                                                                    
     And people from all walks of life have used this rule.                                                                     
                                                                                                                                
     ...  I  think  it's  a  rule  that  provides  for  open                                                                    
     government, accessible  government.  I think  we should                                                                    
     never  be  scared  of  the  public  -  we  should  only                                                                    
     encourage  the public  to challenge  our conduct  - but                                                                    
     the day we've  decided that we're scared  of the public                                                                    
     and that  we're going  to chill  the public's  right to                                                                    
     challenge our conduct,  I think, is the  day that we've                                                                    
     gone the  wrong way.   And I know  that all of  the bad                                                                    
     things I've  talked about aren't  the intent of  any of                                                                    
     the  people who  support  this bill,  and I  understand                                                                    
     there  are good  arguments on  both sides,  but I  feel                                                                    
     very strongly that this is poor public policy.                                                                             
                                                                                                                                
CHAIR  McGUIRE  pointed   out,  however,  that  HB   145  is  not                                                               
preventing someone from  bringing suit; it is  merely saying that                                                               
in certain  circumstances, the  state isn't going  to pay  all of                                                               
the attorney fees.  She noted  that lawsuits are not the only way                                                               
to solve  problems, and reiterated  her suggestion that  the goal                                                               
of the bill  is to encourage people to participate  in the public                                                               
process instead of seeking recourse via lawsuits.                                                                               
                                                                                                                                
Number 1907                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG offered:                                                                                               
                                                                                                                                
     I  think  that  many  people  on  this  committee  have                                                                    
     personally  seen some  action by  government that  they                                                                    
     don't like.   And  I'm looking  back at  something that                                                                    
     happened to a  couple of you just a couple  of days ago                                                                    
     that we discussed in a  couple of committees.  And that                                                                    
     had to do with the invasion  of your rights as you went                                                                    
     through the airport.  It  wasn't exactly like this, but                                                                    
     the concept  was somewhat  similar.   And I'm  sure you                                                                    
     can  all,  everybody  in  this   room,  ...  foresee  a                                                                    
     circumstance  where   you  felt  or  might   feel  that                                                                    
     government  was   acting  beyond  the  scope   of  it's                                                                    
     authority.   And  I'm not  just talking  about in  this                                                                    
     area; I'm talking about in any area.                                                                                       
                                                                                                                                
     And you  would have  been in  the legislature,  and you                                                                    
     would know how difficult and  expensive it is to change                                                                    
     a law.  And you  would know how difficult and expensive                                                                    
     it   is   to   get  government,   anything   from   the                                                                    
     "transportation authority"  on down, to change  the way                                                                    
     the bureaucracy  works.  It's  very difficult.   So the                                                                    
     only  way   you  could  potentially  change   what  was                                                                    
     happening to  you would be  to go to some  attorney and                                                                    
     [say]  ...,   "I've  got  a  problem   here,  and  it's                                                                    
     something that  I haven't lost  any money on,  but it's                                                                    
     something that has really affected  my right" - whether                                                                    
     it's  a fisherman,  or going  through  the airport,  or                                                                    
     having  your  dog  taken away  from  you,  or  whatever                                                                    
     happens to be important. ...                                                                                               
                                                                                                                                
     But the last refuge that each  of us has to make things                                                                    
     equal with the  government is in the court  of law. ...                                                                    
     And [a law has] got to  look good coming at you as well                                                                    
     as  going  with  you.    And  my  question  is  to  the                                                                    
     committee:   ... assuming that there  are problems with                                                                    
     the way certain types  of lawsuits have been conducted,                                                                    
     or  [that] there  might be,  is  this the  best way  of                                                                    
     dealing with  them?  And  there are lots of  other ways                                                                    
     that you  could deal  with the  problem.   The question                                                                    
     is, is  this the best  way?   Or ... are  you overbroad                                                                    
     and hit beyond the mark or  ... miss the mark?  And I'd                                                                    
     just ask you to consider  that because this is only one                                                                    
     possible solution to that problem.                                                                                         
                                                                                                                                
Number 2058                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS moved  to report  the proposed  committee                                                               
substitute  (CS)  for  HB 145,  Version  23-GH1064\D,  Luckhaupt,                                                               
4/30/03, out  of committee  [with individual  recommendations and                                                               
the accompanying fiscal notes].                                                                                                 
                                                                                                                                
Number 2060                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA objected.                                                                                                   
                                                                                                                                
Number 2081                                                                                                                     
                                                                                                                                
A  roll call  vote was  taken.   Representatives Anderson,  Holm,                                                               
Samuels, and  McGuire voted in  favor of reporting the  bill from                                                               
committee.    Representatives  Ogg,  Gara,  and  Gruenberg  voted                                                               
against  it.   Therefore,  CSHB 145(JUD)  was  reported from  the                                                               
House Judiciary Standing Committee by a vote of 4-3.                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 2087                                                                                                                     
                                                                                                                                
The House Judiciary Standing Committee  was recessed at 5:47 p.m.                                                               
to a call of the chair.  [The meeting never was reconvened.]                                                                    

Document Name Date/Time Subjects