Legislature(2001 - 2002)

04/23/2001 09:12 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 23, 2001                                                                                      
                              9:12 AM                                                                                         
SFC-01 # 82, Side A                                                                                                             
SFC 01 # 82, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:12 AM.                                                            
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Also  Attending:    LORETTA  BROWN,  staff  to  Senator  Ward;  GAIL                                                          
FENUMIAI,  Election  Program  Specialist,   Division  of  Elections,                                                            
Office of the Governor;                                                                                                         
Attending via  Teleconference:  From Anchorage: WEV  SHEA, Attorney;                                                          
AL SUNDQUIST, President,  Alaska Chapter of Americans United for the                                                            
Separation of Church and State                                                                                                  
SUMMARY INFORMATION                                                                                                         
HB  81-DENTISTS/DENTAL HYGIENISTS & ASSISTANTS                                                                                  
The bill moved from Committee.                                                                                                  
SJR 24-AMEND CONSTITUTIONAL BUDGET RESERVE FUND                                                                                 
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
SB 183-ATTY FEES:APPORTIONMT/PUBLIC INT.LITIGANT                                                                                
The Committee heard from  the sponsor and took public testimony. The                                                            
bill moved from Committee.                                                                                                      
SB 187-ABSENTEE VOTING STATIONS                                                                                                 
The  Committee  heard  from  the  Committee   and  the  Division  of                                                            
Elections. An  amendment was considered and adopted.  The bill moved                                                            
from Committee.                                                                                                                 
     CS FOR HOUSE BILL NO. 81(FIN)                                                                                              
     "An Act extending  the termination date of the  Board of Dental                                                            
     Examiners;  relating  to  the  Board of  Dental  Examiners  and                                                            
     regulation  of  the  practice  of dentistry;  and  relating  to                                                            
     dental hygienists and dental assistants."                                                                                  
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Senator Wilken  noted his  concerns voiced  at the previous  hearing                                                            
regarding  temporary licenses.  He stated that  while he there  is a                                                            
need for "an  underserved population",  determining the best  way to                                                            
address  the  issue  within  this  bill  would  delay  its  passage.                                                            
Therefore,  he  concluded  he would  work  on  separate legislation                                                             
during the interim.                                                                                                             
Senator Wilken offered  a motion to move from Committee SCS CS HB 81                                                            
(FIN)  with accompanying  zero fiscal  note from  the Department  of                                                            
Community and Economic Development.                                                                                             
The bill MOVED from Committee without objection.                                                                                
     SENATE JOINT RESOLUTION NO. 24                                                                                             
     Proposing amendments to the Constitution of the State of                                                                   
     Alaska relating to the budget reserve fund.                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Co-Chair Donley testified  this resolution would reform the language                                                            
governing  the  Constitutional  Budget  Reserve  fund (CBR)  in  the                                                            
Alaska Constitution  (Article IX,  Section 17). He stated  that when                                                            
the constitutional  amendment  creating this  section was  initially                                                            
proposed, the intent was  that the CBR could be accessed by a simple                                                            
majority  vote of  the  legislature  in years  where  the amount  of                                                            
general  fund  spending was  not  higher  then the  previous  year's                                                            
spending. However, in a  series of rulings, he pointed out the court                                                            
"misinterpreted   the  meaning  of   the  language  of  'all   funds                                                            
available'  or 'unrestricted funds'".  The resulting definition,  he                                                            
said,  requires  a  three-quarters   vote  every  time  the  CBR  is                                                            
Co-Chair  Donley opined, "This  turned the  intent of the  amendment                                                            
effectively  on  its head"  and transformed  it  from  a vehicle  to                                                            
restrain  state spending  into  "a vehicle  that  actually  promotes                                                            
increased  state spending."  He explained  any group of legislators                                                             
constituting   at   least  one-forth   of   either   the  House   of                                                            
Representatives  or the Senate could  "force additional spending  to                                                            
occur"  by refusing  to vote  for the  CBR draw  until their  budget                                                            
requests are included.  He stated this reverses the  original intent                                                            
of the constitutional amendment approved by the voters.                                                                         
Co-Chair Donley  informed this resolution clarifies  the language in                                                            
the constitution  to allow the provision  to function as  originally                                                            
intended. He detailed  that in years of spending higher  than in the                                                            
previous year, the three-quarters  vote would be necessary to access                                                            
the CBR.                                                                                                                        
Co-Chair  Donley noted  the "sweep  provision" is  removed from  the                                                            
constitution  by this resolution.  He defined the provision,  saying                                                            
that  without a  specific three-quarters  vote,  non-general  funds,                                                            
such as from  the Marine Highway System  and Aerospace development,                                                             
are used to repay  the CBR for previous withdrawals.  He stated that                                                            
this  provision  is "unpalatable"  to  those  working  in the  state                                                            
government  as well as most  Alaskans, who  would be "injured"  from                                                            
reductions to the affected programs.                                                                                            
Co-Chair  Donley   summarized  that   the  resolution  corrects   an                                                            
"erroneous   court   interpretation   of   amounts   available   for                                                            
appropriation  language." He remarked  this would help restrain  the                                                            
current practice  of a small group of legislators  forcing increased                                                            
spending,  resulting in  a "more  fiscally responsible  system  that                                                            
reasonably allows access"  to the CBR in those years the legislature                                                            
"exercises  fiscal discipline" and  does not spend more than  in the                                                            
previous year.                                                                                                                  
Co-Chair  Kelly  asked  for clarification  of  how  this  resolution                                                            
addresses the sweep provision.                                                                                                  
Co-Chair  Donley   answered  the  provision  is  removed   from  the                                                            
constitution  thereby eliminating  the necessity of a three-quarter                                                             
vote to prevent "the sweep."                                                                                                    
Senator Austerman  understood the  current system requires  a three-                                                            
quarter vote  to draw from the CBR.  He cited language deleted  from                                                            
the constitution  shown on  page 2, lines 5  and 6 of the  committee                                                            
substitute,  "less than  the amount  appropriated  for the  previous                                                            
fiscal year, an  appropriation may be made". He asked  if the amount                                                            
were higher  than the previous  year, would  the three-quarter  vote                                                            
still be necessary.                                                                                                             
Co-Chair Donley  responded if the  legislature adopts a budget  that                                                            
spends  more than the  amount of  general funds  available for  that                                                            
fiscal year,  a three-quarters  vote would  be required in  order to                                                            
withdraw the remaining amount from the CBR.                                                                                     
Senator  Austerman  asked for  the section  in the  resolution  that                                                            
addresses the three-quarter vote.                                                                                               
Co-Chair   Donley  referred   to  the  existing   language   in  the                                                            
AT EASE 9:20 AM / 9:25 AM                                                                                                       
Co-Chair Kelly  understood the resolution allows the  legislature to                                                            
draw from the  CBR without a three-quarter vote if  the general fund                                                            
spending  is no more than  that of the previous  year. He  continued                                                            
that if  the spending  were higher,  a three-quarter  vote would  be                                                            
necessary.  He explained  funds  could be  withdrawn  from the  CBR,                                                            
without  a three-quarter  vote, to  pay the  difference between  the                                                            
amount of general  funds available  and the total spending  from the                                                            
previous  year. He commented  that this would  eliminate "the  dance                                                            
that we go through down  here" to secure necessary votes for the CBR                                                            
Co-Chair  Kelly opined  the sweep  provision is  "probably the  most                                                            
threatening"   aspect  of   the  CBR  language   currently   in  the                                                            
Senator Olson  spoke to concerns that in a few years,  the CBR would                                                            
be exhausted.  He asked how this resolution guarantees  cost savings                                                            
or increases the longevity of the fund.                                                                                         
Co-Chair Donley  noted the CBR had  been expected to decline  in the                                                            
past few  years, but that  it actually has  grown to a projected  $3                                                            
billion at  the end of the current  fiscal year. He agreed  the fund                                                            
is still  projected to decrease  in the upcoming  several years  and                                                            
remarked this resolution  would protect the CBR in multiple ways and                                                            
would  "reverse the  whole presumption  of  access to  the CBR."  He                                                            
reiterated  the current  system "forces  more  spending" and  larger                                                            
withdrawals   from  the  CBR  because   "certain  elements   in  the                                                            
legislature"  "blackmail" the  majority until  their spending  items                                                            
are  included  in the  budget.  Under  the proposed  constitutional                                                             
amendment,  he continued,  this  practice  could only  occur  during                                                            
years  of increased  general fund  spending. He  read language  from                                                            
page  2,  lines  7  through  12  of  the  committee   substitute  to                                                            
demonstrate:  "However, the amount  transferred from the  fund under                                                            
this subsection  may not exceed the amount necessary,  when added to                                                            
other  funds  available  for appropriation,   to provide  for  total                                                            
funding equal to the amount  of appropriations made for the previous                                                            
fiscal year."  He stated spending  could "fill in the gap"  from the                                                            
previous year  but that a three-quarters vote would  be required for                                                            
any  additional  spending.  This,  he stressed,  would  "hold  down"                                                            
withdrawals from the CBR thus making the fund last longer.                                                                      
Senator Wilken asked for  clarification that the withdrawal from the                                                            
CBR would  be  automatic, provided  the  amount of  spending was  no                                                            
greater then in the previous year.                                                                                              
Co-Chair Donley  specified a majority  vote is required to  pass the                                                            
budget and would  serve as approval to withdraw funds  from the CBR.                                                            
Senator  Green  expressed  that  she  hoped  this  resolution  would                                                            
provide an incentive to spend less.                                                                                             
Co-Chair  Donley  affirmed  it would  by  preventing "a  very  small                                                            
number  of  legislators  to  force  higher  spending"  than  in  the                                                            
previous  year by "utilizing  the courts'  misinterpretation  of the                                                            
original intent of the CBR language."                                                                                           
Co-Chair Kelly emphasized,  "the beauty of it is that we are able to                                                            
fight  over just  the increases,"  which  he said  was the  original                                                            
intent of the constitutional amendment.                                                                                         
Senator  Green  referred  to page  2, lines  12  through  14 of  the                                                            
committee  substitute, "For  purposes of  applying this subsection,                                                             
amounts  available for appropriation  or  appropriated from  federal                                                            
funds, income  of the permanent  fund, or  this budget reserve  fund                                                            
may not be  considered." She asked  if this should include  retained                                                            
earnings,  such as from  the Alaska Housing  Finance Corporation  or                                                            
the  Alaska Development  and  Export  Authority as  exclusions.  She                                                            
noted the court  excluded these earnings  in Hickle vs. Halford  and                                                          
was concerned  whether the court would  reverse itself if  the items                                                            
were left out of the resolution if it was adopted.                                                                              
Co-Chair Kelly  recalled that the  matter of corporate receipts  was                                                            
discussed in  relationship to the  spending limit during  a previous                                                            
meeting. Because  of this, he wanted  to merge this resolution  with                                                            
SJR 23,  Constitutional  Amendment:  Appropriation  Limit, but  that                                                            
there were title restraints preventing this.                                                                                    
Co-Chair  Donley responded  the issue  is addressed  in language  on                                                            
page  2 lines  14  and 15  of  the committee  substitute,  "For  the                                                            
purposes of  this subsection, 'unrestricted  general fund'  shall be                                                            
defined by  law." This he explained,  "leaves it to the legislature                                                             
to, by statute,  have the flexibility  to define that question."  He                                                            
reminded  that  the legislature  had  passed  a law  providing  this                                                            
definition after  the constitutional amendment was  first adopted in                                                            
1990. He stated this law  was consistent with the original intent of                                                            
the amendment  however the  court overturned  it and "adopted  their                                                            
own  interpretation  of  the  definition"  of unrestricted   general                                                            
Senator Hoffman  posed a scenario  of an initial appropriation  that                                                            
is  no greater  than  that of  the previous  year's  spending  until                                                            
supplemental  funds are appropriated  thus raising the total  amount                                                            
above the limit.  He asked if the supplemental budget  would require                                                            
a three-quarter vote in this situation.                                                                                         
Co-Chair Donley  surmised a three-quarter vote would  be required to                                                            
access those CBR  funds because the spending occurs  within the same                                                            
fiscal year and  exceeds that of the previous year.  He noted if the                                                            
original  budget  were  low  enough  to  allow  for  a supplemental                                                             
appropriation, the three-quarter vote would not be required.                                                                    
Co-Chair Kelly shared that he wished the resolution to continue.                                                                
Co-Chair Donley offered  a motion to move SJR 24 from Committee with                                                            
a zero  fiscal note  from the Office  of the  Governor, Division  of                                                            
There was no objection and the bill MOVED from Committee.                                                                       
     SENATE BILL NO. 183                                                                                                        
     "An Act relating to public interest litigants and to attorney                                                              
     fees; and amending Rule 82, Alaska Rules of Civil Procedure."                                                              
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Donley shared that  identical legislation  had passed  the                                                            
Senate  the  previous  legislature.  He  testified  the legislation                                                             
broadens Civil  Rule 82 to include  public interest litigants,  with                                                            
special provisions added for more flexibility.                                                                                  
Co-Chair  Donley  told the  Committee  the  Alaska courts  have  the                                                            
authority  to adopt  rules  that regulate  how the  courts  operate.                                                            
Civil  Rule 82, he  said, establishes  that  prevailing parties  are                                                            
compensated  for their court costs  and attorney fees in  a lawsuit.                                                            
He pointed out  Alaska is the only state with such  a provision, and                                                            
that the federal  government does not have such a  provision either.                                                            
Co-Chair  Donley detailed  the provisions  of Civil  Rule 82,  which                                                            
establishes a  percentage schedule for compensation.  This schedule,                                                            
he  stated, is  based  upon the  amount  of paperwork  involved  and                                                            
whether  or not  the case  goes to  trial.  He noted  that the  full                                                            
attorney fees  are not provided under this rule, but  again stressed                                                            
that  all  other  courts  provide  no  compensation.   He  suggested                                                            
prevailing  parties "have other ways  of making up that difference"                                                             
between the amount compensated and the actual cost.                                                                             
Co-Chair  Donley remarked that  the public  policy is to fairly  and                                                            
fully  compensate  "people   who are  damaged,"   with  recovery  of                                                            
attorney  fees providing  this compensation.  He stressed the  Civil                                                            
Rules are adopted  by the court rather than by a vote  of the people                                                            
or by elected representatives.                                                                                                  
Co-Chair  Donley continued  that  over time,  the  court adopted  an                                                            
additional  public  policy,  based  on court  decisions  called  the                                                            
Public Interest Litigants  Doctrine. This policy, he said, indicates                                                            
that when  the court  feels a party  brought a  lawsuit on a  matter                                                            
that the  court considers  to be in the  public interest, the  court                                                            
could order  compensation in  an amount greater  than what  would be                                                            
awarded under Civil Rule  82. He stated the reasoning is that public                                                            
interest  litigants were providing  a public  service by bringing  a                                                            
lawsuit   in  instances  of   misinterpretation   of  a  law   or  a                                                            
constitutional  provision and that litigant should  be "rewarded" by                                                            
not having to pay for the cost of bringing forth the lawsuit.                                                                   
Co-Chair Donley  noted that the court ruled the calculated  attorney                                                            
fees  should be  "reasonable."  He asserted  this  is because  "some                                                            
rather   active  groups",   such  as  the   "radical  environmental                                                             
community", have  attorneys on staff earning $20 to  $40 per hour on                                                            
salary,  and  that the  group,  upon  winning  a case,  presents  an                                                            
invoice  claiming fees  of $200 per  hour. He  said this is  because                                                            
outside  counsel would  have charged  the higher  rate if the  group                                                            
chose that route in obtaining  legal representation. As a result, he                                                            
said, some courts try to  control public interest litigant's fees so                                                            
the compensation  is no more  than the actual  cost of bringing  the                                                            
lawsuit.  However, he  asserted, other  courts,  including those  in                                                            
Alaska, "have  been prone to award  what it might have cost"  if the                                                            
attorneys were  in the private sector. This, he said  has led public                                                            
interest litigation  to become "a growth industry  for attorneys and                                                            
for certain professional  public interest litigant groups" because a                                                            
profit is made  off of the compensation  system. He charged  this is                                                            
"undermining the  whole public policy involved in  the first place."                                                            
Co-Chair  Donley continued  that until  the past  few years,  courts                                                            
would apportion  the attorney fees  based only on those portions  of                                                            
the  lawsuit where  the  plaintiff  prevailed. He  cited  this as  a                                                            
mitigating  factor  against  "abuses in  this  process."  He gave  a                                                            
scenario  of  a  lawsuit  brought  by  a public   interest  litigant                                                            
containing  ten claims, of  which nine were  dismissed or  defeated,                                                            
and one  prevailed. He explained  in this  instance the court  would                                                            
only  award  attorney   fees  and  costs  apportioned   on  the  one                                                            
prevailing claim.                                                                                                               
Co-Chair Donley  informed that this  practice changed with  the 1998                                                            
Supreme  Court ruling  on Dansereau  vs.  Ulmer in  which the  court                                                          
ruled that  damages would  not be apportioned,  but rather  attorney                                                            
fees would  be awarded for all claims  brought in a lawsuit  whether                                                            
they prevailed  or not.  He called  this "a bizarre  twist of  legal                                                            
analysis"  that  "escalated"  the costs  to  the state  by  awarding                                                            
compensation to  the public interest litigants "astronomically".  He                                                            
alleged this  has resulted in multiple  baseless claims being  added                                                            
to a lawsuit  containing  one meritorious claim  for the purpose  of                                                            
obtaining greater compensation.  He compared this to a lottery since                                                            
victory for one  claim provides compensation for all  of the claims.                                                            
He  asserted this  is a  "bonanza  in the  making"  for lawyers  and                                                            
"radical  special  interest groups"  and  is a  "terrible,  terrible                                                            
public policy  call by the  state Supreme  Court." "It's just  plain                                                            
dumb. It encourages  people to file frivolous claims  or claims that                                                            
aren't  very meritorious,"  he stressed.  This, he  said, costs  the                                                            
state money both  in defending against the unmeritorious  claims and                                                            
paying  the public  litigant  interest  to  bring forth  those  same                                                            
Co-Chair Donley  remarked this is the reason for the  Senate Finance                                                            
Committee  sponsoring this  legislation to  return the compensation                                                             
procedure  to  that  exercised  prior  to  the  Dansereau  case.  He                                                          
explained the  resolution dictates that attorney fees  pertaining to                                                            
public interest litigants  are "generally" governed under Civil Rule                                                            
Co-Chair Donley pointed  out that while the court has decided that a                                                            
prevailing public litigant  is entitled to 100 percent compensation,                                                            
a prevailing  party who is  the innocent victim  of a violent  crime                                                            
only  receives  a portion  of  court  fees incurred  in  bringing  a                                                            
lawsuit against  the perpetrator of that crime, as  stipulated under                                                            
Civil Rule  82. He asked,  "Why in the world  would a court  ever do                                                            
that? Why would  you discriminate  against innocent Alaskan  victims                                                            
of violent  crimes in favor of special  political interests,  and to                                                            
do so in such an unreasonable way."                                                                                             
Co-Chair Donley  stated the answer is found in statements  contained                                                            
in the  Dansereau  decision indicating  the court  wants parties  to                                                          
bring  public interest  litigation  to allow  the  court to  "inject                                                            
their legal views onto  the system because they bemoan the fact that                                                            
'gosh if somebody doesn't  bring a lawsuit, we don't get to say what                                                            
we think is right.'"  He continued, "It's the only  logical possible                                                            
reason a court would create  such a bizarre legal interpretation and                                                            
bizarre justification"  for the disparity in compensation  formulas.                                                            
Co-Chair  Donley returned  to explaining the  resolution. He  showed                                                            
that it allows  the court to award  higher compensation of  attorney                                                            
fees  in  instances   where  the   court  finds  the  circumstances                                                             
"exceptional". This, he  surmised, adopts a public policy dictating,                                                            
"We shouldn't  discriminate in favor of special political  interests                                                            
to the expense  of injured Alaskans and innocent victims."  He noted                                                            
the intent  that the court  should apportion  compensation  only for                                                            
those claims  the public  interest litigant  won, but that  it could                                                            
award compensation  for claims lost, if the court  finds exceptional                                                            
Co-Chair Donley anticipated  testimony that will allege apportioning                                                            
compensation  only to the  prevailing claims  in a lawsuit  would be                                                            
difficult  and therefore  should not  be required  of the court.  He                                                            
countered, "courts have  been doing that [apportioning compensation]                                                            
for a hundred  years" and  that Alaska courts  have been doing  this                                                            
for the period  between the inception  of Rule 82 and the  Dansereau                                                          
ruling. He  pointed out that  the safety clause  is added for  those                                                            
instances  where  the  court  is unable  to  discern  costs  of  the                                                            
prevailing claims from the non-prevailing claims.                                                                               
Co-Chair   Donley  concluded,   "the   Dansereau   case  is   simply                                                          
indefensible  from a public policy  point of view, a basic  fairness                                                            
point of view,  and from a fiscal  responsibility point of  view and                                                            
needs  to  be overturned,"   which this  legislation  would  do.  He                                                            
reiterated the  Dansereau decision is "that terrible  opinion by our                                                          
Supreme Court  that's an abrogation  of law in the United  States of                                                            
Co-Chair Kelly commented  that Co-Chair Donley's explanation of this                                                            
legislation was the best he has heard given for any legislation.                                                                
Co-Chair  Kelly  asked  if  the  court,  citing  a  case  as  "under                                                            
exceptional  circumstances,"  awards actual  costs  or if the  court                                                            
could determine an arbitrary amount.                                                                                            
Co-Chair Donley replied  the legislation stipulates Civil Rule 82 as                                                            
the standard for determining  compensation awards. He qualified that                                                            
the courts  "have  allowed themselves  to  deviate from  Rule 82  on                                                            
their own also," and the  courts would retain that flexibility under                                                            
this  resolution  when it  found justifiable  circumstances.  As  an                                                            
example,  he noted that  organizations with  in-house attorneys  and                                                            
subsequent  lower attorney costs could  still be compensated  in the                                                            
amount that outside counsel would have cost.                                                                                    
Senator   Wilken  thanked   Co-Chair  Donley   for  explaining   the                                                            
legislation.  He looked  forward to  hearing the  other side  of the                                                            
argument,  saying   that  Co-Chair  Donley's  was   concise  in  his                                                            
Senator Wilken  referenced a March  19, 2001 memorandum to  Co-Chair                                                            
Donley  from his  staff, Bill  Church  regarding  Department of  Law                                                            
Public  Interest  Litigant  Payments,  [Copy  on  file]  citing  the                                                            
average annual  cost to the state for public interest  litigation as                                                            
$468,234.  He asked if this  figure includes  the Department  of Law                                                            
costs of defending the state against the lawsuits.                                                                              
Co-Chair Donley  replied it does not and explained  that the figures                                                            
shown in the memorandum  are only for attorney fees and costs to the                                                            
litigants as ordered by the court.                                                                                              
WEV SHEA,  Attorney,  testified  via teleconference  from  Anchorage                                                            
about practicing law in  Alaska since 1977 and prior to that serving                                                            
in the  US Navy  as a  pilot for  five years.  He stated  he is  the                                                            
attorney that Co-Chair  Donley spoke of with regard to the Dansereau                                                          
case. He took  issue with Co-Chair  Kelly remarks on the  quality of                                                            
explanation   given  for  this  resolution   and  Senator   Wilken's                                                            
commendation on the explanation  of the law.  Mr. Shea asserted that                                                            
Co-Chair Donley is not a trial lawyer and is idealistic.                                                                        
Mr.  Shea explained  Civil  Rule  82  saying  it normally  awards  a                                                            
portion of attorney  fees to the prevailing party  in litigation but                                                            
not costs,  which are addressed  in Civil  Rule 79. He responded  to                                                            
Co-Chair Donley's  statement that Alaska has the only  courts in the                                                            
country with  such a rule and that  the federal courts have  no such                                                            
rule.  Mr. Shea  informed  that he  served as  US  Attorney for  the                                                            
District  of Alaska  from 1990-1993  and that  there are  "numerous"                                                            
federal rules  that "not only award total attorney  fees," but award                                                            
damages in civil litigation as well.                                                                                            
Mr. Shea  gave the history  of the Dansereau  lawsuit he brought  on                                                          
behalf of ten  voters challenging  the 1994 gubernatorial  election.                                                            
He charged the practices  in this election were "corrupt". He shared                                                            
that current  law requires legal challenges  to an election  must be                                                            
brought forth  within ten  days of an election's  certification.  He                                                            
spoke to the complexity  of the suit, detailing the three components                                                            
of the case, the  first being inconsistencies at the  polling places                                                            
and in special voting locations,  such as in Prudhoe Bay. The second                                                            
component  he  recounted was  the  mailing  to 10,000  Doyon  Native                                                            
Corporation shareholders  offering a chance to win $10,000 for those                                                            
members who  vote for Democratic Candidate  Tony Knowles.  He stated                                                            
the Fairbanks  Native  Association,  Tanana Chiefs  Conference,  and                                                            
Doyon,  Limited  sponsored   this  contest.  He  related  the  third                                                            
component regarding  the North Slope  Borough giving ten  gallons of                                                            
gasoline, worth $27, to everyone in that borough who voted.                                                                     
Mr. Shea  told the Committee  that when the  Supreme Court  ruled on                                                            
this  litigation,   Justice  Eastaugh,   on  behalf  of   the  court                                                            
determined that  only the contest mailing cause of  the three causes                                                            
of  action was  viable.  Therefore,  he said,  the  plaintiffs  only                                                            
prevailed on one cause of action.                                                                                               
Co-Chair  Kelly  requested  the witness  speak  to  the legislation                                                             
before the Committee.                                                                                                           
Mr.  Shea  agreed he  would  do  so after  explaining  the  case  in                                                            
question as he deemed it pertains to the resolution.                                                                            
Mr. Shea  stated, "Contrary  to Senator Donley,  I know of  no cases                                                            
where,  if the work  is done  by an attorney  at 20  or 40 bucks  an                                                            
hour, and he submits that  bill to the court, that the court somehow                                                            
allows him to bill out  at $200 an hour. It just doesn't happen." He                                                            
qualified  that he works  solely on  litigation and  that he  is not                                                            
trying  to defend  any  lawyer  who brings  frivolous  lawsuits  but                                                            
stressed  that an election  contest  suit is expensive.   He  stated                                                            
that  he expended  approximately   $250,000 worth  of  services  and                                                            
$50,000 in  costs to the aforementioned  case over two and  one-half                                                            
years before the  case was settled. He said this was  because of the                                                            
importance of the issue of an improper election.                                                                                
Mr. Shea expressed there  should be a lot of interest in challenging                                                            
improper elections,  although he surmised  this bill is intended  to                                                            
address environmental  concerns. He warned that this  is "destroying                                                            
the ability of  the public to take action when the  attorney general                                                            
refuses to take action."                                                                                                        
Mr. Shea  pointed  out that  of the $275,000  in costs  and time  he                                                            
invested  in  the  Dansereau  case, he  received  only  $101,000  in                                                          
compensation.  He  noted  the  Department  of  Law  had  ten  to  14                                                            
attorneys and four paralegals working in defense of the lawsuit.                                                                
Mr. Shea remarked the Dansereau  case resulted in a change in Alaska                                                          
law making it "parallel" to federal law.                                                                                        
Mr. Shea  challenged Co-Chair  Donley's  comparison of compensation                                                             
for paraplegic patients  and characterization of all public interest                                                            
litigants  as people  only  interested in  getting  money. Mr.  Shea                                                            
admitted this  could be true and should therefore  be focused on. He                                                            
asked  how  it could  be  expected  that  attorneys  would  take  on                                                            
election  challenges cases  without the ability  to recover  "a high                                                            
percentage of the fee."                                                                                                         
Mr. Shea  stated there is  "strict criteria"  used in determining  a                                                            
public  interest litigant,  stressing  that  if the  attorney has  a                                                            
financial  interest in  the outcome  of the  lawsuit, that  attorney                                                            
does not  qualify.  He suggested  this addresses  Co-Chair  Donley's                                                            
concerns  about  the involvement   of political  action  groups.  He                                                            
explained that  any political group that brings an  action does have                                                            
an interest in the result, "monetary or otherwise".                                                                             
SFC 01 # 82, Side B 10:04 AM                                                                                                    
Mr.  Shea  asserted,  "I  am  as  conservative  as  anyone  on  this                                                            
Committee." He did not  understand what this legislation was "trying                                                            
to attack" other  than "environmental fundamentalists  or radicals",                                                            
but warned that  in the process "a basic fairness  issue" is risked.                                                            
Mr. Shea  expressed that  Co-Chair Donley's  "attack" on the  Alaska                                                            
Supreme  Court  and  Justice  Eastaugh  for  writing  the  Dansereau                                                          
decision is "bizarre and unprofessional as counsel."                                                                            
Senator Leman asked how  much of the expended $275,000 attorney fees                                                            
and  costs the  witness  would  have recovered  under  the  proposed                                                            
Mr.  Shea stated  the  existing  scenario  is what  Co-Chair  Donley                                                            
referred to.  He asserted, "I was  the attorney in Dansereau  and he                                                          
was talking  about  how awful Dansereau  was.  Well, Senator  Donley                                                          
doesn't know the facts."                                                                                                        
Co-Chair  Kelly  interjected  to  ask the  witness  to  address  the                                                            
Mr. Shea did not  know the amount he would have recovered  under the                                                            
stipulation  in the legislation to  calculate compensation  based on                                                            
each claim  in a lawsuit. He stated  that it is difficult  to divide                                                            
costs by the specific  issues. He asserted that the  majority of his                                                            
focus  addressed  the Doyon  Native  Corporation's  "vote  for  Tony                                                            
Knowles,  win $1,000"  mailing.  He explained  this  was a  priority                                                            
because if affected  10,000 voters and "easily could  have swung the                                                            
election", which he reminded was won on 536 votes.                                                                              
Mr.  Shea  compared  this  to  the  2000 presidential   election  in                                                            
Florida,  noting the  complexity  of election-based  litigation.  He                                                            
reiterated that  challenges to an election must be  filed within ten                                                            
days  of certification  and  this  is not  adequate  time to  create                                                            
frivolous claims.                                                                                                               
Co-Chair  Kelly  clarified  that he  did  not hear  Co-Chair  Donley                                                            
oppose the compensation  outcome of the Dansereau case specifically,                                                          
but rather the precedent it set for future cases.                                                                               
Mr. Shea disagreed.                                                                                                             
Senator Wilken  referred to  the witness' mention  of Civil  Rule 82                                                            
fees and costs  and the methods other states employ  to address this                                                            
matter. Senator  Wilken wanted  to know if  the witness found  other                                                            
methods that he could recommend as a model.                                                                                     
Mr.  Shea did  not know  how  other states  handle  public  interest                                                            
litigation.  He cautioned,  "you are  in very  difficult  situation"                                                            
explaining  the  courts  have  determined  that  a  public  interest                                                            
litigant,  in  bringing  an  action, is  essentially  serving  as  a                                                            
private attorney general.  He again stressed the point that a public                                                            
interest  litigant  could  not  have a  financial  interest  in  the                                                            
outcome  of that  litigation.  He remarked  that  Co-Chair  Donley's                                                            
comments  focused  on  the  assumption  that  the  plaintiff  has  a                                                            
financial interest in the result.                                                                                               
Mr. Shea expressed his  experience that attorneys who bring a public                                                            
interest  suit do not  do so to  make money.  He qualified that  Co-                                                            
Chair Donley could  have greater knowledge then he  of environmental                                                            
groups  that  do have  a  vested  interest  in the  outcome  of  the                                                            
lawsuits they pursue.                                                                                                           
Mr. Shea stated  that he did not see the problem as  one with public                                                            
interest  litigants  bringing  suit for  profit.   He  said when  he                                                            
brought  the election  suit, he  was not  even aware  that he  could                                                            
recoup  fees. He suggested  that if  Co-Chair Donley  did have  such                                                            
knowledge, as an attorney,  he should bring the matter to the Alaska                                                            
Bar Association.                                                                                                                
AL SUNDQUIST, President,  Alaska Chapter of Americans United for the                                                            
Separation  of Church and State, testified  via teleconference  from                                                            
Anchorage  in  opposition  to  the  legislation.  He  explained  the                                                            
group's  membership  of  thousands  of  churches  and organizations                                                             
across  the county  and its  mission  to support  the establishment                                                             
clause and  the free exercise clause  of the First Amendment  of the                                                            
United States  Constitution. He qualified  he has limited  knowledge                                                            
of the  litigation  process but  that he  opposed  the placement  of                                                            
"economic obstacles  to the use of the courts by Alaskan  citizens."                                                            
Co-Chair  Donley  responded  to  Mr.  Shea's  testimony  saying  the                                                            
witness misrepresented  several things he had said.  Co-Chair Donley                                                            
agreed that the witness  was correct that other specific statutes in                                                            
both state  and federal law address  costs. He gave an example  of a                                                            
federal  law that provides  triple  damages if someone  cuts  down a                                                            
tree on another person's property.                                                                                              
Co-Chair  Donley  stated  he  was  unaware  that Mr.  Shea  was  the                                                            
attorney  in the  Dansereau  case. Co-Chair  Donley  considered  the                                                          
claim  that the  plaintiff  had  only ten  days  to file  a  lawsuit                                                            
challenging  the  1994 election,  could  be  considered exceptional                                                             
circumstances,  which this legislation provides special  allowances.                                                            
However,  he did  not  think the  precedent  set forth  should  have                                                            
become the public policy  for all public interest litigant lawsuits.                                                            
Co-Chair  Donley  disagreed  that there  is  a strict  criteria  for                                                            
determining  a public interest  litigant. He  pointed out the  court                                                            
found the Anchorage  Daily News to be a public interest  litigant in                                                            
one case.  He remarked the  "problem has become  so bad" in  federal                                                            
courts  that the US  Congress banned  interest  groups that  receive                                                            
federal  funding, from  collecting  attorney fees  under the  public                                                            
interest litigant  doctrine. He noted this might have  been recently                                                            
overturned  by  the  court,  but  stressed  the  perception  of  the                                                            
situation was such that Congress did take action.                                                                               
Co-Chair Donley  stated Mr. Shea might  not be aware of the  problem                                                            
but that he has studied  the Department of Law budget and the number                                                            
of court-ordered  compensations by  the state to political  interest                                                            
groups. He assessed this to be a major budget item.                                                                             
Co-Chair Donley  gave examples of public interest  litigant cases in                                                            
which the  state was ordered  to pay attorney  fees, such as  a suit                                                            
challenging campaign  finance reform. He shared that  he agreed with                                                            
the litigants  in this  case and  disagreed with  the Supreme  Court                                                            
ruling against  the plaintiff on all but one point.  However, he did                                                            
not agree that  the plaintiff should have been subsequently  awarded                                                            
full compensation on all attorney fees.                                                                                         
Co-Chair Kelly was concerned  with the use of the courts for setting                                                            
public policy. He expressed,  "They have ruled in such a manner that                                                            
they think  they are one  of the arms of  government to mold  public                                                            
policy and  to create public  policy rather  than to just decide  on                                                            
it." He spoke  of the lack of public  participation in this  method.                                                            
He surmised  there is  "disdain in  the courts  for the legislative                                                             
Senator Olson  asked Co-Chair Donley  the Supreme Court vote  on the                                                            
Dansereau case and whether the decision was unanimous.                                                                        
Co-Chair  Donley   was  unsure  and  said  he  would   provide  that                                                            
Co-Chair  Kelly   asked  how  this  legislation  differs   from  the                                                            
legislation from the previous session.                                                                                          
Co-Chair Donley answered it is identical.                                                                                       
Co-Chair  Kelly reminded  that all  members, with  the exception  of                                                            
Senator Olson, had heard  this bill the previous session either in a                                                            
committee hearing, or on the Senate floor.                                                                                      
Co-Chair  Donley reiterated  the importance  of  the "safety  valve"                                                            
giving the court discretion in exceptional circumstances.                                                                       
Senator Ward offered  a motion to move SB 183 from  Committee with a                                                            
Department of Law zero fiscal note.                                                                                             
The bill MOVED from Committee without objection.                                                                                
     CS FOR SENATE BILL NO. 187(STA)                                                                                            
      "An Act relating to absentee and special needs voting."                                                                   
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
LORETTA BROWN,  staff to  Senator Ward, read  the sponsor  statement                                                            
into the record as follows.                                                                                                     
     This  legislation  will require  the director  of elections  to                                                            
     notify  the voting public  of all "absentee  in person  voting"                                                            
     locations  at least 60 days prior to an election.  It will also                                                            
     provide  a  uniform  statewide  opening  date for  absentee  in                                                            
     person voting.  Currently the location and opening  periods for                                                            
     absentee  voting stations is at the discretion  of the director                                                            
     of the  division of  elections and requires  no public  notice.                                                            
     This  has led  to some  inconsistencies  in  opening dates  and                                                            
     voting locations.                                                                                                          
     SB 187 requires that  the director of the division of elections                                                            
     provide  full public  notice of  the location  of all  absentee                                                            
     voting  stations at least  60 days prior  to each election.  No                                                            
     new  absentee voting  stations  sights may be  added or  opened                                                            
     after the 60-day notification period.                                                                                      
     Absentee voting  stations will be operated on  or after the 15                                                             
     day before  a primary, general, or special election.  Qualified                                                            
     voter  may  apply  in person  for  an absentee  ballot  at  the                                                            
     absentee  voting  station on  or after  the 15   day before  an                                                            
     election  up  to  and  including  the  date  of  the  election.                                                            
     Absentee voting stations can not be opened early.                                                                          
     Having   a  uniform   state   wide  opening   date  and   prior                                                            
     notification  of all absentee  voting in person locations  will                                                            
     make for less confusion  for the voters and a more even playing                                                            
     field for all concerned.                                                                                                   
Amendment  #1: This amendment  changes the  number of days  required                                                            
for notification  of absentee voting station locations  from 30 days                                                            
to 45 days before each election.                                                                                                
Senator Ward moved for adoption.                                                                                                
Co-Chair Kelly objected for an explanation.                                                                                     
Senator Ward  noted the Senate State  Affairs Committee had  changed                                                            
the requirement  from the  originally proposed  60 days, to  30 days                                                            
and this amendment would be a compromise.                                                                                       
Senator Ward spoke to the  legislation itself. He shared that during                                                            
the previous legislative  election, he became aware  of "unexplained                                                            
radio  and television  advertisements"   sponsored by  his  opposing                                                            
candidate  and  candidates  in other  races.  He then  learned  that                                                            
absentee  voting  would  begin  at the  Dimond  Center  sooner  than                                                            
originally  scheduled.  He noted  the  Division of  Elections  spent                                                            
$35,000  advertising  the earlier  opening.  Speaking  on behalf  of                                                            
himself  and  other   candidates,  who  were  now   sitting  on  the                                                            
Committee,  he expressed, "This caught  some of us flat footed."  He                                                            
questioned  how  the opposing  candidates  learned  of  the  earlier                                                            
opening sooner than he and other Republican candidates did.                                                                     
Senator Ward remarked the  reason for this legislation is to set the                                                            
opening  dates  into  law  rather  than at  the  discretion  of  the                                                            
lieutenant governor  and the director of the Division  of Elections.                                                            
He asserted that the process  is already established in statute, but                                                            
commented, "They violated that law."                                                                                            
Senator  Ward  stated  that  while  30  days  is  not  adequate  for                                                            
notification  purposes,  45 days  is ample  time  for candidates  to                                                            
relay to voters when and where absentee voting is available.                                                                    
Co-Chair Kelly removed  his objection and the amendment was ADOPTED.                                                            
Senator  Ward  noted  neither  the Division  of  Elections  nor  the                                                            
Administration  opposed this legislation,  to his understanding.  He                                                            
stated this  legislation is "clean  up language to put into  writing                                                            
what we all thought the rules were."                                                                                            
GAIL FENUMIAI,  Election Program Specialist, Division  of Elections,                                                            
Office of  the Governor,  agreed that the  division does not  oppose                                                            
the legislation.  She clarified  that the  absentee voting  stations                                                            
for the 2000 general  election were opened one week  prior to the 15                                                            
days originally  announced,  or 22 days prior  to Election  Day. She                                                            
stated this was done under  statutory authority to open those voting                                                            
locations  early  if  the  ballots   are  available  and  ready  for                                                            
distribution.  She noted this was an unusual circumstance.  She told                                                            
of voters  coming  into the regional  elections  offices asking  for                                                            
ballots, citing travel  plans and other reasons they would be unable                                                            
to wait until  the posted opening  date. She stressed all  political                                                            
parties were notified  by telephone of the earlier  opening and that                                                            
the division  advertises the beginning  of absentee voting  in every                                                            
election as part of normal procedures.                                                                                          
Senator  Ward offered  a motion to  move from  Committee, CS  SB 187                                                            
(STA), with  accompanying zero  fiscal note  from the Office  of the                                                            
There was no objection and the bill MOVED from Committee.                                                                       
Co-Chair Pete Kelly adjourned the meeting at 10:31 AM                                                                           

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