Legislature(1999 - 2000)
03/06/2000 01:56 PM Senate JUD
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+ teleconferenced
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SENATE JUDICIARY COMMITTEE
March 6, 2000
1:55 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Rick Halford, Vice-Chairman
Senator Dave Donley
Senator John Torgerson
Senator Johnny Ellis
MEMBERS ABSENT
COMMITTEE CALENDAR
SENATE BILL NO. 286
"An Act relating to the duties and powers of the attorney general."
-HEARD AND HELD
SENATE JOINT RESOLUTION NO. 14
Proposing amendments to the Constitution of the State of Alaska
relating to the election and the duties of the attorney general.
-HEARD AND HELD
SENATE BILL NO. 163
"An Act relating to a trustee's duties to inform and account to
beneficiaries; relating to the revocation, modification,
termination, reformation, construction, and trustees of trusts; and
relating to transfer restrictions in trusts."
-MOVED CSSB 163 (JUD) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 286 - No previous action.
SB 163 - See Judiciary Committee minutes dated 5-3-99, 5-11-99,
5-12-99.
SJR 14 - See State Affairs Committee minutes dated 3/18/99 and
4/7/99. Judiciary Committee minutes dated 4-12-99 and 2-
9-00.
WITNESS REGISTER
Mr. Mark Johnson
Subcommittee on Privatization for the
Department of Law
13631 Windward Circle
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on SB 286
Mr. Doug Blattmachr
Alaska Trust Company
Address not furnished
Anchorage, Alaska
POSITION STATEMENT: Testified on SB 163
Mr. Dick Thwaites
Alaska Trust Company
Address not furnished
Anchorage, Alaska
POSITION STATEMENT: Testified on SB 163
Justice Thomas B. Stewart
Alaska Court System
PO Box 114100
Juneau, Alaska 99811-4100
POSITION STATEMENT: Opposed to SB 286 and SJR 14
ACTION NARRATIVE
TAPE 00-12, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:55 p.m. Present were Senator Torgerson, Senator Donley
and Chairman Taylor. The first order of business to come before
the committee was SB 286.
SB 286-DUTIES AND POWERS OF ATTORNEY GENERAL
MR. MARK JOHNSON, representing the Subcommittee on Privatization
for the Department of Law (DOL), gave a collective overview of SB
286 and SJR 14. SB 286 emerged from the work of the Subcommittee
on Privatization and was introduced by the Senate Judiciary
Committee. The bill is an attempt to "re-craft" certain powers of
the Attorney General (AG). The most significant part of this
legislation is in Section 1(b)(7), perform all other duties
required by law [OR WHICH USUALLY PERTAIN TO THE OFFICE OF ATTORNEY
GENERAL IN A STATE]; and. Common law powers of the AG may be taken
by someone in that position to imply just about anything--this bill
clarifies the duties of the AG. There may be powers the AG
believes are necessary for carrying out the duties of office, and
a way to resolve this may be for the department to come forward and
say what it needs and enumerate on that.
MR. JOHNSON commented that the second most important item is the
effort to redefine where the AG's obligations lie. The law
currently states, the AG is the legal advisor of the governor and
other state officers. CSSB 286 proposes in section 1, the state,
including the governor and other state officers. This is a
philosophical difference--an important one.
MR. JOHNSON noted that the third item of importance is in section
1(c), The attorney general may, subject to the power of the
legislature to make appropriations, settle actions, cases, and
offenses under (b) of this section in which the attorney general
represents the state and in which the state is a party.
Constitutionally in Alaska, an appropriation is required before
money is spent. The AG does not settle cases that require new
appropriations nor does he make them subject to appropriation. The
concept of a settlement term requiring an appropriation and being
subject to the legislative power of appropriation does not appear
in the law. This is why the Subcommittee on Privatization is
proposing that the language in CSSB 286, subsection (c) be added.
Number 570
JUDGE THOMAS B. STEWART, retired Superior Court Judge, Secretary of
the Constitutional Convention, Senator in the first Alaska State
Legislature and Chairman of the State Affairs Committee which wrote
the legislation that set up the executive branch, stated he has an
immediate concern with section 1 of CSSB 286, (a) The attorney
general is the legal advisor of the state, including the
governor... It is a mistake to view the AG as representing
anything beyond the executive branch. Because the AG's primary
duty is to represent the executive branch, it is a conflict of
interest for him to be giving advise to the legislature. Each
branch of the legislature needs separate counsel because their
interests sometimes conflict, and it is especially important that
the AG not represent both the governor and the legislature when
they are of different parties. The AG is, of necessity, in a
conflict position if he seeks to advise the legislature. The
language, legal advisor of the state, at least by inference,
suggests the AG is legal advisor for both the legislature and the
court system. The court system has its own counsel and never calls
upon the AG to represent its interest.
Number 905
CHAIRMAN TAYLOR noted he has the same concern as Judge Stewart with
inserting the language, including the. The AG will have to be true
to one side or the other--which side will it be? As concerns the
second page of the bill, subject to the power of the legislature to
make appropriations...., there have been situations where the
governor, through the AG, settled cases where money was
appropriated to a new trust that was created solely out of the
settlement of a specific case. The money was not appropriated by
the legislature even though the funds were due and owing to the
State of Alaska. The governor appropriated all the money by
creating a mechanism that would disperse those monies as he saw fit
and the legislature could find no way in which to affect that
settlement.
CHAIRMAN TAYLOR noted he is concerned with this type of situation
and, at the same time, every case should not have to come back to
the legislature for approval--this legislation may makes that
necessary.
JUDGE STEWART said he has not studied this matter and would be
loath to give an opinion. On the face of it though, he does not
see a problem with the language, and he is sympathetic with the
legislature being the body that determines how state monies will be
spent.
CHAIRMAN TAYLOR asked how Judge Stewart would amend this
legislation to resolve the conflict--will the AG represent the
people of the state, the legislature, or the governor?
Number 1059
JUDGE STEWART responded the AG should represent the executive
branch. The governor is elected by the people to represent them
and the AG represents the governor, thus, representing the majority
of the people.
SENATOR DONLEY asked if the AG has a higher responsibility to the
constitution or to the governor. Some governor's have placed the
AG in direct conflict with their duty to defend the constitution,
and if the AG is serving the people his loyalty will primarily be
to the constitution. How does an AG balance his loyalty between
his duty to the governor and to the constitution?
JUDGE STEWART asked to defer, and stated he will explain his view
when the committee is addressing SJR 14.
MR. MARK JOHNSON noted he appreciated Judge Stewart's comments
regarding the initial proposed amendment and commented that this is
an issue the committee needs to reflect on.
CHAIRMAN TAYLOR asked Mr. Johnson how he would resolve the conflict
of the AG representing both the governor and the state.
MR. JOHNSON responded it is the position of DOL that the executive
branch already represents the legislature and the judiciary in some
matters. Traditionally, if there is a conflict of interest and
someone does not call it to the public's attention, the AG will
raise the issue and allow the other branch to retain their own
counsel.
CHAIRMAN TAYLOR asked why the constitutional convention did not
include the AG as a constitutionally created officer.
JUDGE STEWART responded the legislature had the responsibility to
create all departments of the executive branch, and the AG was
another department of the executive branch--departments were not
created but their functions were described. This is detailed
matter that is adapted to being handled by statute.
CHAIRMAN TAYLOR noted that in some states the AG is elected to
"represent the people," and the governor has separate counsel.
Number 1449
SENATOR DONLEY said he would like the committee to consider adding
to the duties of the AG, "he or she shall defend the constitution
of the State of Alaska against legal challenges." The AG should
have a responsibility to say no to the governor if the governor
asks him to do something that is in conflict with his duty to the
constitution.
Number 1541
SJR 14-ELECTION OF ATTORNEY GENERAL
CHAIRMAN TAYLOR introduced CSSJR 14(JUD), version 1-LS0588\H,
Kurtz, dated 4/13/99.
JUDGE STEWART stated this is a more complicated subject than most
people recognize and one he has had deep concern for during his
whole professional career. One must look to the history of the
American scheme of government which is set out very expressly in
the Federalists written by Alexander Hamilton and James Madison.
Judge Stewart read from the Federalist Paper 70 dated March 18,
1788.
There is an idea, which is not without its advocates, that a
vigorous executive is inconsistent with the genius of
republican government. The enlightened well-wishers to this
species of government must at least hope that the supposition
is destitute of foundation; since they can never admit its
truth, without at the same time admitting the condemnation of
their own principles. Energy in the executive is a leading
character in the definition of good government. It is
essential to the protection of the community against foreign
attacks; it is not less essential to the steady administration
of the laws; to the protection of property against those
irregular and high-handed combinations which sometimes
interrupt the ordinary course of justice; to the security of
liberty against the enterprises and assaults of ambition, of
faction, and of anarchy. Every man the least conversant in
Roman story, knows how often that republic was obliged to take
refuge in the absolute power of a single man, under the
formidable title of dictator, as well against the intrigues
of ambitious individuals who aspired to the tyranny, and the
seditions of whole classes of the community whose conduct
threatened the existence of all government, as against the
invasions of external enemies who menaced the conquest and
destruction of Rome.
There can be no need, however, to multiply arguments or
examples on this head. A feeble executive implies a feeble
execution of the government. A feeble execution is but
another phase for a bad execution; and a government ill
executed, whatever it may be in theory, must be, in practice,
a bad government.
Those politicians and statesmen who have been the most
celebrated for the soundness of their principles and for the
justice of their views, have declared in favor of a single
executive and a numerous legislature. They have with great
propriety, considered energy as the most necessary
qualification of the former, and have regarded this as most
applicable to power in a single hand, while they have, with
equal propriety, considered the latter as best adapted to
deliberation and wisdom, and best calculated to conciliate the
confidence of the people and to secure their privileges and
interests.
This unity may be destroyed in two ways: either by vesting
the power in two or more magistrates of equal dignity and
authority; or by vesting it ostensibly in one man, subject, in
whole or in part, to the control and co-operation of others,
in the capacity of counselors to him.
JUDGE STEWART commented that when you look at the problem of the
relationship between the AG and the governor you have to look back
to this portion of American history. Alaska's state government is
modeled after the federal government and a departure from this
would be a serious error.
JUDGE STEWART noted that a great majority of the states do elect
the AG, the AG is the attorney for the people and, therefore, the
people should choose him, but this is a shallow concept that does
not recognize what the AG does now and should do. The history of
the large majority of the states that have an elected AG is one
that derives from the latter part of the 1800's--this is when their
state constitutions were written. This was a populist era, it was
common for the AG and many of the heads of state departments to be
independently elected. This was also the history of Alaska from
the time it was formed by the Organic Act in 1913 until Alaska
became a state in 1959. There have been no recent states in the
19th century to elect an AG.
JUDGE STEWART commented that there is and has been for many years
the model state constitution that is promulgated by the League of
American Cities. This constitution provides for only the governor
and legislature to be elected in state government. There are many
distinguished people from academic institutions that are unanimous
in the view that the AG should be appointed by the governor and
serve subject to his pleasure.
JUDGE STEWART, having been an AG, has seen first hand how an
independent AG, not having to answer to anyone except his own view
of what the people might want, can disrupt the operations of the
executive branch. An AG is a legal officer and should not be a
policy making officer.
JUDGE STEWART noted that an elected AG has an ambition to be
governor and will take every step he can to make the governor look
bad to enable his candidacy. This completely frustrates the
fundamental idea that the executive branch should have energy and
vigor. If a governor is expending his energy on fighting a
subordinate rather than addressing the problems of the executive
branch, the whole executive branch has lost the energy of that
leadership. A legal officer should not be selected because of his
popularity but for his ability. An elected AG will likely be
chosen because of his popularity and what is needed is "a tough
S.O.B. that can say no."
Tape 00-12, Side B
JUDGE STEWARD stated it is essential in the relationship between an
attorney and the entity he represents that there be loyalty to that
entity. Prime governmental decisions are made by the legislature--
there cannot be a statewide meeting of 500,000 people to come and
analyze these issues. The people at large are not in a position to
sufficiently make a wise decision on who should be a legal advisor.
JUDGE STEWART addressed Senator Donley's question--how does an AG
balance his loyalty between the governor and the constitution?
JUDGE STEWART said the governor is bound by the constitution and
his department heads are bound by the constitution, and if the
department heads do not agree with the governor's interpretation,
it is their responsibility to resign. Setting up a subordinate so
they can override the governor's decision sets up an automatic
conflict.
Number 2143
CHAIRMAN TAYLOR commented that Senator Donley's question comes to
the nub of the issue that has frustrated many of the legislators.
In the past AG's have found themselves in philosophical
disagreements with a governor and have resigned because of the
disagreement. What should the legislature do when a governor
abuses the constitution and his legal officer, wanting the job too
much, goes along with the governor in things that are destructive?
Is the only alternative impeachment?
JUDGE STEWART responded, "get a new governor--he will be up for
election."
CHAIRMAN TAYLOR noted there are three more years left to the
governor's term.
JUDGE STEWART answered that you make the loudest noise you can
publicly, attacking the governor on his bad decisions.
CHAIRMAN TAYLOR responded it does not matter how much noise is
made, the very same people will be in office for the next three
years. At what point does the person who holds that office resign,
and if they refuse to resign what does the legislature do?
JUDGE STEWART reiterated, "you elect a new governor."
SENATOR DONLEY noted that the United States Constitution requires
that the President of the United States receive a majority of the
electorial college votes, and yet the governor of Alaska can be
elected with as few as twenty percent of the people voting for him.
JUDGE STEWART stated this is a place where the law can be changed,
so that the governor will be elected by a majority of the people.
SENATOR DONLEY asked if Judge Stewart would support a
constitutional amendment requiring the governor to be elected by a
majority.
JUDGE STEWART answered yes, the governor should not be elected by
a plurality that is less than a majority, but it would be a serious
mistake to change the structure of the government based on the bad
performance of a single incumbent who will eventually be gone.
Number 1678
SB 163-TRUSTS AND TRUSTEES
CHAIRMAN TAYLOR asked if SB 163 effects the ability of a
beneficiary from finding out about their interest.
MR. DOUGLAS BLATTMACHR, Alaska Trust Company, explained that SB 163
allows the settlor to decide if they would like to limit notice to
beneficiaries who are not entitled to a distribution or who have
not received a distribution for a period of time no longer than
[indisc] after their death or after becoming incapacitated. This
was done because a number of people who are setting up trusts are
doing them early in time because of the special advantages they
provide, and they do not want their young children to know they are
a beneficiary of trust.
MR. BLATTMACHR commented Alaska is unique in that it requires the
trustee to notify beneficiaries when a trust is set up. This bill
still provides the notification requirement if the grantor or
settlor does not ask to hold off for a period of time. After the
settlor dies or becomes incapacitated, the trustee has to notify
the beneficiaries. Beneficiaries have to be notified if they
receive a distribution or are entitled to a distribution. This
bill is only for a beneficiary not receiving a distribution or not
currently receiving a distribution.
CHAIRMAN TAYLOR asked where in the bill is it provided that the
limiting factor is disability or death of the grantor or principal
of the trust and what is the trigger for notification?
MR. BLATTMACHR stated in section 1, subsection (b) the language
says: The exemption may not exceed in duration the shorter of the
settlor's lifetime or a judicial determination of the settlor's
incapacity. This gives the settlor some privacy while letting him
take advantage of the tax laws and benefits.
CHAIRMAN TAYLOR asked if there is anything else in the legislation
that precludes notification to a vested beneficiary.
MR. BLATTMACHR responded no, if a person is a vested beneficiary
receiving distributions or is entitled to a mandatory distribution
of income on an annual basis, they have to be notified.
Number 1439
SENATOR DONLEY asked Mr. Blattmachr to elaborate on his last
response commenting that even if an individual is not entitled to
an annual distribution or guaranteed a final distribution, if the
settlor dies or there is a judicial determination of incapacity--
notice is required.
MR. BLATTMACHR responded yes, even if the grantor said "don't
notify my beneficiaries," if a beneficiary received a distribution
or if the trust said a distribution had to be made on an annual
basis, the beneficiary would still have to be notified at that
time.
SENATOR DONLEY stated his concern is that once the settlor's
lifetime has ended or there is a judicial determination of the
settlor's incapacity, that even if the settlor specifically asked
that the beneficiary not be notified, the law still requires the
beneficiary be notified.
MR. BLATTMACHR responded that is correct.
CHAIRMAN TAYLOR clarified further that even if the document says to
never notify the beneficiary, even after they are dead, the
beneficiary will still be notified.
MR. BLATTMACHR said they are bound by the original statute to
notify beneficiaries. No notification can only be granted during
the lifetime of the grantor, notification is automatic after a
death.
SENATOR DONLEY asked for Mr. Blattmachr to elaborate on the rest of
the bill.
Number 1275
MR. BLATTMACHR indicated the bill allows for judicial modification
of trusts if the original intent of the trust cannot be
accomplished or if tax laws change so they are able to either
terminate or modify the document. This allows the beneficiary to
go to court and say this trust no longer accomplishes the purpose
that was set forth or it does not accomplish the tax purpose
because of a change in law, allowing the judge to either modify or
terminate the document.
MR. DICK THWAITES, Alaska Trust Company, stated there is one other
change in CSSB 163, section 2 that says, or by a written document
after the trust is created, that some people in the trust industry
are concerned about. Individuals that are appointed as trustees
for their "good friend" very often do not know of the requirement
to notify the trustees. It is thought that a written document,
after the trust is created, should be sufficient notice to defer
the notification requirement until death or legal determination of
incapacity so that when the grantor dies, whether or not there is
a determination or notice, the corporate trustee must notify the
beneficiaries of their present or future interest.
CHAIRMAN TAYLOR asked if this is just to confirm the requirement
for existing trusts.
MR. THWAITES responded yes, the language was added because it is
thought to be an oversight. It is suspected that more than half of
the trusts in Alaska exist with non-professional trustees who are
not notifying beneficiaries--this needs to be clarified.
CHAIRMAN TAYLOR noted the clarification is that someone will notify
people at some point.
MR THWAITES stated it permits the person creating the trust to have
protection while leaving the basic statute in tact, which is that
notification must be given in all cases except where this specific
limited circumstance arises.
Number 1121
SENATOR DONLEY expressed his concern with the language in section
2 that reads: or by a written document after the trust is created,
relieve the trustee from the duty to provide notification or
information to a beneficiary in accordance with AS 13.36.080(b).
MR. THWAITES stated that AS 13.36.080(b) is limited to the
trustor's lifetime or his judicial incompetency.
SENATOR DONLEY noted that the language in AS 13.36.080(b), in
accordance, could be interpreted as relief from the requirements of
notification. The language should clearly state that a person has
to comply with the requirements.
CHAIRMAN TAYLOR suggested the words in accordance with should be
replaced with subject to.
SENATOR DONLEY moved to replace the wording in section 2, line 12,
in accordance with to subject to. There being no objection, the
motion carried.
SENATOR DONLEY moved CSSB 163 as amended from committee with
individual recommendations. There being no objections, the motion
carried.
There being no further business to come before the committee
CHAIRMAN TAYLOR adjourned the meeting at 3:20 p.m.
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