Legislature(1993 - 1994)

02/09/1993 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                    SENATE LABOR AND COMMERCE                                  
                        February 9, 1993                                       
                            1:40 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Senator Tim Kelly, Chairman                                                  
  Senator Steve Rieger, Vice-Chairman                                          
  Senator Drue Pearce                                                          
  Senator Georgianna Lincoln                                                   
  Senator Judy Salo                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  SENATE BILL NO. 64                                                           
  "An Act  relating to  civil liability  for workplace  safety                 
  inspections; and providing for an effective date."                           
                                                                               
  SENATE BILL NO. 66                                                           
  "An Act relating to limited  partnerships; and providing for                 
  an effective date."                                                          
                                                                               
  SENATE BILL NO. 85                                                           
  "An Act extending the termination date of the Alaska Tourism                 
  Marketing Council; and providing for an effective date."                     
                                                                               
  SENATE BILL NO. 73                                                           
  "An  Act  relating to  the  time  for filing  certain  civil                 
  actions; and providing for an effective date."                               
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
  SB 64 -  See Labor & Commerce minutes dated 2/4/93.                          
                                                                               
  SB 66 - NONE                                                                 
                                                                               
  SB 85 - NONE                                                                 
                                                                               
  SB 73 - NONE                                                                 
  WITNESS REGISTER                                                             
                                                                               
  Michael Schneider                                                            
  880 N, Suite 202                                                             
  Anchorage, Alaska 99501                                                      
    POSITION STATEMENT: Opposed SB 64                                          
                                                                               
  Roxanne Stewart, aide                                                        
  Senator Jim Duncan                                                           
  State Capitol                                                                
  Juneau, AK 99801-1182                                                        
    POSITION STATEMENT: Reviewed SB 66                                         
                                                                               
  Arthur Peterson, Attorney                                                    
                                                                               
                                                                               
  One Sealaska Plaza, Suite 202                                                
  Juneau, Alaska 99801                                                         
    POSITION STATEMENT: Supported SB 66.                                       
                                                                               
  Willis Kirkpatrick, Director                                                 
  Department of Commerce & Economic Development                                
  Division of Banking, Securities, and Corporations                            
  P.O. Box 110807                                                              
  Juneau, Alaska 99811-0807                                                    
    POSITION STATEMENT: Supported SB 66.                                       
                                                                               
  Tina Lindgren, Executive Director                                            
  Alaska Tourism Marketing Council                                             
  3601 C Street #700                                                           
  Anchorage, Alaska 99503                                                      
    POSITION STATEMENT: Reviewed SB 85.                                        
                                                                               
  Josh Fink, aide                                                              
  Senator Tim Kelly                                                            
  State Capitol                                                                
  Juneau, AK 99801-1182                                                        
    POSITION STATEMENT: Reviewed SB 73.                                        
                                                                               
  Doug Green, Chairman                                                         
  Legislative Liaison Committee                                                
  Alaska Professional Design Council                                           
  P.O. Box 10-3115                                                             
  Anchorage, Alaska 99510-3115                                                 
    POSITION STATEMENT: Supported SB 73.                                       
                                                                               
  Richard Ritter, Chairman                                                     
  Legislative Affairs Committee                                                
  American Chapter of American Architects                                      
  800 Glacier Avenue                                                           
  Juneau, Alaska 99801                                                         
    POSITION STATEMENT: Supported SB 73.                                       
                                                                               
  Colin Maynard                                                                
  Alaska Society of Professional Engineers                                     
  1400 W. Benson, Suite 500                                                    
  Anchorage, Alaska 99517                                                      
    POSITION STATEMENT: Supported SB 73                                        
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-9, SIDE A                                                            
  Number 001                                                                   
                                                                               
  CHAIRMAN TIM KELLY  called the Labor and  Commerce Committee                 
  meeting to order at 1:40 p.m.                                                
                                                                               
  SENATOR  KELLY returned SB  64  (INSURER IMMUNITY FOR SAFETY                 
  INSPECTIONS)  to committee  to hear  testimony from  MICHAEL                 
                                                                               
                                                                               
  SCHNEIDER, off-net from Anchorage.                                           
                                                                               
                                                                               
  (The testimony from MR. SCHNEIDER is transcribed verbatim.)                  
                                                                               
  MR. SCHNEIDER - "SENATOR KELLY,  members of the committee, I                 
  would like to thank  you for accommodating my  appearance by                 
  telephone at  a different date and time.   I am an attorney.                 
  I've been  practicing in  Anchorage since  October of  1975,                 
  when I was admitted to the state's bar.                                      
                                                                               
  I've reviewed SB  64 and I  am here  to testify against  its                 
  adoption, and  I would  hope that  it would  not leave  this                 
  committee's hands because, in my view, I will try to explain                 
  why  it is  a bad  piece of  public  policy.   This proposed                 
  statute  is  an effort  to  reverse  a case  decided  by our                 
  supreme  court,  the Van  Biene  v. E.R.A.  Helicopter, Inc.                 
  case.  It was decided in 1989, and held that an  outfit that                 
  undertakes to provide inspections can be held liable if they                 
  do so negligently,  and if that negligence  causes injury or                 
  death to someone.                                                            
                                                                               
  I guess the first notion I would like to dispel is that this                 
  is a  radical, new, or  unusual statement of the  law by our                 
  supreme court.  I've done just the briefest research on this                 
  matter,  but  I can  assure the  committee  that I've  got a                 
  October 1912 case, called Hartford Steam Boiler, Inspection,                 
  and Insurance v. Pabst Brewing in front of me.  I don't want                 
  to say it's  been followed, but  the supreme court of  Iowa,                 
  for instance, in 1963, came up with the same ruling 30 years                 
  ago.                                                                         
                                                                               
  In  1964 the  supreme  court of  Illinois  reached the  same                 
  decision.  Alabama reached  it in 1971.  Georgia  reached it                 
  in 1974.   Our supreme  court, when finally  confronted with                 
  the issue, issued it's ruling in 1989, and I guess that  the                 
  reason that  I picked these states, I would just like to get                 
  across   to  the   committee  that   an  insurance   company                 
  undertaking  to provide  inspection  services, who  does  so                 
  negligently  can  be  liable,  is  an  idea  that  is   well                 
  established  in the  law of  this country, probably  about a                 
  century old, and  that our supreme court  was simply getting                 
  in line with radical jurisdictions like Alabama and Georgia,                 
  when it came up with its ruling.                                             
                                                                               
  Another thing  that I would  like to point out,  is that the                 
  decision itself was  a decision by  JUSTICE MOORE.  Many  of                 
  you may know JUSTICE MOORE personally.   He's a good jurist,                 
  and in my view, a fairly  conservative individual.  He spent                 
  his  professional   career  defending   ...  the   insurance                 
  industries as defense  counsel.   He authored this  opinion,                 
  and it was  joined in  unanimously by every  justice of  the                 
  supreme court.  This was not  a divided court.  It wasn't  a                 
  close call.  It was simply a statement of the obvious, quite                 
                                                                               
                                                                               
  frankly.                                                                     
                                                                               
  The other thing I guess I would like to make apparent to the                 
  committee, and one of  the reasons that I picked  that whole                 
  1912 case, is to  illustrate that the rights that  are being                 
  forfeited  here  by Alaskans,  are  not simply  forfeited by                 
  injured Alaskan workers.  They are  going to be forfeited by                 
  Alaskans in general, and by businesses as well.                              
                                                                               
  Remember, that the first case that I mentioned to you, was a                 
  case where Pabst  Brewing Company  was suing the  inspecting                 
  insurance  company, and while  I can't  tell you,  because I                 
  didn't  spend enough  time reading the  case, if  anyone was                 
  killed or injured,  I can tell  you that the explosion  that                 
  fostered that  litigation put a heck  of a dent  in the beer                 
  production for quite awhile.                                                 
                                                                               
  I guess that I am concerned  that the committee not overlook                 
  the importance to businesses and to adjacent property owners                 
  of a rule of law that exists in this state now that protects                 
  people from negligent  inspection services.   What kinds  of                 
  businesses and  enterprises are likely to be  the subject of                 
  such an inspection?  A lot of things come to mind, but major                 
  construction  activities, certain  kinds  of demolition  and                 
  explosion   activities,   oil   operations    and   refinery                 
  operations.                                                                  
  Number 105                                                                   
                                                                               
  You're putting a big dent into  the current public policy of                 
  the state that provides protection to people injured through                 
  negligent acts if this legislation leaves the committee.                     
                                                                               
  I  have seen  some of  the correspondence  addressed to  the                 
  committee with regard to this bill, and I guess I would like                 
  to again state what I think is obvious to practicing lawyers                 
  that may not be obvious to everyone else.  And that is, that                 
  by providing an inspection, it is not the law of Alaska, not                 
  the law  anywhere else,  and never  going to  be the law  of                 
  Alaska,  that you are  somehow thus liable,  period, when an                 
  injury  or  some sort  of  damage occurs.    Your inspection                 
  activity has to be related causally,  has to cause, in fact,                 
  the  damage  has  to  be  such  an important  event  that  a                 
  reasonable person  would attach  it as  the cause,  wouldn't                 
  happen, but for  the cause.  Then you have  to be negligent,                 
  and if those things don't apply, you're not liable.                          
                                                                               
  In that old 1912 case,  for instance, this insurance company                 
  had   done  periodic  inspections  of  a  boiler,  submitted                 
  reports.  Pabst relied  upon them -  and why  wouldn't they,                 
  they submitted one  just a month  before the thing blew  up.                 
  They,  as  part of  their  advertising campaign,  touted the                 
  benefits of their  inspection services  as an inducement  to                 
  procure the  coverage in the  intended inspection  services.                 
  Under this legislation,  the inspecting entity would  be cut                 
                                                                               
                                                                               
  loose and completely free of any  responsibility.  I guess I                 
  fail to see, and I hope the committee fails to see, how that                 
  is in the interest of the people of this state.                              
                                                                               
  Number 113                                                                   
                                                                               
  Finally, I  guess I've  got a  couple of  comments.   Having                 
  looked over some correspondence received by the committee, I                 
  found one of the more fascinating to be a February 1 letter,                 
  addressed  to SENATOR KELLY as  chair of Labor and Commerce,                 
  from  JAMES   E.  PFEIFER,  president   of  Alaska  National                 
  Insurance Company.                                                           
                                                                               
  With that particular  piece of correspondence, it's  kind of                 
  hard to know where to start.   Let me hit a couple of things                 
  quickly.  As  I mentioned, this is  not a bill that  is just                 
  going to affect whether or not  injured workers have a third                 
  party  claim under certain  circumstances.  It  goes to much                 
  broader segments of society.                                                 
                                                                               
  Secondly,  it  is  suggested  here   that  in  the  worker's                 
  compensation  system, workers  get full  recovery  for their                 
  injuries, so what's the problem?  That's ludicrous!  Injured                 
  workers give  up the hope  of having anything  approaching a                 
  full recovery in exchange for the administrative proceeding,                 
  no liability or comparative fault issues, and prompt payment                 
  of their claims.   To suggest otherwise, I think, is, well I                 
  think  should  be  an embarrassment  to  whoever  wrote this                 
  letter.  It is certainly not the case.                                       
                                                                               
  Finally, I think, in evaluating some of the support for this                 
  bill,  look  carefully  at  some  statements  made  in  this                 
  particular  piece   of  correspondence.     Alaska  National                 
  suggests that not  only should the  industry be immune  from                 
  liability from its unreasonable and  negligent conduct, when                 
  it causes death or damage, but they should also be free from                 
  their intentional misconduct,  and I guess  that ... I  find                 
  that to be such  a bizarre and unusual  request that, in  my                 
  mind,  it would somewhat  taint the  veracity of  whoever is                 
  communicating it."                                                           
                                                                               
  Number 180                                                                   
                                                                               
  SENATOR KELLY  said the committee  agreed with him  on that,                 
  and has decided  to leave  the language  in the  bill as  is                 
  right now.                                                                   
                                                                               
  MR. SCHNEIDER continued, "Thank you, senator.   I am sorry I                 
  was unaware of that.                                                         
                                                                               
  Frivolous cases are mentioned.  Basically the law, as it is,                 
  promotes frivolous  litigation.  Most people  that represent                 
  plaintiffs, do so on a contingency  fee basis, and the basic                 
  mathematics of that situation are that a percentage of zero,                 
                                                                               
                                                                               
  or  a  trivial or  frivolous amount  of  money are  zero, or                 
  something trivial.   The suggestion that there  is some sort                 
  of any  number of  cases out there  based on  this claim  is                 
  absolutely  contrary  to  my  own   experience,  in  my  own                 
  knowledge  of  plaintiff's  practice  in  this town,  and  I                 
  suspect it is contrary to the record.                                        
                                                                               
  So,  with  that notion,  I would  like  to prevail  upon the                 
  committee to seek  information before it does  anything with                 
  this bill, and  some of the  questions that I would  suggest                 
  would  be  appropriate  would be  questions  like:  How many                 
  inspections  were  done  by  Alaska  National,  State  Farm,                 
  Alstate, some of the major, either casualty carriers in  the                 
  state, before the case in question?  How many have been done                 
  after the case  in question?   How many lawsuits were  there                 
  before and after with this allegation?   I think you'll find                 
  that this big problem, is no problem at all.                                 
                                                                               
  ...I would like to leave the  committee with the notion that                 
  this bill, seeming to address something fairly simple on its                 
  face, is  not so  simple at all.   Unfortunate retreat  to a                 
  concept dead for about a century in this country, and a real                 
  step  backwards  for  an  important  legal   principal  well                 
  established in  the juris prudence  of this state  and every                 
  other state.                                                                 
                                                                               
  And,  with that, if the committee has comments or questions,                 
  I would be pleased to answer them."                                          
                                                                               
  SENATOR  RIEGER  asked MR.  SCHNEIDER,  in reference  to his                 
  testimony, "you said  that even  if the present  law of  the                 
  state were to stand,  that a person performing a  work place                 
  inspection, would have to have performed an inspection which                 
  caused the injury before  they could be held liable.   Could                 
  you elaborate on how that is so?"                                            
                                                                               
  Number 221                                                                   
                                                                               
  MR. SCHNEIDER answered,  "Sure, I'm  happy to, and  it is  a                 
  critical, critical part of the public policy analysis that I                 
  would be hoping this committee would engage in.  Let me give                 
  you  a couple  of examples.   I come  and inspect  your work                 
  site,  you're  engaged  in   construction  activity,  you're                 
  building   a  new  capitol  at  Willow,   and  I  look  your                 
  construction activity  and I  see things  like, maybe,  dump                 
  trucks running through  stop signs, no flagmen  present, all                 
  ... those  kinds of  violations.   You're relying  on me  to                 
  report them,  because I promised to  do so.   I don't report                 
  them.  Nothing is  done to alter the  activity.  Someone  is                 
  run over and killed.                                                         
                                                                               
  Now a plaintiff  in that set  of facts could argue  that the                 
  inspection was  negligent, the reporting  was negligent, and                 
  that  negligence caused  or contributed  to  the death.   So                 
                                                                               
                                                                               
  that's one area  where you have  an argument.   Now, a  jury                 
  might  find  otherwise,  but  you  have  an  argument  about                 
  causation and negligence.                                                    
                                                                               
  Let's say in a different set of facts, the same construction                 
  site,  I walk up,  I see that  everything in front  of me is                 
  fine.  The next day, because of  a design defect in a crane,                 
  which is not noticeable to the naked eye.  Or, let's make it                 
  easy, let's make it a manufacturing defect in a crane.  Some                 
  metal  fatigue,  a boom  falls  off,  kills a  half  a dozen                 
  people.  Am I responsible under those facts?  If I was sued,                 
  my response would be, 'A careful inspection would not reveal                 
  that defect.'  Number 1, I am not negligent.  I haven't done                 
  anything  unreasonable,  and   if  I   have  done   anything                 
  unreasonable,  like not  even  looked at  the  crane that  I                 
  should have looked at,  ok.  Had I  inspected, I would  have                 
  not found the defect, so just like in every single tort case                 
  that  ever  was,  outside  the   area  of  strict  product's                 
  liability, every  case, every auto case,  every construction                 
  case.   If  I  can't prove  not  only unreasonable  conduct,                 
  meaning  an  unreasonable act,  or an  unreasonable omission                 
  where there is a duty to  act.  If I can't prove that,  and,                 
  and not or, that these negligent failings caused the injury,                 
  I got no case, and I lose."                                                  
                                                                               
  (This ends the verbatim portion of the minutes.)                             
                                                                               
  Number 250                                                                   
                                                                               
  MR. SCHNEIDER asked if he had answered the question.                         
                                                                               
  (This ended the verbatim testimony.)                                         
                                                                               
  SENATOR KELLY thanked MR. SCHNEIDER for his testimony.                       
                                                                               
  SENATOR PEARCE  moved  to  pass  SENATE  BILL  NO.  64  from                 
  committee  with  individual  recommendations.     There  was                 
  dissent on  the bill.   A vote was  taken, and SB  64 passed                 
  from committee on a 3 to 2 vote.                                             
                                                                               
  Number 290                                                                   
                                                                               
  SENATOR KELLY introduced SB  66 (UNIFORM LIMITED PARTNERSHIP                 
  ACT UPDATE) sponsored  by SENATOR JIM DUNCAN.  SENATOR KELLY                 
  invited ROXANNE STEWART,  aide to SENATOR DUNCAN,  to review                 
  the bill.                                                                    
                                                                               
  MS  STEWART  explained  the bill  completed  the  upgrade of                 
  Alaska's   Limited  Partnership  Act   to  conform   to  the                 
  recommendations of the National  Conference of Commissioners                 
  under the  Uniform State Laws.   In reviewing  the sections,                 
  she said  Section  1 substitutes  the  notice form  for  the                 
                                                                               
                                                                               
  certificate of  limited partnership  for the  old long  form                 
  certificate, and the rest of the bill simply conforms to the                 
  remainder of the Limited Partnership Act.                                    
                                                                               
  SENATOR KELLY opened the committee to questions.                             
                                                                               
  ART  PETERSON,  presently  in   private  practice,  strongly                 
  supports SB 66.   He drew  attention to two  letters in  the                 
  bill file from Anchorage attorneys written last year on this                 
  subject, also, strongly supporting the bill.                                 
                                                                               
  MR. PETERSON explained  the bill would provide  for national                 
  uniformity with other states, and it would provide a  modern                 
  approach to  the area  of limited  partnerships, along  with                 
  better  access to  the business  communities  throughout the                 
  country.  He noted Section 1 was  the heart of the bill, and                 
  all of the other provisions were compatible amendments.                      
                                                                               
  MR.  PETERSON  continued  to  explain  the reasons  for  the                 
  substitution of the modern use of  the short form, or notice                 
  form of the certificate of limited partnership,  for the old                 
  fashioned long form.   He gave  an extensive account of  the                 
  history and use of  the certificate from its inception,  and                 
  he explained the current application of  the short form as a                 
  cost benefit.                                                                
                                                                               
  SENATOR RIEGER asked  several questions  of MR. PETERSON  to                 
  clarify other types of joint ownership in business forms.                    
                                                                               
  Number 358                                                                   
                                                                               
  To answer SENATOR LINCOLN, MR. PETERSON explained the format                 
  was used  by most states,  but the  long form dated  back to                 
  1917.                                                                        
                                                                               
  SENATOR  KELLY agreed with MR. PETERSON this change had been                 
  left out of  the re-write last year, which satisfied SENATOR                 
  LINCOLN.                                                                     
                                                                               
  Next, SENATOR  KELLY called on WILLIS  KIRKPATRICK, Director                 
  of the Division of Banking, Securities, and Corporations, to                 
  testify.                                                                     
                                                                               
  MR. KIRKPATRICK  testified in favor  of the change  since it                 
  would  lessen the  burden on  his  department in  the filing                 
  procedures.  He asked the committee  to consider a couple of                 
  changes  to  update  the standard  industrial  codes  and to                 
  include a reminder for the limited partnerships  to be filed                 
  in his department.                                                           
                                                                               
  Number 404                                                                   
                                                                               
  After some discussion, SENATOR LINCOLN  moved to pass SENATE                 
  BILL NO.  66 from committee with  individual recommendations                 
                                                                               
                                                                               
  and a zero fiscal note.  Without objections, so ordered.                     
                                                                               
  Next, SENATOR  KELLY introduced a  committee sponsored bill,                 
  SB 85 (TOURISM MARKETING COUNCIL) and invited TINA LINDGREN,                 
  Executive Director for the Alaska Tourism Marketing Council,                 
  to testify.                                                                  
                                                                               
  Number 431                                                                   
                                                                               
  MS. LINDGREN  explained the  bill and  gave reasons  why the                 
  tourism  marketing  council  should be  extended  for  three                 
  years.    She described  destination  marketing, why  it was                 
  important for  Alaska, and how it operated within the state.                 
  MS. LINDGREN  said there were  12000 operators who  used the                 
  council program as their  only means to access  the national                 
  market place, and they would lose their business without the                 
  assistance of the  council.  The large tour  companies would                 
  then gain the greater share of the market.                                   
                                                                               
  SENATOR KELLY opened the meeting to questions.                               
                                                                               
  SENATOR PEARCE gave  some information on a  proposed omnibus                 
  bill that would extend boards  and commission  and explained                 
  the Tourism Marketing Council was chosen  to be extended for                 
  a longer  period of time.   MS. LINDGREN said  there were no                 
  objections  from  either  the  ATMC  or  the  Department  of                 
  Commerce.                                                                    
                                                                               
  SENATOR LINCOLN objected to the criteria used  to select the                 
  presiding  officer  and  board members,  which  she  thought                 
  denied  membership  to those  in  the visitor  industry, who                 
  couldn't  meet the  criteria.   She said  there weren't  any                 
  member on the  council from any  of her 93 communities,  and                 
  she said this  eliminated a lot  of expertise that could  be                 
  used by the  council.  SENATOR LINCOLN opposed  the criteria                 
  for the make-up of the board.                                                
                                                                               
  Number 468                                                                   
                                                                               
  MS. LINDGREN  reviewed the previous  use of the  criteria as                 
  being too difficult to meet, and she explained a prospective                 
  member only needed  to meet one of  the criteria.   She said                 
  the  Department  of Commerce  shared  her concern  about the                 
  representation, and she described how  members could come to                 
  the council through the committee structure.                                 
                                                                               
  SENATOR LINCOLN asked for an amendment on the make-up of the                 
  board on page 1,  line 10 by deleting "substantially."   She                 
  still thought the provisions would eliminate a lot of people                 
  who would be good participants on the council.                               
                                                                               
  After discussion  with SENATOR KELLY,  SENATOR LINCOLN moved                 
  to delete "substantially."   SENATOR PEARCE objected because                 
                                                                               
                                                                               
  she wanted to work with SENATOR LINCOLN on the wording.                      
                                                                               
  SENATOR KELLY agreed with SENATOR  PEARCE and called an  at-                 
  ease to discuss the problem.                                                 
                                                                               
  Number 505                                                                   
                                                                               
  There was no  objection to SENATOR LINCOLN'S  amendment, and                 
  it was passed.                                                               
                                                                               
  SENATOR PEARCE moved to amend page 3, line 17, to change the                 
  date to 1997 for a sunset.  Without objections, so ordered.                  
                                                                               
  SENATOR PEARCE moved to pass CS  FOR SENATE BILL NO. 85(L&C)                 
  from committee  as amended  and with  a single  fiscal note.                 
  Without objections, so ordered.                                              
                                                                               
  As prime sponsor, SENATOR KELLY  introduced SB 73 (LIABILITY                 
  OF  DESIGN/CONSTRUCTION PROFESSIONALS)  and asked  his aide,                 
  JOSH FINK, to review the bill for committee.                                 
                                                                               
  Number 523                                                                   
                                                                               
  MR. FINK   explained a  similar bill had  passed the  Senate                 
  last year, and  he gave  a brief history  on the Statute  of                 
  Repose along with the rationale.  This presumed that after a                 
  building had been utilized safely for 10 years, the facility                 
  should be deemed safe, and the design  professions should be                 
  protected from suit after the passage of a reasonable amount                 
  of time.                                                                     
                                                                               
  MR. FINK  outlined the  legal problems,  and explained  that                 
  currently design professionals are subject  to an indefinite                 
  period of liability.  He reviewed the supreme court decision                 
  arising   from   the   1988   consolidated   cases,   Turner                 
  construction v.  Robert Scales  and Iverson  Construction v.                 
  DeWayne  Carson  and  referred the  committee  to  two legal                 
  opinions in the bill packet.                                                 
                                                                               
  MR. FINK  said SB  73 would  repeal  the 6  year Statute  of                 
  Repose and reenact a 10 year Statute of Repose in its place,                 
  and he  explained the legal  implications of  the bill,  and                 
  referred the Senators to additional  information in the bill                 
  packet.   In his  summation, MR.  FINK said  the bill  would                 
  provide reasonable protection for  design professionals.  He                 
  noted two zero fiscal notes.                                                 
                                                                               
  Number 554                                                                   
                                                                               
  SENATOR KELLY asked  for additional information on  the bill                 
  introduced during the  last legislature,  and MR. FINK  gave                 
  him the voting history on the bill.                                          
                                                                               
                                                                               
  SENATOR KELLY  invited DOUG  GREEN, Chairman  of the  Alaska                 
  Professional Design Council's legislative liaison committee,                 
  and a registered architect, to begin the testimony.                          
                                                                               
  MR.  GREEN  commenced  with  some   history  on  the  Alaska                 
  Professional  Design  Council which  represented all  of the                 
  design  professionals  in  the  State  of  Alaska  -  eleven                 
  different associations and  1400 design professionals state-                 
  wide.   He made  several points  in favor  of  the bill  and                 
  explained  the  Statute of  Limitations  in relation  to the                 
  Statute of  Repose, which  fixes a  time from  the date  the                 
  project is completed  until a  period in the  future.   This                 
  date, 10 years hence, would cut  off the time for litigation                 
  against the  project and  against the design  professionals,                 
  except in the case of gross negligence.                                      
                                                                               
  MR. GREEN predicted the bill would encourage construction in                 
  Alaska, and he  described the number  of third party  claims                 
  for a slip-and-fall type of  incidence that makes the design                 
  professionals vulnerable to litigation.                                      
                                                                               
  Number 580                                                                   
                                                                               
  TAPE 93-9, SIDE B                                                            
  Number 001                                                                   
                                                                               
  MR. GREEN deplored the amount of  research it took to answer                 
  the litigations, and he assured the committee the bill would                 
  not limit the access to courts, even after 10 years.                         
                                                                               
  SENATOR SALO asked for  an example of what would  constitute                 
  gross  negligence  v.  inadequate  design  or  stress  on  a                 
  building.  She said  it might be many years before  a design                 
  flaw comes to light.                                                         
                                                                               
  MR. GREEN  gave an example of what might be concealed in the                 
  construction of a building which  might have a deficiency in                 
  the design.  He said that would not be standard practice and                 
  would constitute gross negligence on the part of a designer,                 
  giving recourse through the courts.                                          
                                                                               
  SENATOR SALO asked about  roofs, which she said  are problem                 
  areas in  Alaska.  She  also asked  whether a change  in the                 
  statute would change the burden of proof.                                    
                                                                               
  MR. GREEN described  the circumstances and remedies  for the                 
  failure  of a  roof as a  maintenance item, and  he said the                 
  Statute of Repose  could inform  the design professional  to                 
  look to the maintenance record by  the owners as part of the                 
  defense.                                                                     
                                                                               
  Number 066                                                                   
                                                                               
                                                                               
  SENATOR  KELLY  next  called  on  RICHARD RITTER  and  COLIN                 
  MAYNARD to testify.                                                          
                                                                               
  MR. RITTER said that  45 states currently have a  Statute of                 
  Repose, and  of the 45, 32 have been declared constitutional                 
  in actual  court cases.   He  explained Alaska's  Statute of                 
  Repose had been declared unconstitutional.                                   
                                                                               
  MR.  MAYNARD  assured  the  committee  of support  from  the                 
  engineering society for  the Statue of Repose, but he didn't                 
  think they  should be subjected  to an indefinite  period of                 
  liability.                                                                   
                                                                               
  He described being dragged into a  suit even though his firm                 
  had been retired for 10 years.  He quoted some statistics to                 
  show  design  problems after  10  years was  for  other than                 
  failure by the design professionals, but from remodeling and                 
  neglected maintenance.                                                       
                                                                               
  SENATOR LINCOLN questioned  the letter from  the legislative                 
  counsel, MIKE FORD,  as to why the change had been made from                 
  7 to 10 years.  MR. FORD explained the correction.                           
                                                                               
  SENATOR LINCOLN, in  reference to  the studies by  Shinnerer                 
  Management  Services, Inc.,  quoted  the "vast  majority  of                 
  claims filed against Design Professionals are brought within                 
  six  years  of   substantial  completion..."     She  quoted                 
  additional statistics from the legislation  as stating 83.6%                 
  of the claims were filed the  first 5 years, and 45% of  the                 
  claims were  filed  during construction.    SENATOR  LINCOLN                 
  wanted to know why the legislature was going to 10 years for                 
  such a small percent of claims.                                              
                                                                               
  MR. GREEN explained the legislation stretches out the number                 
  of possible claims to  97% of everyone who would,  or could,                 
  file a claim.  He further explained the design professionals                 
  want to  provide some  end point  fair to  everyone, but  as                 
  design professionals  wanted to  be able  to retire  and not                 
  have to be called to be accountable for a building.                          
                                                                               
  Number 145                                                                   
                                                                               
  MR. RITTER added  that without  a Statue  of Repose,  design                 
  professionals are  forced  to consider  "tail" insurance  to                 
  retire their business.                                                       
                                                                               
  SENATOR SALO asked  if after the  10 year period, would  the                 
  insurance premiums be less?                                                  
                                                                               
  MR. MAYNARD  said they  were unable  to  see any  difference                 
  immediately, but it would enable the design professionals to                 
  throw away their files after 10 years.                                       
                                                                               
  MR.   RITTER   discussed   insurance    problems   including                 
                                                                               
                                                                               
  deductibles and claims.  In answer to questions from SENATOR                 
  KELLY, MR.  RITTER  described expensive  court costs,  legal                 
  fees, and insurance premiums.                                                
                                                                               
  Number 180                                                                   
                                                                               
  SENATOR RIEGER directed  MR. FORD to  Sections 2 and 3,  and                 
  questioned him  about an equal  protection case  on page  3,                 
  line  5,  where a  number  of  trades and  crafts  have been                 
  included  in  the  exemption  rather  than just  the  design                 
  professionals.                                                               
                                                                               
  MR. FORD  explained why he  thought it might help  to have a                 
  broad  base  of  people.    He  cited the  lack  of  several                 
  liability as a success  factor in the bill.   SENATOR RIEGER                 
  and  MR.  FORD  discussed some  other  aspects  of the  bill                 
  including joint several liability.                                           
                                                                               
  SENATOR KELLY called for a motion on the bill.                               
                                                                               
  SENATOR  RIEGER  moved  to  pass  SENATE  BILL NO.  73  from                 
  committee   with   individual   recommendations.     Without                 
  objections, so ordered.                                                      
                                                                               
  There  being  no   further  business  to  come   before  the                 
  committee, the meeting was adjourned at 2:50 p.m.                            
                                                                               
                                                                               

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