SENATE JUDICIARY COMMITTEE April 9, 1997 1:30 p.m. MEMBERS PRESENT Senator Robin Taylor, Chair Senator Drue Pearce, Vice-chair Senator Mike Miller Senator Sean Parnell Senator Johnny Ellis MEMBERS ABSENT None COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 9(FIN) am "An Act relating to the rights of crime victims and victims of juvenile offenses; relating to the collection by victims of restitution from prisoners; relating to the definition of `incapacitated' for sexual offenses; creating the crime of interfering with a report of a crime involving domestic violence; relating to mental examinations of victims in criminal prosecutions; relating to the safety of victims, other persons, and the community in setting bail or conditions of release; relating to access to certain records of the Violent Crimes Compensation Board; amending Rule 6, Alaska Rules of Criminal Procedure, Rules 404 and 615, Alaska Rules of Evidence, and Rule 3, Alaska Delinquency Rules; and providing for an effective date." MOVED CSHB 9(JUD) OUT OF COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS CS FOR SENATE BILL NO. 119(L&C) "An Act relating to fraternal benefit societies; and providing for an effective date." MOVED CSSB 119 (L&C) OUT OF COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS SENATE BILL NO. 101 "An Act relating to the adoption, amendment, repeal, legislative review, and judicial review of regulations; and amending Rule 202, Alaska Rules of Appellate Procedure." HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 9 - No previous Senate committee action. SB 119 - See Labor and Commerce Committee minutes dated 3/13/97. SB 101 - No previous Senate committee action. WITNESS REGISTER Jim Sourant Legislative Aide to Rep. Porter Alaska State Legislature Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified for sponsor of HB 9. Anne Carpeneti Assistant Attorney General Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Provided a sectional analysis on HB 9. Paul Sweet P.O. Box 1562 Palmer, AK 99645 POSITION STATEMENT: Asked questions about HB 9. Robert Buttcane Youth Corrections - DFYS Department of Health & Social Services P.O. Box 110630 Juneau, AK 99811-6300 POSITION STATEMENT: Supports HB 9. Jayne Andreen Council on Domestic Violence & Sexual Assault Department of Public Safety P.O. Box 111200 Juneau, AK 99811-1200 POSITION STATEMENT: Supports HB 9. Barbara Brink Public Defender Agency Department of Administration 900 W 5th Ave., Suite 200 Anchorage, AK 99501-2090 POSITION STATEMENT: Commented on HB 9. Janice Lienhart Anchorage, AK POSITION STATEMENT: Supports HB 9. Linda Thomas Rex Lamont Butler Law Firm Anchorage, AK POSITION STATEMENT: Opposed to HB 9. Connie Tromble Bethel, AK POSITION STATEMENT: Supports HB 9. Charlie Miller National Fraternal Congress of America P.O. Box 102286 Anchorage, AK 99510 POSITION STATEMENT: Testified in support of SB 119. Marianne K. Burke Division of Insurance Dept. of Commerce & Economic Development P.O. Box 110805 Juneau, AK 99811-0805 POSITION STATEMENT: Commented on SB 119. John Lindback Chief of Staff Office of the Lieutenant Governor P.O. Box 110015 Juneau, AK 99811-0015 POSITION STATEMENT: Commented on the regulatory process. Deborah Behr Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99801 POSITION STATEMENT: Provided an analysis of SB 101. Senator Dave Donley Alaska State Legislature Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SB 101. Jack Kreinheder Office of Management & Budget Office of the Governor P.O. Box 110200 Juneau, AK 99811-0020 POSITION STATEMENT: Testified on the fiscal notes for SB 101. ACTION NARRATIVE TAPE 97-26, SIDE Number 00 CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 1:42 p.m. and acknowledged the presence of Senators Miller and Parnell. The first order before the committee was HB 9. HB 9 VICTIM'S RIGHT TO BE PRESENT AT TRIAL  JIM SOURANT , legislative assistant to Representative Porter, sponsor of the measure, and ANNE CARPENETI , Assistant Attorney General, Department of Law (DOL) took the witness stand. Mr. Sourant noted Janice Lienhart, the recipient of the National Crime Victim Service Award, was available to testify from Anchorage via teleconference and commented on her outstanding service in the area of crime victims' rights in the State of Alaska. He then explained HB 9 is the statutory realization of a constitutional amendment adopted two years ago. Article 1, Section 24, of that amendment contains a list of the rights of crime victims to ensure that those rights are elevated to at least that of criminal defendants. The part of HB 9 that is most relevant to the constitutional amendment is the idea that crime victims have the right to be in the courtroom at all times that the criminal defendant, or juvenile if a juvenile proceeding, has the right to be in the courtroom - notwithstanding the fact that the victim may be later called upon as a witness. Sections 1 and 2 modify Alaska Evidence Rule 615, the exclusionary rule, and recognize the right of a crime victim to be in a courtroom at any time the criminal defendant is present. The State of New Hampshire has modified its equivalent of Alaska Evidence Rule 615 without a constitutional amendment. That modification was upheld by the New Hampshire Supreme Court. In March, 1997 Congress enacted the Victims' Rights Clarification Act of 1997. That bill is consistent with HB 9 regarding a victim's right to be present in the courtroom, and is retroactive so that the victims of the Oklahoma City bombing can be present during that trial. He asked Ms. Carpeneti to comment on the other substantive provisions of HB 9. Number 105 MS. CARPENETI commented that prior testimony in other committees on modification of the exclusionary rule has revealed concern about the possibility that the victim's testimony might be tainted after listening to other witness' testimony. She noted the victim's story has been previously recorded in several ways; by a description of events to police officers and in Grand Jury testimony so that it is on record before he/she testifies at a trial. The precaution against tainting testimony is not very strong in relation to constitutional requirement. MS. CARPENETI gave the following sectional analysis of the remainder of HB 9. Sections 3 through 6 deal with exemptions upon levy for assets that provide that a person's liquid assets and wages are free from being levied by creditors. Those sections exempt victims who have an order for restitution so that the levy can occur to fulfill restitution obligations. Section 7 makes a minor change in the definition of "incapacitated" in sexual assault statutes. To establish that the victim was incapacitated will require proof that the victim was unable to appraise the nature of the act or was physically unable to express unwillingness. Ms. Carpeneti thought that it should be clear that the State has to prove one or the other, but not both. Section 8 creates a class A misdemeanor for interfering with the report of the crime of domestic violence. Often, in domestic violence cases, a phone is pulled out of the wall to prevent the victim from calling police. That action escalates the danger of the situation and makes the victim unable to communicate with anyone who might help. Sections 9 through 12 bring Alaska's bail statutes into line with current court practice and constitutional requirements. Judges are now considering the safety of the victims when ordering bail or setting conditions of release. Section 13 limits the situations where the court can order a mental examination of the victim at the request of the defendant. Mental examinations of victims should be ordered in very rare circumstances because it is such an invasion of one's dignity. Last year the Legislature passed laws which limited the ability of representatives of the defense team to contact the victim. DOL's Special Prosecutions Office attorneys thought about situations in which a victim's mental examination might be relevant and those situations are excepted, otherwise Section 13 provides that a psychiatric examination should not be ordered. Section 4 amends the three-judge panel statute. In Alaska's sentencing laws, a three-judge panel is available to a defendant or the State if, in certain circumstances, the presumptive sentence does not fit the particular case. The three-judge panel has more power than a sentencing court when a presumptive sentence is required by statute. Section 4 provides that if the panel supplements the record by taking testimony from the defendant, the victim may also testify. Section 15 amends the section dealing with crime victims' rights and brings notice requirements from other titles into Title 12 so that most of the rights to notice are located in one title. Section 16 provides that an application for compensation from the Violent Crimes Compensation Board (VCCB) and supporting data is confidential. That is the current practice but sometimes the Board has to defend a subpoena or request and has asked that the statute clarify that the information is not public. Section 17 deals with the right to be present at trial. Section 18 provides that a victim may testify telephonically before a Grand Jury under the same circumstances that other witnesses are allowed to testify telephonically. Section 19 amends the rules of evidence to allow the use of evidence of prior acts of domestic violence in the prosecution of a case. The reason for this change is that frequently domestic violence cases are prosecuted without a witness to the offense. The victim may have recanted or refused to cooperate out of fear, or for many other reasons. More often, the police officer who was at the scene testifies to what occurred. Ms. Carpeneti concluded the sectional analysis by saying the remaining provisions deal with the exclusionary rule of witnesses as they relate to victims. MS. CARPENETI stated DOL has suggested an amendment to Representative Porter who agrees to it if the committee will consider it at this point. The amendment provides specifically that in a case where an indictment is dismissed by the Trial Court and the State intends to, or does, appeal the dismissal, that the release of the defendant be according to the rules of pre-trial release. Recently an order by the Supreme Court unconditionally released a defendant after an indictment had been dismissed by the Superior Court and the State appealed the dismissal with the Court of Appeals. This same procedure using pre-trial release rules is used by the federal court system. Number 245 SENATOR PARNELL noted Section 19, regarding admissibility of evidence in domestic violence cases, amends Evidence Rule 404. He asked whether evidence of prior crimes is admissible in any other circumstances. MS. CARPENETI said there are other circumstances where prior bad acts are admissible to establish the State's case, for example sexual abuse of a minor under certain circumstances. The general rule is one cannot use prior bad acts to establish propensity to prove the person acted in accordance with how he/she behaved in the past, but there are a number of exceptions. SENATOR PARNELL asked if this evidence would be used to prove one's guilt at this time, and whether it could be used to secure applications for restraining orders. He questioned whether it applies strictly to convictions of crimes involving domestic violence. MS. CARPENETI answered the State would have to make a preliminary showing to the Court that the information was still relevant; the evidence could not automatically be introduced. SENATOR PARNELL asked if, in the area of sexual abuse, and evidence of sexual abuse, is the wording in 404 evidence of sexual abuse or is it evidence of conviction. MS. CARPENETI thought it was evidence of prior bad acts. SENATOR PARNELL questioned whether a court order can override Section 16, regarding the confidentiality of records before the VCCB. MS. CARPENETI answered that provision was added to the bill because records have been subpoenaed and the State has to litigate. She thought under certain circumstances one could ask the court because there might be reasons unrelated to this specific issue, but generally, the records should be kept confidential. SENATOR PARNELL asked about the current problem. MS. CARPENETI said people are asking for subpoenas and DOL has to fight the request. DOL has won every time so far. SENATOR PARNELL asked if the intent of the sponsor is that a court order could override this provision in certain circumstances. MS. CARPENETI said she would have to know what circumstances because the provision is clear the records are confidential. SENATOR PARNELL asked why, as a policy matter, we would want to never allow those records to be reviewed. MS. CARPENETI replied the applications contain medical records and personal information from victims. SENATOR PARNELL asked if there is ever a time when the State ends up in a civil proceeding between the two and the evidence is necessary for impeachment purposes for the victim. MS. CARPENETI stated she is not familiar with any such situations, and does not believe any have arisen. SENATOR PARNELL clarified he understands the importance of protecting the information, but is trying to understand the intent with respect to the scope of the protection. MS. CARPENETI answered the intent is to avoid litigating every time someone asks for the records. When people ask for a subpoena, DOL opposes the motion and has prevailed, but DOL wants to avoid litigating every time someone wants to get the records. She agreed this provision would supersede the court's decision. Number 326 PAUL SWEET testified via teleconference from Mat-Su in opposition to HB 9. He asked whether a victim will be able to testify at an appeals case in which the defense is arguing that the sentence was too stiff. MS. CARPENETI clarified when a person appeals a sentence, the Court of Appeals makes the decision based on the record before it; it does not take more testimony from anyone. Both the State and the defendant present their respective positions. In such cases, the State designates, as part of the record on appeal, any statement that the victim has made in terms of the sentence given to the Court prior to the presentence report so the victim's point of view regarding the appropriate sentence is on the record in every case. CHAIRMAN TAYLOR added the Appellate Court should be able to do one of three things: either affirm the sentence handed down by the judge, reduce the sentence, or increase it. If an increase was a possibility, many specious appeals would not occur. MR. SWEET commented that every time the perpetrator has a right to appeal, the victim should have the same right. Number 364 CONNIE TROMBLE testified via teleconference from Bethel and noted her support for HB 9. JANICE LIENHART testified via teleconference from Anchorage in support of HB 9 and made the following remarks. The intent of the constitutional amendment is to allow victims to attend all hearings that the defendant can attend because the victim is kept from so much information from the first point of prosecution: the police cannot give any information until the trial. When a victim is not allowed to attend the hearing, he/she does not get answers or closure. She believes victims will be as honest as they can because they want to see justice served. HB 9 will put teeth in the constitutional amendment and positively impact families who now have to live through the nightmare of having no information about the criminal justice process and are unable to participate. She noted she has been trying to help a woman in Texas who witnessed the murder of her daughter. Because this woman was a witness she is not allowed to attend the trial which is very difficult for her. Number 392 LINDA THOMAS , an attorney with Rex Lamont Butler & Associates in Anchorage, testified in opposition to the provisions that eliminate the exclusionary rule. One of the most important tools to protect innocent persons wrongfully accused from being wrongfully convicted is the tool of cross-examination: it is fundamental to a defendant's Sixth Amendment right to confront witnesses, and to effective assistance of counsel. This is especially true in sexual assault and domestic violence cases where the primary evidence is the complainant's identification or an accuser's testimony and the only defense may be impeachment through cross-examination. Elimination of the exclusionary rule will weaken that tool and it eviscerates fundamental constitutional rights designed to protect those accused of crimes. For whatever reason, we know that there are some people who falsely accuse others, sometimes when relationships are ending they use it as a means to seek financial leverage or power in a custody dispute, or maybe out of revenge to a lover or even as an alibi for their own sexual conduct, for example sometimes in teenagers' unwanted pregnancies. If a false accuser is allowed to stay in the courtroom, he or she is given an opportunity to hear all other testimony and they can clean up any inconsistencies in their testimony which might have been revealed on cross examination. If a false accuser is permitted in a courtroom, they get an opportunity to dot their i's and cross the t's on all their lies. According to Linda Farenstein [ph], former New York District Attorney and director of Manhattan's Sex Crimes Prosecution Unit, who for 20 years put sex offenders away, found that 60 percent of child sex abuse allegations against men were false and 50 percent of all rape allegations were false. The final analysis of a United States Air Force study in 1985 found 60 percent of the original rape claims to be false. In two reports in Canada, 50 percent of child sex abuse allegations were found to be false with the figure climbing to 70 percent when a custody fight was raging. With regard to how this plays out in sexual assault cases and domestic violence cases in Alaska, we are finding that if a complainant makes a false allegation of sexual assault, and later tries to recant, many prosecutors are not permitting the recantation, instead, in a rather neo-paternalistic way, they hire expert witnesses to testify that the recantation is evidence of a cycle of abuse. There is an underlying premise that men abuse women unless proven otherwise. The obvious conclusion is that the State does not believe there is any such thing as a false allegation, yet for eight consecutive years since 1989, the FBI, through DNA testing, found that 25 percent of the sexual assault cases ready to go to trial were based on false accusations. In a research report by the Department of Justice, called Convicted by Juries, Exonerated by Science, 28 cases were studied, where men were later exonerated by DNA test results. Most had been convicted based primarily on victim identification. In the first case a woman was seeking an alibi for her teenage pregnancy. These men, convicted on false accusations, faced sentences ranging from eight years to the death penalty and served an average of 12 years in jail. Every man is vulnerable to false accusations and if it happens in this State, the defendant needs to defend against the State's theories of domestic violence and recantation, against its resources, and will have to rely on the cross examination of a complainant. If HB 9 passes, it will permit the accuser to hear all of the testimony. She urged the committee not to eliminate the exclusionary rule, and to keep the hysteria in check. Number 457 ROBERT BUTTCANE , Division of Family and Youth Services (DFYS), Department of Health and Social Services, testified in favor of HB 9, and specifically to Section 17. DFYS has found that allowing victims greater access to the juvenile justice system has been a very effective rehabilitative tool. JAYNE ANDREEN , Director of the Council on Domestic Violence and Sexual Assault (CDVSA), testified in support of HB 9. In response to Senator Parnell's questions about the Violent Crimes Compensation Board, she noted it is her understanding that the records obtained by VCCB as part of the compensation process are protected under federal guidelines in the Victims' of Crime Act. Section 16 brings Alaska statute into compliance with that Act and will reduce the number of subpoenas that the VCCB and DOL have to deal with. Number 471 SENATOR PEARCE asked Ms. Andreen to respond to Ms. Thomas' testimony. MS. ANDREEN said she was not aware of all of the studies Ms. Thomas cited, however she is aware of the U.S. Air Force report which determined that 65 percent of sexual assault victims lie or make false accusations. That report was based on a checklist used to determine the victim's credibility and looked at their social backgrounds, economic status and employment histories. Ms. Andreen noted as a former victim of sexual assault, she took the test which determined she was lying. Consequently, she does not place any value in that report, whatsoever. In addition, FBI data continues to show that sexual assault reports do not have a higher false reporting rate than any other violent crime. Number 484 CHAIRMAN TAYLOR advised that DHSS has distributed consistent reports concerning allegations of child sexual abuse or physical abuse, and continued reports from the Bar Association and others that deal with family law matters, show the extensive use of false accusations as a leverage tool in divorce actions. MS. ANDREEN responded that in her 11 years as a victim service advocate and service provider she is aware of those concerns, but has found that in dealing with child sexual abuse cases and the mothers of the children, more often than not the advocates file reports rather than the mothers. She noted she is aware of a small number of cases in which the service provider felt the mother was overreacting. Number 493 BARBARA BRINK , Acting Director of the Public Defender Agency, stated that no victims' rights are truly enhanced when the fact- finding process is made less accurate. She expressed concern that some of the provisions in HB 9, particularly Section 13 which bans psychiatric evaluations and the provision that allows the victim's presence at all stages of the proceeding, will affect the jury's ability to get the information it needs to assess a case in a fair manner. The exclusionary rule simply says the judge may exclude a victim who also witnessed the events to ensure that victim's testimony is preserved as accurately as possible. For many victims the exclusionary rule does not apply. Victims can attend every part of the proceeding as long as they were not attendant at the event that the jury is trying to put back together after the fact. Second, a victim's role in a case is different than other parties'. The State is a party because it can obtain a conviction and is responsible for enforcing society's mores. It has something to gain or lose. The defendant is a party because the individual's liberty is at stake. Although the victim has an interest and the desire to understand what is going on, and a desire to not have things happen in secrecy, the victim is not a stakeholder because he/she does not have something to lose such as life or liberty. The fact that the victim is a witness is more important than his/her role as a victim. The fact that they observed and perceived, and have the ability to recall what happened, is their most important role. The exclusionary rule allows a judge to preserve that as truthfully as possible. Ms. Brink said unlike Ms. Thomas who is concerned about people who create false allegations and give false testimony, she is concerned about those witnesses who have no axe to grind, who are simply there to testify and tell the truth. The ability to hear what other witnesses say about what happened affects them in a very subconscious and difficult to ascertain fashion. The human brain is not like a videotape or audiotape, it does not record things 100 percent, so the legal system tries to preserve recollections and not taint them. Even though witnesses have given statements in the past, and might have testified in front of a Grand Jury, that is not what the jury is listening to; the jury is trying to assess how accurate the witness' memory is based on their testimony. Ms. Brink repeated she is concerned about those witnesses who are honestly trying their best to recall events accurately and does not believe another hurdle should be thrown in their path. It will give the jury another piece of the puzzle to assess: how much of the testimony is because of what the victim heard other witnesses say. She discussed a recent Scientific American television program on human memory which compared verbal accounts of an event before and after seeing a photograph. The accounts, after seeing the photograph changed substantially and demonstrated that every person's memory was impacted by what was seen in the photograph. That is why police interview people who witnessed an accident individually. The exclusionary rule is simply a tool that recognizes how the brain works and applies that knowledge in the courtroom setting. Ms. Brink disagreed with previous testimony about the new federal rule and how it applies to the Oklahoma City bombing case. The new rule only refers to witnesses who are going to testify at the penalty phase; it does not give the green light to those witnesses who are trying to put the events together. She urged the committee to not adopt the change to the exclusionary provision and added that a prosecutor can eliminate the whole problem by calling a witness to testify first in the proceeding. Ms. Brink discussed the psychiatric evaluation prohibition in Section 13 and agreed 100 percent with Ms. Carpeneti that psychiatric evaluations of victims should only be done in the rarest of circumstances, as is current practice. Right now, as a criminal defense lawyer, in order to get a psychiatric evaluation she must prove to the judge two things: first that the victim, who is claiming the event happened, has a definite psychological or psychiatric condition that is directly related to his/her ability to tell the truth, and second that the victim's testimony is not corroborated by anything or is otherwise untrustworthy. It is only in the rarest of rare circumstances that such an examination is allowed. Even the Court of Appeals has stated it is not going to let anyone abuse this process. Everyone has to meet that very difficult standard to prove the examination will yield relevant evidence and not harass the victim. She recounted the following case. A man was accused of sexual assault and admitted that he had engaged in the alleged sexual conduct which he thought was consensual. The victim, who said it was forced, had a psychiatric history. She was psychotic and when she did not take medication, heard voices and said she was directed to do things by people who did not exist. Her ability to recall and perceive the events in question was very suspect. She had made false accusations of people in the past, including a Supreme Court Justice. Under this rule, the jury will not hear any of that and will have to decide whether the accusation is true without knowing what the accuser's true state of memory is. Number 562 SENATOR PARNELL asked how often a mental examination of the victim is requested by the defense in a sexual assault case. MS. BRINK said in her nine years of trying cases, she has requested two examinations and was denied both times. She said she was aware of a request granted in a Fairbanks case and in the case she just described. CHAIRMAN TAYLOR asked if AS 11.41 is the rape statute. MS. BRINK replied AS 11.41.400 pertains to sexual assault; AS 11.41 covers all crimes against people. CHAIRMAN TAYLOR stated he would entertain a motion to delete Section 13 regarding mental examinations. SENATOR PARNELL made the motion. There being no objection, Section 13 was deleted. Number 587 CHAIRMAN TAYLOR informed committee members there is a second amendment in committee members' packets, submitted by the sponsor, which pertains to release pending appeal, as explained by Ms. Carpeneti. There being no objection to the adoption of amendment SENATOR ELLIS asked for further elaboration on the change to the exclusionary rule. CHAIRMAN TAYLOR noted he is concerned about changing it and requested research on the subject which revealed nothing new. He said if an attorney has a weak witness, and a whole battery of strong witnesses, the attorney can put the strong witnesses on first and by the time the weak witness has watched them testify, he/she "learns the ropes" and becomes stronger. If the witness is not allowed to watch others testify, his/her strength on the witness stand will not change. TAPE 97-27, SIDE B SENATOR ELLIS asked if there is any reasonable way to find a middle ground to the exclusionary rule change or whether it is an all or nothing consideration. MS. CARPENETI responded it is unusual to even be discussing the exclusionary rule because the constitutional amendment on victims' rights that was adopted by a large percentage of the population mandates what HB 9 does. CHAIRMAN TAYLOR added that the public was sold the victims' rights amendment to the Constitution without much, if any, discussion or debate about the exclusionary rule. Discussion centered around victims' rights to restitution and to be informed, etc. He supported the amendment but after recently rereading it, he was surprised to find the number of aspects of victims' rights that were never discussed. He said he believes this aspect of the exclusionary rule has already been run roughshod by that vote, and at this point it is up to the Supreme Court to decide whether they are going to provide for that aspect of human nature that we all know to exist. MS. CARPENETI noted that although litigation may occur regarding the defendant's right to a fair trial, the Constitution now specifically provides that the victim has the right to be present. CHAIRMAN TAYLOR concluded he does not believe there is a way to find a middle ground at this point because the Constitution has already been amended. SENATOR PARNELL moved CSHB 9 (JUD) from committee with individual recommendations. There being no objection, the motion carried. At 2:32 p.m. CHAIRMAN TAYLOR announced the committee would recess to a call of the Chair, at which time it would take up SB 119 and SB 101. TAPE 97-28, SIDE A Number 00 SB 119 FRATERNAL BENEFIT SOCIETIES  CHAIRMAN TAYLOR called the meeting back to order at 4:15 p.m. on April 10, 1997. Present were Senators Taylor, Miller and Pearce. The first order of business before the committee was CSSB 119. CHARLIE MILLER , representing the National Fraternal Congress of America, stated he was testifying for Richard Klevens. The National Fraternal Congress of America represents fraternal benefit societies that are charitable in nature, usually organized around common ethnic, vocational or religious groups. Among many functions, these organizations also offer insurance plans to members. Several groups are not domiciled in Alaska, but are admitted to write insurance; the Independent Order of Foresters, Knights of Columbus, Sons of Norway, etc. Chapter 84 of Title 21 is the affected statute in the insurance code and was based on a model act enacted in 1966. It has been modified over the years but is still not up-to-date regarding the needs of consumers and insurance writers. Provisions of current law conflict with administrative laws produced outside of the State government and SB 119 addresses those differences. A few examples are irrevocable beneficiaries, privilege to assign insurance to another owner, and purchase insurance on a third party basis which are all common transactions in estate planning and income tax planning. The model act before the committee does not expand the market. The most important provision, from the Fraternal's point of view, is that the Fraternals can form subsidiaries and non-profit institutions to carry out charitable, benevolent purposes. The irrevocable beneficiary designations and absolute assignments in the insurance certificates will allow members to use their insurance for estate planning needs. The Fraternals set up separate accounts and issue variable insurance products to members upon approval of the director of the Division of Insurance in keeping with FCC requirements and the Fraternals may issue, again upon approval, new life or health insurance products that may be developed in the future. Staff from the Division of Insurance felt rewriting the Code was a better way to go rather than offering piecemeal amendments. The model act is considered user friendly. The code has been enacted in 33 other states and 4 other states have enacted essential pieces of the act. There are 8,000+ fraternal members who will be affected. In 1995, 9,000 fraternal acts of service were performed, equaling 57,000 hours, and they dispersed over $225,000 for charitable activities. Number 106 CHAIRMAN TAYLOR noted some states allow for survivorship on ownership of assets and sometimes the estate plans are made up jointly with survivorship provisions in them. He questioned whether SB 119 would change any of those provisions. MARIANNE BURKE , Director of the Division of Insurance, Department of Commerce and Economic Development, replied that SB 119 will bring Alaska law into compliance with IRS regulations for estate planning. Number 123 CHAIRMAN TAYLOR asked whether her staff has actually researched whether SB 119 will bring Alaska into compliance. MS. BURKE replied SB 119 is based on the NAIC Model Act which was developed and researched with the IRS, on a nationwide basis, to ensure compliance with both FCC and IRS requirements. She added the Division believes it is better to repeal and reenact to make sure this was in compliance with those provisions. SENATOR MILLER moved CSSB 119(L&C) from committee with individual recommendations. There being no objection, the motion carried. SB 101 REGULATIONS: ADOPTION & JUDICIAL REVIEW  CHAIRMAN TAYLOR explained SB 101 makes fairly sweeping changes to the current regulatory process. It requires that a cost-benefit analysis be prepared before regulations are adopted, limits the effective period of emergency regulations, and provides for judicial review of the validity of regulations. He noted he supports the concept but does not know whether it is enforceable. JOHN LINDBACK , testifying on behalf of the Lieutenant Governor's Office, the designated lead agency on legislation affecting the regulatory process, gave the following overview of the history and streamlining process that has occurred. Administrative Order 157 was issued in January of 1995. That order changed the way regulations are promulgated by using plain English, making the process more user friendly, and taking cost into account. Last February agencies were required to submit a follow-up report on how they are complying with Administrative Order 157. The report shows that most agencies have set up a regular review of all regulations; for some agencies the task is much more time consuming than for others. Additionally, the Administration introduced SB 155 a week ago, which attempts to make the regulatory process more public-friendly. It allows for an automatic update for corporations, and more public friendly advertising of regulations. The Administration plans to launch a regulations home-page on the Internet which will allow the user to view all regulations in every agency. He offered to provide committee members with more comprehensive information on the current regulatory process and anticipated changes. Number 216 DEBORAH BEHR , Department of Law, testified that SB 101 makes dramatic changes to the regulatory process. She made the following comments on the bill. Sections 5 and 6 deal with a cost benefit analysis on regulations. This concept is not new; in 1995, Representative Kelly introduced HB 130 which eventually became law. It was based on this same concept and the fiscal notes were very high. State law was changed to require state agencies to pay special attention to the costs to private parties. During the public comment period, the agencies are asked to actively solicit costs of compliance and every newspaper ad asks for such information. DEC is now required, under HB 130, to consider alternative means of accomplishing the same goals. Ms. Behr said that after reviewing SB 101, she has come to the conclusion that the cost-benefit analysis is a very expensive provision, especially to get the precision that is necessary to stand up in court. She is concerned about battles with experts, and the cost of hiring economists to defend regulations. In the case of the timber sale contracts, the DOL attorney in charge indicated it would be virtually impossible to get a timber sale contract that would stand up to a court test. The benefit to the public of leaving a tree standing or cutting it down would have to be determined. The bill contains no definition of the word "public." It could be the people in a community, the State of Alaska, or the United States. The new welfare reform program will require a lot of new regulations. It is difficult to determine whether the costs should be based on the short or long term impact. Regulations projects may require more than one financial analysis. The Board of Fish deals with 900 regulations proposals each year. The way SB 101 is written, it is not clear whether the cost-benefit analysis is supposed to occur when the regulation is noticed up, or at the time the Board adopts the regulation. If the Department of Fish and Game had to do a cost-benefit analysis on 900 proposals, the cost would be extremely prohibitive. Additionally, it might change the way the Board of Fish operates. That Board has a very democratic process and allows anyone to fill out a proposal book. Each proposal is noticed up so that anyone can comment. It would be very difficult to cost benefit some of these ideas. Printing the summary in newspaper ads will be very expensive. The Department of Fish and Game did a cost benefit analysis on a regulation in the past and estimated it took over 1 1/2 years and cost over $150,000. Ms. Behr noted SB 101 is written to cover all administrative agencies. The Department of Corrections does regulations on discipline of prisoners. In order for DOC to adopt regulations it will have to do a cost benefit analysis to the public on whether or not the benefits of that prison disciplinary scheme outweigh the cost of implementation. The potential for frivolous litigation in that arena is high. Ms. Behr discussed the difficulties of doing cost benefit analyses on the benefits of public safety, i.e. the benefits of requiring sex offender registration. DPS would not be able to sign off on a regulation unless it could prove that the benefits of registration outweigh the costs. In light of Alaska's constitutional right of privacy, Ms. Behr pointed out that some of the cost information to private parties will be inaccessible. She recently assisted the Board of Dentistry in establishing a regulation pertaining to use of laser equipment by dental hygienists, which the Board felt was inappropriate. In order for the Board to establish the same regulation under SB 101, cost benefit information from dentists regarding how much time each dental employee has used laser equipment would be required. Many dentists may consider that proprietary business information and refuse to supply it. In addition, the issue of regulating mail or telephone access for prisoners would be problematic. Number 325 Ms. Behr said her opinion is that SB 101 is a good idea that may have unintended consequences. During a time when the Legislature is trying to downsize state government, anyone could challenge that approach by suing anytime a regulation is promulgated on the basis that the cost benefit analysis was insufficient. She again referred to problems with the timber sale contracts. Promulgating emergency regulations would also be problematic. In order for an emergency regulation to become permanent, it can only be out for 120 days and an economic analysis that would stand up in court cannot be completed in that time. SB 101 would severely stifle an important part of the Procedures Act which is to respond to crises when the Legislature is not in session. Ms. Behr questioned how one would do a cost benefit analysis of a fee regulation because the cost to an individual person and benefits to the public would have to be determined. Ms. Behr thought this approach might be productive if applied to large projects only but not to regulations that have a minimal impact, such as raising copying costs a few cents. She also suggested exempting federal regulations and particular departments from the requirements of SB 101. She noted the average business person would only do a cost benefit analysis on large projects. Ms. Behr discussed the next major change in SB 101; supplemental notices for significant changes of regulations. If an agency notices up a regulation for a fee increase from $50 to $100, and then, after the first set of hearings determines a more appropriate amount to be $75, the agency would have to solicit a whole new round of public comments. Newspaper notices would be required, and if a board or commission is involved, it would have to meet again resulting in travel and per diem costs. The new public comment could produce different results and the procedure would have to occur again. She repeated her concern that in the attempt to downsize state government and raise fees, anyone who wants to challenge that approach could do so by challenging the cost benefit analysis. She explained that after the Legislature adjourns in May, state agencies will need to implement new regulations based on changes in law, for example welfare reform. They will be required to hold a public comment period and adopt regulations with a cost benefit analysis by July 1. The third major change in SB 101 is the standard of review used by the court to review regulations. Section 7 contains the current standard used by judges to invalidate regulations: for substantial failure to comply with the APA; on constitutional grounds; or for equal protection rights violations. SB 101 changes the standard of review so that there will be a presumption of invalidity. To be valid, a regulation will have to be the least intrusive to the rights of persons or property affected by the regulations. There are many areas where this standard will create problems, such as with prison discipline regulations. A prisoner could sue on the new standard based on the possibility that a lesser punishment could be used. If the State could not defend the regulation based on that standard, it would have to prove a compelling State interest which would be virtually impossible to do. Ms. Behr repeated her concerns that SB 101 will have unintended consequences and may result in a lot of frivolous litigation. She discussed a final change that could occur if SB 101 passes. Significant changes to regulations can be tested in District Court therefore, oil tax regulations could be brought before a District Court judge at the same time the judge is hearing cases about a child smoking underage or a driver who failed to remove studded snow tires. Once the case goes to District Court, it could be directly appealed to the Supreme Court. This will create a dramatic policy change. Ms. Behr noted two technical problems with SB 101. Section 4 does not include all state agencies, and excludes the Office of the Governor, which does regulations on telecommunications and elections, and the University of Alaska which has procurement regulations. Number 410 SENATOR DONLEY , sponsor of SB 101, explained SB 101 is an expansio of legislation proposed in past years. He tried to exempt agencies and areas in which additional restrictions would be inappropriate. The Boards of Fish and Game are exempted on page 4, as well as things that result from federal requirements. He acknowledged there may be other areas, such as natural resources and the timber sale contracts mentioned by Ms. Behr, that may be appropriate to exempt. He also suggested removing the language on page 3, lines 5-7, because of problems identified by Ms. Behr. That deletion would still require departments to use the procedure for informational purposes, but not to use it as the standard for adopting a regulation, thereby preventing that standard from being used as the basis for a challenge in court. That would enable departments to use procedures appropriate for the level of seriousness of the regulation, such as raising the cost of copying fees. SENATOR DONLEY noted that he intended the section on notices on page 4 to apply to all provisions of the bill. SENATOR PARNELL noted he was also concerned about the language on page 3, lines 5-7. CHAIRMAN TAYLOR suggested forming a subcommittee of Senator Donley, department staff, and any interested committee members to work on the legislation and bring a committee substitute before the committee for further review. Number 451 SENATOR DONLEY stated he has not found departments to be cooperative regarding this bill. He discussed the problem of notice in the regulatory process, and stated one has to balance the value of having the Executive Branch do immediate regulations without appropriate public input against the advantages of providing for expeditious regulations when necessary. He stated he believes it is clearly appropriate that the Executive Branch give the public notice of its intentions. SENATOR PARNELL asked Senator Donley why he chose to include District Courts in addition to the Superior Court on page 6. SENATOR DONLEY replied he would like to increase the public's ability to challenge more regulations because such a wide scope of regulations exist now. He thought the challenge of some regulations would be appropriate for District Court, for others the Superior Court. SENATOR PARNELL agreed but thought if the District Court's jurisdiction is under $50,000, it is not appropriate for a case involving millions of dollars in oil taxes to be resolved there. SENATOR DONLEY agreed and suggested changing the way the bill applies to revenue regulations. Number 476 SENATOR ELLIS asked whether the District Court has any equitable jurisdiction right now. CHAIRMAN TAYLOR answered it does not. SENATOR ELLIS asked if the Legislature is seeking to change that. SENATOR DONLEY replied it would be struck down on the basis of fact. CHAIRMAN TAYLOR thought that would fall under the equity jurisdiction because it would require someone to do an act, as opposed to pay money damages. That distinction limits one's ability to get access to the bench. If the focus was on jurisdiction limits, twice the number of judges would be available for adoptions and juvenile matters and it would not take two or three years to get on a court calendar. SENATOR DONLEY said he would be satisfied if the bill required agencies to provide subsequent public notices before adopting things that were subsequently different. CHAIRMAN TAYLOR commented he introduced a bill three years ago that would require, that before an agency proposed a regulation or before a federal regulation was adopted, the department to report the cost of the federal mandate. That bill was vetoed by the Governor. Number 497 JACK KREINHEDER , Office of Management and Budget (OMB), summarized the fiscal notes. The grand total of the fiscal notes is in excess of $1.6 million with the largest impact being on the Departments of Environmental Conservation, Natural Resources, Law and Commerce and Economic Development. The amendment offered to the cost benefit analysis provision may remove some court challenges, however even if that is true, promulgating regulations correctly is a complex process. He stated he is reluctant to advocate legislation with the idea that departments are going to pay lip service to it and provide a one-page cost benefit analysis that is not worth the paper it is written on. He supported Ms. Behr's comments that the benefit of any regulation should exceed the cost, but the effort devoted toward determining dollar figures, for cost, compliance and benefits should be devoted to making a better regulation. CHAIRMAN TAYLOR asked Mr. Kreinheder to work with Senator Donley's staff to improve the approach. He adjourned the meeting at 4:55 p.m.