03/13/2012 01:30 PM Senate LABOR & COMMERCE

        HB 168-INJUNCTION SECURITY: INDUSTRIAL OPERATION                                                                    
                                                                                                                                
1:44:52 PM                                                                                                                    
CHAIR  EGAN announced  consideration  of HB  168 [CSHB  168(JUD),                                                               
labeled  27-LS0395\D, was  before  the committee].  He said  that                                                               
Representative  Feige did  an initial  presentation  on the  bill                                                               
last week.  Before accepting public  testimony, Chair  Egan asked                                                               
if he had any further comments.                                                                                                 
                                                                                                                                
REPRESENTATIVE ERIC FEIGE,  sponsor of HB 168, said  he wanted to                                                               
respond to some of the issues  raised in a letter from the Alaska                                                               
Conservation Alliance. It  says this legislation is  not aimed at                                                               
frivolous lawsuits,  and whether  a lawsuit  is frivolous  or has                                                               
merit is  really a matter  of opinion.  The bond amounts  are not                                                               
determined by  legislation but  by the judge.  Nothing in  HB 168                                                               
specifies an amount.  This bill in no way  prevents Alaskans from                                                               
challenging government  issued permits. The state  permit process                                                               
allows for plenty of public  input prior to granting permits with                                                               
plenty  of  opportunities  to  appeal  them  along  the  way.  He                                                               
reaffirmed  for the  committee that  Alaska has  one of  the most                                                               
comprehensive permitting process of any of the 50 states.                                                                       
                                                                                                                                
He  directed attention  to the  legal memo  prepared for  Senator                                                               
Egan,  dated  February  29,  2012,  that  mirrors  one  that  was                                                               
requested  by  Representative  Gruenberg, dated  March  21,  2011                                                               
(part  of  the  original  bill  packet).  It  says  that  HB  168                                                               
parallels  the  requirements  of  Alaska Civil  Rule  65(c)  that                                                               
states:                                                                                                                         
                                                                                                                                
     No  restraining order  or preliminary  injunction shall                                                                    
     issue  except  upon  the  giving  of  security  by  the                                                                    
     applicant in  such sum as  the court deems  proper. The                                                                    
     payment of such costs and  damages as maybe occurred or                                                                    
        suffered by any party who is found to have been                                                                         
     wrongfully enjoined or restrained.                                                                                         
                                                                                                                                
      No such security shall be required of the state or a                                                                      
     municipality or of an officer or an agency thereof.                                                                        
                                                                                                                                
REPRESENTATIVE  FEIGE  said  the  end of  the  letter  said  this                                                               
legislation is so  broad that it may even prevent  the state from                                                               
enforcing  violations of  law,  but  that is  not  true. A  state                                                               
agency  always has  the  option to  simply  withdraw the  permit,                                                               
especially  if the  company  or an  operator is  found  to be  in                                                               
violation of the terms of its permit.                                                                                           
                                                                                                                                
1:48:56 PM                                                                                                                    
He said  that HB 168  was amended in House  Judiciary, consulting                                                               
with the Department  of Law, to more closely  mirror the language                                                               
of  the  court rule.  The  CS  would  clarify that  the  proposed                                                               
statute would  not change  it, and the  discretion would  be left                                                               
entirely to  the court. He said  they were very conscious  of not                                                               
trying to change the court rule.                                                                                                
                                                                                                                                
REPRESENTATIVE  FEIGE said  when legally  permitted projects  are                                                               
shut down it is not only  the project sponsor who is affected but                                                               
the  project's workers  who get  laid  off (both  union and  non-                                                               
union) and their families. He saw HB  168 as a jobs bill and with                                                               
the Labor and  Commerce Committee referral he  thought the Senate                                                               
agreed.                                                                                                                         
                                                                                                                                
CHAIR EGAN asked  the sponsor's staff, Ms. Hay, if  she wanted to                                                               
testify.                                                                                                                        
                                                                                                                                
LINDA HAY, staff  to Representative Feige, indicated  she did not                                                               
want to testify on HB 168.                                                                                                      
                                                                                                                                
MIKE  SATRIE, Executive  Director, Council  of Alaska  Producers,                                                               
Juneau, AK, said  the council supported HB 168. The  council is a                                                               
non-profit  trade association  representing  the producing  large                                                               
metal mines and  development projects in the State  of Alaska; it                                                               
supports a  rigorous science-based permitting system  that allows                                                               
efficient  and  responsible  development of  Alaska's  resources.                                                               
They  encourage and  respect the  public process  used to  manage                                                               
these resources.  Unfortunately, and too often,  once the process                                                               
has been completed  and permits have been issued,  opponents of a                                                               
project file litigation to force  the injunction or stay of these                                                               
permits,  which  delays  and   potentially  stops  the  permitted                                                               
development. If  this litigation is  ultimately found to  have no                                                               
merit, it  is Alaskan workers  and their families who  suffer the                                                               
most due to lost wages  and opportunity. To rectify this problem,                                                               
HB 168 requires a party  seeking a restraining order, preliminary                                                               
injunction, a stay or a vacation of  a permit to post a bond that                                                               
would cover, amongst other things,  lost wages and benefits if it                                                               
is found the  suit has been wrongfully enjoined.  The courts have                                                               
broad  leeway in  fixing the  amount of  this bond,  which allows                                                               
them to  also protect the  rights of the individual  filing these                                                               
suits.                                                                                                                          
                                                                                                                                
1:52:18 PM                                                                                                                    
MR. SATRIE said  it's important to consider what HB  168 does and                                                               
does  not do.  It does  not  affect federal  permits, appeals  or                                                               
litigation. It does not in  any way prevent appeals or litigation                                                               
of state permits,  and it does not restrict the  rights of public                                                               
interest  litigants.  But it  does  encourage  engagement in  the                                                               
early stages  of public participation in  the permitting process.                                                               
He said they  want people to come  to the table and  find ways to                                                               
make projects  better and not  rely on litigation to  solve their                                                               
differences.                                                                                                                    
                                                                                                                                
He said this  measure also requires public  interest litigants of                                                               
state permits  to recognize the  financial risk of  their actions                                                               
and  ultimately  may provide  security  for  Alaskan workers  and                                                               
their families.                                                                                                                 
                                                                                                                                
MR. SATRIE  thanked the committee  very much for taking  the time                                                               
to  hear  this  bill  that  passed  the  other  body  with  broad                                                               
bipartisan support.                                                                                                             
                                                                                                                                
1:53:23 PM                                                                                                                    
BARBARA  HUFF-TUCKNESS,  Director, Legislative  and  Governmental                                                               
Affairs, Teamsters Local  959, Juneau, AK, supported  HB 168. The                                                               
important issue  before this committee  is the impact  on Alaskan                                                               
workers, she  said. Several years  ago it  was the issue  for the                                                               
Pogo mine when 45 members were  taken off the job because of some                                                               
last  minute litigation.  They lost  two  weeks of  work, and  of                                                               
course there was  no recourse for them. The suit  was not against                                                               
the employer  in this  instance, and it  was not  successful. She                                                               
said the  workers ultimately returned  to work and  completed the                                                               
project.                                                                                                                        
                                                                                                                                
CARL  PORTMAN,  Deputy  Director,  Resource  Development  Council                                                               
(RDC), Anchorage,  AK, supported HB  168. He said  they supported                                                               
efforts  to   bring  more  accountability  to   the  appeals  and                                                               
litigation  process   for  community  and   resource  development                                                               
projects. HB 168  makes progress in this regard  by ensuring that                                                               
opponents of projects  have some skin in the  game. Under current                                                               
law, plaintiffs  have little incentive  not to file  lawsuits and                                                               
appeals  and  seek  injunctions  to  stop  development  projects.                                                               
Seeking  injunctions  cost  plaintiffs  very  little,  while  the                                                               
project sponsors endure  the high cost of  uncertainty and delay.                                                               
The discovery phase in these types  of cases can cost hundreds of                                                               
thousands of  dollars to the  state and project  proponents. Even                                                               
when  projects are  not enjoined,  the uncertainty  of litigation                                                               
can effectively stop progress.                                                                                                  
                                                                                                                                
It is not  just the project sponsor who is  adversely affected by                                                               
these  injunctions,  Mr.  Portman  said.  The  employees  of  the                                                               
project sponsors' contractors are  often burdened with the direct                                                               
and  immediate  impacts of  a  stay  on  a permit,  which  causes                                                               
construction and  development to  shut down. Under  existing law,                                                               
judges  have  not  required   opponents  of  developing  Alaska's                                                               
resources to post  bonds or other security to  cover the economic                                                               
harm  to projects  and to  the  workforce caused  by the  parties                                                               
seeking injunctions.                                                                                                            
                                                                                                                                
HB 168  does not  limit the  ability of citizens  to sue,  but it                                                               
requires a bond  in those cases where an  injunction is requested                                                               
before the  case is  adjudicated. HB  168 strikes  an appropriate                                                               
balance  by removing  incentives for  filing ideologically  based                                                               
challenges designed to delay projects  while still preserving the                                                               
right to bring meritorious challenges.                                                                                          
                                                                                                                                
1:57:21 PM                                                                                                                    
MR. PORTMAN  said the timber  industry in Southeast  Alaska would                                                               
be in  better shape today  if a  bond was required  before timber                                                               
sales  are  adjudicated.  This industry  has  been  decimated  by                                                               
endless appeals and litigation over  federal timber sales. Recent                                                               
headlines  include yet  more legal  challenges  that may  further                                                               
delay exploratory  drilling in the Alaska  OCS (outer continental                                                               
shelf), drilling  that is yet  to occur  on leases sold  in 2008.                                                               
Litigation  in the  Arctic OCS  is delaying  the state's  goal to                                                               
increase throughput  in TAPS through  new OCS  development. While                                                               
these  cases are  in federal  jurisdiction,  litigation in  state                                                               
court is  likely to  increase with the  primacy assumed  over the                                                               
water programs.                                                                                                                 
                                                                                                                                
MR. PORTMAN  said the  ability of  project proponents  to weather                                                               
the storm  of an unfounded stay  of activities varies based  on a                                                               
project's economics  and the  strength of  the balance  sheets of                                                               
those developing it.  A worker who loses employment  because of a                                                               
court-ordered stay might not have  that lasting power to wait out                                                               
what  is often  a lengthy  legal proceeding.  It is  fitting that                                                               
this  bill was  referred to  this  committee, as  both labor  and                                                               
commerce  are directly  impacted, he  said. It  can provide  some                                                               
accountability   to  mitigate   disruption   of  commerce   while                                                               
protecting  the interests  of Alaskans  engaged in  projects that                                                               
may be  subject to challenge.  He thanked them again  for hearing                                                               
this bill and urged its passage.                                                                                                
                                                                                                                                
CHAIR EGAN  found no question and  said he would hold  HB 168 and                                                               
take it up again soon.