02/17/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Overview: Aidea/aea | |
| HB117 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 117 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 17, 2005
8:05 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Gabrielle LeDoux
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Pete Kott
Representative Mark Neuman
COMMITTEE CALENDAR
OVERVIEW: AIDEA/AEA
- HEARD
HOUSE BILL NO. 117
"An Act relating to the liability of the state and
municipalities for attorney fees in certain civil actions and
appeals; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 117
SHORT TITLE: STATE/MUNI LIABILITY FOR ATTORNEY FEES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
01/28/05 (H) READ THE FIRST TIME - REFERRALS
01/28/05 (H) CRA, JUD
02/07/05 (H) STA REFERRAL ADDED AFTER CRA
02/17/05 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
RON MILLER, Executive Director
Alaska Industrial Development and Export Authority (AIDEA)/
Alaska Energy Authority (AEA)
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of AIDEA and AEA.
SARA FISHER-GOAD, Financial Analyst
AIDEA/AEA
Department of Commerce, Community, & Economic Development
(No address provided)
POSITION STATEMENT: Answered questions regarding AEA.
CHRISTOPHER KENNEDY, Assistant Attorney General
Environmental Section
Civil Division (Anchorage)
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Presented HB 117 on behalf of the governor.
MICHAEL MACLEOD-BALL, Executive Director
Alaska Civil Liberties Union (AkCLU)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 117.
KAREN BRETZ, Attorney;
Secretary/Treasurer, Alaskans for Efficient Government
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 117.
UWE KALENKA, President
Alaskans for Efficient Government
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 117.
KEN JACOBUS, Attorney
Anchorage, Alaska
POSITION STATEMENT: Encouraged the committee not enact HB 117.
DALE BONDURANT
Alaska Constitutional Legal Defense Fund
(No address provided)
POSITION STATEMENT: Testified in opposition to HB 117.
KATHIE WASSERMAN
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 117, related the
economic situation of the municipalities.
ACTION NARRATIVE
CO-CHAIR BILL THOMAS called the House Community and Regional
Affairs Standing Committee meeting to order at 8:05:17 AM.
Representatives Olson, Thomas, LeDoux, Cissna, and Salmon were
present at the call to order.
^OVERVIEW: AIDEA/AEA
CO-CHAIR THOMAS announced that the first order of business would
be the presentation from the Alaska Industrial Development and
Export Authority (AIDEA) and the Alaska Energy Authority (AEA).
8:06:00 AM
RON MILLER, Executive Director, Alaska Industrial Development
and Export Authority (AIDEA) and the Alaska Energy Authority
(AEA), Department of Commerce, Community, & Economic Development
(DCCED), began with AIDEA, and informed the committee that
AIDEA's mission [as specified in the PowerPoint presentation in
the committee packet] is: "To provide means of financing to
promote economic growth and diversification in Alaska." The
aforementioned is accomplished by providing long-term commercial
and development financing to Alaskan businesses at a reasonable
cost. He related that AIDEA's role in economic development is
to provide financial assistance to Alaskan businesses and a
dividend to the state's general fund (GF). Since AIDEA's
dividend program began in 1996, it has provided over $178
million to the state's GF. He pointed out that AIDEA can
provide the following types of financing: long term, low cost,
mixed term, and tax exempt. He highlighted that AIDEA is
involved with large and small projects in rural and urban areas,
and these projects involve a variety of industries. He also
highlighted that AIDEA doesn't compete with the private sector,
originate loans, or provide grants.
MR. MILLER informed the committee that AIDEA's key programs are
as follows: development finance, loan participation, loan
guaranty and export assistance, and conduit revenue bonds. He
related that AIDEA's objective under the development finance
program is to finance necessary infrastructure to support Alaska
business projects. Through the development finance program,
AIDEA owns the project and is repaid through user fees, leases,
and other revenue sources. Examples of this type of program are
the Red Dog port and road and the Federal Express maintenance
facility at the Ted Stevens' Anchorage International Airport.
He explained that a qualifying program has to be endorsed by the
local government and be financially feasible. Such projects are
listed on page 11 of the PowerPoint. One of those projects is
the Delong Mountain Transportation System, which was critical to
the opening of the Red Dog mine. The Red Dog mine, he
explained, provided the tax base that led to the creation of the
Northwest Arctic Borough. As of last summer, the Red Dog mine
provided 510 jobs, of which approximately 57 percent are held by
NANA Regional Corporation (NANA) shareholders. Those jobs at
Red Dog mine represent over 30 percent of the private sector
jobs in region.
MR. MILLER turned attention to the Federal Express maintenance
facility at the Ted Stevens' Anchorage International Airport.
The aforementioned project created 20 permanent, high-skill jobs
and brought a pilot base that significantly adds to the income
of Southcentral Alaska. Moreover, the Federal Express
maintenance facility improved the basic services for air
carriers, and therefore strengthens Alaska's role as an
[international] air crossroads. He moved on to the Alaska
Seafood International (ASI) project, which wasn't very
successful. At this point, AIDEA is in the process of signing a
purchase sales agreement for the [ASI] property. The agreement,
he related, will allow a mix of uses at the facility.
Furthermore, AIDEA expects 300 new jobs will be created.
MR. MILLER continued with page 18 of the PowerPoint, which
discusses the Snettisham Hydroelectric Project. The
aforementioned project provides 80 percent of the Juneau-Douglas
area's electrical energy. He informed the committee that AIDEA
has a long-term power sales agreement with Alaska Electric Light
& Power (AEL&P) for the purchase of all electricity produced by
Snettisham. He then moved on to the Ketchikan shipyard, which
AIDEA is looking to expand. He reminded the committee that
AIDEA purchased title [of the Ketchikan shipyard] in 1997. An
Economic Development Agency (EDA) grant was received to put in a
second ship lift, and construction is expected to start soon. A
long-term operating agreement has been negotiated with Alaska
Ship and Dry Dock. However, AIDEA is waiting for the completion
of a long-term memorandum of understanding with the Ketchikan
city and borough regarding tax considerations.
MR. MILLER informed the committee that the loan participation
program is probably the most active program at this point.
Because the legislature expanded that program two years ago,
AIDEA can purchase up to 90 percent of a loan that was
originated by a commercial lending institution with the total
participation not to exceed $20 million. He related that
between 1992 and the end of fiscal year 2004, the loan
participation program created nearly 4,500 construction jobs and
4,700 permanent jobs.
MR. MILLER highlighted that page 24 specifies AIDEA's loan
portfolio diversification by industry. As the chart indicates,
AIDEA is involved in most of the major segments of the Alaska
economy through [the loan portfolio diversification] program.
As of December 2004, AIDEA's outstanding loan portfolio was $304
million. He pointed out that page 25 specifies AIDEA's loan
portfolio delinquency, .44 percent, as of December 31, 2004. He
also pointed out that AIDEA is well below the delinquency rate
of 2.10 percent of Alaska's banks.
8:16:17 AM
CO-CHAIR THOMAS asked if the [loan portfolio delinquency]
included [ASI].
MR. MILLER clarified that [ASI] was a development finance
project, which is different than the loan participation program.
However, he recalled that there are some current fisheries loans
[within the AIDEA loan portfolio]. One of the aforementioned is
the Alaska Glacier Seafoods.
8:16:56 AM
MR. MILLER informed the committee that page 26 of the PowerPoint
specifies the geographic distribution of AIDEA's loan portfolio.
He noted that AIDEA uses the same geographical classifications
that the Department of Labor & Workforce Development (DLWD)
uses. He further informed the committee that AIDEA also has the
loan guaranty and export assistance. He explained that AIDEA
can guarantee up to 80 percent of a loan, but not exceed $1
million on the principal of the loan. Moreover, AIDEA can
provide guarantees for export transactions in the same amount.
Mr. Miller stated that AIDEA is a city-state partnership with
the U.S. Export-Import Bank.
8:17:59 AM
REPRESENTATIVE LEDOUX returned attention to page 25 regarding
AIDEA's delinquency rate being less than that of commercial
loans. She asked if AIDEA takes risks that commercial lenders
won't take.
MR. MILLER replied no. He reminded the committee that AIDEA's
loans are originated by a commercial bank and after doing its
underwriting, the loan is brought to AIDEA. He highlighted that
there are sometimes two to three levels of credit review and
underwriting. If AIDEA agrees to review the loan, AIDEA's
internal credit committee reviews it. If the loan is over $3
million, then it's forwarded to AIDEA's board of directors for
review. Therefore, AIDEA's risk profile is a bit lower than
commercial organizations due to the aforementioned reviews.
REPRESENTATIVE LEDOUX asked if bad loans are merely written off.
MR. MILLER specified that the bad loans are in the over 90 days
category [on the list on page 25 of the PowerPoint]. He
emphasized that AIDEA writes off very few loans. He reminded
the committee that ASI was not a loan, but rather AIDEA built
the building and leased it to ASI.
8:20:18 AM
MR. MILLER continued with his presentation and addressed the
conduit revenue bond program. He explained that under the
conduit revenue bond program, AIDEA can provide financing and
act as a conduit for the issuance of taxable or tax exempt
bonds. The aforementioned can be done without risk to the
assets or credit of AIDEA. He then explained how a business
enterprise can qualify for a conduit revenue bond. From the
program's inception in 1978 thru last year, AIDEA has issued
approximately $929 million in conduit revenue bonds for [over]
303 projects throughout the state. These projects have ranged
over various industries, he stated. He informed the committee
that within the conduit revenue bond program, a new program has
been created. This new program tries to make transaction
documents uniform in order to lower costs, which will allow some
of the smaller nonprofit corporations in the state to access the
program for tax-exempt financing with low transaction fees.
8:23:23 AM
REPRESENTATIVE CISSNA highlighted the measurements used in the
various loans of AIDEA. She inquired as what other information
AIDEA accumulates [regarding communities in Alaska].
MR. MILLER explained that for any project AIDEA reviews the jobs
created and retained under the construction and permanent
category. Through AIDEA's loan portfolio, a close eye is kept
on the delinquency rate, which can provide an idea of what's
happening throughout the state. Through the development finance
program, the match from the business project is reviewed; AIDEA
tries to have a 2:1 match. Furthermore, AIDEA tries to maintain
contact with the financial community throughout the state. This
year, he related, AIDEA will probably perform an extensive
survey throughout Alaska's business community in order to
ascertain what Alaska's business community thinks of the state's
current economic conditions; what it thinks of AIDEA; and what
it thinks AIDEA should do. He offered to provide that
information to all legislators once it's accumulated.
8:26:18 AM
REPRESENTATIVE CISSNA turned attention to the issue of climate
change. She inquired as to the maintenance or replacement of
[equipment] that is related to the changing climate. She opined
that the rural areas are more sensitive to this than the urban
areas. She asked if AIDEA monitors any of that information.
MR. MILLER responded that such is being reviewed on a project-
by-project basis. He informed the committee that AIDEA is
"keeping an eye" on the DeLong Mountain Transportation System
because AIDEA owns 52 miles of the road. Therefore, there are
constant reports on the conditions of the road and its
maintenance requirements. There have been no new developments
with regard to climate change as applied to that road.
8:27:46 AM
MR. MILLER continued his presentation by turning attention to
the Alaska Energy Authority (AEA). He informed the committee
that AIDEA provides staffing for AEA. Like AIDEA, AEA is a
corporation organized under DCCED for administrative purposes.
He specified, "AEA's mission is to reduce the cost of energy in
Alaska." Mr. Miller explained that AEA operates and maintains
state-owned power projects; partners with the Denali Commission
and the private sector to provide safe and reliable power to
Alaskans; and trains Alaskans to build and maintain code-
compliant and [appropriately] sized energy systems.
8:28:31 AM
CO-CHAIR THOMAS related his understanding that construction of
a nuclear power plant in Galena is occurring.
MR. MILLER related that AEA had been approached regarding
involvement in the aforementioned project. However, AEA statute
precludes AEA's involvement in a nuclear power project. The
definition of a power project specifically excludes nuclear
power. In response to Representative LeDoux, Mr. Miller said
that the rationale behind the statutory exclusion was that
nuclear was power was considered to be too risky at the time.
8:29:47 AM
REPRESENTATIVE SALMON informed the committee that the military
has a nuclear power plant north of Fort Yukon, which has been
working for the last 10 years.
8:30:41 AM
MR. MILLER told the committee that AEA owns the following
projects: Bradley Lake Hydro; Larsen Bay Hydro; Alaska
Intertie; and small rural interties. The AEA administers the
following programs: power cost equalization (PCE); alternative
energy and energy efficiency programs, bulk fuel loan programs
and power project loan programs; bulk fuel and rural power
system upgrades; circuit rider and emergency response program;
and a training program. The AEA works with Alaska communities
to lower consumer energy costs while [developing] safe,
reliable, and efficient energy systems. The AEA also works with
Alaska communities to build sustainable and environmentally
sound power systems throughout Alaska.
8:31:49 AM
REPRESENTATIVE SALMON questioned how the President cutting the
budget, including the Denali Commission, would impact AEA's
programs.
MR. MILLER said that AEA is monitoring [national budget
decisions] closely because reductions to the Denali Commission
will result in reductions in the number of projects AEA can do.
8:32:24 AM
MR. MILLER returned to PCE, which provides financial assistance
to rural utilities with kilowatt-hour (kWh) rates greater than
$0.12. He explained that residential customers are eligible for
PCE credit up to 500 kWh per month per customer. However,
community facilities, as a group, can receive PCE credit for up
to 70 kWh per month multiplied by the number of residents in a
community.
8:32:53 AM
CO-CHAIR THOMAS inquired as to who manages the PCE money.
MR. MILLER explained that the PCE endowment is managed by the
Department of Revenue. The PCE endowment is a separate account
from the permanent fund. In further response to Co-Chair
Thomas, Mr. Miller pointed out that the PCE statute provides
strict parameters regarding return. The program assumes a 7
percent return to the endowment, which he recalls being
problematic in the past.
8:34:14 AM
SARA FISHER-GOAD, Financial Analyst, AIDEA/AEA, Department of
Commerce, Community, & Economic Development (DCCED), explained
that the PCE endowment was established to earn 7 percent over
time. She noted that the Department of Revenue uses an
investment policy that includes equity investments, which is
about the only [policy] that would produce 7 percent over time.
Ms. Fisher-Goad informed the committee that the endowment was
originally created in 2000 and although it posted losses in the
first years similar to losses experienced with any investments
during that time, now the endowment is earning 7 percent over
time.
8:35:01 AM
CO-CHAIR THOMAS inquired as to how the PCE endowment compared to
the permanent fund.
MS. FISHER-GOAD offered to provide that information to the
committee and reiterated that the PCE endowment fund is earning
what's expected to earn 7 percent for fiscal year 2005.
8:35:27 AM
MR. MILLER pointed out that page 9, of the AEA PowerPoint
presentation specifies some of the basics of the PCE Endowment
Fund. He then turned attention to AEA's alternative energy
programs, which focus on small hydroelectric projects, wind,
geothermal, and bio-energy. The AEA also participates in the
Rebuild America Conservation Program and energy cost reduction
program. Mr. Miller highlighted that AEA has two loan programs.
The Bulk Fuel Revolving Loan Fund provides short-term, low
interest loans allowing rural communities with a population of
less than 2,000 to make bulk fuel purchases in a cost effective
manner. The first loan a community receives under the bulk fuel
revolving loan fund has a 0 percent interest rate, after which
the loans have a 5 percent interest rate.
8:36:36 AM
CO-CHAIR THOMAS recalled complaints with regard to the bulk fuel
revolving loans.
MR. MILLER said that staff working with the bulk fuel revolving
loan program work very hard to get loans out in enough time to
allow for purchases. He related that last year the loans were
made, but some of the communities didn't make the 10 percent
down payment. Furthermore, some communities faced low water
situations, which resulted in the inability for the fuel to be
delivered. Also, other communities waited [to purchase the
fuel] until late in the year, when the price of fuel had
increased significantly, and therefore the amount needed to
borrow increased as well.
8:37:55 AM
MR. MILLER continued with AEA's power project fund, which
provides loans to local utilities, local governments, or
independent power producers for the development or upgrade of
electric power facilities. He noted that the power project fund
includes conservation, bulk fuel storage, waste energy
conservation, or potable water supply projects.
8:38:18 AM
CO-CHAIR OLSON inquired as to the [delinquency rates] of [the
bulk fuel revolving loan and power project funds].
MR. MILLER answered that the funds are in fairly good shape, and
offered to provide [the committee] the delinquency rates for
those two funds.
8:38:41 AM
MR. MILLER continued the AEA presentation, and turned to bulk
fuel upgrades. Bulk fuel upgrade participants are utilities,
schools, government entities, and the private sector. He
explained that under this program, AEA rehabilitates or
constructs new bulk fuel tank farms to meet state and federal
codes. He pointed out that page 13 of AEA's PowerPoint
presentation shows before and after photographs from the Pedro
Bay bulk fuel storage project. He highlighted two of the
photographs that show local residents who were hired for the
Pedro Bay project. He noted that one of [AEA's] goals is to
have as much local hire as possible.
MR. MILLER moved on to the rural power system upgrades, which,
through the Denali Commission, rebuilds or replaces worn-out
diesel generator units and old, hazardous distribution systems.
Under the rural power upgrades new power generation systems
meeting state and federal codes are constructed. When possible
the new power generation systems include waste heat recovery
systems. Mr. Miller then turned to the circuit rider and
emergency response program that assists village electric
utilities with preventative maintenance, on-site operator
training, consultation, technical assistance, and emergency
response. In conjunction with Alaska Vocational Technical
Center (AVTEC) and other partners, AEA has very active training
programs. He informed the committee that AEA has a very active
training program for PCE clerks, and to date over 120 PCE clerks
have been trained throughout rural Alaska. Furthermore, AEA is
working on distance delivery for that training program. Mr.
Miller specified that AEA state-owned energy assets are Bradley
Lake Hydroelectric Project, Alaska Intertie, and Larsen Bay
Hydroelectric Project.
8:41:30 AM
CO-CHAIR THOMAS inquired as to how AEA ended up with the Bradley
Lake project.
MR. MILLER explained that the Bradley Lake project was funded,
in part, by state appropriation as well as by bonds. The
Railbelt utilities have a long-term power sales agreement with
AEA. In fact, [the Railbelt utilities] are paying $12 million a
year, which goes toward the debt service on the bonds. In
further response to Co-Chair Thomas, Mr. Miller clarified that
the Bradley Lake project provides power to the Railbelt, from
Homer to Fairbanks and Delta Junction. The power sales
agreement is approximately $0.06 per kWh.
CO-CHAIR THOMAS informed the committee that PCE was established
because [in the areas] where dams were built [the cost of energy
was much lower] that in other areas. Co-Chair Thomas related
that [rural energy costs] vary form $0.34 to $0.53 [per kWh],
and even with PCE those areas still don't come close to reaching
$0.06 [per kWh].
MR. MILLER clarified that the earlier mentioned $0.06 is the
wholesale rate to the utilities from the Bradley Lake project.
8:43:51 AM
REPRESENTATIVE SALMON said he appreciated Co-Chair Thomas'
comments regarding the history of PCE. He mentioned the Four
Dam Pool project.
MR. MILLER clarified that the Four Dam Pool project includes the
following communities: Kodiak, Southeast Alaska, and Copper
Valley. The Four Dam project was built with state and federal
money and sold to the Four Dam Pool agency. The sale of those
assets created the basis for the PCE endowment.
8:45:17 AM
MR. MILLER moved on to discuss the Larsen Bay Hydroelectric
project, which is a small 475-kilowatt project. The Larsen Bay
Hydroelectric project went into commercial operation in 1991 and
produces electricity for the City of Larsen Bay. The project
replaced the City of Larsen Bay's old water supply system and
provides a better source of water and electrical [energy]. The
City of Larsen Bay operates the project. Mr. Miller then turned
to the Alaska Intertie, which is owned by AEA on behalf of the
state. The Alaska Intertie is a 170-mile transmission line from
Willow to Healy that connects the power distribution systems of
Anchorage and Fairbanks. The goal of the Alaska Intertie
project was to improve reliability and economic energy delivery
to the Railbelt. He informed the committee that the Alaska
Intertie was built in 1985 with $124 million and allows
Fairbanks to purchase lower cost electricity produced with
natural gas and hydroelectric power produced from Southcentral
Alaska.
8:46:24 AM
CO-CHAIR THOMAS related his impression that the area burned coal
to generate electricity.
MR. MILLER stated that Golden Valley has a coal power plant in
Healy and purchases electricity from the Bradley Lake [project]
and Chugach Electric as well as Municipal Light & Power.
8:46:59 AM
MR. MILLER informed the committee that a couple of years ago the
legislature appropriated $20.3 million to AEA to extend and
upgrade the Alaska Intertie to the Tongass Land Management Plan
(TLMP) in the Mat-Su Valley.
The committee took a brief at-ease from 8:47 a.m. to 8:52 a.m.
HB 117-STATE/MUNI LIABILITY FOR ATTORNEY FEES
8:52:30 AM
CO-CHAIR THOMAS announced that the final order of business would
be HOUSE BILL NO. 117, "An Act relating to the liability of the
state and municipalities for attorney fees in certain civil
actions and appeals; and providing for an effective date."
8:52:52 AM
CHRISTOPHER KENNEDY, Assistant Attorney General, Environmental
Section, Civil Division (Anchorage), Department of Law,
explained that Alaska is unique in that winning litigants in
civil lawsuits in Alaska receive a partial recovery of the
attorney fees at the end of the case. Usually, the attorney
fees are 20 percent of a money judgment or less or 20-30 percent
of the actual attorney fees that were reasonably incurred by the
other side. This legislation addresses a special circumstance
by which Alaska courts have been awarding enhanced fees, that is
full fee recovery, to public interest litigants. Public
interest litigants are those people who, as the court determines
subjectively, are in pursuit of strong public policies. Over
the last 10 years, the amount paid under these enhanced attorney
fees has averaged approximately $600,000 annually. He clarified
that the aforementioned amount of enhanced attorney fees is
beyond the 20-30 percent that would normally be paid. The
Supreme Court created this public interest litigant doctrine
over time, beginning in the 1970s, and it was expanded in the
late 1990s. The public interest litigant doctrine allows
parties to recover full attorney fees from the state or
municipality, even when they don't prevail in many of the claims
brought. He cited the 1999 case of the American Civil Liberties
Union v. State, relating to the 1996 campaign finance reform
law, as an example. The Department of Law feels that it
successfully defended the campaign finance reform law in most
respects and was able to preserve most of its provisions.
However, the American Civil Liberties Union (ACLU) was
successful in two provisions of the campaign finance reform law
and was able to recover all of its fees for the entire
challenge. The fees recovered amounted to $131,000.
MR. KENNEDY pointed out that HB 117 creates a new provision
capping attorney fees against governments in the state, and thus
no enhanced awards would be available. This provision further
provides that for civil actions or appeals in which a money
judgment is recovered, the state municipalities wouldn't be
liable to pay more than 20 percent of the amount of the money
judgment as an attorney fee [award to the adverse party]. He
opined that the aforementioned cap would rarely occur because
it's unusual to receive enhanced attorney fees in a money case.
The legislation also places a cap in civil actions with no money
judgment. For example, the attorney fees awarded in a case
about a regulatory decision that goes to trial would be capped
at 30 percent of the party's reasonable and actual attorney
fees. However, if the aforementioned case didn't go to trial,
the award would be capped at 20 percent of the party's
reasonable attorney fees. The same limit would be in place for
appeals, he related. Mr. Kennedy noted that these limitations
wouldn't apply when statutes specify otherwise or when the court
determines there should be enhanced attorney fees as a sanction.
For example, if there had been misconduct by the state,
municipality, or the attorneys. The limitation also wouldn't
apply in cases relating to eminent domain.
MR. KENNEDY related that the rationale behind the immunity is to
protect the state and municipal treasuries. He characterized it
as a money-saving measure. Furthermore, it returns to the
legislature the authority to make the policy choices regarding
what types of litigation to subsidize. He noted that the
immunity can be waived by specific statute.
9:01:44 AM
CO-CHAIR THOMAS turned attention to the fiscal note, and related
his understanding that a fiscal note specifying savings would
show the savings in brackets. However, this fiscal note is a
zero fiscal note.
MR. KENNEDY suggested that the $600,000 could possibly not be a
savings to the Department of Law because these cases are against
various state agencies.
CO-CHAIR THOMAS, upon counsel from staff, related that usually
these [awards] would be funded in supplemental appropriations.
9:03:07 AM
REPRESENTATIVE CISSNA pointed out that the legislature talks
about accountability a lot. She opined that the legislature
needs to be accountable. She said she would be reviewing the
balance of powers and recourse to the public.
9:04:16 AM
MICHAEL MACLEOD-BALL, Executive Director, Alaska Civil Liberties
Union (AkCLU), paraphrased from the following written testimony
[original punctuation provided]:
We oppose HB 117 (SB 86) on the grounds that it
will have a chilling effect on the ability of parties
acting in the public interest to challenge the
inappropriate exercise of governmental authority.
Further, the bill will tend to widen the legal
advantage currently held by governmental litigants
over private individuals.
The typical plaintiff in a public interest
lawsuit is an individual, a non-profit advocacy
organization, or a charitable organization. The
typical defendant in such a suit is a governmental
entity - usually the federal or state government due
to the nature of the issues commonly litigated. There
can be no dispute that the typical suit pits a party
with limited financial resources who needs to hire
outside counsel against a governmental entity with
access to substantially greater financial and legal
resources. As often as not, the dispute is over
principle and not over money.
Compare this to any other type of litigation.
First, private suits almost always involve a fight
over money or property interests. Typically, general
civil litigation pits business against business or
individual against individual. Certainly there are
disparities in each party's ability to cope with the
costs of litigation - but it's a matter of
happenstance.
The public interest litigant, therefore, is
financially disadvantaged and typically does not have
the prospective benefit of a money damages award. As
a result, attorneys are not readily available to take
on such cases without sizable retainers - it is not
profitable for them to do so. Therefore, the public
interest litigant is legally disadvantaged as well -
because the governmental adversary will always have
counsel on board from the start. In his letter of
transmittal, the Governor complains that the public
interest litigant is being subsidized by the current
system of attorney fee reimbursement. But, bear in
mind that the public interest litigant only receives
reimbursement if a) he or she is acting in the public
interest and b) he or she is successful in showing
that the government acted wrongly. On the other hand,
the government gets its subsidy from the taxpayers
whether it wins or not. It's not as if the individual
within the government who caused the government to
violate the victim's rights is made to reimburse the
taxpayers for the internal costs of running the
government in a manner violative of the public
interest. The key is to set up a system that doesn't
reward improper behavior - and there will be no
incentive for the government to stop inappropriate
action if there is no one willing to speak out against
such action through public interest legal action.
Who will this bill affect? It will affect those
in our society least able to afford it - the poor, the
uneducated, the minorities, the disabled, the elderly
- all of whom have benefited from public interest
litigation at one time or another - and many of whom
would not have been able to bring such actions in
their own right. It won't make a difference to the
wealthy individual who funds a public interest lawsuit
- for such individuals, attorney fee reimbursement is
not a consideration. Rather, this law will discourage
normal, everyday people from trying to make a
difference when they see the government failing to do
its job. If this bill becomes law, the state
government will be able to rest easier that it can act
against the public interest because it will be less
likely to be held to account for its wrongful actions.
In short, this bill is presented as if the
government is unfairly required to pay for a vengeful
individual's lawsuit against the state. Nothing could
be further from the truth. This bill will make it
harder for someone acting in the public interest to
force the government to comply with its legal
obligations. We strongly urge you to reject this
bill.
9:08:33 AM
CO-CHAIR THOMAS asked if the public interest litigant fully
reimburses the state for its costs when the state wins the suit.
MR. MACLEOD-BALL deferred to the attorneys that would know
better, but related his understanding that public interest
litigants don't have to compensate the other side for attorney
fees. However, he reminded the committee that there is a
provision available for the courts to impose when a frivolous or
egregious lawsuit is filed.
9:09:30 AM
KAREN BRETZ, Attorney; Secretary/Treasurer, Alaskans for
Efficient Government, stated her opposition to HB 117. Ms.
Bretz, speaking from her experience as an attorney, opined that
many organizations and individuals that claim public interest
litigant status lack the resources to pay for their own attorney
fees in this type of litigation. By definition, the public
interest litigant has no or little financial interest to bring
the suit. However, the government bodies against which they
bring suit have unlimited resources and the ability to prolong
the litigation. "They have, in essence, the power to squeeze
the public interest litigant to abandon the litigation or to not
even bring it from the state," she stated. Attorneys take on
public interest litigation cases with the understanding that if
the client wins, then his/her fees will be reimbursed 100
percent. Therefore, without the public interest litigant rule,
it's unlikely the attorney would recover his/her full fees
because the public interest litigant doesn't have the resources
to pay. Ms. Bretz opined that the current public interest
litigant law places the public interest litigant on a more even
playing field than the proposal in HB 117. She further opined
that changing the current law will prevent many worthy lawsuits
from being brought.
CO-CHAIR THOMAS restated his earlier question regarding whether
the public interest litigant would pay the attorney fees when
the governmental entity wins the case.
MR. BRETZ replied no. The public interest litigant is only
responsible for the governmental entity's attorney fees if the
court finds that the litigation is frivolous. In further
response to Co-Chair Thomas, Ms. Bretz related her belief that
it would be rare that the court finds public interest litigation
cases to be frivolous because many attorneys won't take
frivolous litigation. In response to Co-Chair Olson, Ms. Bretz
said that to the best of her knowledge, the public interest
litigant hasn't ever paid the governmental entity's attorney
fees in public interest litigation.
9:12:46 AM
UWE KALENKA, President, Alaskans for Efficient Government, said
that the previous witnesses have spoken well on this issue. He
commented, "All I have to say is that $600,000 a year spent on
attorney fees is a small price to pay for justice. If you
really need to save some money, let's start on the jet that cost
$1.4 million so we can finance this litigation for three years
to help the underprivileged in our society." Mr. Kalenka stated
his opposition to HB 117.
9:13:52 AM
KEN JACOBUS, Attorney, noted his agreement with other testimony
[in opposition to HB 117]. He highlighted that in "our system"
there are checks and balances such that the legislature and
municipal assemblies enact the laws and the courts review the
laws. He explained that the courts can't merely say a law is
bad and review it, rather a plaintiff has to bring a case. He
estimated that 99 percent of the [public interest litigants] are
involved on the basis of principle. He noted that most of the
people he represents don't have the money to carry forward the
suit. The idea behind public interest litigation is to
encourage the checks and balances. Therefore, the public
interest litigant isn't placed at risk of losing a lot of money
but rather is allowed the financial ability to take the case
forward. He noted that most of the people he represents are
initiative petitioners. The most recent initiative case was the
Matanuska Valley tax cap. Mr. Jacobus opined that HB 117 harms
the public interest litigants more than the previous bill that
two superior courts held were constitutionally improper. Mr.
Jacobus encouraged the committee not to enact HB 117 because it
creates further problems in an area that is already before the
Alaska Supreme Court.
9:17:38 AM
DALE BONDURANT, Alaska Constitutional Legal Defense Fund, stated
that the Alaska State Constitution is the best in the Union. He
highlighted the following portion of Article 1, Section 1: "all
persons have corresponding obligations to the people and to the
State." Mr. Bondurant informed the committee that the Alaska
Constitutional Legal Defense Fund has been a successful public
interest litigant in all if its cases before the Alaska Supreme
Court. He reviewed some of the [public interest litigant]
decisions [with which he has been involved] such as: Peyton
(ph); McDowell(ph); Gulkana River(ph); Totemoff(ph); Oshik(ph).
Mr. Bondurant said that the 14th Amendment of the constitution
says, "That those who are elected or selected ... support those
who are willing to act responsible interest litigants." He went
on to say, "We, therefore, request that those who are selected,
including the governor ... and legislatures and the general
public be supportive of Alaska's constitution and the 14th
Amendment. We find that, in fact, proposing changes to both the
Alaska Constitution and the US Constitution without proper
citizenships' right to vote on such important issues are
denied." Mr. Bondurant concluded by noting his opposition to HB
117.
9:21:15 AM
KATHIE WASSERMAN, Alaska Municipal League (AML), reminded the
committee that municipalities are involved in these [public
interest] suits. She recalled that two witnesses specified that
municipalities have unlimited means to fight lawsuits. However,
she estimated that two-thirds of the municipalities in the state
don't even have attorneys or have the money to secure an
attorney. Ms. Wasserman stated that any lawsuit would harm the
public interest in the community.
9:22:21 AM
REPRESENTATIVE CISSNA inquired as to how many local governments
have been sued as compared to the suits brought against the
state government.
MS. WASSERMAN said that she didn't know.
9:23:17 AM
REPRESENTATIVE CISSNA requested information regarding the
experience local governments have had with public interest
litigant cases as compared to the state government.
MS. WASSERMAN clarified that she isn't advocating taking away
the ability for the public to bring action against wrong doing,
but merely wanted to be sure that everyone understands that
municipalities could be devastated if they have to hire an
attorney. Ms. Wasserman, in response to Co-Chair Olson, agreed
to contact Mr. Tom Boedeker, the head of AML's legislative
subcommittee. In response to Representative LeDoux, Ms.
Wasserman agreed to provide information regarding the amount in
enhanced attorney fees paid by municipalities that have lost [in
public interest litigant cases] over the last five years.
[HB 117 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:25:51 AM.
| Document Name | Date/Time | Subjects |
|---|