04/11/2003 01:15 PM House JUD
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 11, 2003
1:15 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson, Vice Chair
Representative Jim Holm
Representative Dan Ogg
Representative Ralph Samuels
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 24
"An Act relating to intergovernmental agreements regarding
management of fish or game."
- HEARD AND HELD
HOUSE BILL NO. 151
"An Act relating to claims and court actions for defects in the
design, construction, and remodeling of certain dwellings;
limiting when certain court actions may be brought; and amending
Rules 79 and 82, Alaska Rules of Civil Procedure."
- HEARD AND HELD
HOUSE BILL NO. 245
"An Act relating to certain suits and claims by members of the
military services or regarding acts or omissions of the
organized militia; relating to liability arising out of certain
search and rescue, civil defense, homeland security, and fire
management and firefighting activities; and providing for an
effective date."
- BILL HEARING POSTPONED
PREVIOUS ACTION
BILL: HB 24
SHORT TITLE:AGREEMENTS ON MANAGEMENT OF FISH AND GAME
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH, WHITAKER
Jrn-Date Jrn-Page Action
01/21/03 0037 (H) PREFILE RELEASED (1/10/03)
01/21/03 0037 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0037 (H) RES, JUD
03/05/03 (H) RES AT 1:00 PM CAPITOL 124
03/05/03 (H) Heard & Held -- Meeting
Postponed to After Session --
03/05/03 (H) MINUTE(RES)
03/07/03 (H) RES AT 1:00 PM CAPITOL 124
03/07/03 (H) Moved CSHB 24(RES) Out of
Committee
03/07/03 (H) MINUTE(RES)
03/10/03 0487 (H) RES RPT CS(RES) NT 4DP 3NR
03/10/03 0487 (H) DP: HEINZE, GATTO, LYNN,
FATE;
03/10/03 0487 (H) NR: KERTTULA, GUTTENBERG,
MASEK
03/10/03 0488 (H) FN1: ZERO (H.RES)
03/10/03 0488 (H) REFERRED TO JUDICIARY
04/09/03 (H) JUD AT 1:00 PM CAPITOL 120
04/09/03 (H) Scheduled But Not Heard
04/11/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 151
SHORT TITLE:DWELLING DESIGN/CONSTRUCTION CLAIMS
SPONSOR(S): REPRESENTATIVE(S)MEYER
Jrn-Date Jrn-Page Action
03/05/03 0396 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0396 (H) L&C, JUD, FIN
03/05/03 0407 (H) FIN REFERRAL REMOVED
03/26/03 (H) L&C AT 3:15 PM CAPITOL 17
03/26/03 (H) -- Meeting Canceled --
03/28/03 (H) L&C AT 3:15 PM CAPITOL 17
03/28/03 (H) Moved CSHB 151(L&C) Out of
Committee
MINUTE(L&C)
03/31/03 0707 (H) L&C RPT CS(L&C) 7DP
03/31/03 0707 (H) DP: LYNN, GATTO, CRAWFORD,
GUTTENBERG,
03/31/03 0707 (H) DAHLSTROM, ROKEBERG, ANDERSON
03/31/03 0708 (H) FN1: ZERO(H.L&C/CED)
04/11/03 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE BRUCE WEYHRAUCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 24.
GEORGE UTERMOHLE, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: As the drafter of HB 24, provided comments
regarding separation of powers and responded to questions.
STEPHEN WHITE, Assistant Attorney General
Natural Resources Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 24, provided
comments, suggested an amendment, and responded to questions.
REPRESENTATIVE KEVIN MEYER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 151.
ROBIN WARD, Co-Chair
Legislative Affairs
Alaska State Home Builders Association (ASHBA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 151, expressing
concerns about liability insurance.
THOM ANTONOVICH, Custom Builder;
President, Alaska State Home Builders Association
Wasilla, Alaska
POSITION STATEMENT: Testified in wholehearted support of
HB 151; spoke on his own behalf and on behalf of ASHBA, calling
the bill a step in the right direction to get more competition
in the insurance market in Alaska.
ALAN WILSON
Alaska State Home Builders Association
Juneau, Alaska
POSITION STATEMENT: During hearing on HB 151, testified as a
remodeler about the benefits of the notice provision and setting
out the process that he perceives for the homeowner.
RICHARD TILLY, Builder and Contractor;
Member, Alaska State Home Builders Association; and
President, Interior Alaska Building Association
Fairbanks, Alaska
POSITION STATEMENT: Urged passage of HB 151.
MIKE MUSICK
Ester Construction
Ester, Alaska
POSITION STATEMENT: Testified in support of HB 151.
CHUCK SPINELLI, Owner
Spinell Homes, Inc.;
Immediate Past President
Anchorage Home Builders Association
Anchorage, Alaska
POSITION STATEMENT: Testified in strong support of HB 151.
HARLEY SUDSBURY
Sudsbury & Sons;
Vice President
Anchorage Home Builders Association
Eagle River, Alaska
POSITION STATEMENT: Testified in support of HB 151, indicating
it will protect consumers and builders and will lead to more
availability of the insurance that builders need.
STEVE ORR, Builder
Wasilla, Alaska
POSITION STATEMENT: Testified on HB 151, relating how his
general liability insurance costs 15 times more than last year
and expressing concern about the ability to price houses in the
future.
JESS HALL, Builder;
Area 15 National Vice President
National Association of Home Builders (NAHB)
Palmer, Alaska
POSITION STATEMENT: Testified on HB 151, noting the bill's
value with respect to rate increases and suggesting that even
more valuable is the aspect of opening communication to try to
resolve problems.
SUZANNE CUNNINGHAM, Staff
to Representative Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing on HB 151, Version V,
responded to suggestion by Representative Gara that the warning
to consumers of the new requirements should be on a separate,
one-page document, rather than in the middle of a contract.
ACTION NARRATIVE
TAPE 03-36, SIDE A
Number 0001
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 1:15 p.m. Representatives
McGuire, Holm, Samuels, Gara, and Gruenberg were present at the
call to order. Representatives Anderson and Ogg arrived as the
meeting was in progress.
HB 24 - AGREEMENTS ON MANAGEMENT OF FISH AND GAME
Number 0034
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 24, "An Act relating to intergovernmental
agreements regarding management of fish or game." [Before the
committee was CSHB 24(RES).]
Number 0057
REPRESENTATIVE BRUCE WEYHRAUCH, Alaska State Legislature, joint
sponsor of HB 24, referred to a map of the state of Alaska and
pointed out the area to which HB 24 pertains - Glacier Bay. He
noted that Glacier Bay is a huge body of water, and that the
[National] Park Service claims that Glacier Bay National Park
and Preserve includes the entire Glacier Bay plus "the line
coming outside ... here, into what's called Icy Strait, down
into Excursion Inlet, out this ... body of water, called Cross
Sound, offshore three miles, up the coast and outside three
miles to Lituya Bay, and then into Lituya Bay." That's the area
that the National Park Service says is part of the national
park, "into the state waters," he reiterated.
REPRESENTATIVE WEYHRAUCH explained that when Congress passed the
Alaska National Interest Lands Conservation Act (ANILCA), it
called Glacier Bay Monument a park. He noted that dispute has
arisen regarding whether commercial fishing is prohibited in
wilderness areas, and that there is a wilderness area in Glacier
Bay National Park and Preserve called the Beardslee Islands. He
relayed that there has also been dispute over whether commercial
fishing could continue in Glacier Bay. He mentioned that as he
defines Glacier Bay, "it's more than 600,000 marine acres of
state waters." Therefore, the area of concern is significant,
he added. Glacier Bay "proper" and the marine waters outside of
Glacier Bay proper are home to a huge, flourishing, sustained
commercial fishery, as well as subsistence and sport fisheries.
He remarked that halibut, salmon, Tanner/king crab, cod, shrimp,
and significant troll fisheries occur in the waters that he'd
defined as being outside of Glacier Bay proper.
REPRESENTATIVE WEYHRAUCH relayed that in the 1990s, the Alaska
Wildlife Alliance sued the [National] Park Service, claiming
that commercial fishing could not occur in Glacier Bay. The
district court in Alaska ruled that commercial fishing could
occur. This ruling was appealed to the 9th Circuit Court of
Appeals, which affirmed the district court ruling but also said
that the [National] Park Service could prohibit commercial
fishing via regulation. Subsequently, the [National] Park
Service engaged in the process of adopting regulations to
prohibit commercial fishing in various areas inside Glacier Bay;
this raised concerns that commercial fishing would also be
prohibited outside of Glacier Bay proper - in the "disputed park
waters."
Number 0312
REPRESENTATIVE WEYHRAUCH explained that U.S. Senator Ted Stevens
passed legislation that closed Glacier Bay proper to commercial
fishing, except in certain areas, and required "any fisherman
who wanted to continue to fish there, in the halibut, salmon,
and Tanner crab fisheries, prove they'd fished there and get a
lifetime-access permit so they could continue to fish."
Congress also authorized more than $23 million for payment to
fishermen harmed by the aforementioned closure, and "all kinds
of businesses" and individuals have endeavored to obtain a
portion of that money. As it stands now, he noted, some people
have received compensation and some have not. In addition, some
fishermen who have lifetime-access permits in the "halibut,
troll salmon fishery, and Tanner crab fishery" can continue to
fish in certain areas of Glacier Bay, but otherwise that area is
closed, and as soon as those lifetime-access permit holders pass
away, there will be no more commercial fishing in Glacier Bay
proper.
REPRESENTATIVE WEYHRAUCH mentioned that there is also an ongoing
case in the U.S. Supreme Court - "a quiet-title action" - which
has been referred to a "special master." He also mentioned that
there is another issue involving areas called "donut holes," in
Southeast [Alaska] and the waters of the Tongass National
Forest, that are subject to the aforementioned U.S. Supreme
Court case. The portion of that case which is still ongoing is
"that portion of the case which claims that the waters of
Glacier Bay ... belong to the state" as decided by another U.S.
Supreme Court case involving Idaho, which says that the state
came into the Union on equal footing with all other states and,
thus, would have jurisdiction over its lands and waters.
REPRESENTATIVE WEYHRAUCH pointed out that HB 24 has nothing to
do with "the buy-out program, the compensation program, the
closure of Glacier Bay proper, or the quiet-title action." He
said that he introduced HB 24 because then-U.S. Senator Frank
Murkowski had introduced a bill - S. 501 - that required, under
Section 3, subsection (b), for the Secretary of the Interior and
the State of Alaska to cooperate in the development of a
management plan for the regulation of commercial fisheries in
the outer waters of the park in accordance with existing federal
and state laws and any applicable international conservation and
management treaties. He noted that the international
conservation and management treaties that are not subject to
this bill include "the International Pacific Halibut Commission,
and the U.S./Canada salmon treaty."
Number 0540
REPRESENTATIVE WEYHRAUCH said that HB 24 is intended to ensure
that any co-management agreement with "a sovereign" - meaning
the U.S. government or a tribal entity - would be reviewed and
approved by the State of Alaska, through the legislature. This
review would ensure that before Alaska cedes any jurisdiction
over its right to manage the fisheries and natural resources of
the state, the legislature approves it. He rephrased the goal
of the legislation as being, "We would not cede any jurisdiction
over our resources, to another sovereign - or entity claiming
sovereignty - by contract, which we did not do by constitution
or state law." In response to a question, he remarked that the
state has the basic right, under the U.S. Constitution and
Alaska State Constitution, to manage its own "natural resources
and waters and lands" without interference from another
"sovereign."
REPRESENTATIVE WEYHRAUCH noted that CSHB 24(RES) focuses
specifically on the dispute involving Glacier Bay National Park
and Preserve; it would add a provision that would ensure that
the State of Alaska and the National Park Service would not
enter into a co-management agreement of fish and game in the
navigable waters within or adjoining Glacier Bay National Park
and Preserve unless the legislature has approved that agreement
by law before it takes place. By injecting the legislature into
the process in this manner, he opined, it would be making a
policy statement that the legislature wants the state to
maintain its jurisdiction over commercial fisheries in that
area. He added that he wanted to ensure that any co-management
agreement does not cede the state's jurisdiction, because of the
potential negative precedential effect it would have on other
state waters, lands, fisheries, and natural resources. He
offered that HB 24 is a very narrow bill pertaining to co-
management agreements between the state and the National Park
Service.
CHAIR McGUIRE asked whether HB 24 would violate the separation
of powers [doctrine].
REPRESENTATIVE WEYHRAUCH relayed that legislation passed in 1997
- SB 178 - which pertained to the purchase of an office building
in Anchorage by the Alaska Housing Finance Corporation, had
within it a provision requiring that the legislature approve the
agreement before it went into effect. Specifically, it said:
"This section constitutes the review and approval required by AS
18.55.100(d)", which in turn read in part:
(d) Notwithstanding (a)(7) and (15) of this
section, a proposed public building project shall be
submitted by the corporation to the legislature for
review. The corporation may proceed with the public
building project only if it is approved by law.
REPRESENTATIVE WEYHRAUCH observed that via that past
legislation, the legislature and the governor have allowed
statutory language that entails the review of a contract.
"That's a contract lease, this is a contract for co-management;
it's the same thing, and there is precedent for this kind of an
agreement," he opined.
CHAIR McGUIRE said that although she sees the analogy between
contracts, she disagrees because an agreement to manage
resources is different from an agreement to buy a building. She
asked for comments from the drafter regarding separation of
powers.
Number 0920
GEORGE UTERMOHLE, Attorney, Legislative Legal Counsel,
Legislative Legal and Research Services, Legislative Affairs
Agency, explained that separation of powers becomes an issue
because, under the [Alaska State] Constitution, the legislature
has been given the power to make law, and the governor has been
given the responsibility of exercising those laws. Once the
legislature has enacted a law, the issue then becomes to what
extent can the legislature impair the executive branch's
discretion to implement a law that has been assigned to it by
the legislature. There are numerous incidents in statute
wherein the legislature has given authority to an executive
branch agency to perform a certain function, but withholds the
agency's ability to implement "that agreement" without prior
legislative approval.
MR. UTERMOHLE said that there has been litigation over such
situations. In some cases, the courts have struck down
legislative involvement in areas where executive branch
discretion is at issue; in other cases, the courts have upheld
the legislature's involvement. There are two examples of where
the legislature has attempted to hold to itself certain
authority to control executive branch discretion.
MR. UTERMOHLE said that the first was the 1976 [Alaska Supreme
Court] case, Bradner v. Hammond, in which the legislature
attempted to require the governor to submit to the legislature
for confirmation certain names for sub-cabinet positions. The
court looked at that case in terms of separation of powers, and
described the case in separation of powers terms, but ultimately
made its decision based on other provisions of the [Alaska
State] Constitution which specifically provided that certain
executive branch officials are subject to confirmation but only
those officials. Thus the court found that the legislature had
exceeded its authority in attempting to require that additional
executive branch officers be subject to confirmation.
MR. UTERMOHLE said that the 1980 [Alaska Supreme Court] case,
State v. A.L.I.V.E. Voluntary, arose because the legislature
attempted to control the adoption of regulations by state
agencies. In that case, although the court acknowledged that
the legislature can annul regulations if it so chooses, the
court nonetheless struck down the actions of the legislature,
not based on separation of powers, but because the legislature
chose the wrong avenue in which to annul the regulations in
question. Those regulations that the legislature attempted to
annul are, in fact, law. The legislature has no authority to
change law except by the enactment of laws itself; this did not
happen in the A.L.I.V.E. Voluntary case.
Number 1115
MR. UTERMOHLE reiterated that there have been cases in which the
legislature's attempt to require its approval of executive
branch actions has been upheld. The 1998 Alaska Supreme Court
case of Baxley v. State was one in which the legislature
approved amendments to a contract for the Northstar oil leases;
the legislature's action was upheld because it approved the
contract amendments via legislation. "Another case, which is
the other area where this occurs, is in regard to negotiating
and the approval of contract bargaining agreements with ...
state labor unions," he added. The executive branch has the
authority to enter into collective bargaining agreements;
however, those agreements do not take effect until the
legislature has approved them by law, through the appropriation
process. This provision has been upheld and enforced in
numerous Alaska Supreme Court cases.
MR. UTERMOHLE said that there are no cases on point that
actually say that "we can't do what's attempting to be done" via
HB 24. The cases in which legislative approval of certain
agreements has been upheld were [not] brought to the Alaska
Supreme Court on a challenge to the separation of powers
doctrine itself. He added:
So we don't know ... how much of a risk that is, if
... the issues in those cases were to be challenged on
a separation of powers doctrine specifically, but
given the available case law, there's nothing to
suggest that this ... would exceed the ability of the
legislature to require approval of these cooperative
agreements [with] the National Park Service.
Particularly in the legislature's favor is the
requirement in the [Alaska State] Constitution that
the legislature has the duty to provide for the
conservation, development, and utilization of the
resources of the state, by law.
CHAIR McGUIRE asked why there wasn't a fiscal note from the
Department of Law.
REPRESENTATIVE WEYHRAUCH said he did not know.
REPRESENTATIVE GRUENBERG pondered whether the governor would
have any concerns from a policy point of view about requiring an
executive branch agreement to be approved be the legislature.
He said he wants to know whether the governor intends to veto HB
24 if it passes the legislature.
Number 1353
REPRESENTATIVE HOLM asked: Did not Alaska reserve the right to
be responsible for it's own resources at the time of statehood?
REPRESENTATIVE WEYHRAUCH opined that it did.
REPRESENTATIVE HOLM asked why all navigable waters were not
included in HB 24.
REPRESENTATIVE WEYHRAUCH offered, "Because this bill's easier
for me to chew."
REPRESENTATIVE GARA posited that there might be times when the
state will want to enter into an agreement with the federal
government because that agreement would be beneficial for the
state. Even in those instances, he surmised, under HB 24, the
legislature would still have to approve the agreement. For
example, what if there is the possibility of entering into an
agreement that gives the state more authority to manage its
resources. Why should there be requirement that such a contract
be brought before the legislature for approval?
REPRESENTATIVE WEYHRAUCH replied that HB 24 is designed to
prevent the state from ceding, through contract, any of its
authority without that contract first coming before the
legislature for approval. That is his main concern, he
reiterated, that the state not cede any of it's authority to
manage its resources.
REPRESENTATIVE GARA said he understood that point, but remarked
that the opposite it true too: HB 24 would prevent the federal
government from giving more authority to the state unless such a
contract is approved by the legislature. He elaborated:
Wouldn't we now prevent the federal government ...
from saying in, let's say, May, to the Board of
Fisheries, "Here, we'll let the state manage fish and
game; we'll let them do it today," but actually the
fishermen then miss that whole summer season of
fishing because the legislature doesn't meet 'til next
January. ... Are we not preventing them from giving us
things that we want, as well as taking things away?
Number 1562
REPRESENTATIVE WEYHRAUCH replied:
The only ... place I know that exists right now is in
Glacier Bay proper, where the federal government has
passed a law allowing the National Park Service to
close commercial fisheries in Glacier Bay and manage
the methods, means, ... areas, and fisheries that can
be restricted. This does not have to do with those
waters in Glacier Bay. This is simply on the outside,
where no management regime like that exists at all.
This is only in the outside waters of Glacier Bay
proper - adjoining Glacier Bay.
REPRESENTATIVE GARA surmised, then, that HB 24 doesn't apply to
the inside waters of Glacier Bay.
REPRESENTATIVE HOLM asked: "When did the state ... agree to
give up its sovereignty and give up its rights over its own
waters and its resources to the federal government? Was it
through that federal law that was passed? Did we agree to that
law, or was it just passed and now we succumb under that law?"
REPRESENTATIVE WEYHRAUCH replied: "The law was passed at the
request of [U.S.] Senator Stevens, the ... state has not
challenged the law, and the state did not intervene in ... the
lawsuit that was filed by [the] Alaska Wildlife Alliance." In
response to a further question, he confirmed that HB 24 will not
have any effect on the ongoing litigation involving the "donut
holes" waters.
REPRESENTATIVE GARA asked whether it is correct to say that
currently, the federal government has asserted the authority to
prevent the state from allowing fishing, under the state's fish
and game rules, within the waters of Glacier Bay.
REPRESENTATIVE WEYHRAUCH said yes.
REPRESENTATIVE GARA then said:
So, if there were a chance for us to get that
authority back by contract, I think we would certainly
want to do that. And then -- so the last exchange we
had was that, well, this only affects waters adjoining
Glacier Bay, ... but the language that I have before
me says within "the navigable waters within or
adjoining Glacier Bay".
Number 1738
REPRESENTATIVE WEYHRAUCH said that [HB 24] is intended to be
coincident with the S. 501 co-management requirement that then-
U.S. Senator Frank Murkowski had adopted. If there is a
contract that allows the state to again manage commercial
fisheries in Glacier Bay and reopen those fisheries, it would be
a violation of federal law, he remarked, because federal law has
closed those waters and restricts the commercial fishing that
can occur. Thus, he added, both the state and the federal
government would be subject to an injunction.
REPRESENTATIVE GARA asked whether S. 501 strictly and completely
prohibits the National Park Service from allowing any fishing,
or does it give the National Park Service the discretion.
REPRESENTATIVE WEYHRAUCH said, "It prohibits it." The law that
passed Congress, he added, restricts commercial fishing in
Glacier Bay to certain areas. It only allows trollers, halibut
fishermen, and Tanner crab fishermen who have obtained a
lifetime-access permit to continue to fish inside Glacier Bay
proper and only in those restricted waters.
REPRESENTATIVE GARA said his concern is this:
To the extent we can get the authority back to manage
fish and game by contract - maybe that would require a
statutory change on the federal government's part to
allow us to do that and to allow the [National] Park
Service to do that with us - but to the extent that
opportunity becomes available, why would we not want
to take advantage of it.
REPRESENTATIVE WEYHRAUCH replied:
We should; I believe we have it as a legislative
priority of the executive branch. And we could put
that in here, that it is the policy of the ...
legislature to ask the administration to attempt to do
everything possible to pass us a bill through Congress
that reopens Glacier Bay to commercial fishing. ... I
think that would be a great friendly amendment to this
bill; that would be "a shot heard 'round Congress"
too.
Number 1838
REPRESENTATIVE GRUENBERG said he'd never seen a bill drafted as
this one is in the first sentence [starting on page 1, line 6];
it's drafted in the negative. Normally, he elaborated, a bill
is drafted in the positive, for example, "The state must seek
legislative approval before entering into such an agreement".
He asked whether Representative Weyhrauch intended to have the
bill drafted in the negative.
REPRESENTATIVE WEYHRAUCH explained that when he'd called Mr.
Utermohle, he'd started his sentence with, "I don't want ...,"
and offered that perhaps that is why HB 24 was drafted as it
was. He again reiterated that he did not want a co-management
agreement with the federal government that allows the state to
cede jurisdiction of its resources.
REPRESENTATIVE GRUENBERG suggested putting that sentiment in the
positive. He asked Mr. Utermohle whether there is a reason why
HB 24 shouldn't be written in the positive.
MR. UTERMOHLE explained that HB 24 is drafted in the manner it
is in order to ensure that there is no question that there is no
other authority under other provisions of statute whereby the
state could enter into a cooperative agreement with the National
Park Service.
REPRESENTATIVE GRUENBERG opined that if such is the case, then
HB 24 must be drafted in the positive; otherwise, it's a
negative of a negative.
REPRESENTATIVE HOLM offered the following analogy:
If I own my own house, and I lock it, and ... you
present me with a contract for the use of my house, in
order to unlock my house, ... then don't I admit that
you have the authority over my house if I accept your
contract?
REPRESENTATIVE WEYHRAUCH said, "I guess for purposes of
unlocking it, yes."
REPRESENTATIVE GRUENBERG said, "No, I don't think it follows,
because you can't do it without your permission."
REPRESENTATIVE HOLM said, "Vis-a-vis, it's written in the
contract that way."
Number 1962
STEPHEN WHITE, Assistant Attorney General, Natural Resources
Section, Civil Division (Juneau), Department of Law (DOL), said
that HB 24 presents two constitutional issues, the first of
which has already been explored by the committee, that of
separation of powers. He said that he agrees with Mr. Utermohle
that this is an unsettled area, that there is no case law that
would either say yes or no. But every time that the legislative
branch gets involved with an executive branch power, or visa
versa, the issue of separation of powers has to be raised. Even
though the legislature has adopted statutes which allow the
legislature to review contracts, those haven't been challenged;
there's been no ruling on them.
MR. WHITE said that sometimes contracts involve the power to
appropriate money; for example, in the collective bargaining
agreements. That's a legislative power, so in those instances,
he opined, the legislature is merely asserting its own power.
He said that negotiating contracts regarding the management fish
and game is typically considered an executive branch power; thus
for the legislature to go in and review those contracts raises a
separation of powers issue. He suggested that there may be a
simple way to remove that constitutional issue while maintaining
the sponsor's intent.
MR. WHITE explained that the second constitutional issue, which
has not yet been addressed, is one called the "impairment of
contracts" clause under the federal and state constitutions.
Basically, he explained, it says that the legislature can't pass
a law that impairs, or repeals, or in any way interferes with an
existing contract. On that point, he referred to Section 2,
subsection (b), of HB 24, and noted that it gives the
legislature the ability, after the fact, to rescind a contract -
an agreement - entered into by the federal government and the
state.
MR. WHITE acknowledged, however, that according to the Alaska
Department of Fish and Game (ADF&G), there are no existing
contracts of that nature. Therefore, he opined, that while that
portion of HB 24 might raise the aforementioned constitutional
issue, it may not actually even have any value. Removing that
language, he predicted, would remove the constitutional issue.
On the other hand, if the legislature is determined to keep that
provision, he said, he thinks there is a way to strengthen it
and make it more defensible from a constitutional challenge.
Number 2058
MR. WHITE added: "Do I think that either of these things are
defective in terms of provoking a recommendation for veto by my
department? The answer is no. The area of law is unclear. I'm
here to suggest ways to remove those constitutional problems or
maybe strengthen them from any attack."
REPRESENTATIVE GRUENBERG said he did not see how the
aforementioned provision would impair an existing contract
unless the contract was entered into before the effective date
of the bill.
MR. WHITE said that is correct.
REPRESENTATIVE GRUENBERG surmised, then, that "we're only
talking about a month or two here." He asked Mr. White whether
he is anticipating any contract being agreed upon before the
bill could go into effect.
MR. WHITE said no.
REPRESENTATIVE GRUENBERG asked Mr. White to elaborate on his
suggestion that the separation of powers issue could be
resolved.
MR. WHITE offered:
One way you could do it is, ... instead of having a
legislature review for whether the department has
ceded disciplinary power to manage ... fish and game,
you could basically say the department may not enter
(indisc.) a contract of this type which does that. So
you put the standard up front; any contract that does
that could be voided by any court. So it sets your
concern up front, it sets a standard by which the
executive branch can act or not act, and it ...
relieves you of the obligation - of the duty - to
review and make that determination yourself as a
legislature.
REPRESENTATIVE GRUENBERG said that they could certainly do that,
and then the governor could simply introduce a bill in the
following legislative session allowing him to sign the
agreement.
Number 2180
MR. WHITE said that under his suggested language, he did not
anticipate the governor having to undertake any procedure. His
proposal would basically say that the department doesn't have
the authority to enter into a contract that cedes authority, but
if the department did so, that contract would be void.
REPRESENTATIVE GRUENBERG opined that if the language currently
in HB 24 is unconstitutional, then Mr. White's suggestion is no
more constitutional, because the governor would then have to
submit a bill authorizing the contract, and such would be
subject to the legislative process required to pass any
legislation.
MR. WHITE argued that his suggestion does not entail any
legislative action, it merely establishes a standard, up front,
by which a contract could not be entered into by the department.
CHAIR McGUIRE asked Mr. White to provide to the committee, at
the bill's next hearing, his suggested language and any
documentation substantiating his assertions.
REPRESENTATIVE GRUENBERG asked Mr. White whether he is speaking
on behalf of the administration.
MR. WHITE clarified that he is speaking on behalf of the
Department of Law (DOL), and perhaps on behalf of the Department
of Fish and Game (ADF&G).
CHAIR McGUIRE asked Mr. White to provide a fiscal note from the
DOL, even if it is a zero fiscal note.
REPRESENTATIVE GARA asked whether the issue of separation of
powers with regard to contracts pertaining to management of fish
and game has been resolved in any other state's supreme court.
MR. WHITE indicated that he has not yet done that research, but
is intending to.
REPRESENTATIVE GARA opined that such would be a prudent thing to
do.
MR. UTERMOHLE indicated that he has not yet done that research
either; his research has been confined to the Alaska State
Constitution.
TAPE 03-36, SIDE B
Number 2360
REPRESENTATIVE GRUENBERG, referring to S. 501, noted that
Section 3, subsection (c)(2), says: "Nothing in this Act shall
enlarge or diminish Federal or State title, jurisdiction, or
authority with respect to the waters of the State of Alaska, the
waters within Glacier Bay Park and Preserve, or tidal or
submerged lands." Does that not answer the question that that
bill was not intended to affect state sovereignty, he asked.
MR. WHITE replied, "Well, the bill may not have intended to, but
the parties could separately agree to give it away, ... and
that's what Representative Weyhrauch's concern is."
CHAIR McGUIRE announced that HB 24 would be held over.
The committee took an at-ease from 2:05 p.m. to 2:06 p.m.
HB 151 - DWELLING DESIGN/CONSTRUCTION CLAIMS
Number 2327
CHAIR McGUIRE announced that the final order of business would
be HOUSE BILL NO. 151, "An Act relating to claims and court
actions for defects in the design, construction, and remodeling
of certain dwellings; limiting when certain court actions may be
brought; and amending Rules 79 and 82, Alaska Rules of Civil
Procedure." [Before the committee was CSHB 151(L&C); in packets
was a proposed committee substitute (CS), Version V.]
Number 2314
REPRESENTATIVE KEVIN MEYER, Alaska State Legislature, sponsor of
HB 151, explained that the bill provides a process for
homeowners and builders to resolve construction defects without
litigation, a process called "notice and opportunity to repair"
in the Lower 48. He reported that 13 states are considering
similar legislation; several have it in place, including
Arizona, California, Nevada, and Washington, which perhaps have
the biggest housing booms.
REPRESENTATIVE MEYER told members the bill requires homeowners
to provide the builder or contractor with written notice of
construction defects at least 90 days before taking civil
action. During that period, the builder and owner must get
together and set deadlines to make a reasonable attempt to
resolve defects that are subject to claim; if the defects or
complaints aren't resolved by repair or arranging for [monetary]
settlement, then the homeowner may proceed to litigation. The
homeowner has one year from the date a defect is discovered to
begin this process [by providing notice, under Version V of the
bill]; however, the ten-year limitation in statute cannot be
exceeded.
REPRESENTATIVE MEYER offered reasons he believes this
legislation is important. Alaska requires contractors and
builders to have general liability insurance, which has become
increasingly difficult to obtain - primarily, in his opinion,
because of the ease of proceeding directly to litigation and
suing for expenses. If they can get insurance, it often is very
expensive, or they must get reduced coverage. Offering that
these costs are often simply passed on to the homebuyer, and
noting the rising prices of homes for first-time buyers in
particular, Representative Meyer suggested the need to keep
prices down. He added that a pending civil action can also
affect the home's value to a potential buyer.
REPRESENTATIVE MEYER characterized this as a consumer-protection
bill in the sense that it allows timely repair without the
expense and loss of time due to a trial. Suggesting that most
builders when notified of a defect would repair it immediately,
he said there are times when a more formal process, such as
provided in this bill, is necessary.
CHAIR McGUIRE drew attention to the memorandum from
Representative Meyer to the committee describing the changes in
Version V from CSHB 151(L&C). She asked him whether there are
substantive changes.
REPRESENTATIVE MEYER described the changes as "primarily just
minor," in some cases just grammatical changes. He noted that
[Chair McGuire's] staff and his own had conferred on many of
them, and said Version V doesn't change anything substantive.
[Representative Gara raised a concern that was negated later
when it was clarified that Section 2 of Version V changes the
wording such that a claimant has one year from discovery of a
defect to begin the process outlined in AS 09.45.881-09.45.899,
whereas CSHB 151(L&C) gave the claimant one year from the
discovery to begin an action.]
Number 2085
REPRESENTATIVE ANDERSON moved to adopt the proposed CS, Version
23-LS0499\V, Bannister, 4/10/03, as a work draft. There being
no objection, Version V was before the committee.
Number 2059
ROBIN WARD, Co-Chair, Legislative Affairs, Alaska State Home
Builders Association (ASHBA), noting that this has been a
mission of [ASHBA], told members the following:
Most of our homebuilders in this state today have been
given notice that within this year we will all lose
our current general liability carriers. Most of our
carriers have left the state or are planning to leave
the state, and all of us are struggling for liability
insurance.
One of the things in the research that we found
nationwide is that there are a few things that we can
do, as homebuilders, to make ourselves more attractive
to the insurance industry. This is one very key piece
of legislation. Most of them are looking for some
kind of a state legislative fix. ... They want to see
something that the state is involved in, along with
making ourselves attractive by better contracts,
warranties, and so on - OSHA [Occupational Safety and
Health Administration] programs, safety programs in
our businesses.
But one of the main things that we need to do is
something like this. They have looked at this and
said, "This is something that we like." Therefore,
the national ... homebuilders association has given us
national legislation, model legislation, to pattern
after, and have been helping us work on this so that
we can adopt it ... to bring forward to the Alaska
legislature for adoption. So that's really the reason
we're here, and we want to make sure you understand
why we're doing this.
This is not a huge problem right now in our state, but
it can be. And we want to try and not only prevent
it, but make ourselves attractive [to insurance
companies]. So the "driver" here really is our
liability insurance.
Number 1992
REPRESENTATIVE GARA asked whether insurance companies have said
that if the legislature passes a bill like this, they will
reduce their rates or stay here. He also asked whether states
that have similar legislation requiring notice and an effort to
resolve problems also have cut the statute of limitations to one
year.
MS. WARD replied:
No and no. No, they will not guarantee that if we do
this ... they will come back in ... or anything else.
They're just giving us a list of things that they feel
would make us more attractive, without a guarantee
that if we pass it, we're going to get liability
insurance again. And no to the second because,
respectfully, I'm not sure that that does that here,
either. ... But no, ... not that I know of.
REPRESENTATIVE GARA asked whether the most important part to
[ASHBA] is the general concept of requiring negotiation before
suing.
MS. WARD affirmed that.
MS. WARD, in response to a question from Representative Holm,
said:
We expect that we will lose 25 percent of our small
homebuilders, because we know that even if we do get
insurance, the cost of it will definitely go up. The
new premiums that we're getting right now sometimes
increase the cost of the house [$2,000 to $3,000].
Well, in an appraisal that will never be reflected.
That's not ... an added value. So we find there's an
awful lot of the small builders who have fairly low
profit margins ... or whatever [that] we expect will
go away. We do expect a certain percentage of our
industry will go away this year because of that. You
have to have liability insurance to be able to
operate.
REPRESENTATIVE HOLM emphasized that builders cannot function in
Alaska without liability insurance.
MS. WARD concurred, saying that is why it is [ASHBA's] main
issue. "This is critical to us," she added.
Number 1901
REPRESENTATIVE GARA said he is always skeptical when the
insurance industry suggests that someone do something with the
incentive of possibly lowering rates later. He asked whether
Alaska has a significant amount of homeowner litigation.
MS. WARD replied:
Not in this state. But ... all of our carriers are
... nationwide carriers. ... We are such a small pool
that they don't even hardly use us in their
actuarials. What we're being painted with is the
brush of the Lower 48, and especially the larger
states with large construction booms. Arizona,
California, [and] ... Washington had huge ...
construction defects. And one of the problems that we
have is, ... the insurance industry, as they manage a
claim, tend to settle. They're not necessarily
practical about the ... technical side of it. ...
And I can give you an example of an Anchorage
contractor that this did happen to, and basically the
owner took them to court - with no notice to the
builder - ... [over] a list of what normally [are]
warranty items that our contractors would have fixed.
... The contractor turned it over to his insurance
carrier, which is a normal situation. The insurance
carrier looked at it and said, "Let's just pay it. ...
It's going to be cheaper." ... And it was $52,000 on
normal warranty things that the contractor probably
could have repaired for $2,000 doing their own work.
... It doesn't take very many of those managed claims
to put us out of business without ... notice. That
contractor never even got notice.
REPRESENTATIVE GARA reiterated support for the concept of
negotiating before suing, but indicated that if there is no
problem in Alaska, he has a problem taking away Alaskans'
rights, when there isn't abuse in the state, just to make the
insurance companies happy on that score. Calling it a statute-
of-limitations issue, he added, "If the insurance companies
spent the time to do their actuarials in this state, where they
should be doing them, they'd also confirm that." He indicated
that this is a portion of his concern with the bill.
Number 1781
THOM ANTONOVICH, Custom Builder; President, Alaska State Home
Builders Association, informed the committee that he would
testify on behalf of himself and the 900 members of ASHBA across
the state who make their livings building homes. He said Ms.
Ward had summed up the feelings of ASHBA's members quite nicely,
and noted that there would be testimony via teleconference from
some of ASHBA's larger builders across the state, who could
provide "dollar and cent figures" of what this is doing to his
industry and the consumer. Speaking personally, he said he
renewed his liability insurance last October and was surprised
with an 85-percent increase over the previous year, in spite of
the fact that he has been in the business about 25 years without
a liability claim or workers' compensation claim.
MR. ANTONOVICH said Alaska is such a small market for the
insurance carriers that they probably don't need much of an
excuse to pull out of the market; he suggested this "right to
repair" will create a better business climate for them. He
surmised that the only reason some builders still have liability
coverage is because they also insure their homes and
automobiles, for example, with the same company; the company
doesn't want to lose that business. He added, "I think a better
business climate would help at least keep those operators in the
market supplying us."
MR. ANTONOVICH also reported that until this year, his general
liability insurance was a minor part of his overhead; this year,
however, it is a major line item that must be passed on to the
consumer. Characterizing himself as a "medium-sized builder,"
he said there are many small [companies] in the state,
especially in outlying areas, that won't be able to operate if
they experience an 85-percent increase in liability [insurance
costs]. He suggested that many would lose their businesses in
the next year or two if something isn't done. He added, "I
don't think we view HB 151 as a cure-all. These folks aren't
going to flood back into the state and fall all over themselves
to write insurance policies. But it'll certainly be one step in
the right direction to get more competition in the insurance
market in the state of Alaska." He closed by stating
wholehearted support for HB 151.
Number 1636
MR. ANTONOVICH, in response to a question from Chair McGuire,
reported that ASHBA is seriously looking at forming a self-
insurance pool, which has been done successfully in four or five
states. It would still require attracting an underwriter. He
said having a bill in place would allow [ASHBA] to provide an
underwriter with facts and figures, and show the underwriter
that the builders in Alaska are a good risk and are protected
somewhat from major litigation through this bill.
MR. ANTONOVICH, pointing out that it may not be true, also
reported hearing that, yes, there will be [companies] willing to
"write liability" in Alaska, but that it probably will cost a
small builder a flat $20,000 fee. It would be doable for
someone building 20 houses a year. For someone building 3 or 4
houses a year, however, either it would cost the customer a lot
of money or the builder would go under.
CHAIR McGUIRE called it a critical point, noting that
legislation this year would allow formation of some of these
risk pools. She emphasized the importance of having the state
get involved in some of these areas to set up the framework.
Countering an argument she'd heard that companies could do it on
their own, she said the problem is that insurance companies are
charging $20,000 as a flat fee, which is cost-prohibitive.
MR. ANTONOVICH concurred, saying that, ultimately, the consumer
usually ends up paying the bill.
REPRESENTATIVE GARA, noting that many industries have said
insurance rates are skyrocketing, emphasized the need for a
bigger answer to either regulate insurance companies or find
ways to help lower premiums. He suggested there must be a
better way than just changing liability statutes. He asked Mr.
Antonovich to share with the legislature any future findings
that would assist in insurance reform.
MR. ANTONOVICH responded by offering to work with legislators to
try to help come up with something that would assist all of
Alaska's industries in this regard.
Number 1444
REPRESENTATIVE OGG asked about liability insurance costs - both
before and after the 85-percent increase - for a home that costs
$160,000 to $200,000.
MR. ANTONOVICH answered that it depends on how many houses the
builder constructs a year. He said he used to pay about $2,600
a year in general liability on about $2.5 million in sales.
This year, he'll probably pay $26,000 on slightly higher sales;
if he builds seven houses, it likely will cost $3,000 per house.
He reiterated that previously it wasn't a line item, but was
just part of his percentage. Noting that the increase was over
a three-year period and specifying that the 85-percent increase
was just one year, he concurred with an observation by
Representative Ogg that it had risen 1000 percent. Mr.
Antonovich said he hadn't illuminated that, however, because his
sales had risen too. He said his sales will be the same this
year as last, so 85 percent is a hard-and-true number.
REPRESENTATIVE OGG asked whether this is putting Mr. Antonovich
out of the market for some types of housing.
MR. ANTONOVICH clarified that the person it will hurt most is
the first-time homebuyer who is stretching to make the deal
work, because a thousand dollars can make or break a deal. For
higher-end homes, it won't make the difference between building
or not. He said, "It's not putting us out of the market."
CHAIR McGUIRE called on Alan Wilson, noting that in addition to
being past president of ASHBA, he was Home Builder of the Year
in 2003.
Number 1327
ALAN WILSON, Alaska State Home Builders Association,
characterized himself as a "small builder" who focuses primarily
on remodeling work. Noting that his rates are going up as well,
he pointed out that people who do remodeling tend to work with
their clients differently than those who do new construction,
since remodelers work directly in a person's dwelling and are
there daily from 8 a.m. to 5 p.m.
MR. WILSON reported finding over the years that often clients
don't know the process and are intimated about seeking legal
counsel to remedy issues. Hence one positive thing about the
legislation is that this notice, which is required as part of
the contract language, outlines a system or mechanism that a
homeowner can look at and thus be less intimidated, since the
process begins with writing a letter to the builder. He
surmised that 90 percent of the time this communication will
resolve the majority of the issues. Offering his belief that
few construction-defect cases go to court in Alaska, he said
that when they do, he doesn't believe either the builder or the
homeowner wins because of the cost of a drawn-out legal case.
This bill at least provides an opportunity to fix a problem
without going to court.
MR. WILSON told members a presentation by the Alaska Housing
Finance Corporation (AHFC) to the House Finance Committee on
February 4, 2003, brought out some numbers that he believes
emphasize [the reason for this bill]. He said the housing
industry accounts for roughly 24 percent of the gross state
product, which is equivalent to the [gross national product
(GNP)]; in comparison, fishing accounts for about 19 percent.
He called construction a big "economic engine" that affects a
lot of people. He indicated AHFC also brought up that housing
for the average Alaskan family costs approximately 28 percent of
disposable income, and is probably the largest component of a
family's expenses over the life of the mortgage. He suggested
something like this bill is needed to protect people's assets.
CHAIR McGUIRE offered that it is also good for the consumer
because usually a person has only a year to bring up items that
might be fixed under warranty. She suggested this bill, in
another small way, provides an additional avenue for a consumer
who might discover something later that is severe enough to want
to sue; prior to that, there would be an opportunity to have it
fixed.
MR. WILSON agreed, indicating that he believes many builders try
to limit the warranty by having homeowners sign one-year limited
warranty agreements.
CHAIR McGUIRE called [the legislation], "win-win."
Number 1103
RICHARD TILLY, Builder and Contractor; Member, Alaska State Home
Builders Association; and President, Interior Alaska Building
Association, testified in support of HB 151. He said paying the
cost of liability insurance is a major problem in the
homebuilding industry. He reported that his business is
currently seeking coverage for the 2003 building season; he has
found two carriers for liability insurance, but only one is
willing to provide a quote to his company. He said he still
hasn't received a quote for the upcoming year, despite the fact
that the anniversary date for his insurance is May 1 and he is
right in the middle of the bidding season. In 22 years, he has
never had a liability claim, he told members, and yet he still
cannot get companies to offer him even a quote in order to know
how to bid on projects for the coming season.
MR. TILLY said that last year his rates rose a minimum of 19 to
20 percent; at best, he anticipates 20 to 50 percent this year,
but doesn't have a solid number. Concurring with earlier
testifiers that the bill is intended to help builders as well as
clients, he said the dispute-resolution format is intended to
provide a simple and definitive method to resolve problems and
get the home repaired. He urged passage of the bill.
Number 1005
MIKE MUSICK, Ester Construction, characterizing himself in terms
of gross revenue as a "small builder," told members that this
past year a large percentage of checks he has written are to his
insurance companies. He suggested his situation is a little
better than Mr. Tilly's because his anniversary date for
liability insurance is August 8. Therefore, he has time to
negotiate for the rest of the season and can go to work knowing
his costs. He expressed hope that the legislature would pass
this bill and provide certainty for all [builders].
Number 0931
CHUCK SPINELLI, Owner, Spinell Homes, Inc.; Immediate Past
President, Anchorage Home Builders Association, testified in
strong support of HB 151. He relayed that last year he built
about 189 homes. It was his 17th consecutive year with State
Farm Insurance Company ("State Farm"), which provided a policy
for about $85,000 a year, approximately $450 per home, and the
renewal date on the policy was December 2002. In October 2002
there were rumors State Farm might withdraw from the state. He
obtained a quote of $150,000 from another agent, but received
assurance from State Farm of coverage through 2003. On the day
before his policy was to renew, however, he got a cancellation
notice from State Farm giving him 60 days to renew [with another
carrier].
MR. SPINELLI described the difficult timing because of vacations
and getting together business information for other carriers.
He indicated he'd expected the premium to be around the $150,000
quoted in October. He had 80 or 90 houses under construction
and was planning to be out of town March 1, the cancellation
date. About a week before March 1, he called the "insurance
guy," who told him he didn't even have a quote, although someone
had said he'd insure Mr. Spinelli "for $1 million on a $2-
million actual premium," which the insurance person hadn't taken
seriously.
MR. SPINELLI expressed concern that carriers are "dropping like
flies," with only two or three that will handle something in
Alaska. He continued with his story, explaining that he'd
finally received two quotes, one for $435,000 and one for
$485,000, about $2,000 per house just for general liability
insurance. In his 17 years of building at Spinell Homes, Mr.
Spinelli said he has built about 1,500 homes and has had $71,000
worth of claims against him. He said $35,000 of that was for a
woman who fell down the stairs in an office building from which
his business is run, and had nothing to do with construction.
MR. SPINELLI told members the insurance problem hasn't been
brought on by the construction industry; it is a far deeper
problem that insurance companies are having to deal with. He
suggested the issue isn't just cost, but is availability of
insurance at all. He concluded by saying HB 151 is just the
first step towards bringing insurance underwriters back to
Alaska, and that it would protect [builders] by giving them a
chance to fix [defects] before someone sues.
CHAIR McGUIRE asked that testifiers be brief in order to leave
time to address amendments and move the bill out of committee.
Number 0540
HARLEY SUDSBURY, Sudsbury & Sons; Vice President, Anchorage Home
Builders Association, noting that he is a builder in Eagle
River, stated support for HB 151. He suggested it will protect
both consumers and builders, and indicated it will lead to more
availability with respect to the insurance that builders need.
Number 0515
STEVE ORR, Builder, noting that he has been a builder in the
Matanuska-Susitna area for more than 20 years, told the
committee that a year ago he spent a little under $5,000 for
general liability insurance. This year it will be $80,000 -
almost a 1,500-percent increase. Last year his combined
insurance, including general liability, was slightly over $1,300
per unit. This year it will be more than $3,300. He explained,
"My fear is that right now they've gotten us general
contractors. They haven't started on our subcontractors yet."
He expressed concern that in the near future he won't even know
how to price a house if what has been occurring in other states
occurs in Alaska. Remarking that he's fortunate to have
obtained insurance, even though it took seven weeks to do so, he
said someone may not even get insurance at all for attached
dwellings in Anchorage.
Number 0415
JESS HALL, Builder; Area 15 National Vice President, National
Association of Home Builders (NAHB), told members he has been
building in Alaska for about 25 years. He concurred with
previous testifiers about the bill's value with respect to rate
increases for insurance. More valuable, he suggested, is the
bill's role with regard to the relationship between the builder
and homebuyer in opening communication and avenues to cure
problems. He pointed out that his company uses a warranty put
together by the Mat-Su Home Builders Association that is much
more detailed than this legislation. Therefore, the bill won't
affect how he does business, since buyers are required to notify
the company of a problem so it can be taken care of.
MR. HALL told members that he once received a notice from the
court of being sued for $25 for a problem; he said it never got
to the trial phase because once the [homeowner] discovered the
company was willing to take care of the issue, the problem was
resolved. Mr. Hall reported hearing last week that Idaho passed
legislation similar to this, along with a tort-reform bill that
places a seven-year statute of limitations and $250,000 maximum
liability on homes. He suggested perhaps taking that up in a
future session.
CHAIR McGUIRE asked whether anyone else wished to testify.
Hearing no response, she then closed public testimony.
REPRESENTATIVE GARA offered his belief that Version V is better
than CSHB 151(L&C) and resolves one of his major worries about
the bill. Addressing what he called minor concerns, he asked to
go through them and bring amendments to a future hearing or
offer conceptual amendments at the current one.
REPRESENTATIVE GARA explained his first concern. A consumer who
doesn't give written notice to the builder that he or she has
noticed a problem with a house can lose the right to sue later
on. However, if the warning to the consumer of the need to do
so is in the middle of a thirty-page packet of contract
language, it might not be noticed. Therefore, his concern would
be resolved if the warning to the consumer were provided on a
separate, one-page contract with a heading that says, "Notice
that you must serve notice of your claim within a year," or
words to that effect. He emphasized the need to let consumers
know that the rules are changing.
Number 0040
SUZANNE CUNNINGHAM, Staff to Representative Kevin Meyer, Alaska
State Legislature, pointed out subsection (b) [beginning on
page 5, line 30] says, "The notice required by (a) of this
section may be included as part of the contract, must be
conspicuous, and must be in substantially the following form".
She added that the language that follows, detailed on page 6,
lines 1-19, is explicit, and that staff to some members had been
contacted about this. She stated the intention of making it
clear to everybody.
TAPE 03-37, SIDE A
Number 0001
MS. CUNNINGHAM read from the language beginning on page 6,
line 1. She reported that one change made was adding the
statutory reference to this contract language, to clarify that
this is in law, and that there are deadlines for both the
construction professional and the homebuyer. She concluded, "So
we feel ... that's pretty adequately addressed, as it is, in
this version."
REPRESENTATIVE MEYER added that the key phrase is "must be
conspicuous". Whether it is a separate page or part of the
contract, he said it has to be obvious to the homebuyer.
REPRESENTATIVE GARA emphasized that it should be a separate page
signed by the homebuyer, in order to ensure that the homebuyer
has seen it. Suggesting there may be disagreement over what
"conspicuous" means, he offered his belief that it could be
missed otherwise. In addition, he reiterated his desire to have
a heading for that one-page document that says something like
"Notice of potential claim must be provided within one year",
followed by the language [on page 6, lines 1-19, of Version V].
REPRESENTATIVE MEYER replied that the amendment seems harmless
and is one he could live with. He added that he'd like time to
discuss this, however, and suggested perhaps Representative Gara
could bring these issues up on the House floor.
CHAIR McGUIRE responded that she'd rather have a clean CS from
the committee than have new amendments debated on the floor.
REPRESENTATIVE GARA requested confirmation that the bill doesn't
change the statute of limitations, but says [the consumer] must
file a notice that he or she is "going to do something" within a
certain amount of time.
REPRESENTATIVE MEYER said yes.
MS. CUNNINGHAM said that was her understanding as well.
Number 0230
REPRESENTATIVE GARA remarked that it is a very good change. He
then brought attention to an amendment he'd previously decided
not to offer, which read [original punctuation provided]:
At p. 1 line 13 change "one year" to "two years".
At p. 3 line 21. Insert
Sec. 09.45.884(d). Rules of equitable estoppel
tolling the statute of limitations shall apply so that
the statute of limitations shall not run between the
time the claimant serves notice under AS 09.45, and
the time the plaintiff should reasonably understand
settlement under the procedures in AS 09.45 will not
succeed.
REPRESENTATIVE GARA said that generally in law, statute of
limitations specify certain times when it's unfair for the clock
to tick against the consumer and thus the statute of limitations
would be stopped in those cases. Those times are when the
consumer is under the impression that he/she is working out
something with the person being sued. [This legislation]
includes a provision specifying that before bringing suit, an
individual must enter into a negotiation process. However,
under this legislation the lawsuit must be filed while the
negotiation process is going on, otherwise time runs out.
Therefore, Representative Gara expressed his desire to have a
provision similar to that [specified above], although he
mentioned that it could be reviewed by Legislative Legal and
Research Services.
REPRESENTATIVE GARA explained that the language would specify
that the statute of limitations shouldn't run during the period
of negotiations, otherwise one is forced to sue while
negotiations continue or the consumer is lulled into thinking
that [negotiations] are working well and doesn't think about a
lawsuit. There could be many circumstances that could cause the
consumer to miss the statute of limitations, he said. He
pointed out that there is a concept in law called equitable
tolling of the statute of limitations, which he emphasized he
wanted to see happen during a fairly defined period during the
negotiations.
REPRESENTATIVE GRUENBERG said he hoped [the committee]
considered Representative Gara's suggestion favorably.
Number 0443
CHAIR McGUIRE announced that HB 151 would be held over.
ADJOURNMENT
Number 0460
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:00 p.m.
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