HB 57 - STATE & MUNI IMMUNITY FOR Y2K CHAIRMAN KOTT announced that the final order of business is HB 57, "An Act relating to immunity for certain claims against the state, a municipality, or agents, officers, or employees of either, arising out of or in connection with the year 2000 date change; and providing for an effective date." Number 1207 REPRESENTATIVE ROKEBERG moved to adopt the proposed committee substitute, Version GH1005\G, Ford, 4/8/99, as the working draft before the committee. There being no objection, it was so ordered. MIKE FORD, Legislative Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, explained that on page 3 of the proposed committee substitute a provision regarding the state's immunity was deleted. In Section 3, Mr. Ford inserted a new standard which is the same standard in HB 82 that applies to private businesses. REPRESENTATIVE CROFT asked if the proposed committee substitute maintains the state's immunity and provides the same immunity for municipalities as provided for private businesses. MR. FORD clarified that the standard for municipalities has changed in which certain steps must be taken that are reflected on page 5 or reasonable care must be taken. The state is immune. REPRESENTATIVE CROFT inquired as to whether the state is immune to intentional misconduct with regard to Y2K. MR. FORD said that is not addressed. REPRESENTATIVE CROFT asked what applies to gross negligence regarding Y2K by the state. MR. FORD stated that it is simply in reference to the year 2000 date change. Number 1308 REPRESENTATIVE KERTTULA commented, "Well, it's just the bad example of if, you know, you have intentional misconduct. You can still be immune." MR. FORD agreed that is not excluded. Mr. Ford did not believe that was ever addressed. REPRESENTATIVE CROFT pointed out that there was language in an amendment which addressed that issue. MR. FORD noted that could be addressed easily, but the legislation does not at this point. REPRESENTATIVE ROKEBERG inquired as to how that was addressed in HB 82. MR. FORD explained that HB 82 utilizes the standard of reasonable care. Mr. Ford affirmed Representative Rokeberg's comment that the committee adopted the reasonable care standard for the municipality, but not the state. The state has a blanket immunity while the municipalities have the qualified immunity. REPRESENTATIVE ROKEBERG commented that there are no resolution steps as in HB 82, therefore one would have to go straight to court. MR. FORD agreed that there is no provision for that with the state. Number 1460 MIKE GATTI, testifying via teleconference from the Mat-Su Valley, inquired as to the rationale behind providing the state and municipalities blanket and qualified immunity, respectively. Municipalities provide the same type of necessary services as does the state and therefore, should be given blanket immunity as well. He urged the committee to review the reasoning behind the municipality having qualified immunity. REPRESENTATIVE ROKEBERG said that there is no assurance that those local bodies are taking the appropriate steps. If those local bodies do have a plan, HB 57 provides them with protection. KEVIN SMITH, Joint Insurance Association, Alaska Municipal League, noted that John Corso would be explaining what the City & Borough of Juneau would be doing. Possibly the MIS Director for the Municipality of Anchorage is still on-line to inform the committee of Anchorage's efforts. He informed the committee that he also had information regarding what 14 other municipalities are doing with regard to this issue. JOHN CORSO, City Attorney, City & Borough of Juneau, informed the committee that Y2K compliance is regarded as a public safety and welfare issue which cities should do independent of liability. That is Juneau's approach. Fear of liability does not provide anything particularly constructive. Mr. Corso agreed with Mr. Gatti that municipalities should be treated more like the state. Furthermore, municipalities should be treated differently than private businesses because private businesses are better able to quickly adapt to the detailed list outlined in statute. Mr. Corso stated that it will be likely that creative plaintiff counsel will hold defendants to exact compliance to the specific language of this statute. Although municipalities such as Juneau may have met the substance of Y2K preparedness, as government agencies there would be difficulty in complying with the technicality of the statute and may have to defend litigation not based on the merits. Number 1790 REPRESENTATIVE ROKEBERG asked if Mr. Corso would be more comfortable if the multi-step plan was removed leaving only the reasonable care standard as set out on page 5, line 19. MR. CORSO believed that subparagraph (B) on page 5, line 19 is the legal standard that would apply. Mr. Corso suggested that the statute should be as close to the state's liability which could be achieved by inserting "." after "law" on page 4, line 29. REPRESENTATIVE CROFT said that it seemed to him that the state should be under the same standard as the municipality. He indicated that the state is probably meeting its obligations now, but he was not sure if that would continue. Furthermore, the alternative dispute resolution which was in the original business Y2K preparedness could be applied to the state in order to provide an avenue other than the courts to reach resolution. REPRESENTATIVE ROKEBERG inquired as to whether Mr. Corso had reviewed the curative, mediative, and litigated steps prior to pro-litigation which HB 82 includes. MR. CORSO replied no. In further response to Representative Rokeberg, Mr. Corso stated that alternative dispute resolution could be helpful. MR. GATTI pointed out that parties can already agree to alternative dispute resolution. He noted that he had not seen the HB 82 provisions pertaining to that issue. Mr. Gatti stated that he always advised his clients not to make alternative dispute resolution mandatory because it adds another step and cost to the litigation process which could be agreed to independent of what is expressly stated in a contract or legislation. Number 2046 CHAIRMAN KOTT informed the committee that he intends to hold HB 57 and to review the provisions in HB 82. REPRESENTATIVE ROKEBERG noted that the amendment regarding the REAAs could be adopted. REPRESENTATIVE CROFT pointed out that the statute is unclear regarding what REAAs are, whether an REAA is a political instrumentality of the state, political subdivision, or a hybrid. REAAs are treated differently in different statutes. CHAIRMAN KOTT reiterated that HB 57 would be held. REPRESENTATIVE ROKEBERG informed the committee that the problem is that the "state" is defined as including a REAA city or rural school district. He recommended that the committee review that.