HB 168 - INJUNCTION SECURITY: INDUSTRIAL OPERATION 1:09:45 PM VICE CHAIR THOMPSON announced that the first order of business would be HOUSE BILL NO. 168, "An Act requiring the amount of the security given by a party seeking an injunction or order vacating or staying the operation of a permit affecting an industrial operation to include an amount for the payment of wages and benefits for employees and payments to contractors and subcontractors that may be lost if the industrial operation is wrongfully enjoined." 1:11:58 PM REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, sponsor, to briefly recap, indicated that HB 168 would establish in statute language similar to that of Rule 65(c) of the Alaska Rules of Civil Procedure in order to address lawsuits involving resource development projects, specifically those wherein a party seeks a restraining order, preliminary injunction, or order vacating or staying the operation of a permit that affects an industrial operation, [thereby essentially] requiring the court, when setting the amount of the required security bond, to consider the costs associated with that restraining order, preliminary injunction, or order vacating or staying the operation of a permit. REPRESENTATIVE HOLMES noted that a memorandum in members' packets dated March 21, 2011, from Legislative Legal and Research Services indicates that if HB 168 is interpreted as requiring the security bond to include an amount for wages, benefits, and contract payments, then the bill might also be interpreted as changing a court rule [because currently the court may consider including amounts for those items in a security bond but isn't required to]. She asked whether it's the sponsor's intention to require that the security bond include amounts for wages and benefits and contract payments. REPRESENTATIVE FEIGE said, "[The] intent of the bill is to make sure that the court at least includes that in their consideration for the security amount; ... I don't believe it directs ... them to impose that, particularly, but it does ... ask that they consider that in the ...." REPRESENTATIVE HOLMES sought clarification that the bill would not require the court to include those amounts. REPRESENTATIVE FEIGE said, "Correct." REPRESENTATIVE GRUENBERG said, "With that clarification, that there's not to be any change in the court rule but simply an admonition, in the judge's discretion, that we'd like that to be considered, then I don't think a court rule [change] is ... required, and I feel much more comfortable with the bill." REPRESENTATIVE FEIGE concurred with Representative Gruenberg's interpretation. REPRESENTATIVE GRUENBERG characterized HB 168 as being in line with Rule 65(c). 1:16:26 PM REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1, labeled 27-LS0395\B.2, Bailey, 3/29/11, which read: Page 1, line 10: Delete "determined by the court" Insert "the court considers proper" REPRESENTATIVE KELLER objected. REPRESENTATIVE GRUENBERG explained that Amendment 1 provides for language tracking that of Rule 65(c), and so could further clarify that the bill is intended to do exactly the same thing as that court rule. REPRESENTATIVE FEIGE concurred. REPRESENTATIVE KELLER offered his understanding, though, that the term, "determination" constitutes a final judgment, and expressed a preference for retaining the phrase, "determined by the court", considering it to be "tighter." REPRESENTATIVE HOLMES explained that that term, as used in the bill, doesn't in any way refer to any sort of final judgment, and instead simply means that the court shall decide what amount the security bond should be for. Amendment 1 would not change the meaning of the bill, does not constitute a substantive change, and would instead simply allow the bill to track the aforementioned court rule. Adoption of Amendment 1 would also clarify that the legislature is not trying to change that court rule, she ventured. REPRESENTATIVE KELLER predicted that adoption of Amendment 1 would then allow people to make the argument that the bill isn't necessary because [the situations that are of concern to the sponsor] would be covered under the court rule. He then sought clarification from the Department of Law regarding what the effect of adopting Amendment 1 would be. 1:22:55 PM TINA KOBAYASHI, Chief Assistant Attorney General - Statewide Section Supervisor, Oil, Gas & Mining Section, Civil Division (Juneau), Department of Law (DOL), said she agrees with Representative Holmes's summation that because the language of Amendment 1 more closely tracks the language of the court rule, its adoption would clarify that the proposed statute would not change the court rule, that the discretion would be left entirely up to the court. In response to a question, she offered her belief that under Amendment 1's proposed new language - "the court considers proper" - the court would simply continue following its current procedure. REPRESENTATIVE GRUENBERG observed that the dictionary, which the courts normally look to, in part defines the term, "determine" as meaning to find out or come to a decision about something via investigation, reasoning, or calculation. REPRESENTATIVE FEIGE, in response to a question, concurred that that was the meaning he intended when initially including the phrase, "determined by the court" in HB 168. REPRESENTATIVE GRUENBERG posited that Amendment 1's proposed new language merely restates that intent, thereby removing all question regarding what the bill does. REPRESENTATIVE KELLER indicated that he still has concerns about the meaning of Amendment 1's proposed new language. 1:25:51 PM REPRESENTATIVE HOLMES reiterated that she doesn't consider Amendment 1 to be effecting a substantive change. Instead, she ventured, Amendment 1's proposed new language is just another way of saying what the bill already says, and pointed out that the bill's sponsor is in agreement. It is seemingly being argued that the language currently in the bill should be kept because it means something different than Amendment 1's proposed new language and that which is currently in the court rule, but if that's really the case, and it really does mean something different, then by not adopting Amendment 1, it means that the bill would indeed be changing a court rule - thereby requiring an affirmative two-thirds vote. The closer the language of the court rule is tracked, she opined, then the more likely it is that the bill isn't going to get struck down as having inappropriately effected a court rule change. In conclusion, she urged adoption of Amendment 1. REPRESENTATIVE KELLER mentioned that he simply didn't want to change the bill contrary to what the sponsor wants. He then removed his objection to the motion to adopt Amendment 1. VICE CHAIR THOMPSON, noting that there were no further objections, announced that Amendment 1 was adopted. REPRESENTATIVE GRUENBERG asked the sponsor to consider, as the bill moves forward, possibly changing it in order to ensure that its proposed AS 09.40.230(c) would apply fairly to both parties in a lawsuit; proposed subsection (c) currently reads: (c) The existence of security under (b) of this section does not (1) prohibit a person who is wrongly enjoined or restrained from obtaining relief that may be available to that person; or (2) limit the amount that a party may recover in the action. VICE CHAIR THOMPSON questioned how the portion of a security bond that reflects lost wages and benefits would be distributed to employees. 1:31:09 PM DOUG WOOLIVER, Administrative Attorney, Administrative Staff, Office of the Administrative Director, Alaska Court System (ACS), explained that if a security bond is posted to protect the interests of a company that's alleging potential lost wages, and if that security bond is then forfeited, the court would pay that bond amount to the party that was enjoined, but the court wouldn't have any way of knowing who the company should be reimbursing for lost wages - the decision of who to reimburse would be left up to the company that received the forfeited bond. VICE CHAIR THOMPSON questioned whether a company could simply pocket that money and not reimburse its employees for wages. MR. WOOLIVER acknowledged that a company could do that. Again, the court isn't going to have any of the information necessary to address the distribution of funds, and so it must be left up to the receiving party to appropriately reimburse its employees and subcontractors. REPRESENTATIVE GRUENBERG ventured that certain types of trusts and specific court actions could probably be utilized to mitigate the potential for an enjoined/restrained industrial operation to abuse the system. MR. WOOLIVER mentioned that the apportioning of a forfeited security bond could get somewhat complicated and has the potential of engendering further litigation. VICE CHAIR THOMPSON, after ascertaining that no one else wished to testify, closed public testimony on HB 168. 1:36:38 PM REPRESENTATIVE KELLER moved to report HB 168, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 168(JUD) was reported from the House Judiciary Standing Committee.