HOUSE FINANCE COMMITTEE May 4, 1999 8:45 A.M. TAPE HFC 99 - 116, Side 1 TAPE HFC 99 - 116, Side 2 CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 8:45 a.m. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Vice-Chair Bunde Representative Kohring Representative J. Davies Representative Moses Representative G. Davis Representative Williams Representative Austerman was absent from the meeting. ALSO PRESENT Representative Jeannette James; Bill Parker, Department of Corrections; Michael Stark, Assistant Attorney General, Department of Law; Brett Fried, Economist, Department of Revenue; Tim Benintendi, Staff, Representative Moses; SUMMARY HB 214 "An Act relating to litigation involving correctional facilities; and amending Rules 59(f), 60(b), 62, and 65, Alaska Rules of Civil Procedure." CSHB 214 (JUD) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Corrections dated 5/3/99. HB 217 "An Act relating to obligations and payments to the state under fishery cooperative contracts; and providing for an effective date." HB 217 was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Revenue. HCR 5 Relating to extension of the James Dalton Highway to the Arctic Ocean. CSHCR 5 (TRA) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Transportation and Public Facilities dated 4/23/99. HOUSE BILL NO. 217 "An Act relating to obligations and payments to the state under fishery cooperative contracts; and providing for an effective date." TIM BENINTENDI, STAFF, REPRESENTATIVE MOSES spoke in support of HB 217. He maintained that HB 217 is needed to authorize the Department of Revenue to collect payments in lieu of fisheries landing taxes. "These payments were established in the federal American Fisheries Act of 1998, and are part of the fisheries cooperative contracts existing among those active in the pollock fishery. The basic provision is for payments to be made in lieu of taxes on product, which is not landed, for processing in Alaska. The payments are justified in that, like the landing taxes, they help reimburse coastal communities for basic services rendered to the offshore fleet during the fishing seasons. Because the American Fisheries Act changed the competitive nature and fast pace of the fishery, some boats might well find it in their best interest to return to places like Seattle to refuel, take on supplies, and change crews. In this event, they would take loads of pollock with them, foregoing landing in Alaska. Since the extent of these changes will not be known until at least next year, we can only speculate on the impact on the fisheries landing tax. In the support material to the fiscal note, it is estimated that the potential loss of landing tax revenue would be between $256,000 to $512,000. It may likely be higher." Mr. Benintendi stated that "HB 217 would clearly authorize the Department of Revenue to collect these payments, and process them as though they were regular landing taxes. It is necessary to achieve passage of this legislation this year in order that it be in place for next season." BRETT FRIED, ECONOMIST, DEPARTMENT OF REVENUE stated that the Department of Revenue supports the legislation. In response to a question by Representative J. Davies, Co- Chair Therriault pointed out that the legislation allows the state to collect money that it could not otherwise collect. Vice-Chair Bunde agreed and added that it is new money that the state was not previously able to collect under the fisheries tax. He noted that the state has not had the benefit of collection on resources going to Seattle. In response to a question by Representative Kohring, Co- Chair Therriault explained that the state charges a tax on fish that are landing in the state of Alaska. Offshore factory ships go to Seattle without unloading in Alaska. The federal provision allows the current state tax to be collected on the fish resources that are taken to Seattle. It allows the state to collect the tax that is already in place on the total resource that is fished in the state of Alaska. Co-Chair Mulder MOVED to report HB 217 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 217 was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Revenue. HOUSE BILL NO. 214 "An Act relating to litigation involving correctional facilities; and amending Rules 59(f), 60(b), 62, and 65, Alaska Rules of Civil Procedure." CO-CHAIR MULDER, SPONSOR, spoke in support of HB 214. He noted that the legislation is an attempt to hold down spiraling costs in the Department of Corrections. He observed that the Department of Law indicated that it might be time for the legislature to go forward with its own version of the Prisoner Litigation Reform Act, similar to the one that passed the federal government several years ago. He observed that the legislature passed a resolution requesting the Department of Law to petition the court, under rule 60(b), for the termination of the Cleary decree. The Department of Law felt that the case was not strong enough under rule 60(b). The Department of Law helped to draft HB 214. House Bill 214 places a definite timeline on consent decrees and court orders. He noted that the state is living under the Cleary Consent Decree, which was initiated in the early 1980's. Co-Chair Mulder explained that under the legislation, consent decrees or court orders would be held for two years. After two years the plaintiffs would have to prove that a constitutional violation remained in order to maintain the consent decree or court order. He stressed that the Department of Law could still enter into a consent decree. The legislation only provides a mechanism by which the department can petition the court for the termination of a decree or court order. Co-Chair Mulder maintained that Cleary drives a lot of the state's correctional costs. The Legislature appropriated an additional $10 million dollars in FY 99 in order to bring the state into compliance with the Cleary settlement. He pointed out that in a time of declining state revenues that the correctional system should not be held to a higher standard than other needs of the state. He maintained that the court monitor determines if the state is in compliance and how much money should be spent. He emphasized that the courts are indirectly utilizing their power to affect appropriations. Representative J. Davies questioned if the legislation limits the ability of the court to impose a decision. Co- Chair Mulder noted that if a violation to a constitutional right exists the court could put in place an order. After two years if the department has taken corrective action the department can petition the court to discontinue the order. Then it would be incumbent on the plaintiff to prove the fact that the violation still exists. Representative J. Davies stated that the plaintiffs would have to keep proving their case over and over again. Co- Chair Mulder asked if that would be wrong in relation to prison conditions, when corrective steps have been taken. Representative J. Davies stressed that the court has found that the state has not fulfilled the terms of the Cleary agreement. He pointed out that the agreement was outside of the court. The state agreed to provide certain conditions. He noted that if the state does not fulfill its obligations the plaintiffs would have to prove again that they are owed by the state. Co-Chair Mulder argued that the Department of Law signed onto the Cleary settlement. The Legislature has made it clear that it does not agree with the conditions and terms of the Cleary settlement. He pointed out that at the time of the settlement there were no constitutional violations. The lower Court found that, while the state of Alaska had some of the safest prisons in the United States, that the conditions that existed had a potential to create a problem in the future. He maintained that not all of the components of the Cleary court decree speak to constitutional protections. He gave the example of the degree to which food should be heated. Representative J. Davies stressed that representatives of the state found it in the state of Alaska's interest to agree to the stipulations, even if they did not rise out of a constitutional right. He noted that it might be in the state's interest to agree to a lesser standard to avoid a greater cost. He asked if the legislation would take away the possibility of a similar consideration in the future. Co-Chair Mulder reiterated that the court could still find in favor of prisoners if there is a constitutional violation. The court can still impose the sanction and the remedy to the department. He asserted that the Cleary settlement acts as law in relationship to the Department of Corrections and drives the department's cost. Representative J. Davies disagreed that the settlement is in effect law. He argued that it is no different from any other state contract. He asserted that the affect of the legislation is that "the state doesn't want to be bound to a contract, this specific kind of contract, for more than two years." Co-Chair Therriault questioned if the provisions only apply to consent decrees in the Department of Corrections. MICHAEL STARK, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW explained that the legislation is patterned after the federal Prison Litigation Reform Act, which was adopted in response to consent decrees and court orders that were imposed in litigation cases. He noted that the consent decrees and court orders assumed a life of the own. They went on in many cases for 10 or 20 years. They addressed problems that were real at the time when the orders were first entered. Once federal problems were addressed the states found themselves unable to get out from under the court orders. He maintained that the hands of the executive branches and legislatures were tied in terms of appropriations and flexibility in managing prisons. He asserted that the court systems end up, in one degree or another, managing the prison systems. The legislation is directed at litigation involving conditions in correctional facilities or actions of government officers that affect prisoners' lives. It does not affect the right to sue in any other area. If there is a violation of a state statute, state constitutional provision, federal constitutional provision or federal statute the court has authority to impose orders. If the state feels that the problems have been addressed it can go to the court and move to terminate the order. If plaintiffs demonstrate that the rights are still being violated then the court has the authority to continue the order. The legislation only allows the state to move on with its duties when the problems are fixed. Mr. Stark reviewed the Cleary case. He noted that the case was filed in 1980. At that time there were very few resource being devoted to the state's correctional system. In 19983 the Division of Corrections entered into a settlement agreement that addressed many of the issues. The big-ticket items were left for trial. There was a trial in 1984. The court found that Alaska's system was one of the safest and most humane in the country. It also found that while it was not presently overcrowded, it would shortly be overcrowd, based on statistics developed in the trial. The court imposed population caps. The state appealed the court's decision since there was not violation. It took several years for the case to come to the Supreme Court. In the meantime the prison population had grown. The state decided that they could get more mileage from the plaintiffs than from the courts, so they settled. The state's hands were partially tied because of the partial settlement. He noted that most of the problems have been corrected. He acknowledged that there are still problems with overcrowding. He emphasized that prison population drives the correctional costs. Co-Chair Therriault asked if there are limitations on the length of contracts. Mr. Stark noted that all contracts are dependent on legislative appropriation. If the legislature decides not to fund a contract, the contract becomes null and void. He further explained that the legislation would not affect the award of damages. The legislation only affects prospective relief. In response to a question by Co-Chair Therriault, Mr. Stark stated that the department supports the legislation. He discussed the chance of a constitutional challenge. He noted that the federal legislation has been supported in the courts. It has not been challenged in the Supreme Court. Representative J. Davies expressed concern with the legislation. He stated that the state could delay actions to address a court order. Plaintiffs would then be forced to prove the case again. He maintained that the state should have the burden of demonstrating that the issues have been addressed. Mr. Stark pointed out that a violation of constitutional protections or state statutes were not proven in the Cleary decision. Representative J. Davies emphasized that the irrelevant issue is that the state entered into a contract. He maintained that the state would have lost the court case. Co-Chair Mulder asked if state should be able to get out from under Cleary. Mr. Stark stated that the Department of Corrections has shown that it can operate at higher capacities, for periods of time, than were established by Cleary without violating the Constitution. He stressed that the Department of Corrections is not interested in having prisoners stacked up, but emphasized that the state is entitled to the flexibility to manage. He maintained that the court should not dictate to the executive branch and legislature how operate the prison system unless a law is being violated. Co-Chair Therriault questioned if the settlement rose out of the state's ability to pay the settlement at the time. Mr. Stark stated that the settlement was entered into because the state did not think that the prison population would increase to the extent that it did. Representative J. Davies asked why the burden would be placed on the plaintiff. He felt that the burden should be on the defendant. He used a child support case as an example. He stressed that the burden should be on the party trying to change the contract. Mr. Stark stressed that it is not a monetary contract. He emphasized that it is a policy choice. He spoke in support of placing the burden on the plaintiff, to allow the state the maximum flexibility to manage the prison system. Co-Chair Therriault stressed that plaintiffs can push for an actual court judgement. Mr. Stark reiterated that at the end of two years, if the state felt that it was no longer in violation of the law, it could move to terminate or modify the order. The burden would be on the plaintiff to demonstrate that there is a continuing, current violation in order for the order to continue. Representative Grussendorf pointed out that the courts cannot force the legislature to appropriate money to address problems identified by the court. He pointed out that the Department of Corrections has been able to use Cleary to leverage more funding. He stated that it should be up to the plaintiffs to prove that the state has not corrected the deficiencies. Mr. Stark maintained that the state of Alaska's correctional system is a safe system. He asserted that it is one of the best in the country. He noted that the Department of Corrections and the Department of Law would be leery if the legislature looked at the legislation as a green light to slash funding for corrections. Representative J. Davies questioned how the legislation would limit decent decrees or the ability of court decisions to be based on anything other than a right defined in the legislation. Mr. Stark stated that it limits the ability of courts to order prospective relief to any litigation involving prison conditions to situations where the plaintiffs have shown there is a violation of a federal or state right. If the plaintiff can demonstrated that the state has violated a statute and an inmate or class of inmates have been injured by the action, then the court has the authority to order corrective measures. Mr. Stark pointed out that subsection (e) page 4, line 8 allows the court to approve a consent decree for up to two years. At that time that plaintiff would have to demonstrate that some right is being violated that was addressed in the initial lawsuit. The federal law does not allow consent decrees. The federal act only allows the court to order relief when there has been a demonstrated violation of a right. He observed that the intent is to allow flexibility to accommodate concerns. Damages have to be paid by the state, subject to appropriation by the legislature. Representative J. Davies asked how class action claims would be limited. Mr. Stark referred to page 2, line 24 When a court finds multiple violations of a state or federal right, when multiple remedies are ordered by the prospective relief, or when prospective relief applies to multiple correctional facilities, the findings required by this subsection shall be made as to each violation, each remedy, and each facility, as appropriate. In a civil action with respect to correctional facility conditions that has been certified as a class action, prospective relief applicable to the class may only be ordered after the court makes the findings required by this subsection and finds that the violation of a state or federal right is applicable to the entire class." The relief ordered must be the least intrusive means necessary to correct the violation. The court has to find that the violation of the state or federal right is applicable to the entire class. This is consistent with federal litigation. The court has the right to order relief for individuals, but cannot order sytem wide releif unless it is demonstrated that the entire class is affected. Representative Grussendorf pointed out that under Cleary the state paid the fines to its own General Fund. BILL PARKER, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS stated that the department supports the legislation. He pointed out that it has been 19 years since the case was filed. The settlement has been in place for 9 years. The main issue is overcrowding. All of the institutions are on or below their Cleary cap except for the Cook Inlet Pretrial facility, which cannot be addressed until the new Anchorage jail is built. He stated that the major issues have been addressed and the department is capable of carrying on without constant court oversight. Representative J. Davies asked if the court oversight was helpful in making arguments to the legislature that appropriations were necessary for additional beds. Mr. Parker stressed that the increase in prison population was the main influence on the department's budget. There were approximately 770 prisoners in 1980. There are currently approximately 4,300 prisoners. He pointed out that there would be some savings if Cleary were lifted. The department has additional administrative cost associated with the settlement. He noted that the department pays the court monitor's fees. Representative Foster MOVED to report CSHB 214 (JUD) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 214 (JUD) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Corrections dated 5/3/99. HOUSE CONCURRENT RESOLUTION NO. 5 Relating to extension of the James Dalton Highway to the Arctic Ocean. REPRESENTATIVE JEANETTE JAMES sponsor spoke in support of HCR5. She explained that the goal of the resolution is to complete the opening of the Dalton Highway from the Yukon River to the Arctic Ocean, before the beginning of the summer's tourism season. She noted that it is possible to walk to the Arctic Ocean. The Dalton Highway was open to the public until the installation of two oil company checkpoints that are approximately eight miles from the Arctic Ocean. Visitors must pay $20 dollars per-person for a tour bus ride past this point. She noted that this is a point of contention for many people. She observed that statutes relating to the Dalton Highway refer to a road from the Yukon River to the Arctic Ocean. She stressed that the public has a right to access the Arctic Ocean. Co-Chair Therriault asked what would be done to protect the security of the oil companies operating in the area. Representative James stated that the resolution did not address security measures. She emphasized that the department would need to settle the issue. Representative Grussendorf asked if the road would compete for federal funds. He noted that it is a service road. He stated that he would support the resolution, but anticipated that RV parks would result. Co-Chair Therriault asked if there is currently a route to the end of the road. Representative James pointed out that there is a private road to the ocean. She stated that people that drive from Fairbanks should have access to the Arctic Ocean. Co-Chair Therriault asked if there is land under state control that would allow facilities to be built at the ocean. Representative James did not know. She reiterated that the state should not restrict access to public water bodies. Representative G. Davis estimated that all of the land to the beach is under private lease. He questioned if the point is to provide free access. He stressed the need for cooperation. He stated that he did not object to the resolution, but estimated that the ability of the state to control access would be limited. Representative Foster MOVED to report CSHCR 5 (TRA) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHCR 5 (TRA) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Transportation and Public Facilities dated 4/23/99. ADJOURNMENT The meeting adjourned at 9:50 a.m.