Legislature(2003 - 2004)

05/09/2003 02:10 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 145                                                                                                            
          "An Act relating to public interest litigants and                                                                     
          to attorney fees; and amending Rule 82, Alaska                                                                        
          Rules of Civil Procedure."                                                                                            
SENATOR  GENE  THERRIAULT,  SPONSOR   discussed  the  changes                                                                   
contained  in the Committee  Substitute.   He noted  that his                                                                   
staff  worked to  change language  in  response to  testimony                                                                   
heard  in the  Senate  Resources  Committee.   The  testimony                                                                   
indicated that  in some cases,  the reforms suggested  by the                                                                   
bill were  too broad.   The Committee Substitute  effectively                                                                   
nullifies current  doctrine, and  recreates it in  statute in                                                                   
areas supported by public testimony.                                                                                            
Co-Chair  Harris  MOVED  to ADOPT  Committee  Substitute  23-                                                                   
GH1064\H,  Luckhaupt,  5/8/03  as  the version  of  the  bill                                                                   
before the  Committee. Representative Berkowitz  OBJECTED for                                                                   
the purpose of discussion.                                                                                                      
Senator  Therriault  referred  to Section  1,  pertaining  to                                                                   
Alaska court cases, which had  lead to the establishment of a                                                                   
doctrine.  He noted that Section  2, (b) amends the language,                                                                   
not allowing  the court  to discriminate  in the awarding  of                                                                   
attorney  fees "except  as  otherwise provided  by  statute".                                                                   
Subsection (c)  allows for some  differentiation to  be made,                                                                   
allowing  the   doctrine  to   remain  in  force,   in  cases                                                                   
"concerning the establishment,  protection, or enforcement of                                                                   
a  right   under  the  United   State  Constitution   or  the                                                                   
Constitution  of the  state of  Alaska".   He explained  that                                                                   
Subsections (d) and (e) outline the award process.                                                                              
Senator Therriault  added that  Section 3 (c)  clarified that                                                                   
litigants  may  not be  excused  for stays  or  interlocutory                                                                   
relief.   He  observed that  the language  in Subsection  (h)                                                                   
clearly delineated  what issue  can and  cannot be  placed in                                                                   
public  interest  litigant  status.   He  noted  that  public                                                                   
interest  doctrine  was  not   listed  anywhere  in  adopted,                                                                   
printed  court rulings.   He stated  that the  Administration                                                                   
supports the language changes.                                                                                                  
Representative  Berkowitz emphasized  that the new  Committee                                                                   
Substitute had been brought forward  late [in the legislative                                                                   
session] and  wondered why there  had not been  prior notice,                                                                   
since  the new  version contained  such substantive  changes.                                                                   
Senator  Therriault   responded  that   the  work   had  been                                                                   
finalized  in  the early  morning  hours  and that  time  was                                                                   
Representative  Berkowitz  WITHDREW  his  OBJECTION.    There                                                                   
being   NO  OBJECTION,   Committee  Substitute   23-GH1064\H,                                                                   
Luckhaupt, 5/8/03, was ADOPTED.                                                                                                 
Co-Chair  Harris asked  if a public  interest litigant  would                                                                   
liable for  the legal fees on  both sides of the  case should                                                                   
they lose a case. Senator Therriault  observed that currently                                                                   
litigants could  enter suit in  the hope that even  a portion                                                                   
of the suit would  be found valid, and have  the potential of                                                                   
having attorneys  fees paid. He maintained that  there was no                                                                   
"down side".   He asserted that  people use the  court system                                                                   
as a  potential means  of raising  revenue.   He stated  that                                                                   
other types of cases bore other risks.                                                                                          
Representative Berkowitz referred  to legislative research on                                                                   
public  interest litigation  in Alaska.   He emphasized  that                                                                   
there  was no  personal gain  to be  arrived at  by a  public                                                                   
interest litigant.  He asked for  the Sponsor's definition of                                                                   
public interest litigant.  Senator  Therriault responded that                                                                   
it  was a  class  of litigants  recognized  by  the court  as                                                                   
receiving   special   provisions   that   provide   for   the                                                                   
possibility of  having attorney fees  covered if the  case is                                                                   
Representative  Berkowitz observed that  in order  to achieve                                                                   
that status,  a litigant  must satisfy certain  requirements.                                                                   
Senator Therriault  noted that the bill proposed  to restrict                                                                   
those criteria to constitutional issues.                                                                                        
Representative  Kerttula  asked  for clarification  on  which                                                                   
cases  would   no  longer   be  considered  public   interest                                                                   
litigation.    Senator  Therriault observed  that  any  cases                                                                   
involving  the denial  of  due process  could  apply for  and                                                                   
receive  public interest  litigant status,  since this  was a                                                                   
constitutional   right.  In   response  to   a  question   by                                                                   
Representative  Kerttula, Senator  Therriault explained  that                                                                   
cases that  made no constitutional  claim could no  longer be                                                                   
considered for public interest litigant status.                                                                                 
Representative Berkowitz asked  about the types of cases that                                                                   
would be disallowed.   Senator Therriault stated  that a list                                                                   
of specific cases had not been compiled.                                                                                        
TAPE HFC 03 - 86, Side B                                                                                                      
Representative  Berkowitz asked  for a list  of the  kinds of                                                                   
cases that might be included or disallowed under the bill.                                                                      
CS HB 145 (FIN)  was heard and HELD in Committee  for further                                                                   
HOUSE BILL NO. 145                                                                                                            
          "An Act relating to public interest litigants and                                                                     
          to attorney fees; and amending Rule 82, Alaska                                                                        
          Rules of Civil Procedure."                                                                                            
TADD  OWENS,  RESOURCE  DEVELOPMENT  COUNCIL,  testified  via                                                                   
teleconference  in support of  the bill.   He explained  that                                                                   
his  group is  a  non-profit trade  association  representing                                                                   
individuals  and  companies from  the  oil and  gas,  timber,                                                                   
mining,  tourism and  fisheries  industries.  He pointed  out                                                                   
that  Alaska   must  provide  a  business   environment  that                                                                   
encourages investment  and suggested that the  bill addressed                                                                   
the  risk   associated  with  potential   litigation  against                                                                   
companies.   He  maintained  that  Alaska did  not  currently                                                                   
provide a  level playing  field in this  area as  compared to                                                                   
other  states.     He  suggested   that  the   bill  prevents                                                                   
discrimination  in awarding  fees, and  prevents courts  from                                                                   
waiving  the bond requirements  when an  individual seeks  to                                                                   
stop a  development project.   He noted  that the  bill still                                                                   
supports   public  interest   litigation  in   constitutional                                                                   
Representative Berkowitz cited  changing circumstances as the                                                                   
reason for enacting  lasting court rules.  He  suggested that                                                                   
the ability to  change rules was actually more  supportive of                                                                   
development, and  asked if the  bill inhibits the  ability of                                                                   
groups to try  to change public rules.  Mr.  Owens maintained                                                                   
that  the  legislation  does  not amend  a  court  rule,  and                                                                   
suggested that the legislature  was the proper place to enact                                                                   
public policy changes.                                                                                                          
Representative Berkowitz proposed  that the true problem from                                                                   
the private perspective  was the prohibitive  costs of delays                                                                   
in litigation.   He asked if expedited hearings  might better                                                                   
serve both  parties.  Mr. Owens  concurred that there  may be                                                                   
additional  ways  to  continue  reform of  the  process,  but                                                                   
reiterated  that the  legislation  drew what  they viewed  as                                                                   
appropriate distinctions.                                                                                                       
Representative  Berkowitz persisted  that it  was the  delays                                                                   
resulting  from  court  cases  that  were  prohibitive.    He                                                                   
reiterated that  the best approach  was an expedited  hearing                                                                   
process.   Mr. Owens observed  that the bill did  not prevent                                                                   
litigants from bringing suits,  but only changed the economic                                                                   
circumstances and possibility of state support.                                                                                 
DORIN HAWXHURST,  ANCHORAGE testified  via teleconference  in                                                                   
opposition  to the  bill.   She  described  a situation  that                                                                   
occurred   during  her  experience   with  Cordova   District                                                                   
Fisherman United  (CDFU), during which she  participated with                                                                   
public  interest  litigants  in  the  Prince  Williams  Sound                                                                   
Tanker Plan  appeal.  She stated  that the issue  was whether                                                                   
the Department of Environmental  Conservation had implemented                                                                   
the law that  the legislature enacted after  the Exxon Valdez                                                                   
oil spill.  She  noted that the law required  oil shippers to                                                                   
have additional equipment to ensure  that oil spills like the                                                                   
Exxon Valdez  spill would  not occur  again.  She  maintained                                                                   
that  CDFU  entered  the  process  since  the  Department  of                                                                   
Environmental  Conservation  ignored  HB 567  under  pressure                                                                   
from the oil shippers. She discussed  the difficult nature of                                                                   
these proceedings,  and noted that the  administrative appeal                                                                   
was prohibitively  expensive  to continue.   She stated  that                                                                   
the city of Cordova could no longer  participate in what they                                                                   
termed "an unbearably expensive  process", and that later the                                                                   
Department of  Environmental Conservation held  hearings that                                                                   
were heavily  attended by fishers.   She urged  the Committee                                                                   
to closely  examine the case as  a reason to  continue public                                                                   
litigant proceedings  in the state of Alaska.   She explained                                                                   
that the individuals who brought  these litigations could not                                                                   
afford lengthy legal processes.   She asked the Committee not                                                                   
to pass the bill in protection of individuals.                                                                                  
TAPE HFC 03 - 87, Side A                                                                                                      
STEVE   BORRELL,   ALASKA   MINERS   ASSOCIATION,   ANCHORAGE                                                                   
testified in  support of the bill.   He stated that  the bill                                                                   
provided needed  streamlining of the permitting  process.  He                                                                   
maintained that it was essential  to ensure that when permits                                                                   
were issued,  there was no  longer a financial  incentive for                                                                   
third parties to challenge permits.                                                                                             
Representative  Berkowitz asked how  much attention  had been                                                                   
given to find a  way to expedite the process in  order to cut                                                                   
costs incurred  while  waiting for disputes  to be  resolved.                                                                   
Mr. Borrell maintained that Alaska  had a reputation as a bad                                                                   
place  to do  business and  suggested  that this  legislation                                                                   
made the state more attractive to investors.                                                                                    
Representative   Berkowitz   contended  that   private   suit                                                                   
litigation  was  not  really   the  culprit  in  discouraging                                                                   
business, but rather  the length of the hearing  process.  He                                                                   
suggested that the  best thing to attract business  to Alaska                                                                   
was to streamline the litigation process.                                                                                       
KARL  HANNEMAN,  FAIRBANKS  CHAMBER  OF  COMMERCE,  FAIRBANKS                                                                   
testified  via teleconference  in support  of the  bill.   He                                                                   
noted that many  organizations had helped craft  the language                                                                   
of  the  bill.     He  pointed  out  that  the  language  was                                                                   
supported by the  Administration.  He noted  the significance                                                                   
of the legislation  to the Northern Interior,  where projects                                                                   
had been  delayed due  to litigation,  affecting the  overall                                                                   
economy of Fairbanks.                                                                                                           
CHRIS KENNEDY, ASSISTANT ATTORNEY  GENERAL, DEPARTMENT OF LAW                                                                   
testified via  teleconference and provided  information about                                                                   
the  bill.     He  explained   that  the  current   Committee                                                                   
Substitute   was  an   integral   part   of  the   Governor's                                                                   
legislative package to streamline  the permitting process for                                                                   
resource  development.     He   noted  that  it   limits  the                                                                   
application  of  a  court  doctrine in  areas  where  it  has                                                                   
encouraged exceptive  and speculative litigation.   He stated                                                                   
that  the  bill  addressed  public   interest  litigants,  as                                                                   
defined by the  Supreme Court, as one who:  1) defined public                                                                   
policy; 2) effect  numerous people; 3) could  only be brought                                                                   
by a  private party;  and 4)  could not  be a self  appointed                                                                   
public  advocate.  He  pointed out  that currently  litigants                                                                   
could  have their  attorney's  fees paid  even  if they  lost                                                                   
their case, if the changes they  advocate are adopted by some                                                                   
other means.   He maintained that a public  interest law firm                                                                   
could make  money if they won  and gave such an example.   He                                                                   
contended  that the  current statute  provided an  unintended                                                                   
subsidy for public interest litigants.   He stated that those                                                                   
seeking  to  challenge  or  obstruct  tort  development  were                                                                   
different  from  ordinary  litigants,   since  they  have  an                                                                   
incentive  to  take the  chance  on  doubtful claims  as  the                                                                   
downside risk is removed and the potential reward enhanced.                                                                     
Mr.  Kennedy gave  an example  of misuse  of public  interest                                                                   
litigation  in a  five-year suit  against  the Department  of                                                                   
Environmental   Conservation   regarding  the   1995   Prince                                                                   
Williams  Sound Tanker  Contingency plan.   He recounted  the                                                                   
story from  earlier testimony  from a different  perspective,                                                                   
and noted  that changes occurred  during the lengthy  hearing                                                                   
process  to address fishers'  concerns.   He emphasized  that                                                                   
CDFU   was  accommodated   without   litigation.     However,                                                                   
following the process, an individual  from Washington who was                                                                   
not satisfied  led a  massive court  challenge containing  85                                                                   
separate  issues.  Ultimately  54 issues  were abandoned,  31                                                                   
were briefed,  and none prevailed.   The case cost  the State                                                                   
$154  thousand  dollars,  with  a possibly  greater  cost  to                                                                   
private  parties.     The  individual  who   brought  the  85                                                                   
unsuccessful challenges  was immune  from paying any  Rule 82                                                                   
fee awards  to either  the State  or shippers.   He  conceded                                                                   
that HB  145 would not do  away with that type  of litigation                                                                   
entirely.  However, it will abolish  public interest litigant                                                                   
doctrine in certain  areas and, by evening out  the risks and                                                                   
benefits  of bringing  claims, will force  people opposed  to                                                                   
permits  or plans  to more  carefully  evaluate whether  they                                                                   
pursue more speculative challenges.                                                                                             
BEN BROWN,  ALASKA STATE  CHAMBER OF  COMMERCE, testified  in                                                                   
support of  the legislation.   He  stated that their  members                                                                   
want  to  promote  Alaska's  healthy  economy  by  preventing                                                                   
misuse of  the State's  instrumentalities to impede  resource                                                                   
development.   He recommended  the approach contained  in the                                                                   
Committee Substitute.  He clarified  that the 4  party of the                                                                   
existing doctrine  did not require  that the public  interest                                                                   
litigant  have  no  economic incentive,  but  only  that  the                                                                   
economic incentive  be less than the non-economic  incentive.                                                                   
He also  speculated that, regarding  the Cordova  case, given                                                                   
the  requirement   in  the  current   doctrine  for   a  non-                                                                   
governmental  entity,  the  litigants   might  have  actually                                                                   
benefited  from  the city  of  Cordova withdrawing  from  the                                                                   
case.   He explained  that the previous  version of  the bill                                                                   
addressed  three  specific  State  Departments,  whereas  the                                                                   
current bill version  examines the nature of  the claim being                                                                   
brought.  He suggested that this  was the most germane issue,                                                                   
given the importance of the claims.   He suggested that under                                                                   
the legislation, important claims  would still be brought, as                                                                   
well as lesser claims.  He pointed  out that Alaska still has                                                                   
Rule 82  that allows  for parties  to recover  some, but  not                                                                   
all,  of  their  legal  fees from  another  party  when  they                                                                   
prevail.   He  referred  members  to a  study  of the  Alaska                                                                   
Judicial Council  from 1995 giving the history  of this Rule.                                                                   
He maintained that, because of  Rule 82, the courthouse doors                                                                   
would not  be "closed", but  pointed out that  litigants will                                                                   
still  have to  face  the risk  of having  to  pay the  other                                                                   
party's fees if they do not prevail.   He concluded that this                                                                   
creates  a  "level  playing  field" in  the  area  of  public                                                                   
interest litigation.                                                                                                            
LARRY   HOULE,  THE   SUPPORT   INDUSTRY  ALLIANCE,   JUNEAU,                                                                   
testified  in support  of the  bill.  He  read from  prepared                                                                   
testimony  (copy on  file).   He  explained that  they are  a                                                                   
statewide   trade   association   of  union   and   non-union                                                                   
contractors.   He  read from  prepared testimony,  discussing                                                                   
the history of  Alaska Civil Procedure allowances  to allow a                                                                   
prevailing party in  a civil lawsuit to recover  a portion of                                                                   
their  attorney's  fees.  He  differentiated  this  from  the                                                                   
Alaska  Supreme  Court  Public   Interest  Litigant  Doctrine                                                                   
enacted in  1968, which allows  a prevailing public  interest                                                                   
litigant  to  recover  all  of   its  attorney's  fees.    He                                                                   
contrasted  this to  oil, logging  or  trucking companies  or                                                                   
labor  unions that  are consistently  denied public  interest                                                                   
litigation  status on  the ground that  they had  "sufficient                                                                   
economic incentive  to bring a  lawsuit".  He  concluded that                                                                   
the  current doctrine  results  in certain  groups  receiving                                                                   
preferential  treatment  in  the  courts,  which  he  claimed                                                                   
reflected a "very marked and distinct  anti-development, pro-                                                                   
preservationist  political slant".   He  maintained that  the                                                                   
bill would eliminate  special treatment, and  noted that Rule                                                                   
82  of the  civil rules  of procedure  would  still permit  a                                                                   
trial judge  to adjust awards  of attorney's fees based  on a                                                                   
variety of factors for all litigants.                                                                                           
RICH  HEIG, GREENS  CREEK, AND  COUNCIL  OF ALASKA  PRODUCERS                                                                   
testified in support  of the Committee Substitute.   He noted                                                                   
that  the Council  was  an organization  representing  mining                                                                   
companies in  Alaska.  He  noted that his industry  underwent                                                                   
extensive permitting  processes with  the state,  federal and                                                                   
local  governments.    He noted  that  the  process  included                                                                   
public   hearing    and   comment   opportunities    and   an                                                                   
administrative  review process.   He  noted that the  process                                                                   
could take  several years  to complete  and pointed  out that                                                                   
the process  could be  extended by  legal challenges  against                                                                   
the permits.   He confirmed  that a large  part of  the issue                                                                   
was  the delay  in  the process.  He stated  that  challenges                                                                   
could come  from well-funded  organizations, which  were well                                                                   
versed in the permitting processes.   He maintained that fees                                                                   
could be recovered from the organizations,  especially if the                                                                   
litigation    was    successful.   He    acknowledged    that                                                                   
Representative Berkowitz's  comments regarding the  length of                                                                   
the hearing process were correct,  but pointed out that these                                                                   
issues  were   already  being   addressed  by  the   resource                                                                   
ROBERT BRIGGS, STAFF ATTORNEY,  DISABILITY LAW CENTER, JUNEAU                                                                   
testified  in opposition  to the  Committee  Substitute.   He                                                                   
noted that  every state receives  federal monies in  order to                                                                   
set  up   advocacy  programs   for  the  disabled   that  are                                                                   
independent from  the State. He pointed out  that many states                                                                   
followed  the   Alaskan  model,   which  uses  a   non-profit                                                                   
organization  to address  litigation  for the  disabled.   He                                                                   
explained  that  his  organization   served  exclusively  the                                                                   
disabled in Alaska.  He noted  that many of these individuals                                                                   
had suffered  a range  of abuses  and neglect, and  explained                                                                   
that  the  ultimate  way  for  a  citizen  to  address  these                                                                   
complaints was  to file suit.   He stated that many  of these                                                                   
individuals were  very impoverished  due to their  conditions                                                                   
and thus were not  able to pay for litigation.   He described                                                                   
his  history  of law  practice  both  in private  and  public                                                                   
practice and observed the power of the State.                                                                                   
Mr.  Briggs  stated that  the  Committee  Substitute  greatly                                                                   
expanded the impact of the bill,  and pointed out that he did                                                                   
not testify  against the original  bill.  He  emphasized that                                                                   
any challenge  brought  by a citizen  against any  government                                                                   
action was  now contained in this  bill, and stated  that the                                                                   
bill  prevented  the  State  from  applying  public  interest                                                                   
litigation doctrine  to any  of these cases.    He  urged the                                                                   
Committee not  to pass  the bill, and  to consider  its broad                                                                   
impact  on public  interest doctrine  and  on the  applicable                                                                   
Court Rule.                                                                                                                     
Mr.  Briggs expressed  his  opinion  that the  Supreme  Court                                                                   
could issue  a decision by  any of three  means:   a codified                                                                   
rule, a  Supreme Court  Order, or  announcing a rule  through                                                                   
judicial  opinion.     He  explained  that   public  interest                                                                   
doctrine  is comprised  of a  series  of court  rulings.   He                                                                   
noted his successful experience  in representing the disabled                                                                   
in  litigation, and  noted that  the rates  of disability  in                                                                   
Alaska was high due to the nature  of Alaskan industries.  He                                                                   
speculated  that the bill  would drive  plaintiffs in  public                                                                   
interest litigation  into federal  court.  He  emphasized the                                                                   
negative  effect on  private individuals  who  stand to  lose                                                                   
their  entire  life  savings if  they  lose  public  interest                                                                   
suits.   He noted  that the Juneau  School District  employed                                                                   
the most expensive  attorneys available, putting  families at                                                                   
a disadvantage.   He  maintained that  the legislation  would                                                                   
prevent individuals from filing suit in state courts.                                                                           
Mr.  Briggs  referred  to Senate  Concurrent  Resolution  #4,                                                                   
passed during the 18  Legislature,  urging the Alaska Supreme                                                                   
Court to  reexamine the wisdom  of Civil  Rule 82.   He noted                                                                   
that  the  Alaska  Supreme  Court   issued  a  ruling,  which                                                                   
included  an extensive  study  of the  Rule.   He noted  that                                                                   
nowhere in the study was the conclusion  that the Rule had an                                                                   
unfair effect.   He  pointed out that  the majority  of those                                                                   
benefiting  from public  interest litigations  were not  from                                                                   
environmental  groups.   He  noted  that the  past  testimony                                                                   
would indicate otherwise,  in its emphasis on  the effects of                                                                   
public interest doctrine on development  of natural resources                                                                   
in  the State.    He clarified  that  roughly  16 percent  of                                                                   
awards  in  state  litigation   have  gone  to  environmental                                                                   
groups.  He suggested that there  was not a basis to overturn                                                                   
the  Rule, which  he maintained  was  the net  effect of  the                                                                   
bill.  He noted that this was  in relation to awarded monies,                                                                   
which were  legitimate claims.   He suggested that  an entire                                                                   
doctrine should not  be thrown out as a result  of 16 percent                                                                   
of the litigation.  He proposed that the original  bill was a                                                                   
more defendable  doctrine and suggested that  the legislature                                                                   
consider this as an interpretation of a court rule.                                                                             
Mr.  Briggs read  from a  United States  Supreme Court  Case,                                                                   
Legal Services  Corporation vs. Velaskes,  "Interpretation of                                                                   
the law  and the Constitution  is the primary mission  of the                                                                   
judiciary when it acts within  the sphere of its authority to                                                                   
resolve  a  case of  controversy.  An  informed,  independent                                                                   
judiciary presumes  an informed  independent bar.   Simply to                                                                   
prohibit  the  analysis  of  certain  legal  issues,  and  to                                                                   
truncate  presentation to  the courts,  prohibits speech,  an                                                                   
expression upon which  the courts must depend  for the proper                                                                   
exercise of  judicial power.   Congress cannot wrest  the law                                                                   
from  the  Constitution  which  is its  source."    He  urged                                                                   
Members to adopt the original form of the bill as having                                                                        
fewer legal defects than the Committee Substitute.                                                                              
Vice Chair Meyer clarified that the Disability Law Center                                                                       
preferred the Senate Judiciary version of the Bill.                                                                             
Public Testimony on HB 145 was concluded.                                                                                       
CSHB 145 (FIN) was heard and HELD in Committee for further                                                                      

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