Legislature(2003 - 2004)
05/09/2003 02:10 PM House FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 limited. 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 successful. 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 consideration. 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 matters. 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 th 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 industry. 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, th 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 consideration.