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Bill aims at project-delaying litigation Rep. Eric Feige seeks bonds from litigants requesting injunctions against development projects; House bill now in Senate Judiciary Stefan Milkowski For Petroleum News
In an effort to forestall costly delays to resource development projects, Rep. Eric Feige of Chickaloon is pushing legislation requiring litigants to post bonds covering the cost of lost wages to employees and subcontractors.
“HB 168 seeks to impose a penalty on frivolous suits,” Feige wrote in a sponsor statement. “By requiring a bond to be posted in the event of a stay or injunction, the cost to the party bringing the suit is increased. … This bill seeks to level the legal playing field without infringing on any parties (sic) right to bring a legitimate issue to court.”
The bond requirement would apply to cases involving an “industrial operation,” defined as “construction, energy, or timber activity and oil, gas, and mineral exploration, development, and production.”
HB 168 breezed through the House Judiciary Committee last year and passed the House 33-6. It has the support of the Resource Development Council, the Council of Alaska Producers, the Teamsters, and the Alaska State Chamber of Commerce, which has named judicial reform one of three top legislative priorities. The bill also has the support of Gov. Sean Parnell.
‘Skin in the game’ Advocates say requiring litigants to have “skin in the game” would discourage groups from suing just to slow projects down and would encourage active involvement early in the permitting process.
“Examples of ideologically-based challenges abound throughout Alaska,” wrote RDC’s Carl Portman in testimony on the bill. “The timber industry in Southeast Alaska would be in better shape today if a bond was required before timber sales are enjoined.”
Mike Satre of the Council of Alaska Producers testified that the bill would force litigants to recognize the financial implications of their actions and would provide security for Alaskan workers.
Feige testified that he sees HB 168 as a “jobs bill.”
The bill moved out of the Senate Labor and Commerce Committee on March 20.
It had its first hearing in the Senate Judiciary Committee on April 11.
Permitting impact? Committee Chair Sen. Hollis French questioned whether the bill would affect Alaska’s ability to assume permitting primacy from the federal government, by making access to the courts more restrictive in Alaska than federally. He said Gov. Jon Huntsman had vetoed a similar bill in Utah out of concern that it would affect permitting primacy there.
Feige said he didn’t think the bill would affect primacy, and he offered intent language to that effect.
French also questioned whether the problem was really as Feige describes. In his sponsor statement, Feige mentioned “several cases” where courts have issued stays or injunctions that delay projects and curtail jobs. In testimony, he mentioned the halted construction of the Pogo Mine in 2004 and an injunction against Shell’s offshore drilling project, which he said directly cost him a job.
But those projects all dealt with federal permits, and no one offering public testimony at the April 11 hearing could point to a case in state court where an injunction was later found to be misguided. “The question I keep asking is, Are we doing something wrong that we need to fix?” said French.
In an interview after the hearing, Feige said because companies have so much to lose by an injunction, they often reach settlements. “A lot of stuff never makes it to the court system,” he said.
Asked if there were future projects where HB 168 might apply, Feige mentioned the Wishbone Hill coal project near Palmer.
Feige contends that judges are already directed to require bonds from litigants for the cost of damages, and that HB 168 simply directs them to include in their consideration the cost of lost wages to employees and subcontractors. He says judges would still have wide discretion, and that the bill does not change court rules, which would require a two-thirds vote in the Legislature.
Betting on successful outcome At the Judiciary hearing, critics argued the bill would not affect frivolous lawsuits, which they said a judge would simply dismiss. Instead, it would force litigants with legitimate claims to bet — potentially millions of dollars — on the successful outcome of their cases. “This punishes only Alaskans who bring the strongest cases to court,” said Andy Moderow of the Alaska Conservation Alliance.
Tom Waldo, an attorney with Earth Justice, claimed the bill was unconstitutional.
Kathie Wasserman of the Alaska Municipal League expressed concern that municipalities might have to post bonds, but Feige assured the committee that the state and municipalities would not be required to post bonds.
In a House Judiciary hearing last April, a lawyer with the Alaska Court System testified that nothing would require a company receiving money for lost employee wages to give the money to the workers.
“None of us viewed it as something to hang the bill up on,” Feige said later, adding that a reasonable employer would distribute the money.
French held the bill in committee.
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