(a) A protected person is not individually liable for conduct performed within the scope of the person's duties for the agency. However, the protected person may be held individually liable for conduct if it was not reasonable for the person to believe that the conduct was in, or not contrary to, the best interests of the agency.

(b) Unless prohibited by the agency agreement, the agency shall indemnify a protected person who is or may be made a party to a contested matter arising out of acts or omissions within the scope of the person's duties for the agency against expenses actually and reasonably incurred in connection with the contested matter. However, the agency may not indemnify the protected person if the person did not reasonably believe the conduct to be in, or not opposed to, the best interests of the agency. With respect to a criminal action or proceeding, the agency shall indemnify a protected person unless the person had reasonable cause to believe that the conduct was unlawful.

(c) An agency may purchase and maintain insurance on behalf of a protected person against liability asserted against the protected person and incurred in an official capacity or arising out of the person's status.

(d) In this section,

(1) “agency” means a joint action agency formed under AS 42.45.310;

(2) “conduct” includes action, inaction, and omission;

(3) “contested matter” means a proposed, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative;

(4) “expenses” include attorney fees, judgments, fines, and amounts paid in settlement;

(5) “protected person” means a director, officer, employee, or agent of an agency.