Legislature(2007 - 2008)HOUSE FINANCE 519

02/19/2008 01:30 PM House FINANCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 267 WILDLIFE VIOLATOR COMPACT TELECONFERENCED
Moved CSHB 267(RES) Out of Committee
+ HB 193 POLICE STANDARDS COUNCIL MEMBERSHIP TELECONFERENCED
Heard & Held
+= HJR 2 CONST.AM:NO GAMING WITHOUT VOTER APPROVAL TELECONFERENCED
Scheduled But Not Heard
<Teleconference Listen Only>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 65 PERSONAL INFORMATION & CONSUMER CREDIT TELECONFERENCED
Moved CSHB 65(FIN) Out of Committee
HOUSE BILL NO. 65                                                                                                             
                                                                                                                                
     "An  Act  relating  to breaches  of  security  involving                                                                 
     personal  information, credit  report  and credit  score                                                                 
     security  freezes,  consumer credit  monitoring,  credit                                                                 
     accuracy,  protection of  social security numbers,  care                                                                 
     of  records,   disposal  of  records,   identity  theft,                                                                 
     furnishing  consumer credit  header information,  credit                                                                 
     cards, and  debit cards, and to the jurisdiction  of the                                                                 
     office of administrative hearings; amending Rule 60,                                                                     
     Alaska Rules of Civil Procedure; and providing for an                                                                    
     effective date."                                                                                                         
                                                                                                                                
1:41:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA, SPONSOR,  spoke on behalf of himself and                                                                   
co-sponsor   Representative  John   Coghill   and  made   two                                                                   
clarifications regarding HB 65  for the record. He began with                                                                   
AS.45.48.030,  Methods of  Notice  (page 3).  When a  company                                                                   
realizes  that they  have released  financial information  to                                                                   
the public, whether  by accident or on purpose,  this section                                                                   
requires  that   the  company   tell  the  people   affected.                                                                   
Notification  must take place  through a  letter sent  to the                                                                   
most recent known  address. He said one of  the companies had                                                                   
asked if they would have to keep  trying to notify a consumer                                                                   
if  the address  was  wrong.  Representative  Gara said  that                                                                   
under  the standard  in the bill,  the company  has to  write                                                                   
once. They don't have to keep sending the letter.                                                                               
                                                                                                                                
Representative  Gara clarified  the second issue,  45.48.410,                                                                   
Request and Collection (page 17).  This section bans a person                                                                   
or company from selling, trading  or making money from Social                                                                   
Security  Numbers (SSN).  However,  there  are situations  in                                                                   
which  the  bill  allows  use  of  SSNs.  He  said  the  most                                                                   
important  exception is  in  45.48.410(b)(6).  A company  can                                                                   
always use an SSN  if they are not making money  by using it,                                                                   
if it has no independent value,  or if it is part of a larger                                                                   
transaction such  as a credit check  or if the SSN  is needed                                                                   
to verify identity for debt collection or to prevent fraud.                                                                     
                                                                                                                                
1:43:49 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  thought a Social  Security card  was never                                                                   
intended to  be used  as identification. Representative  Gara                                                                   
said  the  sponsors  agreed.  They  did  not  want  companies                                                                   
demanding  that  people  use  their  SSN  for  identification                                                                   
purposes; however,  there is also no ban on it  being used as                                                                   
identification.                                                                                                                 
                                                                                                                                
Co-Chair Meyer asked if there were amendments to the bill.                                                                      
                                                                                                                                
Representative Nelson MOVED to  RESCIND previous action taken                                                                   
on Amendment  #3, 25-LS0311\K.2, Bannister, 2/07/08  (Copy on                                                                   
File). There being NO OBJECTION, the action was rescinded.                                                                      
                                                                                                                                
Representative Nelson  read Amendment #3, which  deletes "the                                                                   
disclosure of permanent fund dividend  applicant records" and                                                                   
all  references  to  the  same  in the  bill.  She  said  the                                                                   
provision was put  in by the Judiciary Committee.  The battle                                                                   
to not allow  the Dividend Corporation to give  out applicant                                                                   
information was  fought for years  and won; she did  not want                                                                   
the issue slipped into a bill  that is going the other way in                                                                   
terms of providing information.                                                                                                 
                                                                                                                                
AT EASE        1:47:05 PM                                                                                                     
RECONVENE      1:51:36 PM                                                                                                     
                                                                                                                                
Co-Chair Meyer called for questions on Amendment #3.                                                                            
                                                                                                                                
Representative  Nelson  MOVED  to  ADOPT  Amendment  #3,  25-                                                                   
LS0311\K.2, Bannister, 2/07/08 (Copy on File).                                                                                  
                                                                                                                                
     Page 1,  Line 1, deleting  "the disclosure  of permanent                                                                   
     fund  dividend  applicant  records,";  Page  2,  Line  4                                                                   
     through Page 3, Line 18,  deleting all material and then                                                                   
     renumber the following bill  sections accordingly:  Page                                                                   
     29,  Line 17,  deleting "sec.  5",  inserting "sec.  3";                                                                   
     Page  29, Line 21,  deleting "sec.  5", inserting  "sec.                                                                   
     3";  Page  29, Line  24,  deleting "sec.  5",  inserting                                                                   
     "sec.  3";   Page  29,  Line  26,  deleting   "sec.  6",                                                                   
     inserting "sec. 4".                                                                                                        
                                                                                                                                
Representative Hawker OBJECTED.                                                                                                 
                                                                                                                                
LORI DAVEY,  PRESIDENT, MOTZNIK  INFORMATION SERVICES,  spoke                                                                   
in  opposition to  Amendment #3.  Her company  had access  to                                                                   
Fund Dividend  (PFD) information  before  2004. She said  the                                                                   
loss of access to PFD information  has made it more difficult                                                                   
for  title  companies,  banks and  attorneys  to  effectively                                                                   
differentiate  people, especially those  with the  same name.                                                                   
Motznik is not asking to have  the same access to information                                                                   
as they had  before 2004, when anyone could  download the PFD                                                                   
file off  the State's website  into a database. She  said the                                                                   
amendment introduced into Judiciary  gives access only to the                                                                   
name,  mailing address  and year  of  birth, not  to SSNs  or                                                                   
information   for  people   under  18   years  of  age.   The                                                                   
information will be used to effectively  differentiate people                                                                   
and serve due process.                                                                                                          
                                                                                                                                
1:54:47 PM                                                                                                                    
                                                                                                                                
Ms.  Davey  explained  that  when   Motznik  does  background                                                                   
screening for  employment or housing,  they can get  name and                                                                   
date of birth from a criminal  file and other public records.                                                                   
However,  if a  person  does  not vote,  own  a  car, have  a                                                                   
hunting or  fishing license or  show up anywhere else  in the                                                                   
public  record, there  is no  way to  differentiate a  person                                                                   
with a criminal record and no  other address information from                                                                   
someone else  with the same name.  She does not  consider the                                                                   
PFD information  they  are asking to  be re-disclosed  (name,                                                                   
address and year of birth) to be private information.                                                                           
                                                                                                                                
Representative  Nelson asked  how companies  in other  states                                                                   
find information when  they do not have access  to data bases                                                                   
like the  PFD. Ms.  Davey assumed  in other states  companies                                                                   
had more  access to tax records,  which are not  available in                                                                   
Alaska.                                                                                                                         
                                                                                                                                
Representative  Crawford referred to  a person with  his name                                                                   
and a mix-up  that resulted in Representative  Crawford's PFD                                                                   
check being taken  away. He understood both the  need to have                                                                   
access to  information and  to limit it.  He wondered  how to                                                                   
keep protecting people if access is re-opened.                                                                                  
                                                                                                                                
1:57:39 PM                                                                                                                    
                                                                                                                                
Ms. Davey  said the information  would be managed  similar to                                                                   
how it  is managed  in the  DMV, by  limiting the people  and                                                                   
companies  who  have access  to  the information.  There  are                                                                   
limited reasons why  the information can be  accessed. A form                                                                   
must  be signed  and  there  must  be verification  that  the                                                                   
business being  done is legitimate. The amendment  limits the                                                                   
access. She  described how  Motznik's system tracks  requests                                                                   
for information and keeps records indefinitely.                                                                                 
                                                                                                                                
Representative  Gara wondered what  records would be  used in                                                                   
states that  do not have  an income tax.  Ms. Davey  said she                                                                   
only  operates in  Alaska and  did  not know.  Representative                                                                   
Gara wondered if tax records were public in other states.                                                                       
                                                                                                                                
Representative  Gara  wondered  if the  most  recent  address                                                                   
information someone  could find  on someone they  were trying                                                                   
to do  harm would be the  PFD information. Ms.  Davey thought                                                                   
that potentially  DMV would  have updated information.  There                                                                   
are other means  as well, since voter information  is updated                                                                   
with the  PFD. For  most people  that information is  already                                                                   
available.                                                                                                                      
                                                                                                                                
2:00:43 PM                                                                                                                    
                                                                                                                                
Representative Gara voiced concerns  about giving out address                                                                   
information.  Ms.  Davie  answered   that  in  Alaska  it  is                                                                   
difficult  to   do  business   without  access  to   the  PFD                                                                   
information. Representative Gara reiterated his concerns.                                                                       
                                                                                                                                
2:02:27 PM                                                                                                                    
                                                                                                                                
Representative Hawker said he MAINTAINED his OBJECTION.                                                                         
                                                                                                                                
Representative Thomas asked if  the Division of Elections had                                                                   
the authority to use the PFD to update addresses.                                                                               
                                                                                                                                
MEGAN FOSTER,  STAFF, REPRESENTATIVE  LES GARA said  that she                                                                   
believed  they  did.  Representative  Hawker  had  asked  the                                                                   
Division of Revenue (DOR) the  same question recently and the                                                                   
answer was yes. Co-Chair Meyer  noted that DOR people present                                                                   
were nodding their heads.                                                                                                       
                                                                                                                                
Representative Thomas pointed  out that even if the amendment                                                                   
were voted  down, Elections  would still  have access  to the                                                                   
addresses.                                                                                                                      
                                                                                                                                
Representative Nelson  said she was happy to  be offering the                                                                   
amendment to delete  the provision. She did not  want to slip                                                                   
major changes into other legislation,  especially a bill like                                                                   
HB  65, which  tries  to  limit  access to  information.  She                                                                   
thought  if there  were  strong  support for  the  provision,                                                                   
there should  be a stand-alone  piece of legislation  so that                                                                   
it could be discussed on its own.                                                                                               
                                                                                                                                
2:05:01 PM                                                                                                                    
                                                                                                                                
A roll call vote  was taken on the MOTION to  ADOPT Amendment                                                                   
#3.                                                                                                                             
                                                                                                                                
IN FAVOR: Nelson, Stoltze, Thomas, Crawford, Gara                                                                               
OPPOSED: Kelly, Hawker, Chenault, Meyer                                                                                         
                                                                                                                                
Representative Harris was absent from the vote.                                                                                 
                                                                                                                                
The MOTION PASSED (5/4).                                                                                                        
                                                                                                                                
Vice-Chair  Stoltze  asked if  Amendment  #4,  25-LS0311\K.1,                                                                   
Bannister,  1/30/08  (Copy on  File),  which  had passed  the                                                                   
previous day, was superfluous. Co-Chair Meyer said yes.                                                                         
                                                                                                                                
AT EASE        2:06:34 PM                                                                                                     
RECONVENE      2:07:16 PM                                                                                                     
                                                                                                                                
Co-Chair Meyer referred to new  fiscal note for $2 million by                                                                   
the  Department of  Administration,  new fiscal  note by  the                                                                   
Department of  Revenue and new  indeterminate fiscal  note by                                                                   
the Office of Budget and Management.                                                                                            
                                                                                                                                
Representative  Hawker  wanted   an  explanation  of  the  $2                                                                   
million fiscal note.                                                                                                            
                                                                                                                                
2:08:15 PM                                                                                                                    
                                                                                                                                
KEVIN    BROOKS,   DEPUTY    COMMISSIONER,   DEPARTMENT    OF                                                                   
ADMINISTRATION   (DOA),   gave  information   regarding   the                                                                   
Department's fiscal  note. He explained that  since the State                                                                   
was the  victim of a  security breach  in 2005, DOA  had been                                                                   
requesting funds to strengthen  data security. The Department                                                                   
replaced switches  and routers on the network  and took other                                                                   
measures to  secure the hardware  and infrastructure.  The $2                                                                   
million  requested   in  the   fiscal  note  would   pay  for                                                                   
encryption of data  so the various state data  bases would be                                                                   
protected in the event of another breach.                                                                                       
                                                                                                                                
Representative  Hawker   asked  what  the   $1,765.600  under                                                                   
"equipment" in  the fiscal note  was for. Mr.  Brooks replied                                                                   
that the budget was for both hardware  and software. Software                                                                   
is included in equipment when the amount needed is large.                                                                       
                                                                                                                                
Representative  Hawker asked  for  clarification. Mr.  Brooks                                                                   
replied  that  the  $2 million  in  the  FY  09 budget  is  a                                                                   
continuation that would complete  and implement a double fire                                                                   
wall to put around all public  facing servers. The $2 million                                                                   
in the  capital budget completes  the implementation  of that                                                                   
as well  as a network  admission control.  He added  that the                                                                   
detail is  in the Capitol budget,  but they are  separate and                                                                   
distinct projects. The only similarity is the amount.                                                                           
                                                                                                                                
2:11:20 PM                                                                                                                    
                                                                                                                                
Representative  Hawker  stated  that  he  believed  that  the                                                                   
Legislature is  only beginning  to see the requested  funding                                                                   
to  deal  with  data  security  in  Alaska.  He  pointed  out                                                                   
previous funding adding up to  approximate $16 million listed                                                                   
on the  second page  of the fiscal  note. He voiced  concerns                                                                   
regarding long term planning.                                                                                                   
                                                                                                                                
Mr. Brooks  agreed  but wanted  to list every  dime that  has                                                                   
gone into  security. He  said there is  money in  the capital                                                                   
budget for the  proposed project and that the  Department did                                                                   
have a  five year  plan. The encryption  budgeted is  in that                                                                   
plan. He emphasized that the encryption  needed to be done as                                                                   
soon as  possible;  HB 65 points  to the  urgency to  encrypt                                                                   
data.                                                                                                                           
                                                                                                                                
2:14:33 PM                                                                                                                    
                                                                                                                                
Representative Hawker emphasized  that he was not arguing the                                                                   
merits of  encryption. He wondered  if HB 65 places  a burden                                                                   
of  responsibility on  the State.  Mr.  Brooks answered  that                                                                   
from the Department's perspective,  the State is treated like                                                                   
any other  keeper of data. The  State is not in  the business                                                                   
of  making profit  from  the data  but  still keeps  enormous                                                                   
amounts of personal data.                                                                                                       
                                                                                                                                
Representative  Gara clarified  that  HB 65  did not  require                                                                   
data encryption,  although it is  a good, safe  practice. Mr.                                                                   
Brooks agreed that HB 65 did not  require encryption, but DOA                                                                   
believes  encryption is  a prudent  thing to  do in light  of                                                                   
penalties in place in the bill.                                                                                                 
                                                                                                                                
Representative  Hawker  asked  what  penalties  HB  65  would                                                                   
impose upon state  employees or the State itself.  Mr. Brooks                                                                   
answered  that  state  employees  would be  covered  under  a                                                                   
public  officials  bond,  so   there  would  be  no  personal                                                                   
liability.  However, the  bill  has been  amended to  include                                                                   
actual economic  damages caused in  a breach. There  are also                                                                   
costs  to notify.  He acknowledged  positive amendments  that                                                                   
will enable  mass notifications,  but  thought the State  had                                                                   
vulnerabilities that other companies  did not have because of                                                                   
the amount of personal data the State maintains.                                                                                
                                                                                                                                
2:17:17 PM                                                                                                                    
                                                                                                                                
Representative  Hawker reiterated  concerns about the  fiscal                                                                   
note and the enormity of data security issues.                                                                                  
                                                                                                                                
2:18:11 PM                                                                                                                    
                                                                                                                                
Mr. Brooks agreed that the State  will need to be diligent in                                                                   
security efforts,  as the level of sophistication  of hackers                                                                   
is growing.                                                                                                                     
                                                                                                                                
Co-Chair Meyer  pointed out that  the new fiscal note  by the                                                                   
Department of  Revenue was deleted  because Amendment  #3 had                                                                   
passed.                                                                                                                         
                                                                                                                                
Vice-Chair  Stoltze MOVED  to  report CSHB  65  (FIN) out  of                                                                   
Committee  with  individual  recommendations   and  with  new                                                                   
fiscal  note by  the  Department  of Administration  and  new                                                                   
indeterminate note  by the Office  of Management  and Budget.                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CS  HB  65 (FIN)  was  REPORTED  out  of Committee  with  "no                                                                   
recommendation"  and with new  fiscal note by  the Department                                                                   
of Administration  and new indeterminate  note by  the Office                                                                   
of Management and Budget.                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects