Legislature(2007 - 2008)CAPITOL 120
04/25/2007 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB187 | |
| HB207 | |
| HB217 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 225 | TELECONFERENCED | |
| + | HB 217 | TELECONFERENCED | |
| + | HB 207 | TELECONFERENCED | |
| += | HB 213 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 187 | TELECONFERENCED | |
HB 217 - TOURISM DISCLOSURES AND NOTICES 2:33:12 PM CHAIR RAMRAS announced that the final order of business would be HOUSE BILL NO. 217, "An Act relating to required onboard disclosures and displays about tours, flightseeing operations, other shoreside activities, and visitors bureaus; and providing for an effective date." [Before the committee was CSHB 217(EDT), and included in members' packets was a proposed committee substitute (CS) for HB 217, Version 25-LS0696\V, Bannister, 4/19/07.] CHAIR RAMRAS relayed that he has a potential conflict of interest because of his close economic association with the cruise ship industry, and that he has submitted a written request for an advisory opinion from the Select Committee on Legislative Ethics regarding his participation in the legislative process as it relates to HB 217. CHAIR RAMRAS then turned the gavel over to Vice Chair Dahlstrom. 2:35:01 PM REPRESENTATIVE HOLMES made a motion to adopt the proposed committee substitute (CS) for HB 217, Version 25-LS0696\V, Bannister, 4/19/07, as the work draft. There being no objection, Version V was before the committee. REPRESENTATIVE HOLMES, speaking as the sponsor, relayed that HB 217 will address some unintended consequences of [the recently passed ballot initiative regarding cruise ship taxation, regulation, and disclosure], specifically with regard to the provisions pertaining to disclosure; HB 217 proposes to mitigate those unintended consequences while maintaining the ballot initiative's intent as described in the voter information pamphlet to provide for real disclosure and consumer protection. Version V provides for disclosure additional to that which was required by the ballot initiative. REPRESENTATIVE HOLMES relayed that Version V addresses the tours that are sold on board a cruise ship, and requires four levels of disclosure. When a tour is being sold on board a cruise ship by somebody who is aboard the cruise ship, he/she must disclose, both orally and in writing, that the sale is a paid promotion - a commission is being paid - and that there may be other alternatives available at the port of call; must provide information regarding visitors bureaus in the ports of call - including the physical address, web site address, and telephone number; and, if the commission exceeds 25 percent of the total sale price, must disclose that information as well. REPRESENTATIVE HOLMES said Version V maintains the ballot initiative's requirements that all of the aforementioned information be disclosed both orally and in writing and that the written information be in 14-point off-color font. Under the language of the ballot initiative, the only information that had to be disclosed was the exact dollar amount of the commission, but the problem with that is that one would be able to use that information to calculate the tour's actual price as charged by the vendor, and this puts tour companies at a competitive disadvantage. VICE CHAIR DAHLSTROM asked why 25 percent was chosen as the threshold. REPRESENTATIVE HOLMES explained that 25 percent was chosen as being a commission high enough that the consumer would want to know about it. In response to another question, she clarified that under both the ballot initiative and HB 217, either the amount of the commission or the percentage of the total price the commission constituted had to be disclosed; that under CSHB 217(EDT), only the fact that the percentage of the commission exceeded 33 percent had to be disclosed; and that under Version V, only the fact that the percentage of the commission exceeded 25 percent has to be disclosed. 2:43:07 PM CHIP THOMA, after relaying that he has been involved in issues related to cruise ships for a number of years, said that he supports Version V of HB 217. Version V removes specificity regarding the amount of commissions, thereby giving all tour vendors a level playing field; he opined that that is what the voters wanted. He noted that 81,000 people voted "yes" on the ballot initiative, which included disclosure provisions for the benefit of consumers - the passengers aboard the cruise ships. MR. THOMA relayed that extensive testimony in the House Special Committee on Economic Development, International Trade and Tourism indicated that for at least one tour vendor, 70 percent of his shore excursion customers "come to him" via the company's web site. Thus, Mr. Thoma surmised, the current problems related to having sufficient disclosure on the cruise ships will be decreasing as time goes on because fewer passengers will be purchasing such excursions while on board the cruise ships. He characterized this required disclosure as good because it will give consumers more information. He cautioned against providing an exemption from these disclosure provisions for those cruise ship companies that use private docks, noting that most of the ports currently being used by cruise ships in Alaska also have private docks associated with them. MR. THOMA, in conclusion, said he supports Version V, and urged the committee to forward the legislation. 2:46:27 PM REPRESENTATIVE SAMUELS asked whether other entities selling shore excursions need to disclose information about the commissions they receive or whether commissions earned in other industries need to be disclosed. MR. THOMA said not to his knowledge, with the exception of real estate commissions. REPRESENTATIVE SAMUELS characterized the commission disclosure provision in Version V as being better than what was provided for via the ballot initiative, but expressed concern, however, that requiring disclosure about commissions will affect the marketplace in unintended ways. MR. THOMA pointed out that the disclosure provision in Version V only applies to tours sold on cruise ships. According to testimony heard in a prior committee, he relayed, the cruise ship, not the tour vender, determines what the commission will be. REPRESENTATIVE SAMUELS said he would prefer to call it a "markup" rather than a commission, and offered his belief that companies will mark up the price of something as much as they can get away with. Referring to the language in paragraph (2) of Section 1 - "other alternatives at different prices and with different features" - he questioned whether companies paying different insurance premiums, for example, are really selling the same product. "How much detail on a business deal do you want to get involved with," he asked. MR. THOMA said none. REPRESENTATIVE SAMUELS argued that that is exactly what is occurring via the bill's disclosure provisions, adding that there can be a world of difference between companies and what they provide even if they are seemingly selling the same product. He expressed disfavor with the concept of requiring cruise ships to promote businesses they don't like. MR. THOMA pointed out that with regard to the commission disclosure provision, [only the fact that a commission is more than 25 percent of the total cost of the tour] will be disclosed, reiterating that this provision only pertains to tours sold on board cruise ships. REPRESENTATIVE SAMUELS reiterated his argument that cruise ships will be forced to advertise tour companies they don't approve of. MR. THOMA offered his understanding that cruise ships won't be required to advertise other tour companies, merely that the cruise ships will be required to disclose that other options may be available. REPRESENTATIVE HOLMES concurred with that summation. REPRESENTATIVE SAMUELS characterized that as "advertising" nonetheless. 2:53:58 PM STEVEN HITES, Owner, Skagway Street Car Company, Inc., after relaying that his company offers sightseeing tours in Skagway and has been doing so for 21 years, and that over 40 percent of his company's business is "sold on the ship," expressed support for HB 217. Referring to the language in paragraph (1) of Section 1 - "that the onboard sale is a paid promotion by a shoreside vendor" - he offered his belief that the intention of this provision is to [promote] disclosure and the truth. However, he pointed out, the truth is that the term "paid promotion" is not correct: "we don't pay the cruise line anything, there is no promotion, this is actually confused with an onboard shopping program that ... [existed prior]; the ship is a store, they buy wholesale products from us and pay us for what ... they sell." He suggested, therefore, that the language be changed to, "that the onboard sale is a retail-wholesale relationship between the vessel operator and shoreside vendor". 2:55:55 PM CHAIR RAMRAS said he would be introducing an amendment that will address that concern, agreeing that the term, "paid promotion" is inaccurate, and offered an example of a retail-wholesale relationship he was familiar with. MR. HITES said he also supports having the language in paragraphs (2) and (3) of Section 1 remain the same because that language accurately reflects the relationship and the situation. With regard to paragraph (4) of Section 1, he said that if the goal is to have the disclosure be truthful, then the word "commission" is not really accurate because what is actually happening is that a wholesale product is being marked up by a retailer, and although that markup can be expressed as a percentage of the retail price, "the '25 percent' is not accurately portraying the universe and the marketplace." He went on to say: I have a tour sold by a major cruise line that has early- and late-season sale pricing offered ... in the shoulder season ... - both ... spring and fall. They sell this tour of mine for 10 percent less than they do in the height of the season. They lower their retail price to move more of my product - I'm basically a volume seller of product to a store. The result is that they sell my tour for what is essentially only a 10 percent markup. This is a fact. Therefore, my point is, I know of no other retail business that is required by Alaska state law to disclose the percentage of a retail markup. Can any of you name one? If so, we are putting an arbitrary number here. If you absolutely have to, then, for heaven sakes please make it a number [that's] as low as possible because the lower the number the more you disclose the truth, because it's not that relationship at all. MR. HITES then referred to the language on page 1, line 8 - "both orally and in writing" - and said that thousands of his company's sales are made online, and since current technology allows tickets to be printed and delivered to the passenger without him/her ever seeing the crewmember delivering the ticket, it would make more sense for the language to be changed to, "orally or in writing". CHAIR RAMRAS indicated that there is a proposed amendment that will address that specific concern. MR. HITES, in conclusion, offered that time is of the essence given that the first cruise ship is scheduled to come to Alaska on May 5th, opined that the legislature does have a legal right to amend an initiative, and asked that some form of HB 217 be passed from committee on to the House [floor]. 3:01:27 PM ROBERT WYSOCKI, President & CEO, Huna Totem Corporation, offered that Icy Straight Point is a private port - a private destination on private property where guests disembark, embark, and take most of the tours on the corporation's property. This is a very different model than any other Southeast Alaska port, he opined, adding that only one ship at a time docks at Icy Straight Point, all of the port's assets are owned by Huna Totem Corporation, and there is no outside investment. He went on to say: We focus a lot on nature, culture, and history in a different way than every other port. As a private destination, we had to invest millions and millions of dollars to create the destination. Again, the port is not the City of Hoonah - it's Icy Straight Point - and we had to invest heavily in creating an attraction and set of tours that would attract cruise guests. MR. WYSOCKI said that the only way the corporation recovers its substantial investment is through tour revenue, and so it's very critical that the corporation experience a very high volume of tourists, and with substantial enough margins, in order to be able to recoup its investment and survive. He explained that the ballot initiative addresses two points that don't actually apply to the corporation: one, there are no independent tours being offered at Icy Straight Point, and, two, there is no convention and visitors bureau there. He then mentioned that this year, for this project, the corporation will bring in over $1.5 million to the community of Hoonah; with the decline in fishing and logging revenues, the Icy Straight Point project is considered to be the economic engine of Hoonah. MR. WYSOCKI relayed that this coming year, it is estimated that over 15 percent of all cruise ship passengers that visit Alaska will come to Icy Straight Point. He said that the Huna Totem Corporation absolutely supports disclosing to guests its relationship with its cruise partners - "they are retailing our wholesale product." "Our cruise guests are on lines that had to take an extra risk with us in marketing and carrying a port that nobody knew about," he added; for the Icy Straight Point destination, cruise ship companies offer their expertise and do much more marketing on the corporation's behalf - "they earn every penny of their retail markup." The community of Hoonah is very supportive of Huna Totem Corporation's project. MR. WYSOCKI explained that the cruise ship lines have verified that the corporation is offering a quality product, is properly insured, will take proper care of their passengers, and that passengers will have recourse should something go wrong. Economic development in rural Alaska is very challenging, and those that are willing and able to pursue such development take a substantial risk and therefore deserve to be able to compete fairly. He opined that although the intent of the ballot measure was to provide for community involvement and to allow convention and visitors bureaus to "spread around" competition, the Huna Totem Corporation is in an entirely different situation. In conclusion, he asked the committee to consider the concerns of his corporation as HB 217 proceeds through the process. MR. WYSOCKI, in response to questions, offered his understanding that although Icy Straight Point is currently the only such private port - private destination - another one is "in the works" for Southeast Alaska. CHAIR RAMRAS indicated that there is a proposed amendment that will address Mr. Wysocki's concern. 3:08:27 PM DENNIS DeWITT, State Director, National Federation of Independent Business (NFIB), relayed that the NFIB supports HB 217 as being better than current statute, appreciates the work done on the bill, but concurs with some of the concerns expressed earlier. He opined that it is important that cruise ships not be required to list the names of other tour vendors that might be offering similar tours, and expressed favor with Version V's language that requires a cruise ship line to notify passengers that there might be other alternatives available at different prices - not that the other alternatives will be available at lower prices. He relayed that the NFIB does have concern, however, that Version V has reduced the commission disclosure threshold to 25 percent; the NFIB instead supports the 33 percent threshold provided for in CSHB 217(EDT). MR. DeWITT opined that even Version V of HB 217 is substantively better than current law. The NFIB is anxious to see the aforementioned amendment regarding retail-wholesale language, he said, adding that he has never shopped with an eye towards what the retailer's markup rate is; rather, he shops with an eye towards what the retailer's retail price ultimately is. He offered his belief that the notion that sharing information about the difference between retail and wholesale price is helpful to the consumer has not been substantiated in the marketplace. In conclusion, he too said that time is of concern given that the cruise ship season is about to start. 3:11:46 PM JOSEPH W. GELDHOF relayed that he is one of the joint prime sponsors of the aforementioned ballot initiative pertaining to cruise ship taxation, regulation, and disclosure. He acknowledged that what he and his co-sponsor intended in sponsoring the ballot initiative has very little legal weight in terms of legislative intent, adding his belief that the only legitimate legislative intent that the courts would be looking at would be encompassed in the initiative's transmittal letter to the lieutenant governor. Also acknowledging that the legislature has the authority to amend a law adopted via ballot initiative, he opined that in this instance, the legislature should change the law that he helped write and enact. He elaborated by saying that the shoreside vendors in Alaska have articulated a concern which a lot of people who worked on the initiative believe should be corrected. How that concern gets addressed has been the source of a lot of heated discussion, but the goal of telling Alaskans that deliver flightseeing tours that they don't have to have the cruise ships disclose the commission that they receive, or the amount of the commission, is worthy of pursuing. MR. GELDHOF said that Representative Holmes is to be commended for working through this issue and coming up with what he characterized as a realistic amendment - a compromise - to the current law that will work in the real world. He also pointed out that the president of Princess Tours, Charlie Ball, has been helpful in attempting to marshal support among those in the tour industry with various view points, and opined that Mr. Ball's views ought to be considered by the legislature. Mr. Geldhof concurred that there should be a threshold for commission disclosure, whether that threshold is 10 percent or higher, and that there should be disclosure regarding the fact that there are alternatives to particular tours available. On that point, he suggested that convention and visitors bureaus be responsible for listing specific alternatives, not the cruise ship industry. He also suggested that the committee change the penalty for violation from $100 to $1,000. Mr. Geldhof offered his belief that Mr. Ball would accept those changes, and concluded by saying that HB 217 needs to passed and passed soon because local tour vendors need the relief proposed by the bill. CHAIR RAMRAS indicated that he disagrees with all the concepts embodied in the ballot initiative. MR. GELDHOF, in response to comments and a question, said he is not sorry to have included the disclosure provisions in the ballot initiative because he believes that markets work best when there is "as close as we can come to" perfect information being disclosed, and that such disclosure is particularly of benefit to the consumer. He added, "Our goal was not to set up an unworkable system that would punish or harm ...; it was to at least provide some information or cue consumers that there was a - frankly, in some cases, based on my knowledge - very significant commission." He offered that if one were to look at the mortgage-finance industry, for example, one would find that the federal government has required some form of disclosure regarding commission percentages. MR. GELDHOF, in response to a question regarding whether lawyers should be required to disclose the range of fees that they might charge different clients, said: I think there are many instances where - as a matter of good, sound public policy - consumers ... need to be cued that at the point of sale, the transaction costs are very high. And that's all we're trying to do, and I think Representative Holmes has come up with an approach that doesn't disclose the commission or the amount; ... [this approach] meets the needs of the vendors, here, but provides ... sort of perhaps a yellow flag in some situations that maybe there's reason to think that you might want to shop around. That's all we're saying. REPRESENTATIVE LYNN pointed out that as a licensed real estate broker, he is required by law to disclose his commissions, which are negotiable. VICE CHAIR DAHLSTROM, noting that constituents have told her that to alter the aforementioned ballot initiative would be to ignore the will of the people and that the people knew exactly what they were voting for, asked Mr. Geldhof how he would respond to constituents who demand that the legislature not alter the aforementioned ballot initiative. MR. GELDHOF suggested that legislators could simply respond by saying: We have preserved the spirit of disclosure - the requirements that consumers are protected - and we've avoided a situation where ... our local venders may have had to disclose information they were reluctant to [disclose because it] ... may have interfered with their contractual relationships or their financial relationships with a very large industry .... 3:26:42 PM JOHN DUNLAP, Manager, Allen Marine Tours, relayed that his company operates passenger vessels throughout Southeast Alaska and employs over 200 during the peak of the season, and that over 90 percent of his company's customers are cruise ship passengers. He said he believes that the disclosure language of Version V meets the intent of the voters better than the language in the ballot initiative, adding that he concurs with some of the points made earlier by prior speakers. He said he supports passage of HB 217 and the proposed amendments that have been referenced thus far. In conclusion, he thanked the sponsor for her work on the legislation. 3:28:41 PM FREDERIC DRAKE, Owner, Snorkel Alaska, said he supports HB 217, adding that 100 percent of his customers have come from cruise ship shore excursion sales. He mentioned that at one point he was employed by a cruise ship line as a shore excursion manager and so he is familiar with that aspect of the industry as well. His company really relies on the cruise ships' ability to promote his company's tours, he said, adding "we give them a net rate we're happy with, they go ahead and mark it up to whatever they want, but I'm in support of that because they go through all the marketing, they print all the brochures, they have web sites, [and] they handle all of our sales." In conclusion, he said that his company supports HB 217 as being a way to address the problems with the ballot initiative. 3:30:40 PM ROB SCHEER, Great Alaskan Lumberjack Show; Experience Alaska Tours, said he supports HB 217, Version V. Referring to the commission disclosure threshold, he explained that for his company's various products, it took about eight years to develop a price structure that allowed for a retail markup that warranted cruise line industry support of venders such as himself. Therefore, that provision of the bill could give some vendors an unfair market advantage and could result in dissuading passengers from participating in an excursion just because there is a markup in price. He said he supports lowering the commission disclosure threshold to 10 percent and notifying passengers that the tours are being offered as part of a wholesale-retail relationship. He surmised that such a low threshold would be triggered for almost all tours and so wouldn't create an unfair advantage for some vendors. In conclusion, he thanked the sponsor for her work on the bill, and offered his belief that the tour vendor industry does need relief from the problems raised by the ballot initiative. 3:35:04 PM RON PECK, President and Chief Operating Officer, Alaska Travel Industry Association (AlaskaTIA), relayed that over 80 percent of the AlaskaTIA's membership is made up of visitor-related businesses with less than 100 employees. He opined that as currently written, the ballot initiative requires disclosure of confidential business information and poses a significant threat to a single sector of the tourism business. He indicated that he is in support of HB 217, adding that the AlaskaTIA has [adopted] a resolution in support of the bill as well. Referring to page 1, line 13, he suggested that the word "or" replace the word "and", because not all visitors bureaus have "referral" offices on site at the dock. In conclusion, Mr. Peck said the AlaskaTIA supports Mr. Hites comments regarding the wholesale-retail relationship, and urges the committee to move forward with the bill given that the cruise ship season is about to start. 3:37:31 PM ALLAN TESCHE, Co-Owner, G Street House Bed and Breakfast, after noting that he sees hundreds of out-of-state visitors every year, many having come to Alaska on cruise ships, said he supports HB 217. He suggested, however, that members give further consideration to the word, "orally" as used on page 1, line 8, because a number of shore-based excursions are booked electronically onboard cruise ships, and so to require oral disclosure might prove cumbersome. With regard to the issue of the commission disclosure threshold, he surmised that it is up to the committee to determine what percentage that threshold should be, and that the original purpose of the ballot initiative was to provide passengers with the information that there is a markup in the price of the tours being offered on board the ship. MR. TESCHE surmised that the question is whether Alaskans and small businesses are better off with the original language of the ballot initiative or with the language currently in HB 217. He opined that the initiative's language will pit shore-based operators against each other because confidential business information will be disclosed, and will force passengers to base almost all their decisions regarding excursions on price alone. Currently operators of shore-based businesses can negotiate private agreements with cruise ship lines, but they will not be allowed to do so under the ballot initiative's language, he opined, adding that the language in HB 217 [Version V] requires cruise ships to inform passengers that a mark up in price exists but does not go so far as to require the disclosure of confidential information. MR. TESCHE, in response to the earlier question regarding how to respond to constituents who think changing a law adopted via ballot initiative is always a bad thing, suggested that legislators could respond by reminding constituents that ultimately the legislature is required to do the best job it can in implementing the will of the people and that the initiative's sponsors have indicated that there is a problem with the initiative's language. In conclusion, he surmised that the legislature is going to solve that problem in a way that still protects onshore operators, and again said he supports HB 217. 3:41:45 PM JOHN FERGUSON, JC Penney Company, Inc., opined that the requirements outlined in the ballot initiative fly in the face of normal, free market pricing, and sets a precedent that could infringe upon all retail operations in Alaska. A cruise ship company is no different than any other retail venue, be it in a shopping mall or in an open-air market; goods and services are purchased at the wholesale market and resold at the retail market for profit. That profit margin is proprietary information that is not disclosed to the public or to other competitors in the industry, and so to require the disclosure of that information destroys the market process and usurps free trade and fair pricing. In conclusion, he said he applauds the legislature's attempts, via HB 217, at correcting the flaws embodied in the ballot initiative. 3:43:39 PM BRUCE BUSTAMANTE, President and CEO, Anchorage Convention & Visitors Bureau (ACVB), after speaking a bit about his organization, relayed that the ACVB has passed a resolution in support of HB 217 because it views the disclosure language of the ballot initiative as being very damaging to Anchorage's independent businesses, both large and small. He concluded by saying that he appreciates the sponsor's efforts to address this issue, and urged passage of the bill. VICE CHAIR DAHLSTROM closed public testimony on HB 217. 3:46:21 PM CHAIR RAMRAS made a motion to adopt Amendment 1, which read [original punctuation provided]: P.2, L.2 Delete "25" insert "20" P.2, L.5 Delete "25" insert "20" CHAIR RAMRAS offered his belief that Amendment 1 will capture all vendors, putting them on equal footing, and still respects the intent of the ballot initiative. VICE CHAIR DAHLSTROM objected for the purpose of discussion. REPRESENTATIVE HOLMES said she does not feel strongly about the proposed change, but wouldn't want to go below a threshold of 20 percent. VICE CHAIR DAHLSTROM removed her objection, and announced that Amendment 1 was adopted. 3:47:26 PM CHAIR RAMRAS made a motion to adopt Amendment 2, which, along with handwritten changes, read [original punctuation provided]: P.1, L.8 - after "disclose" delete "both orally and in writing" insert "orally or in writing at the point of sale." CHAIR RAMRAS said that Amendment 2 will address situations involving tickets that are sold on board ship via the Internet wherein passengers never speak with the person delivering the tickets. He offered his belief that Amendment 2 will make commerce easier to execute while still respecting the will of the voters. REPRESENTATIVE LYNN objected for the purpose of discussion. 3:48:33 PM CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Anchorage), Department of Law (DOL), opined that Amendment 2 makes sense in that the language of the current statute was intended to require disclosure of commissions or paid promotions in an oral manner if the presentation [for the product] was given orally. And if the presentation [for the product] was only provided in a written format, then it would make sense to require the disclosure to be in writing as well. It would not make sense to require cruise ships to have someone waiting around to provide oral disclosure if there never was an oral presentation [of the product]. He mentioned that it would be his job to enforce the provisions of HB 217. REPRESENTATIVE LYNN asked whether it would be sufficient to have the written disclosure regarding commissions in the same place as the written disclosure regarding visitors bureaus. He questioned how one would prove that oral disclosure ever occurred. MR. SNIFFEN surmised that evidence of a lack of oral disclosure would have to come from the consumers, and acknowledged that confirming that an oral disclosure occurred can be problematic. REPRESENTATIVE LYNN pointed out that if consumers didn't know that oral disclosure was required, they wouldn't know to complain. REPRESENTATIVE HOLMES opined that if there is written material being presented, then the disclosure should also be in writing, and if the presentation is given orally, then the disclosure should also be given orally. She said she doesn't want to create extra work for cruise ship staff. REPRESENTATIVE LYNN suggested that all disclosure should be in writing. VICE CHAIR DAHLSTROM asked Representative Holmes whether she would be amenable to altering Amendment 2 to specify that disclosure [occur in the same fashion as the presentation]. REPRESENTATIVE HOLMES indicated that she would be. REPRESENTATIVE LYNN, in response to a question, reiterated that the disclosure should be in writing, and then, if someone wanted to provide oral disclosure as well, that would be fine, but written disclosure should be sufficient. CHAIR RAMRAS indicated that he would not be in favor of that amendment to Amendment 2. REPRESENTATIVE LYNN argued that other information must already be disclosed in writing and so there shouldn't be a problem with requiring additional written disclosure. REPRESENTATIVE LYNN expressed an interest in amending the language in the bill such that all disclosure occur in writing. 3:55:17 PM REPRESENTATIVE COGHILL surmised that Amendment 2 could be altered in that fashion. CHAIR RAMRAS [although no formal motion was made] said he would accept an amendment to Amendment 2 such that Amendment 2, as amended, would read: P.1, L.8 - after "disclose" delete "both orally and in writing" insert "in writing at the point of sale." [Amendment 2 was treated as amended.] CHAIR RAMRAS said he is assuming that if a ticket is slipped under the passenger's stateroom door, the written disclosure would be as well. REPRESENTATIVE LYNN opined that the passenger should see the written disclosure before the ticket is bought. CHAIR RAMRAS said, "Unless you bought it online." REPRESENTATIVE LYNN removed his objection. VICE CHAIR DAHLSTROM asked whether there were any other objections to [Amendment 2, as amended]. There being none, Amendment 2, as amended, was adopted. 3:57:14 PM CHAIR RAMRAS made a motion to adopt Amendment 3, which read [original punctuation provided]: P.1, L.8 after "future" insert "public" P.2, L.11 Insert a new Sec. 2 to read "For the purpose of this statute, a public port does not include a private destination resort." REPRESENTATIVE HOLMES objected. CHAIR RAMRAS explained that Amendment 3 would address the concern raised by Mr. Wysocki regarding Icy Straight Point. REPRESENTATIVE HOLMES said she would be maintaining her objection, and explained that although she is sympathetic to Mr. Wysocki's concern, Amendment 3 would exempt cruise ships from having to disclose anything about Icy Straight Point. She characterized the change proposed by Amendment 3 as overbroad, and offered her understanding that Version V already contains language that will address Mr. Wysocki's concern. CHAIR RAMRAS asked that Amendment 3 [be set aside]. There being no objection, [the motion was left pending]. 3:58:36 PM REPRESENTATIVE HOLMES made a motion to adopt Amendment 4, which read [original punctuation provided]: Page 2, line 12 Insert new section 2: "AS 45.50.474(c) is amended to read: (c) Each violation of this section constitutes an unfair trade practice under AS 45.50.471 [, AND SHALL RESULT IN A PENALTY OF NOT MORE THAN $100 FOR EACH VIOLATION]" Renumber as necessary VICE CHAIR DAHLSTROM objected for the purpose of discussion. REPRESENTATIVE HOLMES explained that Amendment 4 would address another unintended consequence resulting from the language of the ballot initiative. Prior to the adoption of the ballot initiative, violation of a statutory disclosure requirement constituted an unfair trade practice, and the penalties for such were already defined in statute, but the initiative attempted to attach a specific penalty, and thus confused what it applied to and how it worked and actually lowered the penalty. Amendment 4 returns the statutory language of AS 45.50.474(c) to what it was before the ballot initiative was passed. VICE CHAIR DAHLSTROM questioned whether, if Amendment 4 is adopted, it will take away the existing penalty. MR. SNIFFEN said that Amendment 4 is a good amendment from a couple of perspectives. Concurring that prior to the adoption of the ballot initiative, penalties for violations of the unfair trade practices Act were already statutorily provided for - penalties ranging from $1,000 to $25,000 - he noted that there had been some indication that the ballot initiative's reference to a $100 penalty should instead have been a reference to a $1,000 penalty. Under Amendment 4, just as under the prior law, the court would have the discretion to assess a penalty of between $1,000 and $25,000 depending on the nature of the violation. VICE CHAIR DAHLSTROM removed her objection, and asked whether there were any further objections. There being none, Amendment 4 was adopted. 4:01:28 PM REPRESENTATIVE HOLMES made a motion to adopt Amendment 5, which read [original punctuation provided]: Page 1, lines 9 to 10 Amend to read: "1) That the onboard sale results in a commission paid by the shoreside vendor;" Renumber as necessary VICE CHAIR DAHLSTROM objected for the purpose of discussion. REPRESENTATIVE HOLMES explained that Amendment 5 addresses the confusion resulting from the bill's current use of the term "paid promotion". REPRESENTATIVE COGHILL offered his understanding that the term "commission" also creates some confusion. REPRESENTATIVE HOLMES, after acknowledging that there is another proposed amendment forthcoming that addresses that language, withdrew Amendment 5. 4:02:47 PM REPRESENTATIVE HOLMES made a motion to adopt Amendment 6, which read: Page 1, line 5 Insert new section: "AS 45.50.474 is amended to read: (a) A person may not conduct a promotion on board a cruise ship that mentions or features a business in a state port that has paid something of value for the purpose of having the business mentioned, featured, or otherwise promoted, unless the person conducting the promotion clearly and fully discloses orally and in all written materials used in the promotion that the featured businesses have paid to be included in the promotion. If the value paid by the business is a commission of more than 10% of any single sale, the disclosure shall also state that more than a 10% commission is being retained by the person or entity making the promotion, and that other alternatives may be available at a port of call; and the disclosure shall provide the address, Internet website address, and telephone number of any existing visitors bureaus at each future port of call. All such written notice of disclosure shall be in a type that is not less than 14-point typeface and in a contrasting color calculated to draw attention to the disclosure. VICE CHAIR DAHLSTROM objected for the purpose of discussion. REPRESENTATIVE HOLMES explained that Amendment 6 would put tour sales occurring in shoreside stores on the same footing as tour sales occurring on board vessels, except that the commission disclosure threshold shall be 10 percent. In response to a question, she offered her understanding that Amendment 6 would not affect the 20 percent commission disclosure threshold established via Amendment 1 for onboard sales. VICE CHAIR DAHLSTROM removed her objection, and asked whether there were any further objections. There being none, Amendment 6 was adopted. REPRESENTATIVE COGHILL noted that the existing statutory language being added to by Amendment 6 still makes reference to oral disclosure, and suggested that perhaps some conforming changes might need to be made. REPRESENTATIVE HOLMES acknowledged that point. 4:04:24 PM CHAIR RAMRAS made a motion to adopt Amendment 7, which read [original punctuation provided]: P.1, L.9-10 Delete "paid promotion by a shoreside vendor" and insert "retail/wholesale relationship between the vessel operator and the shoreside vendor." REPRESENTATIVE HOLMES objected for the purpose of discussion. She said she likes Amendment 7 because it more accurately reflects the relationship that exists, though it doesn't reflect that money is being retained by the cruise line. REPRESENTATIVE HOLMES made a motion to amend Amendment 7 such that the words, "that results in a percentage of the sale retained by the cruise line" would be added after the word, "vendor". There being no objection, Amendment 7 was amended. REPRESENTATIVE HOLMES removed her objection to Amendment 7, as amended. VICE CHAIR DAHLSTROM asked whether there were any further objections. There being none, Amendment 7, as amended, was adopted. 4:06:39 PM CHAIR RAMRAS turned attention back to Amendment 3 [text provided previously], and said that Icy Straight Point is a private port with nothing else available in the area; when a cruise ship docks at Icy Straight Point, "it is the tour." REPRESENTATIVE HOLMES objected, and again offered her understanding that language currently in Version V will take care of the concern raised by Mr. Wysocki regarding Icy Straight Point. Specifically, language on page 1, line 14, says that information about "existing visitors bureaus" shall be disclosed; this language should ensure that disclosure regarding visitors bureaus shall not be required at ports where no visitors bureau exists. MR. SNIFFEN concurred with Representative Holmes's summation. CHAIR RAMRAS pointed out that even still a problem could arise for Icy Straight Point if the City of Hoonah is deemed to be the port of call. REPRESENTATIVE LYNN noted that testimony indicated that there might be other private ports established in the future, and so any exception carved out for Icy Straight Point would also have to be applied to them. REPRESENTATIVE HOLMES reiterated her belief that the concern regarding Icy Straight Point has already been addressed via Version V of the bill. 4:09:34 PM A roll call vote was taken. Representatives Coghill and Ramras voted in favor of Amendment 3. Representatives Holmes, Gruenberg, Dahlstrom, and Lynn voted against it. Therefore, Amendment 3 failed by a vote of 2-4. CHAIR RAMRAS again declared a possible conflict of interest. REPRESENTATIVE LYNN objected [thereby requiring Chair Ramras to vote]. 4:10:43 PM REPRESENTATIVE HOLMES moved to report the proposed CS for HB 217, Version 25-LS0696\V, Bannister, 4/19/07, as amended, out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, CSHB 217(JUD) was reported from the House Judiciary Standing Committee.
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