Legislature(2011 - 2012)CAPITOL 106

02/13/2012 03:15 PM House LABOR & COMMERCE


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03:21:37 PM Start
03:22:12 PM HB274
03:39:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Location Change from Room 124 --
+= HB 235 MOTOR VEHICLE TRANSACTIONS TELECONFERENCED
<Bill Hearing Canceled>
*+ HB 274 UNFAIR TRADE PRACTICES TELECONFERENCED
Moved Out of Committee
                 HB 274-UNFAIR TRADE PRACTICES                                                                              
                                                                                                                              
3:22:12 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  only order of business  would be                                                               
HOUSE BILL NO. 274, "An Act  relating to the exemption of certain                                                               
acts  and transactions  from the  provisions dealing  with unfair                                                               
methods  of   competition  and  unfair   or  deceptive   acts  or                                                               
practices."                                                                                                                     
                                                                                                                                
3:22:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LINDSEY HOLMES,  Alaska State  Legislature, prime                                                               
joint sponsor, stated  HB 274 is a consumer  protection bill that                                                               
would clear  up a  potential ambiguity  in the  Alaska's Consumer                                                               
Protection Act  (CPA).   This bill would  clarify that  the state                                                               
can  step  in and  protect  Alaskan  consumers when  the  federal                                                               
government  is not  pursuing enforcement  of prohibited  conduct.                                                               
This bill  would make it  clear that  the state and  its citizens                                                               
are not without  remedy due to a misapplication of  what is known                                                               
as the safe harbor provision in the consumer protection laws.                                                                   
                                                                                                                                
3:23:26 PM                                                                                                                    
                                                                                                                                
JAMES WALDO,  Staff, Representative Lindsey Holmes,  Alaska State                                                               
Legislature, on  behalf of  Representative Lindsey  Holmes agreed                                                               
with  the sponsor's  summary of  the  bill.   He reiterated  that                                                               
Alaska's  consumer  protection laws  should  be  able to  protect                                                               
Alaska  and  its  citizens  in instances  in  which  the  federal                                                               
government  is unable  or disinterested  in  enforcing laws  that                                                               
overlap with  the state's  Consumer Protection  Act (CPA).   This                                                               
bill would remove  an exemption for federal law  contained in the                                                               
CPA.  Currently, an exemption in  the CPA says that if conduct is                                                               
covered by  another state law,  or federal law, or  regulation, a                                                               
party cannot bring an action using  the CPA.  He related that the                                                               
CPA  works well  with state  law, since  the legislature  and the                                                               
governor  are in  control of  state  law.   Additionally, if  the                                                               
state decided to  ramp up enforcement or scale it  back, it could                                                               
do  so; however,  the  state  has less  control  with respect  to                                                               
federal regulation or prohibitions.                                                                                             
                                                                                                                                
3:25:04 PM                                                                                                                    
                                                                                                                                
MR. WALDO  highlighted that little  can be done when  the federal                                                               
government decides  to handle a case  or preempts the state.   In                                                               
some instances, the federal government  may leave it up to states                                                               
to  enforce certain  conduct.   He highlighted  that the  problem                                                               
arises when  the federal government expresses  some interest, yet                                                               
has not  preempted the  state nor  taken any  action.   The joint                                                               
sponsors  want to  make the  state's position  clear, that  it is                                                               
willing and able to pursue  enforcement when bad conduct happens.                                                               
The current exemption in law  leaves the enforcement jurisdiction                                                               
somewhat  unclear.   In some  instances a  federal judge  has not                                                               
issued a  ruling, but may  have implied that the  exemption would                                                               
apply in certain cases.  He  offered one remedy is to remove from                                                               
the CPA  the exemption for  federal law.   In instances  in which                                                               
the federal  government preempts the  state, little can  be done.                                                               
Thus  in  the  gray  areas, the  proposed  change  would  clearly                                                               
indicate the  state has  the authority  to enforce  the CPA.   He                                                               
gave an example in which  a consumer identifies troubling conduct                                                               
from an  insurance company,  and concluded  that the  Division of                                                               
Insurance  (DOI)   would  proceed  to  investigate   the  matter.                                                               
However, in areas  in which jurisdiction is unclear,  or in other                                                               
gray areas, this  bill would empower the DOL to  enforce the CPA.                                                               
In closing,  he summarized that  under the bill, the  state could                                                               
move  forward  to  enforce  the  law  when  no  other  remedy  is                                                               
available and  it would clarify that  the state has the  right to                                                               
do so.                                                                                                                          
                                                                                                                                
3:27:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON referred to page  1, line 6, and asked for                                                               
the effect of removing the language, "or regulation."                                                                         
                                                                                                                                
MR. WALDO asked for further clarification.                                                                                      
                                                                                                                                
REPRESENTATIVE JOHNSON  suggested that removing the  language "or                                                             
regulation" from the bill would be to only refer to statute.                                                                  
                                                                                                                                
MR.  WALDO suggested  that  the Department  of  Law could  better                                                               
answer this.   He offered his belief that  removing the reference                                                               
to regulation might create some  difficulty in instances in which                                                               
state  regulations have  already been  promulgated, such  as with                                                               
the Division  of Insurance (DOI).   He emphasized  the importance                                                               
of relying on  specific state laws govern that conduct  - in this                                                               
case the  DOI - rather  than relying on  the DOL since  the DOI's                                                               
enforcement would be preferable to enforce the CPA.                                                                             
                                                                                                                                
3:28:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON said he is  comfortable if the regulations                                                               
adhere  to the  intent of  the statute.   He  said,"...they don't                                                               
always and that is the concern that I have."                                                                                    
                                                                                                                                
3:29:30 PM                                                                                                                    
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR., Senior  Assistant  Attorney  General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department  of   Law  (DOL),  stated   his  duties   include  the                                                               
enforcement of the  CPA.  He related that the  DOL has experience                                                               
with HB 274.  He characterized  this bill as an important one for                                                               
his office  for the  reasons Mr.  Waldo mentioned.   He  said the                                                               
state's CPA covers  a lot of conduct.   The DOL does  its best to                                                               
enforce the  CPA against wrongdoers,  whether the  wrongdoers are                                                               
in  the state  or  outside  the state.    This  bill pertains  to                                                               
conduct regulated or prohibited by federal  or state law.  As Mr.                                                               
Waldo  explained, when  a federal  statute  or regulation  limits                                                               
certain conduct, enforcement is off  limits to the DOL, even when                                                               
the federal  government decides not  to enforce the  federal law.                                                               
This  bill would  remove  the  reference to  federal  law in  the                                                               
exemption statute.   Thus the state could still  take action even                                                               
if the  federal government decided  not to pursue  enforcement of                                                               
conduct  regulated and  prohibited by  federal law.   He  offered                                                               
numerous  instances   exist  in  which  the   federal  government                                                               
recognizes the state's authority  to enforce certain laws jointly                                                               
with the federal  government.  However, it  becomes difficult for                                                               
the DOL  to take action  when the federal government  decides not                                                               
to pursue  a matter.   He characterized this  bill as a  means to                                                               
strengthen the DOL's statute and to  give the DOL another tool to                                                               
use to take action and not leave  the state without a remedy.  He                                                               
concluded by offering the DOL's support for HB 274.                                                                             
                                                                                                                                
3:31:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked what would  happen in an instance in                                                               
which the regulation was counter to the statute.                                                                                
                                                                                                                                
MR. SNIFFEN,  in response to Representative  Johnson's suggestion                                                               
to Mr. Waldo,  said that removing the reference  to regulation in                                                               
the bill would be fine.   He offered his belief that when conduct                                                               
is regulated by  statute by removing the  reference to regulation                                                               
would broaden  the scope of the  DOL and allow the  department to                                                               
pursue action in  a number of cases.  He  understood the concern,                                                               
with respect  to regulations, which  may expand beyond  the scope                                                               
of the  statute and may  give an  agency more authority  than the                                                               
legislature intended.   He cautioned  that changing  the language                                                               
to collectively  include statute  and regulation could  limit the                                                               
DOL's authority  to enforce  the CPA since  many statutes  do not                                                               
have  corresponding  regulations  to  interpret  or  enforce  the                                                               
statute.    He  reiterated  that  some  issues  may  arise.    He                                                               
summarized  that  removing  the  reference  to  regulation  would                                                               
expand  the DOL's  authority and  give his  office discretion  to                                                               
take  action   in  certain  areas,  but   combining  statute  and                                                               
regulation in the proposed paragraph would be more restrictive.                                                                 
                                                                                                                                
3:33:52 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON related his understanding  that the DOL has oversight                                                               
over any state agency or division.                                                                                              
                                                                                                                                
MR. SNIFFEN  clarified that  conduct is  regulated by  statute in                                                               
some agencies, such  as the DOI or the  Division of Corporations,                                                               
Business, and Professional Licensing  (DCBPL), which are agencies                                                               
with statutes and regulations  that specifically prohibit certain                                                               
conduct.   These  agencies have  remedies in  their statutes  for                                                               
misconduct and  the agencies can  take action  against violators,                                                               
including  issuing  fines  or imposing  injunctive  orders.    He                                                               
explained  that   in  those   cases,  the   DOL  does   not  have                                                               
jurisdiction to enforce  the conduct, but rather it is  up to the                                                               
state agency to enforce its statute or regulation.                                                                              
                                                                                                                                
CHAIR  OLSON  asked  whether  that  would be  true  even  if  the                                                               
agencies had exceeded their scope of authority.                                                                                 
                                                                                                                                
MR.  SNIFFEN answered  that  the specific  question  of scope  of                                                               
authority would  need to  be decided  first.   He pointed  out in                                                               
circumstances in which a court  has ruled that the regulation was                                                               
not  authorized  by  statute and  the  specific  regulation  also                                                               
removed the DOL's jurisdiction, the DOL could then step in.                                                                     
                                                                                                                                
3:35:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked  whether   it  would  clarify  the                                                               
authority  if the  language included  a caveat  so the  paragraph                                                               
would read, "statute  and regulation, if they  exist." He related                                                               
his understanding that  in the absence of  regulation the statute                                                               
would take precedent.                                                                                                           
                                                                                                                                
MR. SNIFFEN responded that he  would need to further consider the                                                               
language.    He  did  not see  anything  objectionable  with  the                                                               
language under consideration, so  long as the statutory authority                                                               
exists  without a  corresponding regulation.   He  concluded that                                                               
the DOL  interacts fine with  state agencies, but what  will help                                                               
the  department's  efforts is  to  remove  the reference  to  the                                                               
federal agencies.                                                                                                               
                                                                                                                                
3:36:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  acknowledged  the  importance  of  state                                                               
regulations matching statutory authority.   He suggested that the                                                               
revisor may wish  to consider adding language "if  they exist" to                                                               
cease the regulatory overreach of some agencies.                                                                                
                                                                                                                                
MR. SNIFFEN suggested the committee  may wish to consider another                                                               
way  to perhaps  accomplish the  same goal,  by adding  language,                                                               
such  as "regulated  by a  statute or  by a  regulatory board  or                                                               
agency  through its  powers."   He offered  to give  this concept                                                               
further  consideration  rather  than   to  combine  "statute  and                                                               
regulation" in this bill.                                                                                                       
                                                                                                                                
REPRESENTATIVE JOHNSON remarked if it  were that easy [to prevent                                                               
overreach] that he would have done so a long time ago.                                                                          
                                                                                                                                
3:38:50 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 274.                                                                                     
                                                                                                                                
3:39:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  moved to report  HB 274 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
note.   There being no  objection, HB  274 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    

Document Name Date/Time Subjects
HB274 Sponsor Statement.pdf HL&C 2/13/2012 3:15:00 PM
SJUD 4/6/2012 1:30:00 PM
HB 274
HB274 ver B.PDF HL&C 2/13/2012 3:15:00 PM
HB 274
HB274 Supporting Documents-Beistline Order re MTD.pdf HL&C 2/13/2012 3:15:00 PM
SJUD 4/6/2012 1:30:00 PM
HB 274
HB274 Fiscal Note-LAW-CIV-02-10-12.pdf HL&C 2/13/2012 3:15:00 PM
HB 274