Legislature(2001 - 2002)
04/24/2002 03:25 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 448 - TELEMARKETERS PHONE LISTS/REGISTRATION Number 0105 CHAIR MURKOWSKI announced that the first order of business would be HOUSE BILL NO. 448, "An Act relating to establishing a data base of residential telephone customers who do not wish to receive telephone solicitations, providing that the data base be compiled at no cost to the customers, requiring telephone solicitors to purchase the data base, and requiring paid solicitors to register; and providing for an effective date." [Before the committee was the proposed committee substitute (CS) for HB 448, version 22-LS1407\L, Craver, 4/8/02, which was adopted as a work draft on 4/8/02.] Number 0127 REPRESENTATIVE CRAWFORD, moved to adopt the proposed committee substitute (CS) for HB 448, Version 22-LS1407\B, Craver, 4/23/02, as a work draft. There being no objection, Version B was before the committee. REPRESENTATIVE CRAWFORD, speaking as the sponsor, noted that in Version B, the effective date has been changed to July 1, 2003. In addition, a few technical changes have been made in an effort to clarify who is exempted; currently there are two groups: those exempt because they are a charitable organization and those paid solicitors and telemarketers who have to pay for the "do-not-call" list. Number 0251 CODY RICE, Intern to Representative Joe Hayes, Alaska State Legislature, assisted Representative Crawford with the explanation of the changes made in Version B. He pointed out that Version B contains "a ceiling for the annual cost of the list" to those participating in telephonic solicitation. He also noted that those who are currently exempt will remain so under Version B. He mentioned that there is a new fiscal note, and that the Regulatory Commission of Alaska (RCA) will no longer have to set "the reasonable rate" for individual local exchange carriers regarding the do-not-call list. He opined that this will save money and be an offset to the fiscal note. CHAIR MURKOWSKI asked whether any changes have been made that will clarify that charitable organizations will be fully exempt. MR. RICE said yes, and noted that subsection (e) in Section 11 clarifies this point. In response to another question, he remarked that nothing has changed with regard to political solicitations - they remain exempt. Number 0512 WILL ABBOTT, Commissioner, Regulatory Commission of Alaska (RCA), testifying via teleconference in response to a question, confirmed that the RCA does anticipate a cost savings via Version B. He added: We would ordinarily include whatever they charge for the "black-dot" now - it'd be included in their tariff - and then we don't have to do that any more. It's not a huge saving to us - ... we can probably say that there's about a $1,000 in there - but one of the things I think we also have to recognize is that it also comes out of our regulatory cost charge. So it's not general fund. Number 0563 CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Fair Business Practices Section, Civil Division (Anchorage), Department of Law (DOL), testified via teleconference and said that after working with the sponsor and resolving DOL's one area of concern with HB 448, DOL is now in support of the legislation. CHAIR MURKOWSKI asked Mr. Sniffen if he is familiar with the fiscal note. MR. SNIFFEN said that he was aware of the numbers contained therein and had some knowledge of how they were arrived at. He ventured that there is a one-time cost of about $24,000 that was allocated for regulation development, and an annual amount of $4,700 for personnel costs related to the third-party administrator who will establish the do-not-call registry and sell the list to telemarketers. He relayed that the interplay between that administrator and his office will require just a little bit of DOL's time. CHAIR MURKOWSKI observed that most of the fiscal note will be used for drafting regulations, and asked whether the amount listed is a reasonable figure for that task. MR. SNIFFEN said that according to his understanding, quite a bit of time goes into drafting regulations: "you have to put them out for notice, you have to have a ... public hearing on the regulations, review comments, [and then] have them reissued." He explained that there is actually someone in [DOL] who is familiar with the regulation-making process and thus provided the estimation on the costs to create these regulations. REPRESENTATIVE CRAWFORD remarked that other states "that do this" generate a positive cash flow. Additionally, he surmised, prosecution of those who violate the proposed statute will also result in revenue, which should offset the fiscal note. MR. SNIFFEN agreed that could be the case since "this bill does contain very good provisions that requires telephonic sellers to identify themselves and provide more information to callers that would help our department to find them if we do need to engage in enforcement or prosecution." However, he noted, he is not sure that the possibility of potential future revenue could accurately be reflected in the fiscal note. REPRESENTATIVE HAYES asked why, given the possibility of generating future revenues, HB 448 did not have an indeterminate fiscal note. MR. SNIFFEN pointed out that notwithstanding any future revenue, the costs related to creating the regulations will still exist. He indicated that perhaps the cost associated with the third- party administrator may be offset somewhat in the future revenues, but such is still not something that can be quantified at this time. He surmised that submitting an indeterminate fiscal note will not improve [the bill's chances] any more than the minimal fiscal note that was submitted. Number 0914 JAMES ROWE, Executive Director, Alaska Telephone Association (ATA), testified via teleconference and said that although ATA is not in support of HB 448, it is no longer averse to the bill in its current version. He said that the local telephone companies that he represents have agreed to advertise via both advertising methods, although there is a small cost. He then referred to page 3, line 3, [paragraph] (5), which says, "any other matter relating to the data base that the attorney general considers desirable", and remarked that although he can appreciate why [DOL] favors this language, he wants legislators to keep in mind that ATA would prefer that no additional costs be placed on the local telephone industry due to the development of regulations. He suggested that [removal of the aforementioned provision] would make ATA comfortable in supporting HB 448. CHAIR MURKOWSKI, after acknowledging that the aforementioned language does appear to be "pretty open-ended", relayed her belief that it did not appear necessary to allow the attorney general that extra latitude unless "it's just so uncertain; we don't know what to anticipate at this point." REPRESENTATIVE CRAWFORD said that the only reason that language is in the bill is because the attorney general's office has indicated to him that it is a necessary component of the legislation. CHAIR MURKOWSKI asked Mr. Sniffen what DOL envisions "might come under" [paragraph] (5) on page 3. MR. SNIFFEN said: I don't know that we have any specific matter of concern, which is probably why the language is as vague as it is. Because you never really know, until you actually sit down and start thinking through these kinds of regulations, what you might have to do to implement the purpose and intent of the bill. And we would have no objection to changing that language to something along the lines of ... "any other matter that the attorney general feels necessary to implement the purpose of this statute", or something along those lines. It certainly isn't our intention to create anything that would impose an additional cost on the local telephone companies. I think one of the purposes of the bill is to actually take that cost away and pass it on to the telephonic sellers. So, with that, if there's some proposed language that would make the telephone folks happy that we could put in and that would still give us some flexibility to implement regulations that aren't specified in ... [paragraphs] (1)-(4) -- if we were limited to drafting regulations just on those items, I think we might not have the authority to accomplish some other things that might be necessary to implement this. CHAIR MURKOWSKI remarked that what [the committee] would attempt to do is contain any additional cost that might be imposed on the existing telephone companies; therefore, leaving the language as is [is not acceptable]. Number 1262 MARIE DARLIN, AARP, said simply that [AARP] is in support of HB 448. CHAIR MURKOWSKI closed the public testimony on HB 448. She asked Representative Crawford to share his thoughts on how best to address the concerns raised regarding the [paragraph] (5). REPRESENTATIVE CRAWFORD suggested adding language that says, "any other matter relating to the data base that the attorney general considers desirable that does not add to the cost to local telephone exchanges". CHAIR MURKOWSKI predicted that such language might be [problematic] if, for example, the additional cost were "a penny." She suggested that it would be better to insert language that recognizes the committee's wish to limit the cost to the local exchange carriers. REPRESENTATIVE CRAWFORD said he would be in favor of such language. MR. SNIFFEN agreed. Number 1407 CHAIR MURKOWSKI made a motion to adopt Conceptual Amendment 1, on page 3, at the end of line 4, after the word "desirable" insert "recognizing the intent to minimize cost to local exchange carriers". There being no objection, Conceptual Amendment 1 was adopted. REPRESENTATIVE MEYER mentioned that perhaps "politicians and pollsters" should not be excluded from the provisions of HB 448. REPRESENTATIVE CRAWFORD pointed out that such an exclusion is required by "the constitution." He then referred to page 2, lines [13-14], which read, "The fee for a data base may not exceed $750". He said: What we intended that fee to be was no more than once per year, but if we put "annual" in there, that would lead people to believe that they had to repurchase it every year even if they didn't intend to do a telephone solicitation in the next year. I don't know exactly how to word that better. Our intention was ... that they would only have to pay that fee once per year. CHAIR MURKOWSKI opined, then, that language saying, "may not exceed $750 annually" would be sufficient to satisfy the sponsor's intent. She remarked, however, that she thought she just heard Representative Crawford say that "you only pay that $750 fee when you purchase ... that data base list." "You don't have to do it on an annual basis, do you?" she asked. REPRESENTATIVE CRAWFORD replied, "If you were to do another telephone solicitation campaign the next year, you would have to buy that list once again." CHAIR MURKOWSKI observed, "At a price not to exceed $750." REPRESENTATIVE CRAWFORD agreed. CHAIR MURKOWSKI reiterated, then, that it would be appropriate to say, "may not exceed $750 annually". Number 1609 REPRESENTATIVE ROKEBERG referred to page 2, line 28, [paragraph] (2), which read, "the frequency with which the data base is updated". He said that he finds that language to be problematic because although there [will be] a toll free number that a solicitor can use to add himself/herself to the data base, the frequency with which that data base is updated will be determined by [DOL]. For example, "if you put an annual $750 amount, and there was a requirement for an update, then you couldn't charge for the update" if it was within that one-year period. REPRESENTATIVE CRAWFORD explained that although he had asked the drafter to [resolve] that issue, it had not yet been done; rather than leave it up to DOL to determine the frequency of the update, the goal was to simply have the update done once annually. He suggested amending HB 448 to that affect. CHAIR MURKOWSKI indicated agreement with doing so. REPRESENTATIVE ROKEBERG argued, however, that "it might be as much as a year almost before they could get 'black-dotted' if they were a newcomer - if you didn't have an update - ... [but] if you had updates that could be purchased periodically ...." He remarked, though, that perhaps that isn't what the committee really wants to do after all. REPRESENTATIVE CRAWFORD said, "We didn't want to do that; we wanted to do it quarterly." REPRESENTATIVE ROKEBERG asked whether there have been any discussions yet with "any of these potential third-party contractors and how they would do this." REPRESENTATIVE CRAWFORD said, "We've had numerous discussions with third-party contractors and with the attorney general's office." Number 1769 MR. RICE said that according to the third-party providers with whom he has had discussions, under federal regulations local exchange carriers are required to show "that they can serve phone numbers." As the population is increasing, he added, "the numbers that are used are being used up" and have to be recycled; those numbers are turned over to the Federal Trade Commission (FTC) on a quarterly basis, and that's how they accomplish this. CHAIR MURKOWSKI asked why, then, would the committee want the data base updated annually. Why not quarterly, she asked. MR. RICE said, "That would be a compromise; I think that would help ease tension." CHAIR MURKOWSKI asked Mr. Rice how he would address Representative Rokeberg's concern. To illustrate, she posed the following scenario: "The announcements go out in the mail the first of the year, I don't move to Anchorage until March, I want to ... be black-dotted, but I wouldn't be able to be black- dotted until January of the following year." MR. RICE said that with the exception of Anchorage and Fairbanks, that's how it works in most of Alaska: in most of Alaska, "all they have is a black dot next to your name in the phone book and you don't get in 'til the next phone book comes out." Therefore, he pointed out, the changes made by HB 448 would not be that far off from current practice. REPRESENTATIVE ROKEBERG asked, "Why have the technology then?" He also asked, "Why do it if we're not going to utilize it?" REPRESENTATIVE CRAWFORD said, "The idea was to keep the cost down; we would have much preferred to update it quarterly, but there seems to be some trepidation amongst the people in the department that they don't know if we could do it for the cost that we've set forth here." He added that he did not want the costs to go too high, but since no one knew how high the cost would go for such as small state, the goal was to leave as much leeway as possible in the current language. CHAIR MURKOWSKI suggested that with that in mind, perhaps it would be best to leave the language in [paragraph] (2) as is so that the frequency would be determined via regulations rather than statute. She predicted that as long as the $750 cap was stated in statute, it would be alright to allow the department to determine, via regulations, the frequency of the updates. Number 1999 REPRESENTATIVE ROKEBERG pointed out, however, that although he can appreciate the need for the aforementioned cap - in order to maintain a reasonable cost - [solicitors] should pay for more frequent updates; unfortunately, the cap would preclude such. CHAIR MURKOWSKI conceded that point. REPRESENTATIVE CRAWFORD relayed that according to his research, the highest cost thus far in the nation is $800. MR. RICE explained that different states use different time periods for updates. For example, some states update daily, most states update quarterly, and some states do it less frequently still. He pointed out that solicitors will only be required to purchase the list upon registration, which is required annually. CHAIR MURKOWSKI surmised, then, that in essence it merely becomes an annual fee. REPRESENTATIVE ROKEBERG suggested that by not requiring solicitors to receive the updates, it defeats the purpose. He predicted that this will be problematic. MR. RICE opined that telemarketers do not really want to contact people who have no interest [in the products offered] and, thus, it will be in their own best interest to get updates whenever possible. He said he doubts that the data base will change significantly over the course of the year, perhaps only as little as 5-7 percent. REPRESENTATIVE HALCRO suggested that instead of having an annual fee, they could simply institute a requirement that solicitors receive and pay for the list quarterly for $175 per quarter. By doing so, the state would still be receiving income for the service, and solicitors that stop doing business during the year would not have to get any further quarterly updates. REPRESENTATIVE CRAWFORD said that option had been discussed but not chosen. CHAIR MURKOWSKI asked what a solicitor receives for paying the annual fee. She surmised that the fee would cover the costs of creating and maintaining the data base, and asked whether it would be reasonable to assess additional costs for updated lists. REPRESENTATIVE CRAWFORD said he thought that there would be an annual cap of $750 and that solicitors ought to be able to get as many updates as they wanted. REPRESENTATIVE ROKEBERG surmised, then, that by allowing the attorney general to set the frequency of the updates, the "as yet unknown costs" of creating, maintaining, and updating the lists could be taken into consideration when determining the frequency; in this way both the original list and any forthcoming updates would not exceed a cost of $750. He said that he could envision that there would be different costs associated with different telephone exchanges. REPRESENTATIVE CRAWFORD agreed. CHAIR MURKOWSKI paraphrased Representative Rokeberg and indicated agreement. [Tape ends early; no testimony is missing.] TAPE 02-64, SIDE B Number 2341 CHAIR MURKOWSKI again suggested leaving [paragraph] (2) as is and changing line 14 [page 2] to read, "may not exceed $750 annually". REPRESENTATIVE CRAWFORD reiterated that his goal is to keep the costs down. He predicted that after the startup costs are taken care of it will be inexpensive to maintain [and update] the list. Number 2270 CHAIR MURKOWSKI made a motion to adopt Amendment 2, line 14, page 2, add "annually" after "$750". There being no objection, Amendment 2 was adopted. Number 2221 REPRESENTATIVE ROKEBERG made a motion to adopt Conceptual Amendment 3, line 14, page 2, after "data base" insert "and updating". There being no objection, Conceptual Amendment 3 was adopted. Number 2195 REPRESENTATIVE ROKEBERG made a motion to, on page 2, line 14, increase the fee from $750 to $1,000. Number 2189 CHAIR MURKOWSKI objected. REPRESENTATIVE HAYES, turning again to the issue of the fiscal note, said he questions the House Finance Committee referral for HB 448 in light of the potential revenue that the bill could generate. REPRESENTATIVE ROKEBERG explained that bills with any form of fiscal note, whether positive or negative, get referred to the House Finance Committee. Number 2120 CHRYSTAL SMITH, Special Assistant, Office of the Attorney General, Department of Law (DOL), pointed out that the current version of HB 448 does not have any provision for "any of this money to back to the department." This bill is drafted so that the money goes to the administrator and not to the state coffers, she added. She said that if it is the committee's intention to have any of the aforementioned revenue come back to the state, HB 448 needs to be amended to reflect that intention. In response to questions, she relayed that the sponsor's staff has been attempting to get the third-party administrators to provide some form of cost model. REPRESENTATIVE CRAWFORD explained that originally, the funds were to come back to the attorney general's office, which would then pay the third-party administrator. The bill, however, has since changed, and now any funds generated will be going directly to the administrator. He said that it was his intention to make "this a self-supporting program." He also remarked that although his desire is to satisfy everyone's concerns, that may not be possible and still have a viable piece of legislation. REPRESENTATIVE ROKEBERG suggested that language could be added to require the third-party administrator to reimburse [DOL] for the cost of administering the program, adding that in doing so, it might also be a good idea to increase the fee to $1,000. CHAIR MURKOWSKI remarked that by requiring the third-party administrator to reimburse the state, the fiscal note could be eliminated. REPRESENTATIVE CRAWFORD agreed on that point, but remarked that raising the fee to $1,000 might result in fewer solicitors. He said he would prefer to keep the cost down if at all possible. CHAIR MURKOWSKI mentioned that having fewer solicitors would not necessarily be a bad thing. She said she agrees with Representative Rokeberg about adding a provision that requires the state to be reimbursed for any costs incurred for this program. REPRESENTATIVE CRAWFORD said that he had intended for the state to be reimbursed; he had not realized that that provision had been removed during the process of changing the bill in attempts to suit all parties. CHAIR MURKOWSKI recommended that the committee adopt a conceptual amendment that would ensure that the state is reimbursed. Number 1840 REPRESENTATIVE ROKEBERG made a motion to adopt Conceptual Amendment 4, "that the state be reimbursed for the costs of the administration of this program." CHAIR MURKOWSKI called an at-ease from 4:20 p.m. to 4:30 p.m. REPRESENTATIVE CRAWFORD said that Ms. Smith has relayed to him that "there is a way to do this through statutory program receipts - that is like getting a fishing license - that it could be done." He expressed concern that time is running out for passage of this legislation. REPRESENTATIVE HALCRO surmised that there is still time. Number 1720 CHAIR MURKOWSKI noted that there were no objections to Conceptual Amendment 4. Therefore, Conceptual Amendment 4 was adopted. REPRESENTATIVE ROKEBERG relayed his concern that in setting up a data base listing one group of people, then, simultaneously, a data base is also being created that lists all others - "a negative list" so to speak. He asked the sponsor to keep this in mind as the bill continues to move through the process. REPRESENTATIVE HAYES asked Mr. Sniffen whether Conceptual Amendment 4 will result in a zero fiscal note. MR. SNIFFEN said that assuming the state can find a third-party administrator willing to take on this project knowing that it will have to reimburse the state for costs, then, yes, it should result in a zero fiscal note. Number 1636 REPRESENTATIVE HAYES moved to report CSHB 448, Version 22- LS1407\B, Craver, 4/23/02, as amended, out of committee with individual recommendations and the accompanying fiscal note. There being no objection, CSHB 448(L&C) was reported from the House Labor and Commerce Standing Committee.