Legislature(2013 - 2014)BARNES 124

04/11/2014 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 346 PUBLIC BENEFIT CORPORATION TELECONFERENCED
Moved CSHB 346(L&C) Out of Committee
+ SB 138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX TELECONFERENCED
<Bill Hearing Canceled>
+ SB 129 REAL ESTATE APPRAISERS TELECONFERENCED
Moved Out of Committee
+= SB 159 AIR AMBULANCE SERVICES TELECONFERENCED
Moved HCS SB 159(L&C) Out of Committee
+ SB 145 VETS' RETIREMENT/LOANS/HOUSING/EMPLOYMENT TELECONFERENCED
Moved Out of Committee
+ SB 58 CANCEL INS. ON CERTAIN ABANDONED PROPERTY TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 11, 2014                                                                                         
                           3:21 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Bob Herron                                                                                                       
Representative Dan Saddler                                                                                                      
Representative Andy Josephson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Charisse Millett                                                                                                 
Representative Craig Johnson                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 346                                                                                                              
"An  Act  relating  to  corporations,  including  public  benefit                                                               
corporations; and providing for an effective date."                                                                             
                                                                                                                                
     - MOVED CSHB 346(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 129(FIN)                                                                               
"An Act extending the termination  date of the Board of Certified                                                               
Real Estate  Appraisers; relating to real  estate appraisers; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSSB 129(FIN) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 159                                                                                                             
"An  Act  relating  to  air   ambulance  service  providers,  air                                                               
ambulance membership agreements, and  regulation of air ambulance                                                               
service providers and air ambulance  membership agreements by the                                                               
division of insurance; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED HCS SB 159(L&C) OUT OF COMMITTEE                                                                                   
                                                                                                                                
SENATE BILL NO. 145                                                                                                             
"An  Act  relating  to  the   Teachers'  Retirement  System,  the                                                               
Judicial Retirement System, and  the Public Employees' Retirement                                                               
System   for  qualified   military  service;   relating  to   the                                                               
definition of 'veteran' for purposes  of housing, eligibility for                                                               
veterans' loans, and preferences  in state employment hiring; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED SB 145 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 58                                                                                                              
"An  Act allowing  an insurer  to cancel  an insurance  policy if                                                               
property   becomes  entirely   abandoned   and  the   abandonment                                                               
increases the hazard insured against."                                                                                          
                                                                                                                                
     - MOVED SB 58 OUT OF COMMITTEE                                                                                             
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 138(FIN) AM                                                                            
"An  Act relating  to the  purposes,  powers, and  duties of  the                                                               
Alaska Gasline  Development Corporation; relating to  an in-state                                                               
natural gas  pipeline, an Alaska  liquefied natural  gas project,                                                               
and  associated   funds;  requiring  state  agencies   and  other                                                               
entities to expedite  reviews and actions related  to natural gas                                                               
pipelines and  projects; relating  to the authorities  and duties                                                               
of  the commissioner  of natural  resources relating  to a  North                                                               
Slope natural gas  project, oil and gas and gas  only leases, and                                                               
royalty gas  and other  gas received by  the state  including gas                                                               
received as  payment for the  production tax on gas;  relating to                                                               
the tax on oil and gas  production, on oil production, and on gas                                                               
production;  relating  to  the  duties  of  the  commissioner  of                                                               
revenue relating  to a  North Slope natural  gas project  and gas                                                               
received   as  payment   for   tax;   relating  to   confidential                                                               
information and  public record status of  information provided to                                                               
or in the custody of the  Department of Natural Resources and the                                                               
Department of  Revenue; relating to apportionment  factors of the                                                               
Alaska  Net Income  Tax  Act; amending  the  definition of  gross                                                               
value at  the 'point of production'  for gas for purposes  of the                                                               
oil  and  gas production  tax;  clarifying  that the  exploration                                                               
incentive credit, the  oil or gas producer  education credit, and                                                               
the film production  tax credit may not be taken  against the gas                                                               
production tax paid  in gas; relating to the oil  or gas producer                                                               
education  credit;  requesting  the   governor  to  establish  an                                                               
interim  advisory  board  to advise  the  governor  on  municipal                                                               
involvement in  a North  Slope natural  gas project;  relating to                                                               
the  development of  a plan  by the  Alaska Energy  Authority for                                                               
developing infrastructure  to deliver affordable energy  to areas                                                               
of the  state that will not  have direct access to  a North Slope                                                               
natural gas  pipeline and  a recommendation  of a  funding source                                                               
for  energy infrastructure  development; establishing  the Alaska                                                               
affordable energy fund; requiring  the commissioner of revenue to                                                               
develop  a  plan  and  suggest  legislation  for  municipalities,                                                               
regional  corporations, and  residents  of the  state to  acquire                                                               
ownership interests in a North Slope natural gas pipeline                                                                       
project; making conforming amendments; and providing for an                                                                     
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 346                                                                                                                  
SHORT TITLE: PUBLIC BENEFIT CORPORATION                                                                                         
SPONSOR(s): REPRESENTATIVE(s) SEATON                                                                                            
                                                                                                                                
02/26/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/26/14       (H)       L&C                                                                                                    
04/11/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 129                                                                                                                  
SHORT TITLE: REAL ESTATE APPRAISERS                                                                                             
SPONSOR(s): RULES BY REQUEST OF LEG BUDGET & AUDIT                                                                              
                                                                                                                                
01/22/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/22/14       (S)       L&C                                                                                                    
02/13/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/13/14       (S)       Heard & Held                                                                                           
02/13/14       (S)       MINUTE(L&C)                                                                                            
02/20/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/20/14       (S)       Moved SB 129 Out of Committee                                                                          
02/20/14       (S)       MINUTE(L&C)                                                                                            
02/21/14       (S)       L&C RPT  3DP                                                                                           
02/21/14       (S)       DP: DUNLEAVY, STEDMAN, MICCICHE                                                                        
02/21/14       (S)       FIN REFERRAL ADDED AFTER L&C                                                                           
03/05/14       (S)       FIN AT 5:00 PM SENATE FINANCE 532                                                                      
03/05/14       (S)       Moved CSSB 129(FIN) Out of Committee                                                                   
03/05/14       (S)       MINUTE(FIN)                                                                                            
03/07/14       (S)       FIN RPT CS  4DP 1NR   NEW TITLE                                                                        
03/07/14       (S)       DP: MEYER, KELLY, DUNLEAVY, BISHOP                                                                     
03/07/14       (S)       NR: OLSON                                                                                              
03/14/14       (S)       TRANSMITTED TO (H)                                                                                     
03/14/14       (S)       VERSION: CSSB 129(FIN)                                                                                 
03/17/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/17/14       (H)       L&C, FIN                                                                                               
04/11/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 159                                                                                                                  
SHORT TITLE: AIR AMBULANCE SERVICES                                                                                             
SPONSOR(s): STEDMAN                                                                                                             
                                                                                                                                
02/05/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/05/14       (S)       L&C                                                                                                    
02/18/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/18/14       (S)       Heard & Held                                                                                           
02/18/14       (S)       MINUTE(L&C)                                                                                            
02/20/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/20/14       (S)       Moved SB 159 Out of Committee                                                                          
02/20/14       (S)       MINUTE(L&C)                                                                                            
02/21/14       (S)       L&C RPT  3DP                                                                                           
02/21/14       (S)       DP: DUNLEAVY, MICCICHE, STEDMAN                                                                        
02/28/14       (S)       TRANSMITTED TO (H)                                                                                     
02/28/14       (S)       VERSION: SB 159                                                                                        
03/03/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/03/14       (H)       L&C                                                                                                    
03/17/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/17/14       (H)       Heard & Held                                                                                           
03/17/14       (H)       MINUTE(L&C)                                                                                            
04/11/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 145                                                                                                                  
SHORT TITLE: VETS' RETIREMENT/LOANS/HOUSING/EMPLOYMENT                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/29/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/29/14       (S)       STA                                                                                                    
02/13/14       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/13/14       (S)       Heard & Held                                                                                           
02/13/14       (S)       MINUTE(STA)                                                                                            
02/20/14       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/20/14       (S)       Moved SB 145 Out of Committee                                                                          
02/20/14       (S)       MINUTE(STA)                                                                                            
02/21/14       (S)       STA RPT 3DP 1AM                                                                                        
02/21/14       (S)       DP: DYSON, COGHILL, GIESSEL                                                                            
02/21/14       (S)       AM: WIELECHOWSKI                                                                                       
03/10/14       (S)       TRANSMITTED TO (H)                                                                                     
03/10/14       (S)       VERSION: SB 145                                                                                        
03/12/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/14       (H)       L&C                                                                                                    
04/11/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 58                                                                                                                   
SHORT TITLE: CANCEL INS. ON CERTAIN ABANDONED PROPERTY                                                                          
SPONSOR(s): EGAN                                                                                                                
                                                                                                                                
02/15/13       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/15/13       (S)       L&C                                                                                                    
04/04/13       (S)       L&C AT 5:00 PM BELTZ 105 (TSBldg)                                                                      
04/04/13       (S)       Heard & Held                                                                                           
04/04/13       (S)       MINUTE(L&C)                                                                                            
02/04/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/04/14       (S)       Heard & Held                                                                                           
02/04/14       (S)       MINUTE(L&C)                                                                                            
02/06/14       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/06/14       (S)       Moved SB 58 Out of Committee                                                                           
02/06/14       (S)       MINUTE(L&C)                                                                                            
02/07/14       (S)       L&C RPT 3DP 1NR                                                                                        
02/07/14       (S)       DP: DUNLEAVY, STEDMAN, MICCICHE                                                                        
02/07/14       (S)       NR: OLSON                                                                                              
02/19/14       (S)       TRANSMITTED TO (H)                                                                                     
02/19/14       (S)       VERSION: SB 58                                                                                         
02/21/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/14       (H)       L&C                                                                                                    
04/11/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE PAUL SEATON                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as prime sponsor of HB 346.                                                                    
                                                                                                                                
TANEEKA HANSEN, Staff                                                                                                           
Representative Paul Seaton                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 346.                                                               
                                                                                                                                
GORDON BLUE, Executive Director                                                                                                 
Alaska Sustainable Fisheries Trust (ASFT)                                                                                       
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 346.                                                                          
                                                                                                                                
ERIK TROJIAN, Director of Policy                                                                                                
B-Lab Benefit Corporation                                                                                                       
New York, New York                                                                                                              
POSITION STATEMENT:  Testified during the discussion of HB 346.                                                               
                                                                                                                                
NATALIE TEAL, Staff                                                                                                             
Senator Anna Fairclough                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the sponsor of SB                                                                 
129, the LB&A Committee, Chair, Senator Fairclough.                                                                             
                                                                                                                                
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions on SB 129.                                                              
                                                                                                                                
CHRISTIE JAMIESON, Staff                                                                                                        
Senator Bert Stedman                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the prime sponsor of                                                              
SB 159, Senator Bert Stedman.                                                                                                   
                                                                                                                                
KONRAD JACKSON, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Explained Amendment 1 for SB 159, on behalf                                                              
of the House Labor and Commerce Standing Committee, Kurt Olson,                                                                 
Chair.                                                                                                                          
                                                                                                                                
MARTY HESTER, Director                                                                                                          
Division of Insurance (DOI); Anchorage Office                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions on SB 159.                                                                            
                                                                                                                                
CURTIS THAYER, Commissioner                                                                                                     
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of SB 145.                                                               
                                                                                                                                
ALIDA BUS, Staff                                                                                                                
Senator Dennis Egan                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the prime sponsor of                                                              
SB 58, Senator Dennis Egan.                                                                                                     
                                                                                                                                
SHELDON WINTERS, Lobbyist; Legal Counsel                                                                                        
State Farm Insurance                                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of SB 58.                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:21:20 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to order at  3:21 p.m.  Representatives Herron,                                                               
Josephson, Reinbold and Olson were  present at the call to order.                                                               
Representatives Saddler  and Chenault arrived as  the meeting was                                                               
in progress.                                                                                                                    
                                                                                                                                
               HB 346-PUBLIC BENEFIT CORPORATION                                                                            
                                                                                                                                
3:21:33 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  346, "An Act relating  to corporations, including                                                               
public  benefit  corporations;  and providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
3:22:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to adopt  the proposed  committee                                                               
substitute  (CS)  for  HB 346,  labeled  28-LS1433\O,  Bannister,                                                               
3/19/14, as the working document.                                                                                               
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:22:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PAUL  SEATON,  Alaska State  Legislature,  stated                                                               
that HB  346 expands  the options  for Alaskan  entrepreneurs and                                                               
investors by placing a new  type of corporate entity, the benefit                                                               
corporations  also known  as  B-Corps, in  Alaska  statute.   The                                                               
existing  corporate  structures  in Alaska,  the  C-corporations,                                                               
provide  numerous   benefits  and  jobs;  however,   the  benefit                                                               
corporation  is  a   for-profit  corporation  which  incorporates                                                               
public  benefits  and  community improvement  into  its  business                                                               
practices, no matter the principal service or product provided.                                                                 
                                                                                                                                
REPRESENTATIVE   SEATON  stated   that   current  corporate   law                                                               
generally  requires  a  corporation  to  consider  the  financial                                                               
impact  to their  shareholders as  the top  priority when  making                                                               
decisions.    He  summarized  the  ruling  in  a  Michigan  court                                                               
decision, Dodge v. Ford Motor Co.,  170 N.W. 668 (Mich. 1919), as                                                               
indicating that  a business corporation is  organized and carried                                                               
on primarily for  the profit of the stockholders.   The powers of                                                               
the directors are to be employed  to that end.  The discretion of                                                               
directors is exercised in the choice  of the means to attain that                                                               
end  and does  not extend  to change  in the  end itself,  to the                                                               
reduction  of  profits, or  to  the  non-distribution of  profits                                                               
among stockholders in order to devote them to other purposes.                                                                   
                                                                                                                                
REPRESENTATIVE SEATON  explained that the goal  of C-corporations                                                               
is exclusively  to make money  for shareholders.  While  there is                                                               
nothing wrong  with that goal  an instance  may arise in  which a                                                               
corporation   chooses  to   have   other  goals.     Thus   these                                                               
corporations may be legally liable  to shareholder lawsuits since                                                               
the  community  involvement must  have  some  nexus to  corporate                                                               
profit.    Under  the benefit  corporate  structure,  owners  and                                                               
boards have the  freedom to take actions  which positively impact                                                               
their communities without fear of violating a fiduciary duty.                                                                   
                                                                                                                                
3:26:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SEATON  explained   HB  346   will  give   these                                                               
corporations  more  flexibility  in   deciding  how  to  run  the                                                               
businesses and  will bring  Alaska a slice  of the  $3.7 trillion                                                               
invested  nationwide  in  socially-responsible  funds.    Benefit                                                               
corporations are formed voluntarily and  have the same tax status                                                               
of  any  other  for-profit  corporation.   Thus  the  corporation                                                               
wouldn't gain  any tax advantage  in electing a  "B-Corp" status.                                                               
The benefit corporations can participate  in tax credits but only                                                               
to the extent that other corporations can elect to do so.                                                                       
                                                                                                                                
REPRESENTATIVE SEATON  reported that 23 other  states have passed                                                               
benefit  corporation legislation  with West  Virginia, Utah,  and                                                               
Nebraska just this year.  He  acknowledged this bill is not based                                                               
on model  legislation, but he  did pull information  from several                                                               
other  states since  similarity in  statutes make  it easier  for                                                               
investors  to attract  investment in  Alaska.   Over 550  benefit                                                               
corporations  have  incorporated in  the  U.S.,  including Ben  &                                                               
Jerry's,  Patagonia, Rasmussen  College,  Epic  Coffee, and  King                                                               
Arthur Flour Company  - America's oldest flour company.   Each of                                                               
these   companies  works   to  benefit   the  public   and  their                                                               
communities in the way that matters most to them.                                                                               
                                                                                                                                
REPRESENTATIVE SEATON related that  HB 346 also includes measures                                                               
to   ensure  accountability   and  transparency   so  a   benefit                                                               
corporation  will  additionally  create  and  publish  an  annual                                                               
benefit  report  describing  how  the  company  has  pursued  the                                                               
general  public  benefit.     This  report  allows  shareholders,                                                               
investors,  and  the  public to  confidently  invest  in  benefit                                                               
corporations that  share their  values.   He summarized  that the                                                               
goal  of  HB 346  is  to  give  businesses more  flexibility  and                                                               
control  over their  decisions and  to provide  private investors                                                               
with a clear social investment option.                                                                                          
                                                                                                                                
3:27:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON related  he has  invested in  a company                                                               
and the  investors knew that the  returns may be less  than other                                                               
investments.     He  asked  whether  that   is  how  shareholders                                                               
approached this and if they  anticipated earning less while doing                                                               
something good.                                                                                                                 
                                                                                                                                
REPRESENTATIVE SEATON  answered yes;  the shareholders  know what                                                               
the  specific benefit  the board  of  directors has  voted on  so                                                               
people investing in the B-Corps  generally share the same kind of                                                               
philosophy,  that it  isn't just  about  maximizing dollars,  but                                                               
sharing  the public  benefit  goal, whether  it  is education  or                                                               
research or some other specified goal.                                                                                          
                                                                                                                                
3:29:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether  any  discussion of  the                                                               
treatment  of   workers  in  third   world  countries   has  been                                                               
considered.   He recalled a big  debate about Old Navy,  Gap, and                                                               
other stores.   He further  recalled an explanation after  a fire                                                               
about why the U.S. pays so little for its clothing.                                                                             
                                                                                                                                
REPRESENTATIVE SEATON  answered that  there can be,  depending on                                                               
what  public benefit  is  selected by  the  corporation, such  as                                                               
whether it  is more  local farm jobs  instead of  cheaper grocery                                                               
costs.    That  would  be  a  benefit  adopted  in  a  particular                                                               
corporation  and people  could invest  in that  corporation since                                                               
they want  to promote local foods  and jobs although it  would be                                                               
cheaper to buy and have them  shipped in.  It's more difficult in                                                               
a typical "C  corporation" structure since it is  not a fiduciary                                                               
choice and the  board of director's goal is  to maximize profits.                                                               
The  "B Corp"  structure allows  those  types of  benefits to  be                                                               
selected as one of the criteria being use.                                                                                      
                                                                                                                                
3:31:07 PM                                                                                                                    
                                                                                                                                
TANEEKA HANSEN,  Staff, Representative Paul Seaton,  Alaska State                                                               
Legislature,  added  that there  are  two  parts to  the  benefit                                                               
corporations,  the   general  public  benefit  purpose   and  the                                                               
specific purpose.  She referred to  page 4 of HB 346, which lists                                                               
the things the board of directors  must consider, one of which is                                                               
the  community and  societal factors  including the  interests of                                                               
each community in which the  offices or facilities of the benefit                                                               
corporations, subsidiaries,  or suppliers are located.   She said                                                               
that  the  specifics  mentioned are  considered  by  the  benefit                                                               
corporations and  the third party  standards used for  the annual                                                               
report will have questions relating to the purposes.                                                                            
                                                                                                                                
3:32:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  whether the  benefit  corporation                                                               
structure   is  aimed   at  existing   corporations  or   if  new                                                               
corporations would take this form.                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON said  that it could be either.   He noted a                                                               
number of businesses exist that  may want to do something locally                                                               
but  don't  want to  violate  their  primary duty  of  maximizing                                                               
shareholder  profits.   This would  allow the  corporation, by  a                                                               
two-thirds vote,  to become a  benefit corporation  and establish                                                               
specific benefits, which is publicized.   People can invest based                                                               
on that but  it also allows the flexibility  for new corporations                                                               
as well,  including small  tour companies  that hire  locals that                                                               
give flavor to the ethnic tours.                                                                                                
                                                                                                                                
3:33:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  this is  primarily focused                                                               
at publically traded companies.   He asked how many businesses in                                                               
Alaska  are publically  traded.    He further  asked  if this  is                                                               
related to smaller corporations, as well.                                                                                       
                                                                                                                                
REPRESENTATIVE  SEATON   answered  that   it  could   be  smaller                                                               
corporations  and  the  Division   of  Corporations,  Business  &                                                               
Professional Licensing could address the number of corporations.                                                                
                                                                                                                                
CHAIR OLSON  removed his  objection.  [Version  O was  before the                                                               
committee as the working document].                                                                                             
                                                                                                                                
3:34:33 PM                                                                                                                    
                                                                                                                                
GORDON  BLUE, Executive  Director,  Alaska Sustainable  Fisheries                                                               
Trust (ASFT), testified in support of  HB 346.  He explained that                                                               
the ASFT's  mission is to  increase the retention of  benefits of                                                               
the  fisheries in  the Gulf  of  Alaska community.   He  reported                                                               
three projects.   First,  this project  is modeled  on community-                                                               
supported agriculture  called Alaskan Zone.   It is  a community-                                                               
supported   fishery  project   in  which   local  fishermen   and                                                               
processors produce product subsequently  sold to local consumers.                                                               
He explained that it is  primarily an educational venture, but it                                                               
also  produces  small  net  proceeds  shared  back  to  a  second                                                               
project,  which is  a community  fisheries conservation  network.                                                               
The network  is a collaboration  of scientists and  fishermen who                                                               
work to solve  some of the fishery  problems, including reduction                                                               
of  unwanted bycatch.    Third,  the ASFT  is  working to  launch                                                               
another project:   the Local Fish Fund.  The  Local Fish Fund was                                                               
designed to  try to increase  the retention of the  fishery quota                                                               
in  the  halibut/sablefish  fisheries   in  the  Gulf  of  Alaska                                                               
communities.    There have  been  several  attempts in  financing                                                               
mechanisms and this  is a further articulation on that  to try to                                                               
bring  some success  to  it  since quota  is  being  lost to  the                                                               
outside.  He related the  essence is that the aforementioned fund                                                               
will  provide a  vehicle for  fishermen who  are about  to retire                                                               
from the fishery to make  an inter-generational transfer of quota                                                               
to  a new  fisherman who  has made  a commitment  to stay  in the                                                               
community.  This process is  complicated by the halibut/sablefish                                                               
regulations so  the ASFT has  worked with attorneys  to construct                                                               
an  arrangement to  accomplish  this.   The  ASFT  has created  a                                                               
subsidiary of a  nonprofit, Local Fish LLC.   The LLC's agreement                                                               
allows the  ASFT to balance  the interest of  participants, which                                                               
include fisherman  about to retire  who would like to  sign their                                                               
quota over on a time contract  and those fishermen who would like                                                               
to purchase  the quota.   It would  provide financing to  pay the                                                               
taxes generated by that transaction.                                                                                            
                                                                                                                                
3:37:54 PM                                                                                                                    
                                                                                                                                
MR.  BLUE related  that the  agreement works  legally, but  it is                                                               
very complicated; however, over time  if it increases the size of                                                               
business  it will  provide improvements  to the  social benefits.                                                               
He explained that  it has become difficult to  administer the LLC                                                               
membership interests and to describe  accurately and identify the                                                               
specific  interests.   Thus the  benefits corporation  would suit                                                               
the ASFT  admirably and would  allow the organization to  use the                                                               
corporate  stock  structure to  keep  a  clear statement  of  the                                                               
interests  of  the participants  that  is  easy to  transfer  and                                                               
understand,  yet   would  allow  them  to   continue  the  public                                                               
benefits.  He  referred to the addendum in the  final part of the                                                               
bill.  The  savings would benefit the corporation  and the entire                                                               
community.  He expressed strong support for HB 346.                                                                             
                                                                                                                                
3:39:31 PM                                                                                                                    
                                                                                                                                
ERIK  TROJIAN, Director  of  Policy,  B-Lab Benefit  Corporation,                                                               
lauded  the sponsor's  description of  the benefit  corporations.                                                               
He  stated that  23  states have  passed bills  in  the past  few                                                               
years, and  currently 550 benefit corporations  have been formed.                                                               
The  key thing  to  consider is  that the  purpose  of a  benefit                                                               
corporation is  to deregulate the  purpose of a corporation.   He                                                               
reiterated  Representative  Seaton's   comparison  between  a  "C                                                               
corporation" and  a benefit corporation  or "B Corporation."   He                                                               
explained  that  if  a  corporation  can only  do  one  thing  it                                                               
inhibits  the free  market from  truly acting  as a  free market.                                                               
Opening  this up  will allow  entrepreneurs to  discover new  and                                                               
innovative ways of running a company.   This can lead to new ways                                                               
of  thinking about  how a  company is  run.   He referred  to Mr.                                                               
Blue's testimony,  with respect  to the LLCs,  who raised  a good                                                               
point.   An LLC  is based on  contract law, which  is not  a good                                                               
vessel for  multiple shareholders.   If a corporation  chooses to                                                               
go public - although  none of the B corps are -  and has a social                                                               
mission the corporation  must deviate from that  mission to bring                                                               
in  investors or  growth will  become stagnant.   There  are $3.7                                                               
trillion  of social  impact investment  funds in  the marketplace                                                               
that is being  targeted towards companies like this.   He offered                                                               
his  belief  that by  opening  this  up  it  sets the  stage  for                                                               
investors and entrepreneurs  to operate.  Not only is  it a great                                                               
way to  protect directors, but it  is a great vehicle  to protect                                                               
shareholders.   He  related  a scenario  in  which an  individual                                                               
would invest  in a  company that  has a  social mission,  but the                                                               
corporation  can deviate  from the  mission since  there isn't  a                                                               
legally  binding  document.     In  fact,  the   purpose  of  the                                                               
corporation is  to maximize profit, as  previously stated, except                                                               
that his  understanding was that  the company would  do something                                                               
else.  This bill  would fill that gap.  He  pointed out one other                                                               
key element  is that this  bill stays fairly consistent  with the                                                               
model  legislation,   with  each  state  having   its  particular                                                               
nuances; however,  the general concept  is very consistent  so it                                                               
will attract investors.                                                                                                         
                                                                                                                                
3:43:42 PM                                                                                                                    
                                                                                                                                
MR. TROJIAN  related that lastly  the younger generation,  and 80                                                               
percent of  college graduates want  to work for companies  with a                                                               
mission that provides a means to  be connected to society and not                                                               
just having a job.  He offered  his belief this is another way to                                                               
keep   the  younger   population  in   the  state   by  expanding                                                               
opportunities for them to come up  with new innovative ideas.  He                                                               
acknowledged that there is no tax  benefit.  In fact, some states                                                               
such as South Carolina have seen  this as a great opportunity for                                                               
businesses tying to  alleviate problems in our  society since tax                                                               
monies  cannot solve  all the  problems  so why  not harness  the                                                               
power of the free market to try to solve problems.                                                                              
                                                                                                                                
MR. TROJIAN further  stated that this bill does  not dictate what                                                               
is good for society,  but it is left up to the  free market.  For                                                               
example, it  allows companies to  bestow conservative  or liberal                                                               
values in  the companies,  as determined  by the  marketplace and                                                               
the entrepreneur.   He  offered his  belief that  if they  have a                                                               
good idea it will attract investors  and consumers, but it is not                                                               
government  dictating what  is  good for  society  and this  bill                                                               
would provide the stage for them to operate.                                                                                    
                                                                                                                                
3:45:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON asked  for  an example  of  how the  state                                                               
would enforce these rights under the bill.                                                                                      
                                                                                                                                
MR.  TROJIAN answered  that the  benefits  corporations would  be                                                               
enforced in  the same manner as  traditional corporations enforce                                                               
its duties to  maximize profits.  He said it  is enforced through                                                               
the shareholders  and not  government.   The same  principles are                                                               
taken here,  which really allow  a contractual  agreement theatre                                                               
statute that  the shareholders and board  can entertain, enforced                                                               
through benefit enforcement proceeding  in which the shareholders                                                               
are the only  ones with a private right of  action.  For example,                                                               
if a  corporation wanted to  consider a particular aspect  of the                                                               
community that  the people in  community cannot sue them  for not                                                               
meeting the  goal, but the shareholder  can do so or  could elect                                                               
to add  outside interests with  a two-thirds vote to  the private                                                               
right of action; however, it would be up to the company.                                                                        
                                                                                                                                
3:47:44 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 346.                                                                                     
                                                                                                                                
REPRESENTATIVE JOSEPHSON  remarked that  this is  good bill.   He                                                               
offered  his belief  that the  bill is  well considered,  plus he                                                               
liked  the concept  of  deregulating corporations.    He said  he                                                               
hopes the committee will move today.                                                                                            
                                                                                                                                
3:48:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON moved  to  report  the proposed  committee                                                               
substitute  (CS)  for  HB 346,  labeled  28-LS1433\O,  Bannister,                                                               
3/19/14,  out of  committee with  individual recommendations  and                                                               
the accompanying  fiscal notes.   There being no  objection, CSHB                                                               
346(L&C) was reported from the  House Labor and Commerce Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
The committee took an at-ease from 3:48 p.m. to 3:49 p.m.                                                                       
                                                                                                                                
                 SB 129-REAL ESTATE APPRAISERS                                                                              
                                                                                                                                
3:49:59 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
CS  FOR  SENATE   BILL  NO.  129(FIN),  "An   Act  extending  the                                                               
termination  date   of  the  Board   of  Certified   Real  Estate                                                               
Appraisers;  relating to  real estate  appraisers; and  providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
3:50:08 PM                                                                                                                    
                                                                                                                                
NATALIE  TEAL,  Staff,  Senator  Anna  Fairclough,  Alaska  State                                                               
Legislature, explained the  additional changes made to  SB 129 in                                                               
the   Senate  version   before  the   committee,  the   committee                                                               
substitute (CS)  for SB 129 (FIN).   The original version  SB 129                                                               
was a  sunset bill to extend  the Board of Certified  Real Estate                                                               
Appraisers  for another  four years;  however, the  Department of                                                               
Commerce,  Community &  Economic  Development (DCCED)  approached                                                               
the committee with  additional changes in order for  the board to                                                               
remain in  compliance with the  federal requirements laid  out in                                                               
the  Dodd-Frank Wall  Street Reform  and Consumer  Protection Act                                                               
(Dodd-Frank) that  amends Title 11 of  the Financial Institutions                                                               
Reform, Recovery, and Enforcement Act of 1989.                                                                                  
                                                                                                                                
3:51:03 PM                                                                                                                    
                                                                                                                                
MS. TEAL explained that Section 1  of the bill extends the board.                                                               
An  audit completed  last  June by  the  Division of  Legislative                                                               
Budget and  Audit recommended  that the  board be  extended until                                                               
June 30,  2018.  This  four-year extension  is half of  the eight                                                               
year maximum allowed in statute.   The shortened extension period                                                               
is  due   to  the  projected   increase  in   federally  mandated                                                               
responsibilities  over  the  next  few   years.    The  remaining                                                               
sections are  designed to  bring the  board into  compliance with                                                               
those changes.                                                                                                                  
                                                                                                                                
3:52:24 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative  Agencies  and  Offices,  stated  that  the  division                                                               
conducted a  sunset audit on  the Board of Certified  Real Estate                                                               
Appraisers and  the report is  dated June  2013.  The  purpose of                                                               
the  audit was  to  examine  whether the  board  was serving  the                                                               
public's  interest   and  if  the  termination   date  should  be                                                               
extended.   Overall  the  division concluded  that  the board  is                                                               
protecting  the public's  interest by  effectively licensing  and                                                               
regulating  real estate  appraisers.   The  audit [Audit  Control                                                               
Number 08-20084-13]  recommends the  board's termination  date be                                                               
extended four  years of the eight  year maximum, and as  Ms. Teal                                                               
explained,  is in  recognition  of the  increase  in the  board's                                                               
responsibilities mandated  by the federal  government.   She said                                                               
the division  felt it  was prudent  to come  in earlier  than the                                                               
eight years to  examine the board and its  responsibilities.  The                                                               
audit  report recommendations  for  operational improvements  are                                                               
directed not  to the board  but to the Division  of Corporations,                                                               
Business and Professional Licensing  (DCBPL).  One recommendation                                                               
was  to improve  administrative  support to  the board  including                                                               
addressing investigative  delays.  The second  recommendation was                                                               
directed to the DCBPL's director  to continue improvements to the                                                               
investigative  case  management system.    She  related that  the                                                               
board and the department agreed with the recommendations.                                                                       
                                                                                                                                
3:54:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON referred  to the  second recommendation                                                               
and said his  understanding is that this issue is  a problem that                                                               
has been seen in a number of boards and commissions.                                                                            
                                                                                                                                
MS. CURTIS  stated that the  second recommendation is  to improve                                                               
administrative  support.     She   clarified  that   her  earlier                                                               
testimony   pertained  to   improving   the  investigative   case                                                               
management, which has been a division-wide issue.                                                                               
                                                                                                                                
3:55:03 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on SB 129.                                                                                     
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  assumed  the [appraisers]  found  this                                                               
acceptable.   He asked whether  the committee has  heard anything                                                               
otherwise.                                                                                                                      
                                                                                                                                
CHAIR OLSON answered no.                                                                                                        
                                                                                                                                
3:55:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  moved  to  report CSSB  129(FIN)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSSB  129(FIN)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
                 SB 159-AIR AMBULANCE SERVICES                                                                              
                                                                                                                                
3:57:49 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
SENATE BILL  NO. 159, "An  Act relating to air  ambulance service                                                               
providers,  air ambulance  membership agreements,  and regulation                                                               
of air  ambulance service providers and  air ambulance membership                                                               
agreements by  the division  of insurance;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
3:58:11 PM                                                                                                                    
                                                                                                                                
CHRISTIE  JAMIESON, Staff,  Senator  Bert  Stedman, Alaska  State                                                               
Legislature, explained  that passage  of SB  129 would  allow all                                                               
life-saving air  medical transport services to  continue to offer                                                               
membership  programs to  Alaskan  residents.   The  purpose of  a                                                               
membership program  is to cover  all out-of-pocket  expenses that                                                               
may  not   be  covered  by   a  primary  payer.     Following  an                                                               
organizational  restructure  last  year,  in  2013,  the  Airlift                                                               
Northwest  membership  program  was discontinued  by  the  Alaska                                                               
Division of Insurance (DOI).   The division deemed the membership                                                               
program  was   no  longer  exempt  from   insurance  regulations.                                                               
Presently,  the Airlift  Northwest is  allowed to  honor existing                                                               
memberships but cannot allow renewals  to the program.  This bill                                                               
would  exempt  all  air  ambulance   services  from  the  state's                                                               
insurance code thereby allowing  continued membership programs to                                                               
Alaskans.   Over  3,000 Alaskan  residents subscribe  and benefit                                                               
from  the membership  program.   The Division  of Elections  said                                                               
that  it does  not  anticipate that  SB 159  will  result in  any                                                               
financial impact to the division and it has a zero fiscal note.                                                                 
                                                                                                                                
3:59:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON moved  to adopt  Amendment 1,  labeled 28-                                                               
LS1359\N.1, Wallace, 3/20/14, which read as follows:                                                                            
                                                                                                                                
     Page 2, following line 28:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(c) Except as provided in this section, an air                                                                       
         ambulance service provider or an air ambulance                                                                         
      membership agreement that complies with this chapter                                                                      
     is not otherwise subject to this title."                                                                                   
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
3:59:56 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON,  Staff, Representative  Kurt Olson,  Alaska State                                                               
Legislature, stated that Amendment 1  was brought forward by some                                                               
who wanted it  to be clear that an air  ambulance provider is not                                                               
subject to Title 21.                                                                                                            
                                                                                                                                
4:01:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON understood  that one  main function  of                                                               
the   DOI  is   to   ensure  that   insurance  is   appropriately                                                               
underwritten and that the resource  will be there for the insured                                                               
when  the time  comes.   He  asked if  any concern  exists or  if                                                               
people can be confident "the jet will come when it is called."                                                                  
                                                                                                                                
MS.  JAMIESON expressed  her confidence  that the  [air ambulance                                                               
service] will respond when called.                                                                                              
                                                                                                                                
CHAIR OLSON recalled  the Airlift Northwest has  been in business                                                               
since the  late 1970s  or early  1980s, so  it has  established a                                                               
track record.                                                                                                                   
                                                                                                                                
4:02:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  there  are  any  other                                                               
"carve  outs" like  this  that aren't  subject  to the  insurance                                                               
code.  He didn't think this was a bad idea but was curious.                                                                     
                                                                                                                                
MARTY HESTER,  Director, Division  of Insurance  (DOI); Anchorage                                                               
Office,   Department   of    Commerce,   Community   &   Economic                                                               
Development, said  different statutes  deal with  different lines                                                               
of insurance  and have different regulations  and stipulations on                                                               
those different lines  of insurance.  This would  be a particular                                                               
"carve out" for the air ambulance  industry.  He did not think it                                                               
would be  an "apples to  apples" comparison for a  different line                                                               
or type of insurance would have the same type of application.                                                                   
                                                                                                                                
4:03:44 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on SB 159.                                                                                     
                                                                                                                                
REPRESENTATIVE SADDLER  commented that  the absence  of questions                                                               
demonstrates that this bill was  vetted in previous meetings.  He                                                               
felt confident [about the bill.]                                                                                                
                                                                                                                                
4:04:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON moved  to report the CSSB  159, as amended,                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying fiscal  notes.   There being  no objection,  the HCS                                                               
CSSB  159(L&C) was  reported from  the House  Labor and  Commerce                                                               
Standing Committee.                                                                                                             
                                                                                                                                
4:04:23 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:04 p.m. to 4:06 p.m.                                                                       
                                                                                                                                
        SB 145-VETS' RETIREMENT/LOANS/HOUSING/EMPLOYMENT                                                                    
                                                                                                                                
4:06:20 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
SENATE  BILL  NO.   145,  "An  Act  relating   to  the  Teachers'                                                               
Retirement  System,  the  Judicial  Retirement  System,  and  the                                                               
Public  Employees'  Retirement   System  for  qualified  military                                                               
service; relating to the definition  of 'veteran' for purposes of                                                               
housing,  eligibility for  veterans'  loans,  and preferences  in                                                               
state employment hiring; and providing for an effective date."                                                                  
                                                                                                                                
4:06:31 PM                                                                                                                    
                                                                                                                                
CURTIS  THAYER,   Commissioner,  Department   of  Administration,                                                               
stated that this  bill provides clean-up to statutes.   First, he                                                               
commented  that the  state has  hiring preferences  for veterans.                                                               
However, these statutes  have not been updated  since the Vietnam                                                               
War, so this  bill would update the statutory  definitions to the                                                               
federal  definition to  recognize  veterans that  have served  in                                                               
military conflicts  such as  the 1991  Gulf War,  Operation Iraqi                                                               
Freedom, and any  conflicts arising after September  11, 2001, as                                                               
qualifying  for the  state's hiring  preference.   He noted  that                                                               
veterans who apply  for state service obtain  a hiring preference                                                               
for  having served.   Additionally,  the  Alaska Housing  Finance                                                               
Corporation  (AHFC) Veterans'  Housing  Preference definition  is                                                               
outdated  and needs  updating.   These  changes  would bring  the                                                               
AHFC's  statutes in  alignment with  the federal  definition used                                                               
for  public  housing and  mortgage  loans.   Finally,  this  bill                                                               
updates the provisions related to  the Heroes Earnings Assistance                                                               
and Relief  Tax Act of 2008  (HEART Act), which is  a federal law                                                               
passed in  2008.   Basically, this  would require  additional tax                                                               
and health benefits for employees  who are absent from state work                                                               
due  to duty  in the  uniformed military  service.   For example,                                                               
someone who serves  in the military reserve is called  up to duty                                                               
and  subsequently  killed in  the  line  of  duty would  have  an                                                               
effective  date of  service coinciding  with the  day the  person                                                               
left state service.  This means  the family would be eligible for                                                               
any  vesting  the military  individual  would  have had  for  the                                                               
period of time since they left  state service through the time of                                                               
military service until  his/her death.  It would  also allow them                                                               
to collect life insurance benefits.   He pointed out that this is                                                               
a  federal  requirement  and  the   state  is  currently  out  of                                                               
compliance.   He referred to an  upcoming audit due in  2015, and                                                               
this bill  would clean up  some veterans' statutes and  allow the                                                               
department to be compliant by 2015.                                                                                             
                                                                                                                                
4:09:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON related  two committee members are  veterans and have                                                               
taken advantage of programs.                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked  for any costs to  "back date" the                                                               
life insurance for veterans.                                                                                                    
                                                                                                                                
COMMISSIONER  THAYER  answered that  the  department  has a  zero                                                               
fiscal note  for all three  provisions.   He said that  the state                                                               
was lucky that it did not  have any state employee who was called                                                               
up for duty  and killed.  He explained that  actuaries review the                                                               
past to predict the future  so currently the actuary's prediction                                                               
is  zero.   In  further response  to a  question,  he agreed  the                                                               
department briefed the legislature earlier in the year on this.                                                                 
                                                                                                                                
4:10:59 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on SB 145.                                                                                     
                                                                                                                                
REPRESENTATIVE HERRON  moved to  report SB  145 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  SB 145 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
The committee took an at-ease from 4:11 p.m. to 4:13 p.m.                                                                       
                                                                                                                                
        SB 58-CANCEL INS. ON CERTAIN ABANDONED PROPERTY                                                                     
                                                                                                                                
4:13:10 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
SENATE BILL  NO. 58,  "An Act  allowing an  insurer to  cancel an                                                               
insurance policy  if property becomes entirely  abandoned and the                                                               
abandonment increases the hazard insured against."                                                                              
                                                                                                                                
4:13:20 PM                                                                                                                    
                                                                                                                                
ALIDA BUS, Staff, Senator Dennis  Egan, Alaska State Legislature,                                                               
stated that SB 58 clarifies  that insurance can be cancelled when                                                               
a property owner  abandons the property, and  thereby increases a                                                               
hazard covered  by the insurance.   He referred to  AS 21.36.210,                                                               
which lists allowable reasons  for cancelling personal insurance,                                                               
including a grossly  negligent act by the  insured that increases                                                               
a covered  hazard and  physical changes  in the  insured property                                                               
that  result  in the  property  becoming  uninsurable.   As  this                                                               
statute  is currently  written,  it is  not  clear whether  these                                                               
reasons  would  include  abandonment   of  the  property  by  the                                                               
insured.   This is the  reason the  sponsor wants to  clarify the                                                               
entire abandonment cancellation of insurance.                                                                                   
                                                                                                                                
MS. BUS said  that homeowners insurance is  underwritten based on                                                               
the  property  generally  being  occupied.    An  abandoned  home                                                               
greatly   increases  the   risk   of  damage   beyond  what   was                                                               
contemplated in  the insurance contract, including  damage caused                                                               
by  vandalism, broken  water pipes,  and fire.   Cancellation  of                                                               
insurance when the  property is abandoned is  necessary to manage                                                               
insurance costs for all consumers.                                                                                              
                                                                                                                                
MS. BUS related  that SB 58 clarifies that  insurance on property                                                               
that has been  entirely abandoned can be cancelled  in Alaska, as                                                               
it can in all other states.                                                                                                     
                                                                                                                                
4:14:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  asked   how   this  statute   defines                                                               
abandonment.                                                                                                                    
                                                                                                                                
MS. BUS answered that "entire  abandonment" means the property is                                                               
no longer  occupied by the insured  as defined by the  policy and                                                               
does not have contents of substantial  utility.  Thus, if it is a                                                               
property that is owned by a  "snowbird," the fact that they spend                                                               
their winters south is probably reflected in the policy.                                                                        
                                                                                                                                
CHAIR OLSON suggested it might be listed as seasonal use.                                                                       
                                                                                                                                
MS. BUS agreed.                                                                                                                 
                                                                                                                                
4:15:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON wondered  if it creates a  conundrum if the                                                               
person  is  paying  the  insurance how  it  could  be  considered                                                               
abandoned.                                                                                                                      
                                                                                                                                
MS. BUS clarified that the question  is to identify what it means                                                               
to  be abandoned.    She  suggested that  perhaps  the pipes  are                                                               
overflowing  or   the  property  doesn't  contain   any  moveable                                                               
contents.                                                                                                                       
                                                                                                                                
CHAIR OLSON  further suggested  that perhaps  no one  is watching                                                               
the property.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HERRON pointed  out that  the customer  is paying                                                               
premiums  for the  insurance.   He  wondered if  this bill  would                                                               
allow  the insurance  company to  cancel the  policy even  if the                                                               
premiums are being paid.                                                                                                        
                                                                                                                                
MS. BUS  offered her belief  that the situation for  the property                                                               
would have  to be so bad  that the insurance would  still want to                                                               
cancel  it.   She  acknowledged  that  if the  insurance  company                                                               
receives premiums  it would not  be in their interest  to collect                                                               
the  premiums.    Otherwise, the  insurance  company  could  just                                                               
choose not to renew the policy, she said.                                                                                       
                                                                                                                                
4:17:38 PM                                                                                                                    
                                                                                                                                
SHELDON  WINTERS, Lobbyist  and  Counsel,  State Farm  Insurance,                                                               
explained how  the bill  came about.   He related  that insurance                                                               
policies are written  and the premiums are  underwritten based on                                                               
certain  assumptions  and  requirements.   A  homeowner's  policy                                                               
assumes  that  the   home  will  primarily  be   "more  or  less"                                                               
maintained and  occupied.   He recognized  this will  differ from                                                               
person  to   person,  noting  some  people   don't  perform  much                                                               
maintenance and others are very  attentive.  However, within that                                                               
wide range,  homeowners are placed  in the same risk  pool, which                                                               
provides the  key to answering Representative  Herron's question.                                                               
As long as the risk is  acceptable and the homeowner has "more or                                                               
less"  been occupying  the property,  the homeowners  are in  the                                                               
same risk  pool.  Throughout the  country there has not  been any                                                               
dispute that when property becomes  abandoned, those risks become                                                               
so great that  they weren't contemplated in  the insurance policy                                                               
and  the property  should  not  be in  the  same  risk pool  that                                                               
everyone  participates  in.   For  example,  Ms. Bus  alluded  to                                                               
evidence of  vandalism or abandonment  of a home in  Fairbanks in                                                               
winter, which likely  means the pipes will freeze and  a flood or                                                               
fire results.                                                                                                                   
                                                                                                                                
MR.  WINTER pointed  out  that  the problem  is  that the  Alaska                                                               
statutes are not completely clear  that insurance can be canceled                                                               
in those  instances.   He referred  to page  1, which  lists five                                                               
reasons for canceling insurance prior  to the renewal period.  He                                                               
read as follows:                                                                                                                
                                                                                                                                
      (4) discovery of a grossly negligent act or omission                                                                      
     by the insured that substantially increase the hazards                                                                     
     insured against;                                                                                                           
                                                                                                                                
       (5) physical changes in the insured property that                                                                        
     result in the property becoming uninsurable;                                                                               
                                                                                                                                
MR. WINTER offered his belief  that this language is pretty broad                                                               
and vague.  He said this  statute is not much different than many                                                               
other  states.     Some  other  states   simply  allow  insurance                                                               
companies to  cancel insurance if  the hazard increases.   Others                                                               
are  more  specific  and  indicate   that  companies  can  cancel                                                               
insurance if  the property becomes abandoned  or vacant; however,                                                               
a  definition  for  abandoned  or   vacant  is  not  given.    He                                                               
emphasized  that  in all  states  when  the property  has  become                                                               
abandoned,  State Farm  Insurance, who  provide insurance  in all                                                               
states, has never  had a problem with the  divisions of insurance                                                               
by canceling.   He said  that the  question was raised  in Alaska                                                               
when the  state reviewed its  policy for consistency  in language                                                               
and  reviewed Alaska's  statutes with  the Division  of Insurance                                                               
(DOI) and whether existing statutes  would allow for cancellation                                                               
of insurance on abandoned property.   The division responded that                                                               
Alaska's statutes were  not completely clear and  taking a strict                                                               
view  that the  answer would  be  no.   The company  felt that  a                                                               
situation could  arise in  which someone  walks out  and abandons                                                               
the property and State Farm couldn't cancel the insurance.                                                                      
                                                                                                                                
4:22:04 PM                                                                                                                    
                                                                                                                                
MR.  WINTERS said  the reason  this  is so  important during  the                                                               
midterm  of the  policy is  that the  premium has  been paid  and                                                               
[once canceled]  will be returned  to the consumer;  however, the                                                               
insurance company wants  to remove the at-risk  property from the                                                               
risk pool since something drastic could happen.                                                                                 
                                                                                                                                
MR. WINTERS  offered to  point out  practical protections  in the                                                               
statute, but emphasized  two things.  First,  the insurance agent                                                               
is in  business to sell  insurance, which  is their product.   It                                                               
doesn't make  sense that  they would  cancel insurance  since the                                                               
insurance premium  has been  paid and  return the  premium unless                                                               
something  drastic  has  happened.     Second,  the  local  agent                                                               
probably  provides the  customers their  auto insurance  and life                                                               
insurance.   Therefore,  the agent  will not  want to  lose these                                                               
policyholders  as customers.   From  a practical  standpoint, the                                                               
agent will try to reach out  and figure out what is happening and                                                               
if the  home is truly  abandoned.   Secondly, the policy  term is                                                               
for one  year and  at the  end of  the period  can choose  to not                                                               
renew the  policy and  not rely  on the  aforementioned statutory                                                               
cancellation policy.   For example, if a situation  arises in the                                                               
10th  or 11th  month  of  the policy  and  it  becomes clear  the                                                               
property has  been abandoned, the insurance  company could choose                                                               
to  not renew  the  policy.   He  clarified  that  what is  under                                                               
discussion  is an  eight or  nine-month period  of time  in which                                                               
something really  drastic has happened and  the insurance company                                                               
wants to cancel  the policy and remove the house  out of the risk                                                               
pool.  Turning to the proposed  bill, SB 58, State Farm Insurance                                                               
worked with  the DOI, the  industry, and  stakeholders, including                                                               
the realtors who wanted some "sideboards" on this.                                                                              
                                                                                                                                
MR. WINTERS suggested  this bill was likely  the most restrictive                                                               
in  the  country.   Basically,  this  bill would  require  entire                                                               
abandonment.   First,  to be  considered  abandoned the  property                                                               
cannot  be occupied  by the  insured  as defined  in the  policy.                                                               
This  language  was inserted  to  address  the seasonal  home  or                                                               
recreational  home.   He clarified  that  a person  with a  cabin                                                               
policy  is assumed  to  not be  occupying it  most  of the  time.                                                               
Thus, the  insurance company will  not cancel the  policy because                                                               
the cabin  is not being  occupied.  Additionally, it  cannot have                                                               
contents of substantial  utility.  He emphasized that  he was not                                                               
aware  of any  other state  statute that  includes both  of these                                                               
requirements  to  meet  the  test   of  determining  whether  the                                                               
property is  abandoned.   This language was  put in  to basically                                                               
identify that not only is it  not occupied, but the furniture has                                                               
been removed,  and nothing exists  that could be utilized  by the                                                               
typical  homeowner.   At that  point the  insurance company  must                                                               
provide  a 30-day  written cancellation  notice,  as required  by                                                               
existing statute.   Additionally,  the statutes require  that the                                                               
insurer  must provide  written notice  to any  lender of  record.                                                               
Even if  the aforementioned notices  occur, the owner,  agent, or                                                               
real  estate agent,  or personal  representative  can inform  the                                                               
insurance company that  a mistake has been made  and the property                                                               
is  not  abandoned  property,  that  reasonable  maintenance  and                                                               
monitoring  is  underway  to  assure that  the  property  is  not                                                               
abandoned.   Finally,  he could  not  think of  any situation  in                                                               
which a property could be improperly  canceled.  He has not heard                                                               
anyone voice  concern; however, he  assured members that  the DOI                                                               
has  oversight  over all  of  this  and  if "some  rogue"  reason                                                               
existed the division  could step in.  He thanked  the sponsor for                                                               
this effort,  which has taken  several years and the  concept has                                                               
gone through  four or five  legislative committees.   In closing,                                                               
he said the company would like to see the bill move along.                                                                      
                                                                                                                                
4:27:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON remarked  that  the bill  seemed to  be                                                               
written  tightly.   He  asked  how  State Farm  Insurance  treats                                                               
policies in  the event someone  has died  and their heirs  are in                                                               
the process of selling the property.                                                                                            
                                                                                                                                
MR. WINTERS answered  that the agent almost  assuredly would know                                                               
what  has  been   happening  and  would  talk   to  the  personal                                                               
representative.                                                                                                                 
                                                                                                                                
4:28:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  referred to page  2, line 6,  which read,                                                               
"entire  abandonment  of the  property  that  increases a  hazard                                                               
insured against;  ...."  He asked  whether he could think  of any                                                               
type  of entire  abandonment  that would  not  increase a  hazard                                                               
insured against.   He suggested that  homeowner's coverage covers                                                               
almost everything.  He wondered what it might not cover.                                                                        
                                                                                                                                
MR. WINTERS answered  that he was right; however,  the intent was                                                               
to  make this  as restrictive  as possible  to satisfy  everyone.                                                               
This bill includes the provisions listed.                                                                                       
                                                                                                                                
4:29:15 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on SB 58.                                                                                      
                                                                                                                                
REPRESENTATIVE  HERRON moved  to report  SB 58  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
note.   There being  no objection,  SB 58  was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
4:29:42 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:29 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB346 ver N.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Sponsor Statement.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Draft Proposed Blank CS ver O.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Sectional Analysis ver O.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Supporting Documents-Sampling of Benefit Corporations.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Supporting Documents-States with Benefit Corporations.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
HB346 Supporting Document- Legal FAQS benefitscorp.net.pdf HL&C 4/11/2014 3:15:00 PM
HB 346
SB58 ver N.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Sponsor Statement.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Fiscal Note-DCCED-DOI-01-21-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Written Testimony-NAMIC-4-07-2014.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Email Babcock 2-20-2013.PDF HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Letter NAMIC 2-21-2013.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Handout State Farm 1-31-2014.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Letter Brine 4-04-2013.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB58 Supporting Documents-Letter Winters 2-21-2013.pdf HL&C 4/11/2014 3:15:00 PM
SB 58
SB129 Ver P.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Sponsor Statement.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Sectional Analysis.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Fiscal Note-DCCED-CBPL-03-05-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Supporting Documents-Letter AK Chamber.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Supporting Documents-DCCED BCREA Audit 2013.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB129 Supporting Documents-Summary of Changes.pdf HL&C 4/11/2014 3:15:00 PM
SB 129
SB145 ver A.PDF HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Sectional Analysis.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Fiscal Note-DCCED-DED-01-17-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Fiscal Note-DOA-DRB-01-20-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Fiscal Note-DOR-AHFC-01-21-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Fiscal Note-DOA-DOP-01-20-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Supporting Documents-Transmittal Letter 1-28-2014.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB145 Supporting Documents-TalkingPointsExt.pdf HL&C 4/11/2014 3:15:00 PM
SB 145
SB159 Draft Proposed Amendment ver N.1.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 Supporting Documents-Letter AK Trollers Assoc 3-17-2014.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 Supporting Documents-Letter United Fishermen of AK 3-13-2014.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 ver N.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 Sponsor Statement.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 Sectional Analysis.pdf HL&C 4/11/2014 3:15:00 PM
SB 159
SB159 Fiscal Note-DCCED-DOI-2-10-14.pdf HL&C 4/11/2014 3:15:00 PM
SB 159