Legislature(1995 - 1996)
04/21/1995 01:15 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 210 - PRIVATE MOTOR VEHICLE LICENSING/TESTING Number 645 CHAIRMAN DAVIS announced the next item on the agenda was HB 210. CHAIRMAN DAVIS asked for a motion to adopt the CS for HB 210 Version R, as the working document. REPRESENTATIVE SANDERS made a motion to adopt the CS for HB 210, Version R, as the working document. CHAIRMAN DAVIS asked if there was objection. Hearing none, the CS Version R, was adopted as the working document. REPRESENTATIVE AL VEZEY noted there has been previous discussion and a small subcommittee working with the Division of Motor Vehicles (DMV) on HB 210. He said a number of changes were made which were reflected in the committee substitute before the committee members. He asked if there were any questions. He then indicated there were proposed amendments before the committee. CHAIRMAN DAVIS said he, too, discussed the amendments with the DMV. He indicated that with the consent of the prime sponsor, the Administration and the committee, he would like to discuss and vote on each amendment individually. He suggested that Ms. Juanita Hensley with the Department of Public Safety could present details of previous meetings that she and the prime sponsor had regarding this issue. TAPE 95-16, SIDE B Number 000 JUANITA HENSLEY, Chief of Driver Services, Division of Motor Vehicles, Department of Public Safety, asked if Chairman Davis wanted her to speak directly to the amendments. She stated she worked directly with the sponsor of this bill to come up with the draft that was before the committee. She indicated that she had reviewed the draft and coordinated information with the Department of Law. The amendments presented were the concerns that they have. CHAIRMAN DAVIS suggested they make a motion for each particular amendment and have discussion and debate as each amendment was presented. REPRESENTATIVE JAMES made a motion to move Amendment 1. CHAIRMAN DAVIS asked if there was objection. REPRESENTATIVE BRICE objected to Amendment 1. MS. HENSLEY explained Amendment 1 on page 4, lines 24-25, Section (F) states "felonious attempt to commit an offense..." She said it had been the advice of the Department of Law that a felonious attempt is a felony. Section (F) would not be needed because "felony" is already covered in Section (E). CHAIRMAN DAVIS asked Representative Vezey if he would care to comment on this. REPRESENTATIVE VEZEY said he did not have any strong feelings on this particular amendment. He stated the intent was to try and create a contract relationship between an entity of the state and the private sector. He indicated a person does not have to break the law to have grounds under normal commercial law to terminate a contract. Crimes of moral turpitude are usually considered sufficient reasons to dissolve a contract. He explained this is what he was attempting to do here. He said they were trying to give the state more reasons for terminating a contract, but the state is indicating that they do not want more reasons. CHAIRMAN DAVIS indicated he communicated with the Department of Law in a meeting and said it's true that Section (E) is covered by Section (F). He then asked if the objection was still maintained on Amendment 1. REPRESENTATIVE BRICE withdrew his objection. CHAIRMAN DAVIS asked if there was any other objection to Amendment 1. Hearing none, Amendment 1 passed. REPRESENTATIVE JAMES motioned to move Amendment 2. CHAIRMAN DAVIS asked if there was objection on Amendment 2. REPRESENTATIVE BRICE objected to Amendment 2, for the purpose of discussion. Number 095 MS. HENSLEY explained the department feels that to take a person to arbitration, the due process must still be carried out. This would not allow for full due process with superior court oversight as to a decision being made. Ms. Hensley said the department would propose changes on lines 18-21, deleting the language "shall submit the issue to arbitration as provided under AS 09.43; the department may not cancel or suspend a certificate or card under this paragraph unless the cancellation or suspension is supported by the decision of the arbitrator." Ms. Hensley suggested that language be deleted and insert after examiner, "notice and hearing as provided under AS 28.05.141." CHAIRMAN DAVIS asked for confirmation that this was the department's current administrative hearing procedures. MS. HENSLEY said yes, the administrative procedures that are not covered under the Administrator Procedures Act. However, the person still may, if they feel they are aggrieved after the administrative hearing, file an appeal in superior court based on the record itself and not on (indisc.) hearing. Number 120 REPRESENTATIVE VEZEY stated the basic difference with this issue is the state is accustomed to operating under a certain set of statutes and procedures for adjudicating complaints or differences. What we are trying to establish is a contract. The standard in the state of Alaska and across the country for contract -- commercial law -- is that contract disputes are arbitrated. People are voluntarily entering into contracts that stipulate that any dispute on that contract will be solved by arbitration. Representative Vezey felt there were advantages to the state. Some of those advantages are: Under a contract relationship, any methods of dispute resolution can be used, providing both parties of the contract agree to it. It is when an agreement cannot be reached that they have to go to mandatory procedures, such as an administrative hearing procedure that the state and the DMV is accustomed to using. However, this is subject to appeal in the trial courts. He explained the advantage of arbitration is it does not cost the state anything. Both parties are required to pay for the cost of the arbitration. They are not using the court system, rather they are using an arbitration system. The courts have traditionally refused to review or overturn the findings of an arbitrator, because they respect the arbitration process and the right of parties to agree to arbitration. In commercial law, it is unusual for a court to take up a case that has been decided by an arbitration tribunal, unless there is some sign of clear abuse. Representative Vezey proposed arbitration will give the state greater flexibility than what they are currently bound to. He indicated it was a judgment value and either system achieves justice. It is a question of how are we willing to look at going to a new system. Number 174 MS. HENSLEY asked to address Representative Vezey's comments and stated if we had to go through the provision of setting up an arbitration section or to deal with arbitrators, it would cost the department to contract with an arbitrator and pay the cost of hotel accommodations for that individual, if they had to come in from out of town. Presently, the department already has administrative hearing officers on staff and the Department of Law already handles their appeals through the superior court. The mechanism is already set up. With the arbitrations area, they would have to set up a separate procedure for that, which would be costly to the department. Ms. Hensley did not feel the department would be able to absorb the cost, because the DMV does not have the budget in order to establish a program without receiving that cost of that program. Number 189 CHAIRMAN DAVIS asked if the arbitration was to continue as is, would the department establish a fiscal note for this bill? MS. HENSLEY said they would have to indicate what the cost of the arbitration would be, because they do not have the necessary process set up in their department at this time. In order to do that, they would have to develop whatever costs would be associated with that contract or the arbitrator. In most cases, when using arbitrators you do pay for all their expenses. Whereas, currently the department has hearing officers on staff. CHAIRMAN DAVIS stated the arbitration language is in statute so there would be no need for the regulations. MS. HENSLEY stated there would be no regulations. Number 196 REPRESENTATIVE JAMES said she visualized an arbitrator to be more neutral and fair than someone who is on staff with the department. She presented an example of arbitrators having to come to Juneau if that is where they had to work out of, or, if there was a contractor in Fairbanks, they would deal with an arbitrator from Fairbanks. To attach a fiscal note would be to presume that there are going to be disputes. She stated if there was any value to this legislation, it should be placed that this would be an infrequent occurrence where there would be arbitration issues such as this. Based on that position, she supported the idea of an arbitrator because of the fairness issue of not having someone within the staff of the Department of Public Safety. REPRESENTATIVE MACLEAN asked Ms. Hensley if snow machines and all terrain vehicles (ATV) were included under the category of motor vehicles. MS. HENSLEY explained it is a requirement with the DMV that snow machines be registered through Title 5. This is not the case with ATVs. The federal government determined years ago that ATVs were unsafe vehicles. Number 238 REPRESENTATIVE VEZEY stated he appreciated the department's position. Unless he was mistaken about the Alaskan Uniform Arbitration law, he thought that both parties have to pay, up- front, the anticipated costs of an arbitration proceeding. Typically, arbitration panels are not bound by Rule 82 that the court proceedings are. The prevailing party would be awarded full costs and fees. He indicated arbitration encourages mediation, where both parties agree to pay the costs of mediation. There are very few limits placed on how an arbitrator is selected. There is a proposed panel that is organized and people are given the chance to veto, or agree on an arbitrator or a mediator. He added that there were other means to settling disputes, but they are trying to create the atmosphere of a commercial relationship between the state and a contractor. CHAIRMAN DAVIS asked if there was still objection to Amendment 2? REPRESENTATIVE BRICE stated he objected to the amendment. CHAIRMAN DAVIS asked for a role call vote. Representatives Davis, Brice, Williams and James opposed the Amendment. Representative MacLean voted in favor of Amendment 2. Chairman Davis indicated Amendment 2 failed to pass the committee. He then announced Amendment 3. REPRESENTATIVE MACLEAN made a motion to move Amendment 3. CHAIRMAN DAVIS asked if there was objection. REPRESENTATIVE JAMES stated she objected to Amendment 3. Number 292 CHAIRMAN DAVIS asked Ms. Hensley to address Amendment 3. MS. HENSLEY explained that the DMV and the Department of Revenue reviewed this amendment and both departments expressed concern for Amendment 3. She explained in order to have some type of an audit trail on the contractors, the department would propose changes to page 7, lines 8-13, by deleting the existing language and inserting on line 8 after department, "as determined by contract." She explained if they have a business which only processes 20 transactions per month, then they might want the option to say, on a monthly basis they can make the deposits. She added it would give the department more control of a business and the ability to monitor that particular area more closely. She commented this is a good piece of legislation, but the department is just trying to obtain the maximum out of it. They are currently developing private indices; it's like a contract with government, privatizing out. They are trying to privatize areas such as the IM (inspection/maintenance) stations in Anchorage which are processing approximately 100 registrations per day. She noted there are currently 13 commission agents they are working with. She said this amendment just gives the department and the Department of Revenue more control over the amount of money being collected and when it is to be deposited, as well as the interest the state collects off that money. Number 303 REPRESENTATIVE VEZEY said he did not have strong opposition to Amendment 3. His intent was to provide for a reasonable commercial relationship between an agent and a proprietor (indisc). He said they modeled this after the Internal Revenue Service (IRS) and their manner of collecting payroll taxes. Whenever an agent collects a sum of money that exceeds $5,000, it is due that week, just as the payroll taxes are with the IRS. If $5,000 is not collected during the course of the quarter, then they still have to submit quarterly. He felt it was a reasonable standard. CHAIRMAN DAVIS supported the amendment. He stated it was hard to imagine what the outcome of this might be. He referred to the 13 contract agents and stated there are communities where there may be five transactions per day, yet another contractor could do much more, so different contracts are going to have different needs. If there is the flexibility such as what the department is requesting in the amendment, it would be beneficial because no one method is going to fit each contract. He asked if there were further discussions on Amendment 3, and was the objection still maintained? Hearing none, Amendment 3 passed. He then offered Amendment 4. REPRESENTATIVE JAMES made a motion to move Amendment 4. CHAIRMAN DAVIS asked if there was any objection. REPRESENTATIVE MACLEAN objected for purposes of discussion. She expressed concern for the section on the commercial drivers licenses CDL) program. MS. HENSLEY explained that 49 CFR (Code of Federal Regulations) of the Commercial Driver License Act allowed an individual to be grandfathered in until April 1, 1992. She explained that this stated if an employer certified that the person met the qualifications up until April 1, 1992, then the employer could certify that individual had met those requirements and they had been employed, and the individual would not be required to take a skills test - a driving test. After April 1, 1992, federal law requires a skills test to be administered to an individual applying for a commercial drivers license. This section would place the DMV out of compliance with the Commercial Driver License Safety Act of 1986, and it is subject to a 10 percent loss of federal highway funds, if they are found in noncompliance of that program. She mentioned that a couple of years ago, 10 percent of the federal highway fund equalled approximately $25 million. Number 359 REPRESENTATIVE BRICE referenced the loss of funding and asked if the funds are diverted, or does the state not get it. MS. HENSLEY explained it was part of the Intermodal System Transportation Efficiency Act (ISTEA) funds and would not be diverted, as the "helmet money" was diverted; it would be totally sanctioned against the state. REPRESENTATIVE VEZEY disagreed with the DMV on this particular issue because the Code of Federal Regulations (CFR) provide for that particular type of certification through private channels. The intent here was to allow for the program to be up by the state. He noted they were not mentioning anything regarding grandfathering people in after April 1, 1992, but they were only saying that a program will be set up. He mentioned that currently, there is a program in Alaska that is providing professional driver training which has received a number of accolades. However, they do not have the authority at this time to issue driver licenses. Representative Vezey indicated it would not take a great deal to bring them into compliance. He stated he disagreed with the characterization that this would put the state out of compliance with the federal regulations. Number 375 MS. HENSLEY explained that under this bill, the DMV would have the authority to contract or conduct third party testing, if the individual met all the requirements. The third party testing would be comprised of a commercial company, if the DMV chose to do a third party testing. The federal government requires extensive monitoring of those third party testers, of which the DMV has never had the budget to monitor, so they have never allowed a third party tester to do commercial driver licensing. However, the safety regulations dealing with the employer responsibility with the single license requirement, implies that within this requirement it states, "effective April 1, 1992, no person shall operate a commercial vehicle unless such person has taken and passed written and driving tests which meet the federal standards contained in subparts (f), (g) and (h) of this part, for commercial vehicles that a person operates." The department feels the remainder of the bill would provide the department with the opportunity, if they chose, to initiate a third party contract. She stated currently, they have the opportunity to do this, they've never been able to do the monitoring that the federal government requires of third party testers. She said they were interested in the fact an employer can say that an individual does meet the required standards without the required skills testing which may be completed and maintained by the employer, certifying that the person has passed all the skills requirements. Number 440 REPRESENTATIVE VEZEY withdrew his objection to Amendment 4. He stated it was not his intent to be in conflict with the federal regulations. CHAIRMAN DAVIS stated if Amendment 4 had not passed, his intent was to request that a note follow the bill to ensure the legality of it was carried out. He asked for objection on Amendment 4. Hearing none, Amendment 4 was passed. REPRESENTATIVE WILLIAMS made a motion to move Amendment 5. CHAIRMAN DAVIS asked if there was any objection. REPRESENTATIVE MASEK objected to Amendment 5. MS. HENSLEY acknowledged that Amendment 5 may be somewhat controversial. Amendment 5 was drafted by the Department of Law, proposing to delete on page 19, lines 18 and 19 in their entirety. She referred to the DMV regulations and stated that they preferred having as much as possible put into statute. She added she has to write the regulations and does not enjoy doing this, so if it can be placed in statute and have everything spelled out as to the desires of the department, then the department would like to not have to have regulations. However, the DMV and the Department of Law feels there possibly could be some requirements that they would have to have, particularly when dealing with some of the contract issues, instead of having to come back to the legislature every year and with those contracts in statute. If the Occupational Safety Hazard Administration (OSHA) requirement change or if the insurance requirements change, then they would have to return every year to the legislature and have all the statutes changed annually. The DMV feels this was an area they wanted to leave open so they would have the leeway. She said the DMV has always had legislative input on all of their regulations. REPRESENTATIVE VEZEY explained the purpose of that particular section was twofold. First, they wanted to construct a bill that was thorough and understandable. The goal of privatization of a service currently provided by the government, is something that has not been met with much success in the state of Alaska. He has observed numerous attempts over the years, and they have all failed. He explained they started out with the goal that the entire program would have to be placed in statute, so they would know exactly what they were getting into and how it would work. For that reason, he started off with the premise that there would not be any regulations; the statutes would have to be complete and functional. The other aspect of this section is the realization that this particular program may not work. It is somewhat of an experiment. He explained other states are trying it, most notably California. He felt it was important that the legislature does come back after a year or two of experience with this. He did not feel that the adoption of Amendment 5 would cause this program not to work, but he did feel it would cause the legislature to take a somewhat laissez faire attitude towards the statute. He stated it seems there is the tendency to say "well, we will let them work that problem out in regulation, and let it go." He remarked that it forces us to take what is in the amendment very seriously. Number 450 REPRESENTATIVE BRICE stated with all due respect to his good colleague from district 32 and his abilities, he felt it would be impossible to be so thorough to plan every contingency for the possible success of a piece of legislation. He indicated because of that, by not adopting Amendment 5, we are tying hands on possibly even insignificant issues that cause such projects to fail. He added these were his concerns, when that type of language is inserted. REPRESENTATIVE JAMES disagreed with Representative Brice and stated she supported the idea of coming back and making a legislative decision on anything that does not work. She inquired as to the three levels of decisions that affect the way state business is run. There is a statute, which is the underlining law, then there are regulations which also are law, and policies as well. If any of those things that you mentioned would arise, that you would be able to have a policy until there could be a legislative change. She said she was uncomfortable with writing a statute, within the length of time that we write statutes, that would encompass absolutely everything. She stated she had mixed feelings about this issue because the regulation process we have currently does not seem to be working. She noted she was not directing that comment specifically to the Department of Public Safety, but in general. She stated in her evaluation, writing regulations are what the Administration does. This is where most of the time and energy is spent. She added this is also where most of the laws are being made. REPRESENTATIVE WILLIAMS noted he had been watching legislation go through the process, which is a very timely process, where a lot of egos get in the way and games are played. He expressed concern that the public will hurt, if we have to wait a legislative session to get this changed to where it will work, rather than have to call in experts. He stated he was not always in agreement with the regulations, but will work with them. He said he would like to see the bill go and have it worked on. He suggested that the Administration should construct the regulations. MS. HENSLEY stated it has always been the department's intent, as well as the DMV's intent, to work with the legislators on regulations. The DMV would include legislative input on any regulations that would be adopted as a result of this legislation passing. Number 529 CHAIRMAN DAVIS indicated his support for the inclusion of Amendment 5. He stated he was is support of eliminating regulations and incorporating things into statute. He asked Ms. Hensley, "on a scale from 1 to 10, how inclusive is this piece of legislation as far as not needing regulations." MS. HENSLEY stated it is just about where we (indisc.) she was not sure if the DMV would even have to adopt a regulation. Policies may then have to become a regulation, if the department can't get statute change. If they came back for a statute change to implement that, then the regulation is a moot point. However, unless they do that, there may be some problems. Based on everything the department has looked at, this piece of legislation is quite intensive, as well as extensive. From her viewpoint, the department would not have to adopt many, if any, regulations to implement this program. CHAIRMAN DAVIS referred to the contract formats in the bill, and asked if there is any availability in the contract formats to make changes, should the federal government pass down some mandates relating to this. He questioned whether or not it is within the contract to make changes. MS. HENSLEY said no, there is not. The contracts are set in statute and law. These will be the contracts that they have to abide by. Any changes that are requested, would require the DMV to return to the legislature and request a change, unless a regulation could be adopted to include that into the contract. CHAIRMAN DAVIS said, "that would be my major concern, because this division...the business being taken care of in this legislation... has the federal government dealing with it to a certain degree also and we can't control the changes that they make that may require changes on our part." REPRESENTATIVE JAMES stated she did not think if we have those contracts in statute, that they can be changed by regulation. By deleting this section we have not said that regulations can change the contracts. She felt the statute will dictate. MS. HENSLEY stated Representative James was correct. She commented that the DMV has decided that they would not work on it with this committee, but would take it up in the House State Affairs Committee, regarding the contracts. The Department of Law has some problems with the contracts being in statute, due to the changes that are always being made, especially with the DMV and the federal hand that they have over them. She suggested putting in statute what the legislature would like for the DMV to have in a contract, but the contract, itself, not be in the statute, because of all the changes being made. Number 546 REPRESENTATIVE BRICE referenced the various sections throughout the bill that reflect back to statements such as "as required by the department," "provided for by the department", etc. He indicated the department has to have the ability to form the more intricate statements. He suggested this is what happens in regulations. He felt that type of language might cause the department some inability to work the various mandates of the bill. CHAIRMAN DAVIS commented that was a good point. He asked if there was further debate on Amendment 5. REPRESENTATIVE JAMES stated she still objected. CHAIRMAN DAVIS asked for a roll call vote on Amendment 5. Representatives MacLean, Williams and Brice were in support. Representative James and Davis were opposed to Amendment 5. He announced Amendment 5 passed. He asked Ms. Hensley to address the issue of why there was no fiscal note with the bill. Number 595 MS. HENSLEY explained when the DMV first reviewed this bill, it was their understanding they would have a mandate where they would have no option as to whether they could look at an area and determine whether or not it would be cost effective for them to contract with an agent, or whether it would be cost effective for the state to continue with the DMV services that are provided. She indicated in some areas there may be both. The first initial fiscal note they prepared was "unbelievable" because of the oversight they would be required to have. It was not going to be a cost savings to the state to contract with individuals. She said that is why we have worked with the sponsor in deleting the word "shall" and inserting the word "may" so they would have some leeway and would not be a mandate that this will be done. MS. HENSLEY added with this particular draft that was before the committee, the fiscal note would be zero. However, Ms. Hensley said she did want to go on record and say "that as we develop these contracts with the various agents, and if we see that it is costing for us to have the oversight and have the audit trails that we must have, especially when you're looking at the division bringing in $34 million or $36 million a year, those audit trails and that accounting needs to be there. There needs to be some training done. So, if we see and as those contracts increase, and we cannot absorb it within the existing staff that we have, we would like to go on record and say we will be coming back for an increment in the budget to address those issues, but right now the fiscal note would be zero." She indicated she would provide a fiscal note to the committee the following day. CHAIRMAN DAVIS stated the fiscal note will be accepted as a verbal statement that it would be a zero fiscal note and will look for a written statement in the near future. REPRESENTATIVE VEZEY referenced Version R of the bill, which contains the word "shall." He thought there was another version that read "may." MS. HENSLEY explained that was one of the recommendations the DMV had made. She thought it was an oversight when this went to the drafter after their conversation. She recommended that on page 1, line 7, the word "shall" be deleted and insert the word "may." REPRESENTATIVE JAMES made a motion to move Amendment 6. CHAIRMAN DAVIS asked if there was objection. Hearing none, Amendment 6 passed. He said he would entertain a motion to move CSHB 210(TRA) as amended out of the House Transportation Committee. REPRESENTATIVE JAMES made a motion to move CSHB 210(TRA), Version R, as amended out of the House Transportation Committee with individual recommendations and zero fiscal note. CHAIRMAN DAVIS asked if there was objection. Hearing none, CSHB 210 (TRA) as amended was passed out of the House Transportation Committee.