Legislature(2011 - 2012)BELTZ 105 (TSBldg)

03/15/2012 01:30 PM Senate LABOR & COMMERCE


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01:48:56 PM Start
01:49:34 PM Presentation: "how Equality Policies Work to Strengthen Economies and the Labor Force."
02:05:47 PM SB28
02:29:26 PM HB267
02:37:27 PM SB116
03:02:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Special Presentation: "How Equality Policies TELECONFERENCED
Work to Strengthen Economies and the Labor
Force."
Uniform Rule 23 Waived
+ HB 267 REAL ESTATE SALES LICENSEES/COM'N TELECONFERENCED
Moved 2d CSHB 267(JUD) Out of Committee
Bills Previously Heard/Scheduled
+= SB 116 WORKERS' COMP.: COLL BARGAINING/MEDIATION TELECONFERENCED
Heard & Held
= SB 28 PRICE GOUGING INVOLVING ENERGY RESOURCES
Moved SB 28 Out of Committee
        SB  28-PRICE GOUGING INVOLVING ENERGY RESOURCES                                                                     
                                                                                                                                
2:05:47 PM                                                                                                                    
CHAIR EGAN announced consideration of SB 28.                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI, sponsor  of SB  28, said  he had  received                                                               
many  phones calls  and  emails  in support  of  SB  28 and  none                                                               
opposing it.                                                                                                                    
                                                                                                                                
2:07:32 PM                                                                                                                    
SENATOR GIESSEL asked  Mr. Sniffen, Department of Law,  if he had                                                               
investigated fuel prices in the past.                                                                                           
                                                                                                                                
ED SNIFFEN,  Assistant Attorney General, Department  of Law, said                                                               
his  responsibilities  include   enforcement  of  anti-trust  and                                                               
consumer protection  statutes. In that role,  he had investigated                                                               
fuel prices in the last decade.                                                                                                 
                                                                                                                                
SENATOR GIESSEL asked if he found any issues.                                                                                   
                                                                                                                                
MR.  SNIFFEN  replied  that pricing  investigations  are  tricky,                                                               
because anti-trust law requires  finding evidence of collusion or                                                               
coordinated conduct. The department  has retained experts to look                                                               
at fuel pricing in the State  of Alaska, the details of which are                                                               
confidential, but they have released  a couple of reports setting                                                               
out  their  findings.  No  evidence of  illegal  activity  -  any                                                               
collusion or  coordinated conduct -  had been found of  among the                                                               
refiners, distributors or retailers in the state.                                                                               
                                                                                                                                
He said  one of  the good  things about  this particular  bill is                                                               
that it would  remove the requirement to  actually find collusion                                                               
or coordinated conduct.  They could look at conduct  that is just                                                               
"unconscionable." But  the tricky thing  would be  if determining                                                               
unconscionable would be any easier  than determining collusion or                                                               
coordinated conduct.                                                                                                            
                                                                                                                                
SENATOR   GIESSEL  asked   if  he   knew  of   a  definition   of                                                               
unconscionable.                                                                                                                 
                                                                                                                                
MR. SNIFFEN responded that case  law provides some guidance on it                                                               
using  words like  excessive or  exorbitant. In  discussions with                                                               
Senator Wielechowski's  office, they decided  that unconscionable                                                               
would  be   slightly  easier  to   identify  than   collusion  or                                                               
coordinated  conduct, only  because  a couple  of cases  actually                                                               
define  what that  means, although  he didn't  know how  it would                                                               
apply in Alaska.  For example, in Pennsylvania and  Ohio they say                                                               
unconscionable  means  something  that   affronts  the  sense  of                                                               
justice,   decency  and   reasonableness.  Senator   Wielechowski                                                               
pointed out  that in  most states, price  gouging laws  require a                                                               
declared state  of emergency  before the laws  kick in;  then you                                                               
have a  baseline. You could point  out a company that  had raised                                                               
its price by  300 percent only because Hurricane  Katrina came in                                                               
and wiped  out a lot of  people. But because of  Alaska's lack of                                                               
competition, distributors and refiners  can charge what they like                                                               
without a  declared state of emergency,  and he had never  had to                                                               
look at an unconscionable price.                                                                                                
                                                                                                                                
SENATOR  GIESSEL remarked  that he  just  said he  didn't have  a                                                               
determination of "unconscionable price."                                                                                        
                                                                                                                                
MR. SNIFFEN replied that was right,  and he would have to come up                                                               
with a test if  this bill passed. Also, if you  are going to tell                                                               
somebody  they can't  charge something,  the  follow-up might  be                                                               
having to tell them what they  can charge. An accounting would be                                                               
required  to   determine  what  their   costs  are,   what  their                                                               
investment risks  are and what  their return on capital  is. Then                                                               
it starts  to look a lot  like regulation, which is  what the RCA                                                               
does.                                                                                                                           
                                                                                                                                
SENATOR GIESSEL  said page 2, line  2, refers to "fuel  for space                                                               
heating." In Anchorage  that fuel is natural gas;  in other areas                                                               
it's  diesel. What  does this  refer  to and  who regulates  that                                                               
price?                                                                                                                          
                                                                                                                                
MR. SNIFFEN  answered most diesel  fuel that is used  for heating                                                               
(delivered  by a  tank wagon  or a  truck) is  the kind  of space                                                               
heating fuel that would be covered  by this bill, but natural gas                                                               
could also  be used, and  that is regulated  by the RCA.  The RCA                                                               
does not regulate prices for fuel oil.                                                                                          
                                                                                                                                
SENATOR GIESSEL asked  if this language conflicts  with the RCA's                                                               
regulatory authority over natural gas.                                                                                          
                                                                                                                                
2:15:09 PM                                                                                                                    
MR. SNIFFEN  replied maybe, but  by default, it would  only apply                                                               
to the commodity that is regulated  by the RCA. He didn't know if                                                               
there  would be  an actual  conflict in  the sense  that the  RCA                                                               
would not attempt to regulate this kind of fuel product.                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI  responded that this provision  was added in                                                               
a committee several years ago  by the Senate Energy Committee; at                                                               
that  time, Senator  Hoffman and  Senator Stedman  were concerned                                                               
about high costs in rural  and Southeast Alaska, particularly, in                                                               
areas that  use diesel oil for  heating. It was never  the intent                                                               
to regulate an  energy source that is currently  regulated by the                                                               
RCA.                                                                                                                            
                                                                                                                                
SENATOR PASKVAN  asked Mr. Sniffen  to comment on  the difficulty                                                               
in  applying a  collusion or  coordinated conduct  standard in  a                                                               
smaller limited market  where there could be  either an oligopoly                                                               
or a monopoly.                                                                                                                  
                                                                                                                                
MR. SNIFFEN  answered that  it's very  difficult to  find illegal                                                               
collusion  or coordinated  conduct in  a smaller  market, because                                                               
prices are  displayed for everyone to  see. There is no  need for                                                               
competitors to engage in illegal  conduct, because everyone knows                                                               
what everyone  else is doing.  Even in Anchorage, where  there is                                                               
robust competition  for gasoline, collusion between  retailers is                                                               
very  difficult  to  uncover. Several  years  ago,  the  Attorney                                                               
General's Office found evidence  that some retailers had meetings                                                               
and agreed  to fix the price  on gasoline, and he  took action by                                                               
shutting  the stations  down.  But absent  a  "mole" or  "whistle                                                               
blower" who is  at those kinds of meetings, it  is very difficult                                                               
to find.                                                                                                                        
                                                                                                                                
2:18:51 PM                                                                                                                    
SENATOR  WIELECHOWSKI said  originally  the bill  had a  specific                                                               
trigger of  10 percent higher  than Seattle gas  prices. Refiners                                                               
didn't  like that;  it  was  too specific,  even  though the  two                                                               
prices had tracked  for years. Then they  tried using "excessive"                                                               
or "exorbitant" and were finally  advised by attorneys that using                                                               
"unconscionable" was  a better  standard, because  it is  used in                                                               
other states  and in regulatory hearings  and has a body  of case                                                               
law behind  it. The Attorney  General has  reported investigating                                                               
this issue  twice, but  they have been  limited to  collusion and                                                               
anti-trust issues; they have not  investigated whether or not the                                                               
prices are unconscionable.                                                                                                      
                                                                                                                                
SENATOR  WIELECHOWSKI pointed  out  that all  this  bill does  is                                                               
empower the  Attorney General, if  he believes there  is evidence                                                               
of very  high prices without  warrant, to investigate, and  if he                                                               
finds  evidence,  he  can  file  a  lawsuit.  He  explained  that                                                               
originally  the bill  was drafted  so  that anyone  could file  a                                                               
lawsuit.  Tesoro  said that  their  main  concern was  that  they                                                               
didn't  want  to   fight  100  lawsuits.  He  was   told  by  the                                                               
representative that if that provision  were changed to only allow                                                               
the Attorney  General to  file a lawsuit,  they would  not oppose                                                               
the bill. The  next day after he made the  change, Tesoro came in                                                               
and opposed  the bill.  So there are  tight restrictions  on this                                                               
bill; it is designed to protect Alaskan consumers.                                                                              
                                                                                                                                
SENATOR WIELECHOWSKI  stated that  he was  not saying  anyone was                                                               
acting other than  they would in a free market;  people are going                                                               
to try  to make as much  money as they possibly  can. The problem                                                               
in the State of Alaska is there  is no free market here, and that                                                               
situation allows  legal price gouging.  This bill just  says that                                                               
in  that   situation  the  Attorney   General  is   empowered  to                                                               
investigate   and  if   they  find   evidence  of   gouging  with                                                               
unconscionable prices, they have the ability to file a lawsuit.                                                                 
                                                                                                                                
2:22:12 PM                                                                                                                    
SENATOR GIESSEL moved conceptual Amendment 1 as follows:                                                                        
                                                                                                                                
     I move  that SB  28 be amended  to include  health care                                                                    
     (from both  providers and facilities),  rental housing,                                                                    
     and  the  sale of  grocery  food  items. That  they  be                                                                    
     covered  by  and  subject   to  the  same  anti-gouging                                                                    
     provisions as the  refiners, distributors and retailers                                                                    
     of certain energy resources.                                                                                               
                                                                                                                                
She apologized  for the  conceptual form  and said  her amendment                                                               
was  still in  drafting.  She explained  that  the Department  of                                                               
Administration was struggling to  contain the accelerating health                                                               
care costs.  Alaskans pay  50 percent more  for health  care than                                                               
people  in Seattle.  In  fact, many  insurers  are sending  their                                                               
beneficiaries to  Seattle for health  care services,  because the                                                               
prices  are so  high  in Alaska.  She had  heard  the same  about                                                               
rental housing and grocery prices in some locations.                                                                            
                                                                                                                                
SENATOR DAVIS  asked the sponsor  if this amendment  would affect                                                               
the title and what his thoughts were on it.                                                                                     
                                                                                                                                
SENATOR WIELECHOWSKI replied the  amendment would require a title                                                               
change; he  had additional  problems with  it, because  he didn't                                                               
think the state should be in  the business of regulating the free                                                               
market   unless  it's   absolutely  necessary.   The  significant                                                               
difference between groceries, for  instance, and gasoline prices,                                                               
is that there  is one place to buy gasoline;  one refiner refines                                                               
80 to  82 percent  of gasoline, and  another refines  10 percent.                                                               
There is  an oligopoly when it  comes to gasoline and  heating in                                                               
the State  of Alaska, but if  he doesn't like what  he is charged                                                               
for a  dozen eggs or a  carton of milk  at Safeway, he can  go to                                                               
any of another  dozen stores that are around. If  he doesn't like                                                               
what his doctor at Providence charges,  he can go to other health                                                               
care providers.  He has hundreds  of choices in  rental property.                                                               
There  is a  free market  for those  items; there  is not  a free                                                               
market for gasoline. That is the major difference.                                                                              
                                                                                                                                
SENATOR  GIESSEL said  many  Alaskan  communities have  extremely                                                               
limited  grocery and  housing  opportunities  and certain  groups                                                               
offer specialized  health care. So  it does apply to  these other                                                               
vendors.                                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI  said Senator  Giessel was correct  and that                                                               
would  be an  excellent bill  for  to file  on her  own and  take                                                               
through the committee process.                                                                                                  
                                                                                                                                
2:26:47 PM                                                                                                                    
SENATOR  MENARD  said  she  had   one  strong  concern  with  the                                                               
amendment and that was that it  had not had due process. She knew                                                               
the direction  in which Senator  Giessel was going and  wanted to                                                               
hear from  those other  industries about  why citizens  of Alaska                                                               
feel gouged, but it's way too  late in the session to tackle this                                                               
amendment.                                                                                                                      
                                                                                                                                
SENATOR PASKVAN objected  to the amendment. A roll  call vote was                                                               
taken.  Senator  Giessel  voted   yea;  Senators  Menard,  Davis,                                                               
Paskvan and Egan voted nay. Therefore, the amendment failed.                                                                    
                                                                                                                                
2:29:05 PM                                                                                                                    
SENATOR PASKVAN moved to report SB  28 from committee to the next                                                               
committee  of   referral  with  individual   recommendations  and                                                               
attached fiscal  note, if any.  Senator Giessel objected.  A roll                                                               
call vote  was taken:  Senators Menard,  Davis, Paskvan  and Egan                                                               
voted  yea;  and Senator  Giessel  voted  nay. Therefore,  SB  28                                                               
passed from the Senate Labor and Commerce Standing Committee.                                                                   
                                                                                                                                

Document Name Date/Time Subjects
SB 116 lttr opposing, WCCommittee of AK 030512.pdf SL&C 3/15/2012 1:30:00 PM
SB 116