Legislature(1999 - 2000)

03/15/1999 01:32 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE JUDICIARY STANDING COMMITTEE                                                                                     
                   March 15, 1999                                                                                               
                     1:32 p.m.                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Pete Kott, Chairman                                                                                              
Representative Joe Green                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Jeannette James                                                                                                  
Representative Lisa Murkowski                                                                                                   
Representative Eric Croft                                                                                                       
Representative Beth Kerttula                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
OVERVIEW:  CARRS/SAFEWAY MERGER                                                                                                 
                                                                                                                                
     - HEARD AND HELD; EXECUTIVE SESSION                                                                                        
                                                                                                                                
* HOUSE BILL NO. 102                                                                                                            
"An Act imposing certain requirements relating to cigarette sales                                                               
in this state by tobacco product manufacturers, including                                                                       
requirements for escrow, payment, and reporting of money from                                                                   
cigarette sales in this state; providing penalties for                                                                          
noncompliance with those requirements; and providing for an                                                                     
effective date."                                                                                                                
                                                                                                                                
     - MOVED HB 102 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 57                                                                                                               
"An Act relating to immunity for certain claims against the state,                                                              
a municipality, or agents, officers, or employees of either,                                                                    
arising out of or in connection with the year 2000 date change; and                                                             
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
(* First public hearing)                                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 102                                                                                                                    
SHORT TITLE: CIGARETTE SALES: AGREEMENT/ESCROW                                                                                  
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/19/99       258     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/19/99       258     (H)  JUDICIARY, FINANCE                                                                                  
 2/19/99       258     (H)  2 ZERO FNS (REV, LAW)                                                                               
 2/19/99       259     (H)  GOVERNOR'S TRANSMITTAL LETTER                                                                       
 3/15/99               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
                                                                                                                                
BILL: HB  57                                                                                                                    
SHORT TITLE: STATE & MUNI IMMUNITY FOR Y2K                                                                                      
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/22/99        64     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/22/99        64     (H)  CRA, JUDICIARY                                                                                      
 1/22/99        64     (H)  ZERO FISCAL NOTE (ADM)                                                                              
 1/22/99        64     (H)  GOVERNOR'S TRANSMITTAL LETTER                                                                       
 2/04/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
 2/04/99               (H)  MOVED OUT OF COMMITTEE                                                                              
 2/04/99               (H)  MINUTE(CRA)                                                                                         
 2/05/99       142     (H)  CRA RPT  5DP 1NR                                                                                    
 2/05/99       142     (H)  DP: DYSON, MORGAN, HARRIS, MURKOWSKI,                                                               
 2/05/99       142     (H)  HALCRO; NR: KOOKESH                                                                                 
 2/05/99       142     (H)  ZERO FISCAL NOTE (ADM) 1/22/99                                                                      
 2/05/99       142     (H)  REFERRED TO JUDICIARY                                                                               
 3/15/99               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
BRUCE M. BOTELHO, Attorney General                                                                                              
Department of Law                                                                                                               
P.O. Box 110300                                                                                                                 
Juneau, Alaska 99811-0300                                                                                                       
Telephone:  (907) 465-2133                                                                                                      
POSITION STATEMENT:   Testified on HB 102.                                                                                      
                                                                                                                                
GAIL VOIGTLANDER, Assistant Attorney General                                                                                    
Special Litigation Section                                                                                                      
Civil Division                                                                                                                  
Department of Law                                                                                                               
1031 West 4th Avenue, Suite 200                                                                                                 
Anchorage, Alaska 99501-1994                                                                                                    
Telephone:  (907) 269-5100                                                                                                      
POSITION STATEMENT:   Testified on HB 57.                                                                                       
                                                                                                                                
BOB POE, Commissioner-designee                                                                                                  
Department of Administration                                                                                                    
P.O. Box 110200                                                                                                                 
Juneau, Alaska 99811-0200                                                                                                       
Telephone:  (907) 465-2200                                                                                                      
POSITION STATEMENT:   Testified on HB 57.                                                                                       
                                                                                                                                
BRAD THOMPSON, Director                                                                                                         
Division of Risk Management                                                                                                     
Department of Administration                                                                                                    
P.O. Box 110218                                                                                                                 
Juneau, Alaska 99811-0218                                                                                                       
Telephone:  (907) 465-5723                                                                                                      
POSITION STATEMENT:   Testified on HB 57.                                                                                       
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-12, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee                                                                
meeting to order at 1:32 p.m.  All members were present at the call                                                             
to order.                                                                                                                       
                                                                                                                                
Number 0068                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT called for a brief at-ease at 1:33 p.m. and called                                                                
the meeting back to order at 1:38 p.m.                                                                                          
                                                                                                                                
OVERVIEW:  CARRS/SAFEWAY MERGER                                                                                                 
                                                                                                                                
Number 0120                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT announced the first order of business is an overview                                                              
on the Carrs/Safeway merger.                                                                                                    
                                                                                                                                
CHAIRMAN KOTT invoked Rule 22, "Open and Executive Sessions", of                                                                
the Uniform Rules due to the sensitivity of the nature of the                                                                   
merger arrangement.  He noted it requires a majority vote and                                                                   
called for a motion.                                                                                                            
                                                                                                                                
Number 0143                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to invoke the rule of executive                                                              
session.                                                                                                                        
                                                                                                                                
Number 0160                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG objected and asked Chairman Kott whether                                                                
this has been discussed with the attorney general.                                                                              
                                                                                                                                
CHAIRMAN KOTT replied yes.  The attorney general has indicated a                                                                
cautious approach due to the nature of some of the questions that                                                               
might come up.                                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG withdrew his objection.  The House                                                                      
Judiciary Standing Committee went into executive session at 1:40                                                                
p.m. and came out of executive session at 2:42 p.m.                                                                             
                                                                                                                                
                                                                                                                                
HB 102 - CIGARETTE SALES: AGREEMENT/ESCROW                                                                                      
                                                                                                                                
CHAIRMAN KOTT announced the next order of business is HB 102, "An                                                               
Act imposing certain requirements relating to cigarette sales in                                                                
this state by tobacco product manufacturers, including requirements                                                             
for escrow, payment, and reporting of money from cigarette sales in                                                             
this state; providing penalties for noncompliance with those                                                                    
requirements; and providing for an effective date."                                                                             
                                                                                                                                
CHAIRMAN KOTT called on Bruce M. Botelho from the Department of Law                                                             
to discuss the bill.                                                                                                            
                                                                                                                                
Number 0230                                                                                                                     
                                                                                                                                
BRUCE M. BOTELHO, Attorney General, Department of Law, stated the                                                               
purpose of the bill is simply to accomplish one aspect of the                                                                   
settlement reached last November between the attorneys general and                                                              
the tobacco industry.  It calls for the enactment of a model                                                                    
statute whose purpose is to deal with the non-participating                                                                     
manufacturers.  The purpose is to make sure that those companies do                                                             
not take advantage of the ability to undersell their products and                                                               
gain market share in any state in the union.  The state is not                                                                  
required, under the terms of the Master Settlement Agreement, to                                                                
pass this type of legislation nor is it a condition precept for the                                                             
state to receive monies from the settlement.  However, there is a                                                               
major penalty in the sense that if there is an increase in a market                                                             
share that increase is shared disproportionately with those states                                                              
that have not enacted the model legislation.  The material that has                                                             
been provided shows a hypothetical example of this kind of adverse                                                              
fiscal impact on the state.  At this stage, more than 99 percent of                                                             
the total are participating.  The legislation provides the option                                                               
of signing on or establishing an escrow account reflecting a                                                                    
manufacturer's percentage of its share of the market and cost that                                                              
it would otherwise bear under the terms of the agreement.                                                                       
                                                                                                                                
Number 0448                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked Attorney General Botelho whether the bill                                                                   
applies only to cigarettes or is there a broader application to                                                                 
cover cigars or smokeless tobacco products.                                                                                     
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied it is targeted at all cigarettes.                                                              
There is a separate settlement regarding chewing or smokeless                                                                   
tobacco.                                                                                                                        
                                                                                                                                
Number 0490                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked Attorney General Botelho whether there                                                               
are any sales of tobacco products that are not made in the U.S.                                                                 
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied he doesn't know.                                                                               
                                                                                                                                
Number 0520                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked Attorney General Botelho whether the                                                                 
bill would have any affect on alien tobacco manufacturers.                                                                      
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied it would require any company or                                                                
person attempting to sell in the state of Alaska to sign on to the                                                              
agreement or pay money into an escrow account.  The incidence is                                                                
really the sale of tobacco in the state.                                                                                        
                                                                                                                                
Number 0549                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked Attorney General Botelho whether                                                                 
there have been any legal challenges to the model legislation.                                                                  
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied, to his knowledge, there hasn't                                                                
been any challenge to the model legislation.  There have been                                                                   
challenges in several states to the underlying settlement itself.                                                               
Most notably are California, New York, New Jersey and Pennsylvania.                                                             
In each instance, except for New York, they have challenged the                                                                 
overall efficacy of the settlement.  New York's battle has been                                                                 
over the allocation of monies between the local government and the                                                              
state.  In addition, a separate class action has been filed in                                                                  
Oklahoma for the overall settlement to be declared                                                                              
unconstitutional.                                                                                                               
                                                                                                                                
Number 0632                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked Attorney General Botelho whether                                                                 
this legislation would be thrown out, if everything is thrown out.                                                              
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied correct.                                                                                       
                                                                                                                                
Number 0650                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN referred to Section 45.53.020 of the bill and                                                              
stated the schedule of increase is an unusual mill.  He wondered                                                                
whether it is an estimate of a cost of living increase, for                                                                     
example.                                                                                                                        
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied the numbers were negotiated at                                                                 
great length between the industry and the leading states in the                                                                 
settlement.  He cannot answer why they are at the 1/10,000 point.                                                               
                                                                                                                                
Number 0711                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT stated this doesn't prevent any new revenue to the                                                                
state.  It prevents cherry picking.                                                                                             
                                                                                                                                
ATTORNEY GENERAL BOTELHO said correct.  The bill is not a revenue                                                               
source.  It is simply an escrow account by which the public may                                                                 
draw on monies in the event that the non-participating manufacturer                                                             
chooses to sell.                                                                                                                
                                                                                                                                
Number 0736                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho to comment                                                               
on the steps it would take to sell cigarettes in the state.                                                                     
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied any company that wishes to sell in                                                             
the state is required through its wholesaler to register and pay a                                                              
tax right now.  The bill would require a non-signatory manufacturer                                                             
of the settlement to establish a separate escrow account.                                                                       
                                                                                                                                
Number 0784                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho how much                                                                 
would it deposit.                                                                                                               
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied it would be based on estimated                                                                 
sales according to a schedule.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho whether                                                                  
there is a stipulated schedule in the settlement.                                                                               
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied there is a schedule in terms of a                                                              
per pack.  Each manufacturer has given a different estimate of the                                                              
cost of the settlement to that manufacturer.  He reiterated this                                                                
would be primarily based on a representation of estimated sales; it                                                             
would be trued for actual sales.                                                                                                
                                                                                                                                
Number 0835                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho whether the                                                              
bill gives any guidance to a manufacturer.                                                                                      
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied it is triggered in Section                                                                     
45.53.020(a)(2) of the bill.  The bill also provides additional                                                                 
authority to adopt regulations to implement the terms of the                                                                    
agreement.                                                                                                                      
                                                                                                                                
Number 0878                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho whether the                                                              
"units sold" is an individual cigarette.                                                                                        
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied yes.                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Attorney General Botelho whether the                                                              
formula is suppose to be close to the 45 cent tax surcharge put in                                                              
place in December of 1998.                                                                                                      
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied yes, in general.  The 45 cents is                                                              
an estimate that varies from company to company.  Some companies                                                                
have chosen to overstate their overall fiscal impact per pack.                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG called the 45 cents an imprecise variable.                                                              
                                                                                                                                
ATTORNEY GENERAL BOTELHO stated correct.                                                                                        
                                                                                                                                
Number 0925                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Attorney General Botelho what other                                                                  
states have adopted something like this.                                                                                        
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied he doesn't have the current list,                                                              
but will provide one as quickly as possible.  All states this year                                                              
are considering it during their legislative session.  He is not                                                                 
aware of any state that has already enacted it.                                                                                 
                                                                                                                                
CHAIRMAN KOTT indicated Alaska could be the first.                                                                              
                                                                                                                                
Number 0958                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Attorney General Botelho whether there                                                               
are other bills to cover cigars and chewing tobacco.                                                                            
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied cigars are not covered in this                                                                 
bill.  He reiterated there is a separate agreement with smokeless                                                               
tobacco, but there isn't separate legislation.                                                                                  
                                                                                                                                
Number 1014                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Attorney General Botelho whether the                                                                 
attorneys general negotiated with the companies covered by the                                                                  
settlement, not the companies that opted out.                                                                                   
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied the states negotiated with the                                                                 
five largest manufacturers in the United States.  The terms of the                                                              
settlement itself provides an opportunity for other companies to                                                                
opt in, and for the most part they have.  He reiterated, at this                                                                
stage, those who are not included constitute less than .5 percent                                                               
of the overall market.  There really are only 5 major players in                                                                
the country, 20 minor players, and a slew of mom and pops that                                                                  
Alaska will probably never see.                                                                                                 
                                                                                                                                
Number 1084                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT stated his question was directed at drafting                                                               
HB 102 and negotiating the numbers to the one-ten thousandth of a                                                               
cent.                                                                                                                           
                                                                                                                                
ATTORNEY GENERAL BOTELHO stated the numbers in the bill were the                                                                
result of negotiations specifically with the big five companies.                                                                
                                                                                                                                
Number 1106                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked Attorney General Botelho, for                                                                    
clarification, whether the bill would not apply to cigars.                                                                      
                                                                                                                                
ATTORNEY GENERAL BOTELHO replied that is his understanding.                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred to the "Definitions" section of                                                               
the bill and asked what a cigar is rolled in.                                                                                   
                                                                                                                                
REPRESENTATIVE CROFT read, "(i) any roll of tobacco wrapped in                                                                  
paper or in any substance not containing tobacco;", and stated                                                                  
tobacco wrapped in tobacco wouldn't be covered.                                                                                 
                                                                                                                                
REPRESENTATIVE GREEN noted a cigar is wrapped in a leaf.                                                                        
                                                                                                                                
Number 1158                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG complimented Attorney General Botelho for                                                               
placing the financial burden of cigarette smoking on the                                                                        
manufacturers and not the state of Alaska.                                                                                      
                                                                                                                                
CHAIRMAN KOTT closed the meeting to public testimony and called for                                                             
a motion to move the bill out of committee.                                                                                     
                                                                                                                                
Number 1199                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES made a motion to move HB 102 from the                                                                      
committee with individual recommendations and the attached zero                                                                 
fiscal note(s).  There being no objection, HB 102 was so moved from                                                             
the House Judiciary Standing Committee.                                                                                         
                                                                                                                                
                                                                                                                                
HB 57 - STATE & MUNI IMMUNITY FOR Y2K                                                                                           
                                                                                                                                
Number 1260                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT announced the next order of business is HB 57, "An                                                                
Act relating to immunity for certain claims against the state, a                                                                
municipality, or agents, officers, or employees of either, arising                                                              
out of or in connection with the year 2000 date change; and                                                                     
providing for an effective date."                                                                                               
                                                                                                                                
CHAIRMAN KOTT opened the meeting up to the teleconference network.                                                              
                                                                                                                                
Number 1285                                                                                                                     
                                                                                                                                
GAIL VOIGTLANDER, Assistant Attorney General, Special Litigation                                                                
Section, Civil Division, Department of Law, testified via                                                                       
teleconference from Anchorage.  She stated the department is                                                                    
proposing an amendment to clarify the definition of "state" in the                                                              
bill.  There is some concern because the organizations that fall                                                                
within the state are not automatically thought of as the "state".                                                               
The amendment flushes that out and ensures that public authorities                                                              
such as the Alaska Industrial Development and Export Authority                                                                  
(AIDEA) are clearly within the ambit of the bill.  The amendment                                                                
reads as follows:                                                                                                               
                                                                                                                                
     Page 3, following line 19:                                                                                                 
                                                                                                                                
          Insert a new paragraph to read:                                                                                       
                                                                                                                                
          "(3) "state" includes a department, institution, board,                                                               
          commission, division authority, public corporation,                                                                   
          council, committee, or other instrumentality of the state                                                             
          including the University of Alaska;"                                                                                  
                                                                                                                                
     Page 3, line 20:                                                                                                           
                                                                                                                                
          Delete "(3)"                                                                                                          
                                                                                                                                
          Insert "(4)"                                                                                                          
                                                                                                                                
Number 1385                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN made a motion to adopt Amendment 1.  There                                                                 
being no objection, it was so adopted.                                                                                          
                                                                                                                                
Number 1478                                                                                                                     
                                                                                                                                
BOB POE, Commissioner-designee, Department of Administration,                                                                   
stated HB 57 intends to address a big problem of potential                                                                      
litigation related to the year 2000 (Y2K).  There are three                                                                     
alarming statistics involved:  the national cost to clean up Y2K is                                                             
expected to be about $300 billion to $400 billion, the cost of                                                                  
litigation is expected to be about $1 trillion, and 300 national                                                                
law firms have already opened up Y2K practices.  In addition, the                                                               
state doesn't have a cap on what it can be sued for.  He further                                                                
stated that the bill intends to try to mitigate the liability                                                                   
issues.  There are lawsuits now in the courts where somebody has                                                                
tried to do the right thing, but were sued because they were a deep                                                             
pocket.  The state is a likely candidate for those types of suits.                                                              
He deferred to Brad Thompson from the department.                                                                               
                                                                                                                                
Number 1585                                                                                                                     
                                                                                                                                
BRAD THOMPSON, Director, Division of Risk Management, Department of                                                             
Administration, stated the division offers the state's property                                                                 
casualty insurance protection.  The division anticipates a                                                                      
significant cost to be realized should the state not be provided                                                                
the protection afforded in HB 57 as proposed.  Twenty states, at                                                                
the moment, are actively considering similar legislation to protect                                                             
both the state and local municipal governments.  Five state have                                                                
already enacted a law.  Thirty-two states have already limited the                                                              
type or value of claim that can be brought against them and/or the                                                              
local municipalities.  The state of Alaska has no such protection.                                                              
He reiterated the bill provides for limited protection just for the                                                             
Y2K exposure.  It does nothing to remove or vacate the state's                                                                  
responsibility for people to provide a benefit or perform a duty to                                                             
the public.                                                                                                                     
                                                                                                                                
Number 1668                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked whether the bill requires due diligence                                                              
from the state in protecting people from the effects of the Y2K                                                                 
change.                                                                                                                         
                                                                                                                                
MR. THOMPSON replied the state is performing exhaustive efforts                                                                 
with the available funding, personnel and time.  He doesn't believe                                                             
that there is a condition preceding the protection provided by                                                                  
this.                                                                                                                           
                                                                                                                                
Number 1714                                                                                                                     
                                                                                                                                
MS. VOIGTLANDER stated the bill does not have due diligence as a                                                                
requirement for immunity.  The state has been undertaking quite an                                                              
effort on Y2K remediations.  Each agency has had to access mission                                                              
critical programs and come up with remediation and contingency                                                                  
plans.  The bill really accompanies the efforts that                                                                            
Commissioner-designee Poe has been leading.                                                                                     
                                                                                                                                
Number 1759                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Ms. Voigtlander whether there is                                                                     
anything in the bill that requires an effort to get this immunity.                                                              
In other words, if one state agency does absolutely nothing and                                                                 
another state agency makes substantial efforts, are both immune?                                                                
                                                                                                                                
MS. VOIGTLANDER replied yes.  The bill in its present form does not                                                             
have a standard of performance attached for immunity.  It does                                                                  
address the efforts being made for remediation.                                                                                 
                                                                                                                                
Number 1821                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG stated that he is concerned about the                                                                   
definition of "year 2000 date change" in the bill.  Does it mean                                                                
January 1, 2000 or does it mean January 1, 2001?  It is debatable.                                                              
He announced he has an amendment to specify the years.                                                                          
                                                                                                                                
Number 1860                                                                                                                     
                                                                                                                                
COMMISSIONER-DESIGNEE POE stated the definition in the bill is a                                                                
similar definition that has been used in lots of other things that                                                              
describe Y2K.  He understands Representative Rokeberg's point, that                                                             
being when does the actual millennium occur - 2000 or 2001.  In                                                                 
testing systems, there is a range of dates that fall under the Y2K                                                              
moniker, such as a date projected four months in advance.                                                                       
                                                                                                                                
Number 1895                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG announced he has an amendment that provides                                                             
for an 18-month window at which time the millennium bug will have                                                               
come out of its cocoon.                                                                                                         
                                                                                                                                
Number 1922                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked whether there would be any other                                                                     
immunity drawn into this alleviating the obligation of the state.                                                               
                                                                                                                                
MS. VOIGTLANDER stated the bill intends to cover only acts or                                                                   
omissions for damages caused directly or indirectly by the failure                                                              
of an electronic computing device.  She said, "If I understand the                                                              
question which I presume is in the nature of what if there's just                                                               
some very tangential link to a year 2K issue, would this--is this                                                               
intended to immunize for that?  I don't see the bill as doing that                                                              
because what it--the act or omission is immunized through this bill                                                             
for damages that are caused by a failure of an electronic computing                                                             
device.  So I think that if--it would have to circle back to that                                                               
for it to fall within the gambit of (indisc.--coughing)."                                                                       
                                                                                                                                
Number 2038                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred to the definition of "physical                                                                
apparatus that is not primarily used as a computer".  She noted it                                                              
includes medical equipment and asked whether the state would still                                                              
have immunity if that equipment failed to work and killed somebody,                                                             
especially if there hadn't been an upgrade and it was not Y2K                                                                   
compliant.                                                                                                                      
                                                                                                                                
COMMISSIONER-DESIGNEE POE stated medical devices are in mission                                                                 
critical areas.  They have been checked out.  In addition, they                                                                 
have to be covered with a contingency plan.  It is covered under                                                                
the state's due diligence effort.                                                                                               
                                                                                                                                
MR. THOMPSON stated he is not so sure that the state or its                                                                     
agencies are directly involved with that type of medical care.                                                                  
There may be some, but as Ms. Voigtlander said it would have to be                                                              
directly or indirectly caused by the Y2K date change.  He said,                                                                 
"But, I don't think there's a disincentive that members may be                                                                  
concerned about of the state's efforts to be prepared and to do                                                                 
what it can to prevent any fallout for Y2K.  We are doing the best                                                              
we can.  I don't think this bill would have any effect to that                                                                  
effort."                                                                                                                        
                                                                                                                                
Number 2165                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked whether the Administration looked at                                                             
a carve-out in the event of death caused by a medical malfunction.                                                              
                                                                                                                                
COMMISSIONER-DESIGNEE POE stated he didn't look at it specifically.                                                             
                                                                                                                                
MS. VOIGTLANDER stated she doesn't recall it as being an issue                                                                  
probably because that is not the type of medical care the state                                                                 
renders.  She said, "Usually, if you're going to be rendering                                                                   
medical care with that type of equipment, then people have been                                                                 
moved out of the state system, so to speak, and are receiving                                                                   
medical care through private medical sources.  Either they've been                                                              
transferred to an emergency room or another hospital, or there are                                                              
physicians that are not state employees who are brought in to see                                                               
people and to use the particular equipment.  But, I don't recall                                                                
seeing something specifically other than some--I have a somewhat                                                                
vague recollection that one of the Eastern states maybe had a bill                                                              
that had to do with medical devices.  Unfortunately, I can't put my                                                             
hands right on that right away."                                                                                                
                                                                                                                                
Number 2252                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI explained she was referring to legislation                                                             
from the state of Montana which says, "...the state's immunity does                                                             
not apply to a health care facility if death or bodily injury                                                                   
results from failure or malfunction..."                                                                                         
                                                                                                                                
Number 2277                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether a situation like Juneau where                                                             
the municipality owns the hospital is the concern.                                                                              
                                                                                                                                
COMMISSIONER-DESIGNEE POE stated that sounds right.  There is also                                                              
the Alaska Psychiatric Institute (API) and the pioneers' homes.  So                                                             
far, it hasn't been found that biomedical devices are causing a                                                                 
problem.  On the same token, Providence Alaska Medical Center in                                                                
Anchorage and Fairbanks Memorial Hospital are finding devices that                                                              
have Y2K problems.  He referred to Senator Bob Bennet's Year 2000                                                               
report addressing health care issues and stated that a lot of the                                                               
issues focus on doctor's offices.  But, they aren't paying that                                                                 
much attention to this because they don't have that much in their                                                               
offices that really affect life and death situations on a Y2K                                                                   
basis, whereas hospitals do.                                                                                                    
                                                                                                                                
Number 2344                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked Commissioner-designee Poe how the state                                                              
has been paying for the Y2K efforts.                                                                                            
                                                                                                                                
COMMISSIONER-DESIGNEE POE replied the state has been paying for it                                                              
out of the Risk Management Fund.  The state has used about $2.1                                                                 
million to $2.2 million to date.                                                                                                
                                                                                                                                
REPRESENTATIVE CROFT asked Commissioner-designee Poe whether using                                                              
money from the Risk Management Fund was appropriate because of the                                                              
potential liability risk.                                                                                                       
                                                                                                                                
COMMISSIONER-DESIGNEE POE replied right.  The state would be                                                                    
exposed to more suits without taking a due diligent effort.  The                                                                
Risk Management Fund is used to settle suits and it also made sense                                                             
to use it to avoid suits.                                                                                                       
                                                                                                                                
CHAIRMAN KOTT stated it was a good business decision.                                                                           
                                                                                                                                
CHAIRMAN KOTT indicated that the bill would be held over for                                                                    
further consideration.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
Number 2400                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT adjourned the House Judiciary Standing Committee                                                                  
meeting at 3:25 p.m.                                                                                                            

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