02/18/1998 03:22 PM House L&C

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

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HOUSE LABOR AND COMMERCE STANDING COMMITTEE February 18, 1998 3:22 pm. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Jerry Sanders Representative Joe Ryan Representative Tom Brice Representative Gene Kubina MEMBERS ABSENT All members present OTHER HOUSE MEMBERS PRESENT Representative Alan Austerman COMMITTEE CALENDAR * HOUSE BILL NO. 387 "An Act relating to dentists." - MOVED CSHB 387(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 392 "An Act relating to access by the Department of Environmental Conservation and the Department of Fish and Game to confidential tax records for fisheries resources prepared or kept by the Department of Revenue under AS 43.75; relating to certain salmon products reports; and providing for an effective date." - HEARD AND HELD * SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 49 "An Act establishing and relating to a consumer protection section in the Department of Law; increasing penalties for violation of laws relating to consumer protection; requiring special accounting for money from certain actions related to consumer protection; and providing for an effective date." - MOVED CSSSHB 49(L&C) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 387 SHORT TITLE: DENTISTS ABILITY TO DO CPR SPONSOR(S): REPRESENTATIVES(S) THERRIAULT Jrn-Date Jrn-Page Action 02/06/98 2241 (H) READ THE FIRST TIME - REFERRAL(S) 02/06/98 2241 (H) LABOR & COMMERCE 02/18/98 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 392 SHORT TITLE: REPORTS: FISH TAX & SALMON PRODUCTS SPONSOR(S): REPRESENTATIVES(S) AUSTERMAN, Hudson Jrn-Date Jrn-Page Action 02/11/98 2280 (H) READ THE FIRST TIME - REFERRAL(S) 02/11/98 2280 (H) LABOR & COMMERCE 02/18/98 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 49 SHORT TITLE: CONSUMER PROTECT.: DIVISION & PENALTIES SPONSOR(S): REPRESENTATIVES(S) CROFT, Hudson Jrn-Date Jrn-Page Action 01/13/97 40 (H) PREFILE RELEASED 1/3/97

01/13/97 40 (H) READ THE FIRST TIME - REFERRAL(S)

01/13/97 40 (H) LABOR & COMMERCE, JUDICIARY, FINANCE 03/26/97 849 (H) SPONSOR SUBSTITUTE INTRODUCED - REFERRALS 03/26/97 849 (H) LABOR & COMMERCE, JUDICIARY, FINANCE

01/30/98 2189 (H) COSPONSOR(S): HUDSON 02/18/98 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER REPRESENTATIVE GENE THERRIAULT Alaska State Legislature Capitol Building, Room 511 Juneau, Alaska 99801 Telephone: (907) 465-4797 POSITION STATEMENT: Sponsor of HB 387. AMY DAUGHERTY, Legislative Administrative Assistant to Representative Alan Austerman Alaska State Legislature Capitol Building, Room 434 Juneau, Alaska 99801 Telephone: (907) 465-4230 POSITION STATEMENT: Presented HB 392. BRUCE SCHACTLER, United Salmon Association P.O. Box 2254 Kodiak, Alaska 99615 Telephone: (907) 486-4686 POSITION STATEMENT: Testified in support of HB 392. VIRGINIA ADAMS, United Fishermen of Alaska 620 Hemlock Street Kodiak, Alaska 99615 Telephone: (907) 486-6834 POSITION STATEMENT: Testified in full support of HB 392's intent, noting the bill's present language had not been brought before UFA's full board for approval. RICK LAUBER, Lobbyist for Pacific Seafood Processors Association 321 Highland Drive Juneau, Alaska 99801 Telephone: (907) 586-6366 POSITION STATEMENT: Testified against HB 392, suggested changes. CHRIS BERNS, commercial fisherman P.O. Box 26 Kodiak, Alaska 99615 Telephone: (907) 486-5091 POSITION STATEMENT: Testified in support of HB 392. KRIS NOROSZ, Government Affairs Icicle Seafoods, Incorporated P.O. Box 1147 Petersburg, Alaska 99833 Telephone: (907) 772-4294 POSITION STATEMENT: Testified against HB 392. PAUL DICK, Revenue Audit Supervisor I Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 465-3691 POSITION STATEMENT: Answered questions on HB 392. REPRESENTATIVE ERIC CROFT Alaska State Legislature Capitol Building, Room 430 Juneau, Alaska 99801 Telephone: (907) 465-4998 POSITION STATEMENT: Sponsor of SSHB 49. DAN KECK, Chairperson State Legislative Committee American Association of Retired Persons P.O. Box 438 Sitka, Alaska 99835 Telephone: (907) 747-3408 POSITION STATEMENT: Testified in support of SSHB 49. DON PEACOCK, President Alaska Federation National Association of Retired Federal Employees 6623 Fairweather Drive Anchorage, Alaska 99518 Telephone: (907) 349-1714 POSITION STATEMENT: Was unable to testify, faxed a statement in support of HB 49 to the committee. LES GARA 1242 West 10th Avenue Anchorage, Alaska 99501 Telephone: (907) 274-0730 POSITION STATEMENT: Testified in support of HB 49. JAMES BEVERIDGE, Consumer Advocate Alaska Public Interest Research Group 507 "E" Street, Number 202 Anchorage, Alaska 99501 Telephone: (907) 278-3661 POSITION STATEMENT: Testified in support of HB 49. FLOYD E. HEIMBUCH, Executive Director Older Persons Action Group, Incorporated 2140 Saratoga Avenue Anchorage, Alaska 99517 Telephone: (907) 276-8563 POSITION STATEMENT: Testified on HB 49. EUGENE E. (GENE) DAU, Capital City Task Force State Legislative Committee American Association of Retired Persons P.O. Box 20995 Juneau, Alaska 99802 Telephone: (907) 586-3816 POSITION STATEMENT: Testified in support of HB 49. MARIE DARLIN, Legislative Chair and Past-President Alaska Federation National Association of Retired Federal Employees 415 Willoughby Avenue, Number 506 Juneau, Alaska 99801 Telephone: (907) 586-3637 POSITION STATEMENT: Testified in support of HB 49. ACTION NARRATIVE TAPE 98-15, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:22 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson, Sanders and Brice. Representatives Ryan and Kubina arrived at 3:23 p.m. and 3:30 p.m. respectively. HB 387 - DENTISTS ABILITY TO DO CPR Number 0084 CHAIRMAN ROKEBERG stated the committee's first item of business was HB 387, "An Act relating to dentists." He invited the bill's sponsor to come forward. Number 0091 REPRESENTATIVE THERRIAULT stated HB 387 is intended to give the Board of Dental Examiners the ability to enter into formal Memorandums of Agreements (MOAs) with applicants or licensees who are unable to perform cardiopulmonary resuscitation (CPR) as required in statute. Representative Therriault said currently the board enters into MOAs when it is determined that an applicant or licensee is physically unable to perform CPR. However, during a legislative audit conducted last year, it was discovered that the board possesses no statutory authority to enter into such agreements. He stated this bill gives that authority to the Board of Dental Examiners while preserving the spirit and intent of the statute: to protect the patients of dentistry. Number 0156 REPRESENTATIVE THERRIAULT referred to a copy of the letter from the Division of Legislative Audit in the committee members' bill packets. He noted the audit primarily looked to see that an MOA had been extended properly, but in determining that it had been extended properly as far as the board's actions, the auditors also made this following finding: "Our review of this particular case has raised concerns about whether the board can exercise such discretionary authority. From our reading of the statute it appears the board has, through the use of the MOA, permitted the dentist to continue to practice under terms that are inconsistent with the requirements of statute. We have made inquiries of the Department of Law (DOL) and will be notifying OccLic (Division of Occupational Licensing) of our question regarding the board's authority and action in this area. We will keep your office apprised of any further developments." He noted the Division of Legislative Audit had kept his office informed, and he commented on letters in the bill package in support of the legislation from the DOL, Commissioner Sedwick of the Department of Commerce and Economic Development (DCED), and Dr. Kenneth Crooks, Chairperson of the Board of Dental Examiners. Representative Therriault noted that board was unable meet to take formal action so Dr. Crooks wrote a personal letter of support for the intent of HB 387. Number 0280 REPRESENTATIVE THERRIAULT stated there was a proposed committee substitute (CS) which limited MOAs to those people who can demonstrate to the board that they have some physical limitation which makes them unable to perform CPR. He noted the legislation's intention had not been to allow anyone who didn't want to get CPR certification to petition to the board and have someone else on their staff certified. Representative Therriault said he thought it probably is appropriate for a dentist who actually doing intrusive dental procedures to be CPR-certified, unless he or she can document a physical limitation. He stated he was available for questions, and also noted the presence of Catherine Reardon, Director of the Division of Occupational Licensing. Number 0353 CHAIRMAN ROKEBERG stated he would entertain a motion to adopt the proposed CS labeled 0-LS1474\B, Lauterbach, dated 2/18/98. Number 0357 REPRESENTATIVE JOHN COWDERY made a motion to adopt the proposed CS. Number 0362 CHAIRMAN ROKEBERG stated, hearing no objections, the proposed CS was adopted. Number 0368 REPRESENTATIVE TOM BRICE asked if there was a need to include dental hygienists, requesting some discussion regarding that. Number 0398 REPRESENTATIVE THERRIAULT stated that had been brought up in some of the letters of support, and would be something the committee might want to consider, noting he wanted to draft the legislation to take care of a particular problem. If the committee wanted to expand it, he would leave it up to the committee's discretion. Number 0423 REPRESENTATIVE JOE RYAN asked if the department could have done this by regulation. Number 0432 REPRESENTATIVE THERRIAULT answered in the negative, saying he believed that the auditor determined the existing law was fairly specific: dentists were supposed to be CPR-certified. Number 0444 CHAIRMAN ROKEBERG referred to page 3, line 1, which he quoted, "Another person who is certified in CPR shall be in the same room ..." He noted the use of the word "room" rather than "premises" or "office" and what that intention was. Number 0463 REPRESENTATIVE THERRIAULT explained he thought the MOAs currently entered into require the person, the dental assistant, to be in the room in case a person has a sudden heart attack. Representative Therriault indicated they wanted a CPR-certified person in the same room with the patient. He noted that certainly if the dentist was certified, he or she would be right there with the patient. Number 0492 CHAIRMAN ROKEBERG asked if there were any further questions. Number 0503 REPRESENTATIVE RYAN made a motion to move the proposed CS for HB 387, out of committee with individual recommendations and without a fiscal note. Number 0520 CHAIRMAN ROKEBERG, hearing no objections, stated CSHB 387(L&C) was so moved. HB 392 - REPORTS: FISH TAX & SALMON PRODUCTS Number 0533 CHAIRMAN ROKEBERG stated the committee's next item of business was HB 392, "An Act relating to access by the Department of Environmental Conservation and the Department of Fish and Game to confidential tax records for fisheries resources prepared or kept by the Department of Revenue under AS 43.75; relating to certain salmon products reports; and providing for an effective date." Number 0543 AMY DAUGHERTY, Legislative Administrative Assistant to Representative Alan Austerman, came forward to present HB 392 noting Representative Austerman would be in attendance shortly. She stated that HB 392, as set forth in the sponsor statement, spoke to several of the reporting requirements. MS. DAUGHERTY stated HB 392 addresses exvessel value reporting and wholesale price reporting to the state. The first part of the bill allows the Department of Revenue (DOR) to share, in confidence, exvessel value information with the Department of Fish and Game (ADF&G) and the Department of Environmental Conservation (DEC); and the second part of the bill updates wholesale price reporting by requiring better and more timely information from processors. She said she could go through the original bill, but noted she brought forward a proposed CS. She explained that there had been a lot of adjustments based on feedback, and the decision had been made to incorporate the suggested changes into a proposed CS since there was consensus from all parties, the agencies as well as processors and fisherman. Ms. Daugherty noted there was one outstanding amendment. Number 0645 CHAIRMAN ROKEBERG stated the committee had before it Version H of HB 392, labeled 0-LS1423\H, Bannister, dated 2/18/98, and would entertain a motion to adopt Version H. Number 0661 REPRESENTATIVE BILL HUDSON made a motion to adopt Version H. Number 0645 CHAIRMAN ROKEBERG indicated Version H was adopted. He also noted the amendments the committee had before it, asking Ms. Daugherty if she wished to speak about the substance of the bill or have the committee move the amendments first. Number 0683 MS. DAUGHERTY stated the proposed CS incorporated most of the amendments and the outstanding amendment, which she called Amendment 8, could be discussed after they had talked about the body of the bill. Number 0704 MS. DAUGHERTY stated the first three sections of HB 392 concerned the exvessel value reporting and allow the departments to share some of this information. She said she believed currently ADF&G and DEC do not have access to DOR's exvessel value reporting, but DOR has access to numbers from ADF&G. The agencies have deemed this access a real need in order for the reporting to work for the state and the industry. Ms. Daugherty stated that from Section 4 on the bill is concerned with wholesale reporting, and she noted the original bill version read across the House floor spoke to canned salmon. She said they have been informed that the term used by DEC in its regulations, as well as within the federal regulations, is "thermally processed." For consistency, that term is now in the proposed CS. She said Section 4 also sets out three reporting periods a year in which the processors need to give this information to DOR. Ms. Daugherty noted this wholesale value is currently reported semi-annually. She said Section 5 is concerned with the size of the containers, since the intention was to include not just canned product, but the pouched salmon which is newly on the market. She stated they wanted that type of information in the wholesale reporting as well. Number 0842 MS. DAUGHERTY referred to use of the term "thermally processed," noting there were many adjustments with that change in language; those are the changes contained in Section 6. She stated the deleted language in Section 7 is essentially the language currently in statute referring to specific can sizes often no longer in use. In order to receive accurate marketplace information, Ms. Daugherty said the generic reference is now: "In the size of the container which the salmon is sold," so that no matter how it is sold the wholesale value is reported. She said Sections 8 and 9 are adjustments for the use of the term "thermally processed" instead of "canned." Ms. Daugherty commented that Section 9 is already in statute and does not require any new reporting to the legislature. She noted the audit section begins with Section 10, "At the expense and the request of a collective price bargainer," and she states it goes on to define that "'collective price bargainer' means a person who represents 50 or more persons who are engaged in the business of fishing for salmon in the state and who negotiate with fish processors." She stated, "An audit ... will be selected by the department to evaluate the sales records of fish processors who submit the reports of the wholesale value. ... The department will be selecting the auditor, they are required also in this section to sign a confidentiality agreement supplied by the department which they have on hand anyway because often they contract out some of their audits." Number 0975 REPRESENTATIVE RYAN asked what the brief rationale was for having the department come up with the auditor, rather than the person hiring the CPA (certified public accountant). He said it was going to be a lot more expensive. Number 0999 MS. DAUGHERTY responded that they were trying to avoid stressing the DOR with another duty. She stated that currently the DOR doesn't audit this wholesale price information because it doesn't really affect the department's income, which is based on the exvessel value mentioned in the first three parts of HB 392. So, she said, even though the DOR receives this information, the department doesn't audit it because it doesn't apply to taxes. She said that in order to enable this information to be audited, they wanted to provide a mechanism for it to be audited by someone other than DOR but with the DOR's oversight, to avoid stressing the department's resources. Ms. Daugherty commented she thinks the processors feel more comfortable having DOR appoint the auditor, with the department's confidentiality statements, et cetera, rather than having "some guy ... off the street who has (indisc.) documentation." Number 1065 CHAIRMAN ROKEBERG noted, on that point, Section 10 refers to "the department," and he asked if that meant DOR set the auditor. MS. DAUGHERTY answered in the affirmative. Number 1075 CHAIRMAN ROKEBERG also asked for an explanation of the zero fiscal note, wondering how that could be if DOR was (indisc.) an auditor. Number 1079 MS. DAUGHERTY said they were hoping to receive a zero fiscal note because, and that was part of the reason the industry or the collective price bargainer was willing to pay for this, essentially the only stress on DOR would be the appointment of the auditor and showing him or her the records to be audited. Number 1098 CHAIRMAN ROKEBERG commented then, that if the Chairman had thoroughly understood the bill, he would have figured that out already. Number 1106 MS. DAUGHERTY stated that this is the part that has had the most amendments since the initial House version because they have been working with processors and fisherman, trying to get as much consensus as possible. The confidentiality section was changed regarding the "boilerplate" language with DOR, and the appointment of the auditor by DOR was also incorporated into the proposed CS. She noted there were also some class A misdemeanor provisions. Ms. Daugherty stated the rest of the bill was mainly definitions. She said the transition was "a little tricky," noting that was another change from the original version. Because of the change from two to three [reporting] periods per year, and the desire to get all of the information, there was a small transition overlap and one small change from the original bill. She noted they were also trying to get this information on-line as soon possible so it could be utilized. Number 1170 CHAIRMAN ROKEBERG asked if she had stated that Section 13 requires 3 reporting periods. Number 1178 MS. DAUGHERTY explained the reporting was actually set out in Section 4, and the transition simply makes the switch from the 2 to 3 periods. Number 1194 REPRESENTATIVE RYAN moved Amendment 1, labeled 0-LS1423\H.1, Bannister, dated 2/18/98, to the proposed CS. Amendment 1 read: Page 2, line 30, following "wholesale": Insert "and whose business sells more than 240,000 pounds of thermally processed salmon products at wholesale during a calendar year" Page 2, line 30, following "department": Insert "during the following calendar year" Page 3, line 2, following "each": Insert "reporting" Page 3, line 3, following "April 30": Insert "of the reporting year" Page 3, line 4, following "each": Insert "reporting" Page 3, line 5, following "August 31": Insert "of the reporting year" Page 3, line 6, following "each": Insert "reporting" Page 3, line 7, following "December 31": Insert "of the reporting year" Page 3, line 12: Delete "If a processor does not sell thermally processed [SELLS NO CANNED] salmon products during a reporting period, the report for that period must [SHALL] include only a statement of that fact." Insert "[IF A PROCESSOR SELLS NO CANNED SALMON PRODUCTS DURING A REPORTING PERIOD THE REPORT FOR THAT PERIOD SHALL INCLUDE ONLY A STATEMENT OF THAT FACT.]" Page 3, line 18, following "However,": Delete "a" Insert "the" Page 5, following line 23: Insert a new paragraph to read: "(7) "reporting year" means the calendar year after the calendar year in which a fish processor's business sells more than 240,000 pounds of thermally processed salmon products;" Renumber the following paragraphs accordingly. Page 5, line 28: Delete "and" Page 5, line 29, following "1998": Insert ", and must be filed by a fish processor whose business sold more than 240,000 pounds of thermally processed salmon products at wholesale during the 12- month period ending August 31, 1998. In this section, "fish processor" and "thermally processed" have the meanings given in AS 43.80.100" Number 1206 CHAIRMAN ROKEBERG asked if there were any objections. Hearing none, he stated Amendment 1 was adopted. He asked Ms. Daugherty to describe the amendment. Number 1221 MS. DAUGHERTY stated that the amendment started out as a threshold. She said they had been contacted very recently by DOR, who said the intention was not to encumber the "mom-and-pop" operations, so they were looking for a threshold to exempt small organizations from reporting requirements. In working with industry and DOR, in this amendment they have exempted businesses that sell less than 240,000 pounds of thermally processed salmon products a year. Ms. Daugherty said the rest of the amendment looked like it was just adjustments to the statutes. She referred to lines 4 and 5, "during the following calendar year", noting that, in other words, if an operation sold less than 240,000 pounds in the preceding year, it would be exempted in the next year. She referred to wording on page 2 of the amendment, "that report shall include only a statement of that fact", and she noted, upon review, they realized reporting would be an unnecessary duty on those processors. Number 1326 CHAIRMAN ROKEBERG questioned if that deletion was intended to absolve the processor from reporting duty if the processor was under the threshold. Number 1336 MS. DAUGHERTY replied that was correct, and she stated it also meant the people who didn't sell any thermally processed salmon didn't have to write a letter to that effect. Number 1349 CHAIRMAN ROKEBERG commented that there were witnesses who wished to testify on HB 392, noting the presence of Janice Adair on teleconference. Number 1380 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, stated via teleconference from Anchorage that she had no testimony, but was available to answer questions from the committee. Number 1389 CHAIRMAN ROKEBERG noted the committee had no questions for Ms. Adair. Number 1424 BRUCE SCHACTLER, United Salmon Association, came forward to testify. He stated the United Salmon Association is a marketing cooperative incorporated in the state of Washington and licensed to do business in Alaska, with approximately 1,000 members in Alaska. In the past year the association has attempted to somewhat change the way business has been done in the seafood industry for the last 100 years, and they feel there have been some great changes for the industry. He said they found, during that process, that some changes needed to be made in this particular regulation to address the way business is being done nowadays in the salmon industry. Mr. Schactler noted he thinks the relationship among all aspects of the industry during this process has been one more of cooperation from the harvesting side and the processing side, and he noted they haven't had a common source of information that they can use to do business together. He sees this as providing that source in a timely and accountable way, and thinks it will be a great benefit, not only to the industry, but also to the state of Alaska. Number 1511 MR. SCHACTLER stated, for products sold presently, it may be as long as 18 months before the state of Alaska knows what its resource is worth, and he thinks that is unacceptable in this "age of information." He said the legislature, as stewards of the state's resources dealing with the tax base, should be able to know what these products are worth, as should they, the harvesters and salespeople of this resource. He noted they ought "to be all on the same page of music," understanding the value of this product on the world market in a much more timely manner. Mr. Schactler said he saw much of this as housekeeping, bringing them into the way modern business is being conducted, noting the industry has changed over the last forty years. He said he would certainly hope this was being brought forward in the spirit of cooperation. He stated they have been trying to do that over the last several weeks as this legislation has been developed, and even five minutes ago with the adoption of the latest amendment into the proposed CS. He stated his organization has no problems with making this compatible for everyone. Number 1587 CHAIRMAN ROKEBERG called on Kris Norosz in Petersburg to testify. Number 1598 KRIS NOROSZ, Government Relations, Icicle Seafoods, Incorporated, speaking from Petersburg via teleconference, asked to delay her testimony until she was able to look over the proposed CS. Number 1634 VIRGINIA ADAMS, United Fishermen of Alaska (UFA), came forward next to testify. She stated, "As you know we're here for our semi- annual board meetings, we would like to qualify our endorsement by saying that we have not brought this bill with its present language before our full board for approval, but that we fully endorse the intent of this bill. We discussed in our full board meetings that we were looking for this type of legislation to come before you so that we could have more accurate reporting data for the industry, so that we could move forward in establishing prices with ... real- time data. So without going any further, without having brought this before our full board, I would like to say that UFA does stand firmly behind this type of legislation and we encourage you to pass this." Number 1674 CHAIRMAN ROKEBERG asked Ms. Adams if she had examined the latest amendment regarding the threshold, and if she thought it was a good thing. Number 1679 MS. ADAMS answered that she thought it was, noting she would not want to burden small processing facilities with unnecessary work. She stated the intent of the bill is really to enable industry to work with real-time data, and that is on a much larger scale for them than a small processing facility in, for example, Cook Inlet or Prince William Sound. She said this was aimed much more at bringing the industry into conformity with most other industries, noting very few industries have only an annual wholesale report for their producers to work with. She said it is very difficult for producers to determine adequate pricing for their product with data that can sometimes be a year old. Number 1727 RICK LAUBER, Lobbyist for Pacific Seafood Processors Association, came forward next to testify. He said he "hated to rain on the parade" of the previous witnesses, but the members of his association did not think much of this legislation. Mr. Lauber stated, "Let me just go back a few years. Canned salmon was taxed by the state of Alaska based upon the average wholesale price of the salmon (indisc.) period of time over an average years and that's the way the tax was collected until about 1979 or 1980, when the canned salmon was taxed the same way as other seafood, and that was based upon the exvessel price." Mr. Lauber said the tax used to be 3 percent of the average wholesale price of the canned product and then it went to 4.5 percent. At the time this happened, there was one seafood harvester group using a small sliding scale; about 85 or 90 percent of their price was paid up front and there was a small part of it that was held back, and this was based upon the average price. He noted most of the state did not do that, and has not over the years. Mr. Lauber said they needed some method to continue that, and although it was a relatively small group, the state decided it was necessary, so there is the existing law. He noted not very many years later things changed, and that group stopped using the sliding scale, but no one thought to come to the legislature and say, "Gosh, we don't need this anymore. All you processors don't need to issue all those reports." Number 1833 MR. LAUBER stated they have been reporting this and nobody has been using it, noting, "As you know it hasn't been audited, and so it's not a -- until this situation came along and now somebody wants to amend it. Well I have a good amendment and that is repeal the - the old law." He stated he appreciated the efforts of the sponsors, staff and others who have attempted to make some amendments to the bill, which he thinks by and large are an improvement. However, he referred to the analogy of making a silk purse out of a sow's ear, saying it was not going to work. Mr. Lauber said all the change in reporting status does is require the processors to report more frequently. This would require them to report at probably their busiest time, when they're doing things like paying fisherman and suppliers, settling up with people, et cetera. He said he doesn't know how many thousands and thousands of these reports they have issued that nobody has paid any attention to, and now they are being asked for three more. He said that if any reports were to be required, he thought two were adequate, but one would probably be sufficient. Number 1909 MR. LAUBER said, however, they probably save their most serious concern for the auditing provision. He said the provision has been changed so that DOR would select the auditor, but he wanted the members of the committee to look at just exactly what they were doing. He stated, "Is this really something that the state government should be involved with? ... At the direction and request of somebody as putting auditors in various places. I submit that that's really not a function of government." Mr. Lauber said they have no problem with any fishermen's organization negotiating an agreement with a processor that contains a provision giving the fishermen's organization the right to audit the buyer's books. He said that is fine, it is collective bargaining, and they are entitled to do that. However, he said what the committee was being asked to do was authorize the audit of the books of somebody a 1000 miles away, to whom the fishermen had never sold a pound of fish, and to whom the fishermen might never sell fish. Mr. Lauber noted one of his big objections also was that an individual company could be selected for audit, and although it was said the company's identity would be kept confidential, if the [audit] information was released, "you'll know darn good and well ... who you audited." He said, "Certainly (indisc.) the state requires that, I think, no less than three or four people to release any information. We don't release fishermen's information - where they caught their fish - unless there are at least three or four reports issued, so you - you can't determine the information from one person. For instance, in this thermally processed thing they're talking about pouches. Now pouches are an excellent new product but I don't know that they're widespread use. You would audit -- if you report all the pouches, there may be only a couple of producers of pouches so they're going to know what the other person's prices are and so forth." Number 2031 MR. LAUBER noted he wanted to make the distinction that they did not object to an audit. They objected, in this case, to the fishermen demanding the audit and the state directing them to audit. He stated, "If ... any organization wants to have an audit of a fish processor, then negotiate with that fish processor and have the audit. Let's not have the state mandating that type of collective price bargaining." Mr. Lauber noted the proposed CS was also new to him, and he asked for some clean-up language on the collective price bargainer. He commented that it mentioned 50 harvesters; he thought they must mean 50 permit holders, but that needed to be made clear, giving the example that 10 seine boats with crews of 5 could demand an audit for someplace 1000 miles away in Bristol Bay. In another suggestion, Mr. Lauber noted the fish processors are taxpayers and the DOR audits its taxpayers; they have the DOR's auditors in and out of their businesses frequently. He said if the people wanted the information, he thought it would be a simple matter for one of the DOR's tax auditors to merely check on the processor's reports given under the current law to see if the processor's books corresponded to the information given. He noted if this was important, they had state auditors onsite who could do this with very little additional time and money. Mr. Lauber stated he thought the bill would need a lot work before it moved, and he hoped the committee would take the concerns he mentioned into consideration because, he said, "I think this is walking you down the wrong path ... in the state requiring something forced upon industry that is not the business of the state but is left with the individual." Number 2139 REPRESENTATIVE RYAN asked if Mr. Lauber had served on the bench at one time, and if he still had some friends left there. Number 2144 MR. LAUBER replied he had served, and, in answer to Representative Ryan's question about friends, he said he thought so, but none who were there when he was there. He added that if he had stayed on the bench, he wouldn't be there any longer either, because retirement at 70 was mandatory, and there was no such requirement for lobbyists. Number 2161 REPRESENTATIVE RYAN referred to the changes Mr. Lauber had suggested and asked if he had anything in writing he thought would be applicable. Number 2165 MR. LAUBER answered in the negative, noting he had just seen the committee substitute a few moments ago. Number 2168 REPRESENTATIVE BRICE added that they had just received it that day. Number 2172 CHAIRMAN ROKEBERG agreed, and stated for that reason and the testimony just heard, the Chairman did not want to move the bill at this time. Number 2184 REPRESENTATIVE JERRY SANDERS questioned if he had understood Mr. Lauber correctly, asking if this bill required three additional reports. Number 2189 MR. LAUBER answered in the negative, indicating there would be one additional report per year. He said the current law requires them to make two reports, which, he added, have not been used in recent years. He stated three reports are now wanted, and presumably these reports are going to be used for a short period of time. Mr. Lauber stated, "Had I had the presence of mind at the time that this bill originally passed, maybe I could have negotiated a sunset clause, 'If you don't use it, lose it, renew it,' ... because we've been going with this for years and nobody's been paying much attention to it -- and I believe even the contract to find out what the price is has other sources for that information." He said he believed there were several other, more current, sources for this information besides the state of Alaska. Number 2229 REPRESENTATIVE GENE KUBINA requested, for the committee, a response from the sponsor's representative to questions raised by Mr. Lauber's negative testimony. Number 2239 CHAIRMAN ROKEBERG noted there certainly would be an opportunity for the sponsor's representative to respond, but there was another witness waiting to testify via teleconference. Number 2250 CHRIS BERNS, commercial fisherman, testified via teleconference from Kodiak. He stated he had been a fisherman since 1970, and when they were doing sliding scale back then and different contracts things came in, they used the wholesale price averages "stuff," it came out of the candle (ph) formula. He said that formula came from a group of Cordova fisherman. Mr. Berns stated it gave them something to base what they were going to get paid for their salmon on. He said Mr. Lauber's testimony that the state didn't have any business messing around with this was kind of funny since it was a common property fishery owned by the state. Mr. Berns said it wouldn't matter if the fish were harvested by fish traps, trawlers or individual small businesses like salmon fishermen, because the state derives its taxes off the exvessel value of the fish, and if the state of Alaska, as the owner of the fish, can't raise that exvessel value, the state is never going to get any more taxes. He said he hopes all the committee members realize that they have lost $100 million in exvessel value in the previous two years, $100 million a year, noting that is total statewide exvessel value. Mr. Berns said that basically they've gone from an over $500 million exvessel value in Alaska for salmon in the late 1980s to currently about $230 or $240 million exvessel value for the state of Alaska's salmon harvest. He commented that everybody's fish is taxed, canned salmon at 4.5 percent raw fish tax, and 3 percent for frozen. He said it is an awfully big tax base they'll be losing, and all they need to do is get the price of salmon back up. Mr. Berns noted that the intention was not to put pressure on the processors; he said that hopefully the processors will make money, then the fishermen and harvesters make money, and the state, as the owner of the resource, makes money. Number 2353 MR. BERNS described the situation in Canada. He said there is one main buyer in Canada, and that buyer is vertically integrated into Lustin (ph) Foods, a big Canadian supermarket chain. Because of this vertical integration they can't trace what goes on with the books, and so in Canada they base their contracts on out-of-country export values. Mr. Berns explained that was because basically if the processor lied about its export taxes, it would be lying to the government and "there'd be some teeth there." He noted it was possible to mess around with the books inside a domestic market. He stated this bill basically came out of the frustration of trying to negotiate a contract with a number of different processors, different companies, who did not want to show their books. Number 2389 MR. BERNS stated, "Rick Lauber spoke to -- you know you negotiate individual companies into a third-party auditing deal, ... and none of them were willing to do that at all. Maybe one of 'em was (indisc.) but most of 'em said, 'No way, we'll just use this average wholesale case value.'" Mr. Berns commented that there were problems with that because, basically, as Mr. Lauber correctly said, the processors were out of compliance on these reporting requirements for years because nobody really cared about it. Mr. Berns stated, "When you lose such exvessel value that everybody wakes up ... in the harvesting center and all of a sudden wants to raise the exvessel values back ... up into some range where it's feasible to fish salmon, well, these reporting requirements are very important again." He said there were many things that were true in the picture Mr. Lauber painted, but the dire straits of the salmon fishery currently was that they had to raise their prices up. He said, "And you know when you're talking about this season for pink prices they went from a nickel to over 12 cents [a pound] and hopefully they'll be higher ... if the case price is higher because we've negotiated a sliding scale based on ... an average case price -- so (indisc.) this legislation, ... whether it gets amended, and hopefully ... the fishermen and Mr. Lauber and the processors can work together to come - to come - to some compromise that everyone'll be happy with. ... Nobody likes to do more paperwork, and nobody likes to get audited, but I'd like to say that it's the state who will win if we ... [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 98-15, SIDE B Number 0001 MR. BERNS continued "... basically driving the price of the cases down, you know, and the price of our exvessel value, so I just think that you need to really look into this bill and see that it does benefit the state of Alaska. It's just -- this isn't a private enterprise thing between processors and salmon fishermen, and I thank you for your time." Number 0018 CHAIRMAN ROKEBERG asked Mr. Berns if he could define exvessel value for the committee. Number 0027 MR. BERNS stated, "That's the price that you get paid at the dock when you deliver fish, and you know that's ... what the state derives its raw fish tax from, so if we get paid a dime a pound, the state takes their - their, either their three cents ... [BRIEF TAPE MALFUNCTION, SOME TESTIMONY LOST] ... (indisc.) of a dollar, however you want to look at it, so, you know -- and that's the only level that the fish are taxed at, ... they aren't taxed at a ... wholesale level or retail level. They're just taxed at by what the processors pay the fishermen, and that's where the state derives the taxes from." Number 0054 CHAIRMAN ROKEBERG commented, before the public testimony on HB 392 for this meeting was concluded, he wanted to return to Kris Norosz in Petersburg. Number 0065 KRIS NOROSZ, Government Affairs, Icicle Seafoods, Incorporated, testified via teleconference from Petersburg. She stated she had just been handed the proposed CS and would keep her comments brief. She was concerned with some of the aspects of this bill in that it increased the number of departments which could receive, not only the reports regarding wholesale fish value, but also income tax returns and any other information supplied to DOR. She noted that, while she understands the intent of confidentiality, it is her experience the more people who know a secret, the less likelihood it will remain a secret. She hopes the committee appreciates the company's concern about confidentiality, noting she shares Mr. Lauber's concern that this seems to be an unwarranted intrusion by the state into proprietary aspects of their business, and she is concerned with the whole idea and the extent that this audit would have. Ms. Norosz said she would like to make further comments after thoroughly reviewing the proposed CS and amendments, but stated, for the record, that Icicle Seafoods is opposed to this bill. Number 0140 MS. DAUGHERTY came forward to respond to the processors' point of view. She stated she was frankly a little surprised that Mr. Lauber was still opposed to the bill because they had discussed many of the changes incorporated in the proposed CS. Ms. Daugherty said she knew Mr. Lauber had still had one outstanding concern. She noted he had said he would prefer it if there were minimum number of processors of a stipulated size audited at a single time. In other words, the auditor couldn't audit just one processor, but would have to have a sampling of the minimum size, to avoid word getting out that a certain processor was being audited. Ms. Daugherty stated they had proceeded with that thought, running it by some of the fishermen, fishermen's organizations and DOR. She noted a representative from DOR was present and she was not sure she should speak for the department, but she indicated DOR's view was that this desire for a sampling size requirement was based the premise that the confidentiality was not going to work, and that was not the way DOR performed audits. She stated DOR takes every safeguard along the way to maintain confidentiality, and it standardly works. She noted, "If there was a problem, then ... it would be, perhaps, at the individual processor, as far as word getting out." Ms. Daugherty said DOR did not seem to think that requirement was necessary, and so that was the only thing not incorporated into the proposed CS from her last conversation with Mr. Lauber several days ago. She stated they are certainly willing to look at language modifying the collective bargainer definition, and she thought, "As far as exvessel audits - exvessel value audits currently - currently exercised by Revenue, this was the way that we found in talking to them, to -- in order to assure accuracy, just having this stuff in statute on that wholesale information, this was the way to do it, and not have a fiscal note - in other words, not have a fiscal impact on the agency. ... So that's why we are - why we're here." Number 0253 REPRESENTATIVE KUBINA referred to the language on page 4, lines 19 and 20, quoting, "In this subsection the term "collective price bargainer" means a person who represents 50 or more persons who are engaged in the ..." and he asked if it would be possible to change that to "50 or more permit holders, and who negotiate with fish processors". Number 0271 MS. DAUGHERTY stated that was up to the all the parties involved, noting it was a valid point. Number 0279 CHAIRMAN ROKEBERG stated, for everyone's information, it was his intention to send this bill back to the sponsor, as this was the only committee of referral in the House, and he wanted to make sure the bill had a modicum of consensus before the committee took it up again. Number 0298 REPRESENTATIVE RYAN commented to Ms. Daugherty, Benjamin Franklin had observed that three people can keep a secret if two of them were dead. He asked if DOR had given her a sequence of events showing how the department maintained confidentiality. Number 0308 MS. DAUGHERTY noted she had had extensive conversations with DOR, and would prefer it if a department representative spoke regarding the sequence of events. Number 0325 PAUL DICK, Revenue Audit Supervisor I, Income and Excise Audit Division, Department of Revenue, came forward to testify. He stated they collect fishery business taxes and also the wholesale reports currently based on canned salmon. Number 0337 CHAIRMAN ROKEBERG asked what the bill did, what was being reported, and why it was being done. Number 0344 MR. DICK responded that the substantive change made by HB 392 was to move away from the specific can sized defined by law, noting different size cans are currently being produced, and the industry is also moving into different technologies including pouching for shelf-stable product. Mr. Dick stated that is what was substantively happening with the reporting requirements. He also stated the first part of the bill addressed some authorization for DOR to exchange information with ADF&G and DEC, and that was really a stepping stone toward consolidated reporting for the processors. He noted currently the processors report certain information to ADF&G and DOR; he commented a lot of the information is the same but because DOR's information is confidential under the tax statutes, there has to be this separation of reporting requirements. Number 0397 MR. DICK said DOR has taken the first step on the public process with the licensing of fishery businesses, and the department is in its second year of a consolidated license application. DOR has consolidated the licensing applications of ADF&G and DEC in with DOR's, noting it was a "one-stop shopping" for the fishery businesses. He said they were able to do that because licensing information is public. Mr. Dick said that allowing this exchange of information would be the next phase of their project, so that the fish processors could report to the DOR, probably, because DOR would strip off the tax information but the common information would be available to ADF&G. He stated DOR already has this type of arrangement with the Department of Natural Resources (DNR) in the statutes, noting a couple of years ago the legislature authorized DNR to exchange mining tax information with DOR. Mr. Dick noted DNR is under the same confidentiality requirements as DOR, and the two departments have been very successful in exchanging information. He referred to Representative Ryan's question about the sequences of confidentiality, and said that the processors file the tax returns with DOR and the department keeps that information confidential, stating the department has an excellent track record of not divulging information. Number 0467 REPRESENTATIVE RYAN stated, "There's this concern in the testimony that this information may leak by who you audit, or, say, there's only so many people that pouch the fish - the product, and then, and everybody knows who they are, and if that information got out it would be detrimental to business, et cetera, et cetera." Representative Ryan asked how those concerns could be addressed, and if Mr. Dick could assure them there would not be a problem. Number 0488 MR. DICK responded that he could absolutely assure them DOR wouldn't be doing that, and he said he thought it would probably be more from inference, or possibly from the processors making a request which resulted in an audit under the current structure. He said any information that would come out would be inferential, but the DOR certainly wouldn't divulge that information. Number 0515 REPRESENTATIVE KUBINA stated it sounded like the information DOR would share with ADF&G or DEC was only the information that ADG&G or DEC would need. He asked if that were accurate - if, in other words, DOR didn't give the other departments "the whole tax issue," and he asked how it worked with DNR, asking if it was the same situation, or would the whole report be given over to ADF&G. Number 0536 MR. DICK replied that was correct, the DOR gives copies of mining license tax returns to DNR. REPRESENTATIVE KUBINA questioned whether it had worked. Number 0541 MR. DICK responded that it had worked, and noted the DOR had taken safeguards; DNR is required to return the copy of the tax return within a 30-day period to DOR. Number 0558 REPRESENTATIVE KUBINA asked if DEC or ADF&G, who were now getting other reports, would cease receiving those reports because all the necessary information would be included in this, and would this bill mean a reduction in paperwork. Number 0576 MR. DICK indicated that was what would happen. He stated there would be one report, like what was currently being done with the license application. He said there is now one license application, which is much easier for the license processor, noting there had been past complaints about the multiple licenses required. He said it worked both ways: the applicants only make one stop, and the departments were coordinated to ensure all of the licensing and permits were in place on the state level. Number 0601 CHAIRMAN ROKEBERG said he wasn't sure he understood how reporting a third time reduced paperwork. Number 0607 MR. DICK stated the reference had been to the fish tax return at that level, noting currently much of the information on the fish tax return was also recorded on ADF&G's commercial operator annual report. Number 0620 CHAIRMAN ROKEBERG commented he wished to proceed to HB 49. He indicated HB 392 would be held over in the hopes that it would come back to the committee in a more understandable form, with more consensus, so the committee could move it. SSHB 49 - CONSUMER PROTECT.: DIVISION & PENALTIES Number 0642 CHAIRMAN ROKEBERG announced the committee's next item of business was SSHB 49, "An Act establishing and relating to a consumer protection section in the Department of Law; increasing penalties for violation of laws relating to consumer protection; requiring special accounting for money from certain actions related to consumer protection; and providing for an effective date." He invited the bill sponsor to come forward. Number 0712 REPRESENTATIVE ERIC CROFT came forward to present SSHB 49. In background, he stated they were celebrating the 100-year anniversary of a colorful section of Alaska history. He said one of the most colorful characters of that period was Soapy Smith. Representative Croft noted Mr. Smith, who performed the type of work mentioned in this bill, was in the business of defrauding the public. Soapy received his name because he would sell soap with one bar containing a $5 or $10 bill wrapped with it. This bar would always be received by Soapy's henchman, but this practice led to huge soap sales from people looking for the money. Representative Croft stated those kinds of "scams" are still practiced today, noting he has received letters telling him he could get a snowmobile, but he said the notice actually says getting the snowmobile is a one in a million or one in a billion chance, and he's really going to get the worthless watch. He said every time this is done by a "scam artist," it undermines legitimate businesses who sometimes use that approach, noting, "Open an account with me ...." However, he said, if someone's been burned by that approach a couple of times the person is not going to patronize those legitimate businesses. Representative Croft noted Mr. Smith was also in the business of selling shoddy equipment to gold-miners. He said that also happens today. He commented that the most recent consumer protection case receiving a lot of publicity in the Anchorage area was a tire seller selling refurbished tires as new. Representative Croft noted this was a very difficult thing for a consumer to figure out, and even a sophisticated consumer who did figured it out and complained may have simply received a new tire. He indicated it is an extremely difficult practice for individual consumers to stop, and that is where the state comes in. Number 0820 REPRESENTATIVE CROFT commented that Alaska, like most states, had a consumer protection division in the mid-1980s; in fact, he said, every state had a consumer protection division. He said as the state slowly felt the effect of budget cuts, the consumer protection division was dissolved and reduced to about 1.5 attorneys covering the entire state for scams for anything from permanent fund dividend fraud (attempts to get individuals' dividends through some fraudulent means) to every one of the ways discussed above. He said this bill was intended to be a step toward curing some of that, noting Alaska is now the only state in the nation without a consumer protection division. Representative Croft explained the bill, as originally drafted, restored it as a division, but after discussions with the Administration they are now convinced that the section level would be appropriate and would raise awareness. He said they believe this is the minimum step in beginning to correct this declining trend. Representative Croft noted the bill adds one supervisory position which would not only prosecute these actions on behalf of the defrauded members of the state, but also work to annually make recommendations to the governor and the legislature to keep this updated. He commented that is, to some extent, what Daveed Schwartz (Assistant Attorney General, Commercial Section, Civil Division, Department of Law (DOL)), who is the 1 in this 1.5, does anyway in his spare time. Representative Croft said he has been with Mr. Schwartz on a number of his radio shows, noting Mr. Schwartz is a fount of personal and accumulated statistical knowledge in this area, and so, to some extent, is serving as the unofficial head of the division of consumer protection the state does not currently have. Number 0904 REPRESENTATIVE CROFT said the bill, besides establishing the section, also does two other important things. It increases the fine from $5,000 to $10,000, and it attempts to cure the chronic under-funding of this area by allowing the section to keep a designated fund of fines successfully obtained from defrauding businesses. If the court imposes a fine on a business that is found to have committed a crime, that fine can stay there to provide a pool of money to operate the section ["division" stated on tape]. He noted the fiscal note was approximately $140,000 because of the added position and attached support. Representative Croft said they have gone from about $800,000 to $1,000,000 for the state's consumer protection division in the mid-1980s down to 1.5 positions with paralegal support costing about $250,000. He noted the state's population has actually increased during that time. Representative Croft said this attempts to put some "teeth back," increase the fine, and provide a separate amount of money so that the fines pay for continued policing. Number 0971 REPRESENTATIVE RYAN stated that, to his historical recollection, Soapy Smith was mayor of Leadville, Colorado before he came to Skagway, where Representative Ryan also thought Mr. Smith was mayor. Representative Ryan noted he thought Mr. Smith had run as a Democrat. Number 0980 REPRESENTATIVE CROFT said he doubted that, but would look into it if Representative Ryan wished. Number 0986 CHAIRMAN ROKEBERG stated the committee would proceed to teleconference testimony. He noted the presence of Julia Coster, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, on teleconference in Anchorage to answer questions. Chairman Rokeberg requested witnesses limit their testimony to three minutes. Number 1036 DAN KECK, Chairperson, State Legislative Committee, American Association of Retired Persons (AARP) testified via teleconference from Sitka. He thanked the sponsors of the legislation, and gave some background information on the AARP's legislative committee. He said each year the committee works on four or five issues it thinks are most important to AARP members. He said that, looking at the telemarketing fraud the last few years, it is at the top of their list this year and the legislative committee is pushing hard to get legislation passed that will help. He stated HB 49 is most certainly a step in the right direction to help curb fraudulent activity in Alaska, commenting he has been told $10 million dollars was taken out of Alaska last year in fraud, and he noted that is a lot of money to go out of a state the size of Alaska. Mr. Keck stated senior citizens appear to be most affected by this and they are the group which can least afford to lose their money. He encouraged the members of the committee to move SSHB 49. Number 1128 DON PEACOCK, President, Alaska Federation, National Association of Retired Federal Employees (NARFE), was scheduled to testify via teleconference from Anchorage, but had to leave. A short statement in support of HB 49 was faxed to the committee which read: The some 1200 members of the National Association of Retired Federal Employees residing here in Alaska strongly endorse the intent of HB 49. We believe greater protection is needed for the elderly so that they may feel more secure in being able to avoid fraudulent practices, and if they are unable to avoid such practices, to understand that such perpetrators will be brought to justice. Number 1163 LES GARA testified next via teleconference from Anchorage. He stated he was an Alaska Public Interest Research Group (AKPIRG) member, and was formerly an attorney with the attorney general's office. He wanted to tell the committee that, as an attorney, he has received dozens of consumer complaints from people which have not been resolved by the state attorney general's office because the state does not have the funding to deal with these matters. Mr. Gara said he could guarantee them that if a position was funded to represent these Alaskans, the position would be cost effective because at the end of a year the state attorney general's office would have collected more money in the way of fines than it cost the state to represent these people. He stated, "You'll see that and the accounting provisions under this bill, I think, would - would provide for that." Number 1209 MR. GARA gave the most recent example of a case involving someone who came into their office who couldn't afford legal representation and couldn't be helped by the state. He related the story of Ruby Riley (ph), a 75-year-old woman whose husband died and who couldn't afford the lease payments on a car she had purchased at a local dealership. She brought the car in, traded down for four-year older Ford Taurus, and was told that, with the trade, she wouldn't owe any more money on her lease. She took the older car - she was living on a fixed income - and a few months later she started receiving bills from the lease company. She was told she owed $4,000 plus penalties. Mr. Gara said the state attorney general's office couldn't help her, but his office was fortunate enough to have a break in their work and were able to help. He noted he put in about 40 or 50 hours for Ms. Riley (ph), and he said that the leasing company, at the courthouse steps right before they were going to file a complaint, finally said they wouldn't pursue the bill. Mr. Gara commented that this kind of thing happens all the time, and, for better or worse, the private bar doesn't seem to be able to handle all of these cases on a pro bono basis, and the state can't handle them. He noted that the Ruby Rileys (ph) of the world go unrepresented, receiving these $4,000 bills which turn into collection agency notices. Mr. Gara said a large number of Alaskans are harassed every year by what is unethical conduct and there is nobody to stand up for them. He noted that was exactly where the state needed to act: where the claims are of such a size that the person can't afford an attorney. Mr. Gara noted there is a resource at the state attorney general's office in most other states to help these people. He strongly encouraged the committee to take note that this was not an ideological issue, stating, "It's not a Republican issue, it's not a Democratic issue; as far as I can see it's an issue of whether or not we're going to help Alaskans who have to deal with the daily stresses of consumer fraud." Mr. Gara commented he has a list of other cases that would fall under this Act's definition of fraud. Number 1352 CHAIRMAN ROKEBERG asked Mr. Gara if he could provide that information to the committee in writing. MR. GARA noted he was on his way out of town, but would try to meet the Chairman's request. Number 1375 JAMES BEVERIDGE, Consumer Advocate, Alaska Public Interest Research Group, testified next via teleconference from Anchorage. Mr. Beveridge noted AKPIRG is a nonprofit consumer research and advocacy organization, with approximately 3,000 members statewide. He stated that, through the research and advocacy they do at AKPIRG, they are exposed on a daily basis to many of the frustrations and financial losses experienced by Alaskan consumers every year, noting many of those were reflected in Mr. Gara's testimony. Mr. Beveridge stated that those people are mislead and taken advantage of by unscrupulous businesses which seem to be attracted up here. He said that was in no small way due to the lack of a fully-funded consumer protection division in Alaska, and was certainly exacerbated by a lack of resources in the DOL to be able to effectively respond to many of the consumer complaints and to enforce current laws. He said this bill certainly seemed like it would go a long way toward addressing a lot of these problems, particularly because it provides for a section ["division"] with a clear mission and intent, and a source of funding. Mr. Beveridge said he echoed Mr. Gara's words in that they believe the funding of a section ["division"] like this would certainly be covered by the revenue generated from fines and "things to do with the enforcement of those laws." He said they believe the package of this bill would benefit all Alaskan consumers and small businesses alike. Number 1512 FLOYD E. HEIMBUCH, Executive Director, Older Persons Action Group, Incorporated (OPAG), testified next via teleconference from Anchorage. Mr. Heimbuch noted OPAG is a statewide group which advocates for senior citizens. He stated he and Representative Croft had spent quite a bit of time discussing consumer protection. Mr Heimbuch said OPAG has a great concern for consumer protection, and he hopes something is done this legislative session. Number 1573 EUGENE E. (GENE) DAU, Capital City Task Force, State Legislative Committee, American Association of Retired Persons, testified next from the committee chambers in Juneau. Mr. Dau distributed some hand-outs to the committee before beginning his testimony. He stated, as Mr. Keck had testified, that the defrauding of citizens is one of the four issues most important to AARP Alaska, and HB 49 was a step in the right direction. Mr. Dau urged the committee to quickly expedite the bill to the next committee. He said he would like to see every member of the committee vote to move this bill, see them continue to support it as it moved through the House, and, at the end of the session, he would like them to be able to mark this as up as one of their major accomplishments. Number 1668 CHAIRMAN ROKEBERG noted he was a member of AARP, and other committee members expressed their eligibility for membership. Number 1690 MARIE DARLIN, Legislative Chair and Past-President, Alaska Federation, National Association of Retired Federal Employees, testified next in Juneau. She stated she wanted to urge the committee to pass HB 49, noting this has been an issue of concern to their retiree group in Alaska for sometime. Ms. Darlin commented that she had distributed a resolution passed at their convention last May in support of HB 49, stating they would like to see something like this legislation happen. She said they have done considerable work on it since that time; they continue to support HB 49 and anything that will help consumer protection issues. She noted that their members have received a lot of contact this last year identified as fraud-related, and she commented that $10 million leaving the state through some type of scam was criminal and almost hard to believe. Ms. Darlin brought the committee's attention to a letter she had received last week, one those famous "Nigeria-types of things." She noted that the committee has already heard about many of "these kinds of things that go on," and knows that senior citizens are particularly targeted. She asked the committee where she should send the original letter to, if they weren't going to have somewhere to send these kinds of things to, and she wondered how these fraudulent groups obtain peoples' addresses. Ms. Darlin said, "These are the kinds of things that are going on, and when we tell people -- or they call and say, 'What do I do?' We've said, 'Well, send it to the attorney general's office.' And they say, 'Well, I contacted the Better Business Bureau. They (indisc.) anybody that can handle anything like this, they just for work for businesses and stuff that are their members.' So this is an example of what really does go on, and then, that our concern is, even with the resolution that's going to be worked on for our convention coming up the last of April, we will not be letting up on the importance of this issue." Number 1925 CHAIRMAN ROKEBERG asked, regarding the letter from Nigeria, if they were asking her to give them her bank account information. Number 1934 MS. DARLIN answered in the affirmative, and noted, "We've been hearing about these Nigerian -- things from all these countries for years, and they're still going on." Number 1965 REPRESENTATIVE RYAN made an observation that among the people who conduct these con games, there is an old axiom: "You can't con an honest person." Number 1979 CHAIRMAN ROKEBERG noted, for general information, he had inquired with Willis Kirkpatrick, Director, Division of Banking and Securities, Department of Commerce and Economic Development, about the multitude of various mail loan solicitations, to see if there was anything they could do to restrict this activity. He noted Mr. Kirkpatrick had checked with the attorney general's office, et cetera, and to make a long story short, Chairman Rokeberg said there was nothing they could really do, (indisc.) it was in the federal purview. However, he said he was directed to a United States Senator with a bill that endeavors to put some guidelines on that type of activity. Chairman Rokeberg noted he was speaking about banking by mail and solicitation of banking by mail, which he thought preyed on some people, particularly if they got into situations where they had high interest rates and bank fees which started compounding through a number of loan rollovers. Number 2071 PEGGY MULLIGAN, Capital City Task Force, State Legislative Committee, American Association of Retired Persons, testified next in Juneau. She said she had appeared previously before the committee on another bill and knew Representative Ryan felt that people should be responsible for their actions. However, she said she thinks the very fact $10 million goes out of this state testifies to the fact that, yes, everybody should be responsible for their actions, but, obviously, there are some very clever scams which do catch people, and it would be great if this money went to Alaska's own businessmen instead. She added that the AARP's state legislative committee had a meeting in Juneau last week and they again voted that this one of their biggest interests. They wanted to support several bills, and they would love to see the committee pass SSHB 49 on to the House Judiciary Standing Committee. Number 2144 CHAIRMAN ROKEBERG commented that an amendment was necessary to change the effective date from 1997 to 1998. Number 2163 REPRESENTATIVE CROFT noted the suggestion of the amendment changing the effective date. He also responded to Representative Ryan's comment that a lot of scams rely on the greed of the victim. Representative Croft indicated a tremendous amount could cheat even an honest person, citing the tire seller example he had mentioned previously. He said those buyers were not dishonest; they were going to what they thought was a legitimate business, purchasing a falsely advertised product. He noted in many of these situations it is not greed, it is fraud. He indicated people need to be careful, but that was only part of the answer, effective enforcement was still needed. Number 2239 REPRESENTATIVE KUBINA moved that they change the effective date to 1998. Number 2240 CHAIRMAN ROKEBERG stated Amendment 1, a conceptual amendment, was before the committee and asked if there were any objections to the amendment. Hearing none, he stated Amendment 1 had been adopted. Number 2254 REPRESENTATIVE RYAN stated he did not have any objections to moving SSHB 49 out of the committee, but said he would "arm-wrestle" the sponsor in the House Finance Standing Committee regarding the fiscal note. Representative Ryan referred to the concept of "caveat emptor" (let the buyer beware), and said he believed the buyers had a personal responsibility, but he noted the point was well-taken; there were some people a lot more clever than the average person who would take advantage of them. Number 2292 CHAIRMAN ROKEBERG stated he had no objection to moving the bill, noting he had not thought the committee would make it through the public testimony during this meeting. Number 2308 REPRESENTATIVE HUDSON made a motion to move SSHB 49, as amended, with individual recommendations and the attached fiscal note, out of committee with unanimous approval. Number 2324 CHAIRMAN ROKEBERG asked if there were any objections. Hearing none, he stated CSSSHB 49(L&C) was so moved. ADJOURNMENT Number 2358 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 4:56 p.m.

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