03/28/2007 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB155 | |
| HB65 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 155 | TELECONFERENCED | |
| += | HB 65 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 28, 2007
3:06 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 155
"An Act extending the termination date of the Alcoholic Beverage
Control Board; and providing for an effective date."
- MOVED HB 155 OUT OF COMMITTEE
HOUSE BILL NO. 65
"An Act relating to breaches of security involving personal
information, credit report and credit score security freezes,
consumer credit monitoring, credit accuracy, protection of
social security numbers, care of records, disposal of records,
identity theft, furnishing consumer credit header information,
credit cards, and debit cards, and to the jurisdiction of the
office of administrative hearings; amending Rule 60, Alaska
Rules of Civil Procedure; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 155
SHORT TITLE: EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD
SPONSOR(s): LABOR & COMMERCE
02/26/07 (H) READ THE FIRST TIME - REFERRALS
02/26/07 (H) L&C, FIN
03/16/07 (H) L&C AT 3:00 PM CAPITOL 17
03/16/07 (H) -- MEETING CANCELED --
03/28/07 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 65
SHORT TITLE: PERSONAL INFORMATION & CONSUMER CREDIT
SPONSOR(s): REPRESENTATIVE(s) COGHILL, GARA
01/16/07 (H) PREFILE RELEASED 1/5/07
01/16/07 (H) READ THE FIRST TIME - REFERRALS
01/16/07 (H) L&C, JUD, FIN
01/31/07 (H) L&C AT 3:00 PM CAPITOL 17
01/31/07 (H) <Bill Hearing Canceled>
03/28/07 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
DOUGLAS "DOUG" B. GRIFFIN, Director
Alcoholic Beverage Control Board
Department of Public Safety
Anchorage, Alaska
POSITION STATEMENT: Presented HB 155.
GARY SUPERMAN, President
Kenai Peninsula CHARR
Nikiski, Alaska
POSITION STATEMENT: Testified during hearing on HB 155.
ANDY LUNDQUIST, Owner
Tony's Bar & Liquor Store
Kodiak, Alaska
POSITION STATEMENT: Testified in support of HB 155.
LOUSE STUTES, President
Kodiak CHARR
POSITION STATEMENT: Testified in support of HB 155.
DARWIN A. BIWER, JR., Owner
Darwin's Theory
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 155.
BOB KLEIN, Chairman
Government Affairs Committee
Alaska CHARR
POSITION STATEMENT: Testified in support of HB 155.
DALE FOX, President & Chief Executive Officer (CEO)
Alaska CHARR
Anchorage, Alaska
POSITION STATEMENT: Testified during hearing on HB 155.
TED ANDERSON, JR., Owner
Mug Shot Saloon;
Tailgaters Sports Bar and Grill
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 155.
JIM FLATLEY
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 155.
BILL BUBBEL, Owner
The Pump House Restaurant and Saloon
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 155.
REPRESENTATIVE JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 65.
SENATOR GENE THERRIAULT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions and offered background
information on HB 65.
KENTON BRINE
Property Casualty Insurers Association of America (PCI)
Olympia, Washington
POSITION STATEMENT: Testified during hearing on HB 65
MICHELLE JUN, Staff Attorney
Consumers Union
San Francisco, California
POSITION STATEMENT: Testified during hearing on HB 65.
STEVE CLEARY, Executive Director
Alaska Public Interest Research Group (AkPIRG)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 65.
PAT LUBY, Advocacy Director
AARP Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 65.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:06:00 PM. Representatives
Neuman, Gatto, Gardner, and Olson were present at the call to
order. Representatives Buch, Ramras, and LeDoux arrived as the
meeting was in progress.
HB 155-EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD
3:06:14 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 155, "An Act extending the termination date of
the Alcoholic Beverage Control Board; and providing for an
effective date."
3:06:38 PM
DOUGLAS "DOUG" B. GRIFFIN, Director, Alcoholic Beverage Control
Board ("ABC Board"), Department of Public Safety (DPS), began by
expressing appreciation for the committee's willingness to
sponsor the board extension legislation. He requested that the
bill be "kept clean" as it moves through the legislative
process. He then gave a brief history of the ABC Board, which
regulates the sale and manufacture of alcoholic beverages in the
state. He said that there are close to 1,830 licenses, and
around 1,200 licensees. The ABC Board is responsible for
licensing and enforcement. He explained that in 2003, the ABC
Board was moved from the Department of Revenue (DOR) to the DPS
by an executive order from the Governor, noting that while the
legislature may override such an order, it chose not to do so.
He stated that the ABC Board is comprised of five members, two
of which are from the industry, and meets approximately six
times per year to discuss license issues, as well as other
issues regarding alcoholic beverage law. He noted that a recent
report by the Division of Legislative Audit ("the Division")
titled "Alaska Division of Legislative Audit, Summary Of: A
Sunset Review of the Department of Public Safety, Alcoholic
Beverage Control Board, August 31, 2006" shows that improvements
are needed, adding that the ABC Board is currently working on
these. He then detailed several areas that the ABC Board is
currently focusing on, which include an improved database, as
well as improved minutes and product procedures.
3:10:04 PM
REPRESENTATIVE GARDNER asked for more detail regarding the
concerns raised by the Division.
MR. GRIFFIN replied that the most recent report by the Division
shows that the ABC Board has substantially complied with all
recommendations from the prior audit. The first recommendation
was for the ABC Board to strengthen its controls, such as its
record keeping process and database security. He explained that
the database system will be very secure, and may be moved to the
DPS, so that the system administrator is not a part of the ABC
Board staff. He then detailed the recommendations regarding the
permitting functions. He explained that currently, single
investigators in Juneau and Fairbanks complete each step
involved in issuing catering permits. The Division feels that
that this should be changed. He stated that the ABC Board
refunds municipal license fees to local governments that enforce
state, federal, and local liquor laws. The Division noted
errors in refunds, and suggested a more in-depth application
process and criteria, in order to better judge whether local
police departments are enforcing liquor laws. The ABC Board is
working with the administration in order to come up with a more
involved process.
MR. GRIFFIN then discussed the second recommendation made by the
Division, which involves the development and implementation of
an overall plan for enforcement activities. He stated that the
ABC Board has instituted a plan which will provide a more
systematic approach to scheduling inspections and compliance
checks. The third recommendation, he said, suggests that the
ABC Board be more precise with public notice requirements for
meetings, along with statutory and regulatory changes.
Additionally, procedures should be established to ensure that
the meeting records are complete and accurate. The fourth
recommendation would remove the voting ability of the director.
He explained that under certain circumstances, the director may
be required to vote, which raises some concerns with the
Division, and said "I understand where the [Division of
Legislative Audit] was coming from. It is a philosophical
question. I don't fault their reasoning. They make some very
legitimate points regarding that."
3:16:42 PM
REPRESENTATIVE GARDNER, referring to the Division's report
conclusions, asked whether Mr. Griffin agrees that the current
wholesale license fee structure "has a regressive effect and
puts low-volume wholesalers at a competitive disadvantage."
MR. GRIFFIN replied that this is a policy issue, adding that
this "may be worthwhile" for the legislature or the ABC Board to
review. The aforementioned fee structure is based on statute.
He commented that legislative audits may bring issues to the
surface that should be reviewed. He agreed that this is a
legitimate point.
3:18:04 PM
REPRESENTATIVE GATTO asked what kind of problem the ABC Board is
having in regard to fee collection.
MR. GRIFFIN replied that part of the problem was a clerical
error, which was remedied. The other part of the problem is due
to the fee structure. He explained that because of the current
fee structure, the increased volume is not necessarily reflected
in an increased collection of fees.
REPRESENTATIVE GATTO questioned the increase in alcohol sales.
MR. GRIFFIN surmised that this is due to an increase in the
number of visitors to Alaska, in addition to population
increases. He stated that the biggest concern is that much of
the alcohol is sold illegally, to underage individuals, or to
individuals who have an alcohol dependency problem. He pointed
out that an estimated 20 percent of alcohol sold nationwide is
consumed by individuals who are underage. He stated that his
response is based partly on statistics, although some is
personal speculation.
3:21:54 PM
REPRESENTATIVE BUCH in regard to the aforementioned wholesaler
license fee structure, inquired as to whether Mr. Griffin has
any suggestions on how to address these concerns.
MR. GRIFFIN replied that the ABC Board has not addressed this
issue. He shared his belief that the concerns regarding the
wholesale fee structure are legitimate, and that individuals in
the alcohol industry feel the previous alcohol tax increase was
adequate. However, he stated that considering an increase in
the wholesale fees "is certainly not out-of-bounds," and would
be a legitimate consideration, based on the auditors' comments.
REPRESENTATIVE BUCH shared his hope that the ABC Board would
have a plan, or would consider this and report back to the
legislature.
MR. GRIFFIN replied that the ABC Board does not currently have a
plan for this. He pointed out that the fees have not been
increased since 1983, and reiterated that this is a legitimate
consideration. He stated that while he does not currently have
a plan, he would work on developing one if this was requested.
REPRESENTATIVE BUCH said that he would work with Chair Olson
regarding this issue.
3:24:54 PM
REPRESENTATIVE NEUMAN shared a concern regarding a golf course
in his district. He explained that the owners of the golf
course are unable to sell alcohol on the golf course during
special events, although federal agencies are allowed to do so.
The owners of the golf course feel this is an unfair labor
practice. He inquired as to Mr. Griffin's opinion of this
situation.
MR. GRIFFIN replied that when the golf course license was
revised in 1998, the legislature made a conscious decision to
limit alcohol sales to beer and wine. He stated that military
golf courses are not regulated by the ABC Board, and do sell
alcohol other than beer and wine. A change in statute would be
required to allow the sale of alcohol on a golf course. He
commented that there are many ways this might be done, including
allowing a "special events" permit. He expressed concern that
if alcohol was sold on the golf course, it would then become a
licensed premise, and underage individuals may be present. He
shared his understanding that this was taken into consideration
when the golf course license was revised to allow beer and wine
to be served. He agreed that the state regulated golf courses
are "at a disadvantage" due to what is allowed on military base
golf courses.
3:28:43 PM
REPRESENTATIVE NEUMAN then offered his understanding that the
sale of beer and wine is allowed on the golf course, and asked
if this is correct.
MR. GRIFFIN replied yes, adding that food must also be
available. The food may be available on a roving cart, or at a
food stand. In response to additional questions, he explained
that this is allowed with a golf course license, although there
are other requirements, such as the length of the course. He
reiterated that the sale of alcohol is limited to beer and wine,
and stated that a catering license may be obtained for sale of
other types of alcohol during a special event, such as a wedding
or a golf tournament. However, the sale of additional types of
alcohol would be confined to an "alcoholic beverage tent," and
would not be allowed on the course, thus creating a more
controlled environment.
3:33:10 PM
GARY SUPERMAN, President, Kenai Peninsula CHARR, expressed
concern that the ABC Board is currently located within the DPS,
while all other licenses are regulated in the Department of
Commerce, Community, & Economic Development (DCCED). He stated
that the alcoholic beverage industry is a "pretty substantial
part" of the travel industry in Alaska, and agreed that much of
the industry growth has been due to growth in the travel
industry. He opined that DCCED is pro-business, while DPS is
not. He stated that CHARR feels that the ABC Board should be
returned to DCCED, or to the Department of Revenue (DOR), where
it was previously located.
CHAIR OLSON shared his understanding that a separate bill may
come before the committee to address this issue.
MR. SUPERMAN said that he is not aware of such a bill.
CHAIR OLSON stated that while the location of the board is an
issue, it is not the issue currently before the committee. He
pointed out that the issue currently being considered is the
extension of the ABC Board, and requested that testimony be
limited to this subject.
3:38:02 PM
ANDY LUNDQUIST, Owner, Tony's Bar & Liquor Store, stated that he
is in support of extending the ABC Board. He also expressed his
hope that the concerns regarding the department under which the
ABC Board is regulated will be addressed.
REPRESENTATIVE LEDOUX thanked Mr. Lundquist for his testimony.
3:39:21 PM
LOUISE STUTES, President, Kodiak CHARR, stated that she is in
support of extending the ABC Board. She also expressed concern
with the current location of the ABC Board.
REPRESENTATIVE LEDOUX inquired as to whether Ms. Stutes would be
in support of extending the ABC Board, regardless of whether the
departmental issue is addressed.
MS. STUTES replied yes, adding that the ABC Board provides a
service that the industry "can't afford to be without."
3:40:57 PM
DARWIN A. BIWER, JR., Owner, Darwin's Theory, stated that he is
in support of extending the ABC Board. He also agrees with the
previous speakers regarding the location of the ABC Board, and
offered details relating to this.
3:42:56 PM
BOB KLEIN, Chairman, Government Affairs Committee, Alaska CHARR,
said that he spent 12 years on the ABC Board. He stated that he
is in support of the extension, and agreed with previous
testimony regarding the location of the ABC Board.
3:44:46 PM
DALE FOX, President and Chief Executive Officer (CEO), Alaska
CHARR, stated that in general, the industry is in support of
extending the ABC Board. However, there is "huge frustration"
with the move to DPS. He said "At the appropriate time, we'd
love to share with you some of the horror stories of an agency
that looks for ways to bust people, rather than looks for ways
to work with an industry." He stated that the food and beverage
industry is important, and is responsible for a significant
amount of visitor revenue to the state. In regard to taxes, he
said that Alaska has "some of the highest excise taxes in the
nation."
3:46:26 PM
REPRESENTATIVE RAMRAS noted that he is a member of CHARR. He
commented that CHARR was not present during discussions on HB
75, which relates to driver's licenses and alcohol and drug
awareness and safety testing, and expressed frustration with
CHARR's attempts to move the ABC Board from DPS to DOR. He
stated that he is in support of extending the ABC Board, and
said "The idea is for CHARR to get behind more stringent
compliance, and to do a better job within the guidelines that
government sets out, and not just to look for an easier agency
to be the steward under." He expressed disappointment with
CHARR.
3:48:14 PM
REPRESENTATIVE GATTO, in regard to underage drinking, questioned
whether CHARR has been involved in any activities that are
directed towards reducing underage drinking.
MR. FOX replied that CHARR is a leader in alcohol awareness and
education in Alaska. In regard to underage drinking, he stated
that 65 percent of alcohol consumed by underage individuals is
taken from home, while only 7 percent comes from bars,
restaurants, or liquor stores. He stated that 7 percent is too
high, and CHARR does everything it can to ensure that alcohol is
"enjoyed by those who legally and responsibly use it." He said
that CHARR has taken a proactive stance on this issue for many
years.
REPRESENTATIVE GATTO asked whether CHARR has any school programs
to educate youth on the effects of alcohol. He opined that
CHARR would be instrumental in leading the effort to educate
youth on the harmful effects of alcohol.
MR. FOX replied that CHARR has a number of programs working to
address these issues, such as "Teen Talk," which assists parents
in discussing alcohol with children. Some programs are taken
into the schools, however, schools are not always interested in
the alcohol industry coming to the school. He said "Where we're
welcome, we've brought programs."
3:54:50 PM
TED ANDERSON, JR., Owner, Mug Shot Saloon and Tailgaters Sports
Bar and Grill, stated that he has been in the industry for
approximately 27 years. He expressed support for extending the
ABC Board.
3:55:44 PM
JIM FLATLEY stated that he is in support of extending the ABC
Board, adding that he is pleased to see the board working out
its problems. He would also like the concerns regarding where
the ABC Board is regulated to be addressed.
3:56:35 PM
BILL BUBBEL, Owner, The Pump House Restaurant and Saloon, stated
that he has been in the food and beverage industry for 30 years.
He is in support of extending the ABC Board. He commented that
the ABC Board has enforcement powers similar to Department of
Environmental Conservation (DEC), although these two entities
are completely different. He stated that Fairbanks has one ABC
Board officer that is in the same office as the state troopers.
He explained that in order to meet with this individual, an
appointment must be made. He opined that the ABC Board has
forgotten that it is an administrative board, and is now
"basically a police inquisition." He would like to see this
change. He expressed concern with the intimidation and method
associated with inspections, which was not an issue previously.
4:00:01 PM
MR. BUBBEL, in response to comments from Representative Ramras,
stated that food service operations in Fairbanks work hard to
protect licenses.
REPRESENTATIVE RAMRAS stated that in Anchorage, the ABC Board
office is located on the DPS campus. He described the ABC
Board's Fairbanks office, and recommended that the Director
consider finding a more accessible location. He also expressed
frustration with "stings" done by the ABC Board.
4:04:12 PM
REPRESENTATIVE NEUMAN inquired as to how Mr. Griffin intends to
address the concerns raised by Mr. Bubbel.
MR. GRIFFIN shared his understanding that the Fairbanks office
was previously moved to a more accessible location. He agreed
that it can be difficult to meet with Mr. Richard Finney, who is
the only field investigator there. The ABC Board is a small
organization, and does its best with the resources available.
He said that the concerns regarding accessibility will be
addressed, adding that this is an ongoing challenge.
REPRESENTATIVE NEUMAN asked if this is the first time this
concern has been raised.
MR. GRIFFIN replied no. He stated that the office was moved in
response to a prior complaint. He agreed that it can be
difficult to meet with Mr. Finney when he is out in the field,
adding that the ABC Board has attempted to be responsive to this
issue.
REPRESENTATIVE NEUMAN commented that the legislature often hears
of problems with various boards, to which the board response is
that it "will fix the problem." However, when the board
extension is before the legislature again, the same concerns
remain. He stated that this seems to be a recurring theme, and
expressed hope that the accessibility concern would be
addressed.
4:08:25 PM
REPRESENTATIVE RAMRAS expressed respect for Mr. Griffin and
shared his belief that overall, the ABC Board is an
extraordinary agency. He stated that at one time, the ABC Board
functioned in a "very complimentary fashion" with the licensees
across the state. While he feels the ABC Board should stay
under DPS, he stated that the mission of the board should be to
work with licensees, and to recognize that the majority of
licensees across the state are law-abiding operators with well-
trained staff. He shared his belief that the predator in
underage drinking is the minor, not the licensee. He encouraged
the ABC Board to recommend changes to the legislature to modify
the penalties in "sting" operations. He also encouraged the ABC
Board to review its mission, and said "You have strayed far, far
away from the relationship that I [previously] enjoyed as a
licensee." He opined that this is the reason behind CHARR's
request that the ABC Board be returned to DOR or DCCED, adding
that he feels DPS is the appropriate department for the ABC
Board. He commented that the director has shown "exemplary"
leadership, and shared his hope that the necessary changes will
be made in order to maintain a constructive and positive
relationship with licensees while still accomplishing the
broader mission, as it relates to underage drinking.
4:15:11 PM
REPRESENTATIVE NEUMAN moved to report HB 155 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 155 was reported from the
House Labor and Commerce Standing Committee.
The committee took an at-ease from 4:15 PM to 4:17 PM.
HB 65-PERSONAL INFORMATION & CONSUMER CREDIT
4:17:48 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 65, "An Act relating to breaches of security
involving personal information, credit report and credit score
security freezes, consumer credit monitoring, credit accuracy,
protection of social security numbers, care of records, disposal
of records, identity theft, furnishing consumer credit header
information, credit cards, and debit cards, and to the
jurisdiction of the office of administrative hearings; amending
Rule 60, Alaska Rules of Civil Procedure; and providing for an
effective date."
4:18:02 PM
REPRESENTATIVE JOHN COGHILL, Alaska State Legislature, joint
prime sponsor, began by explaining that a similar bill was
introduced during the previous legislative session. He stated
that when personal information is used, whether for-profit or
for credit scoring purposes, it should be kept secure. He
opined that the rules in Alaska "need to change with the times,"
adding that the various agencies involved would explain any
concerns. He stated that HB 65 addresses when personal
information is used, as well as identity theft and the
consumer's right to freeze credit. He said that if social
security numbers are going to be used, this should be properly
protected. He requested that the committee not consider
amendments at this time.
REPRESENTATIVE NEUMAN questioned how HB 65 will correspond with
the ethics issues that the legislature is currently working on.
REPRESENTATIVE COGHILL replied that both of these deal with the
issue of public trust. With regard to legislators, he stated
that Title 24 deals with legislative reporting requirements,
which he opined are "justifiable." He explained that HB 65
applies to personal information that is used for credit
purposes. He said "I think you're talking about two ...
different realms. One of them is going to be about your
personal credit history, and one of them is going to be about
your disclosure of personal income." He stated that HB 65
creates safeguards for the transfer of personal information.
REPRESENTATIVE NEUMAN shared his belief that these two issues
overlap. He pointed out that legislators are required to
provide the names and addresses of individuals that they work
with, and questioned how this information is going to be
protected.
REPRESENTATIVE COGHILL replied that these two issues may
overlap, and requested that any areas be pointed out to him as
the bill is discussed. He stated that he is open to discussion;
however, at this point he does not know which areas overlap.
4:28:14 PM
REPRESENTATIVE LEDOUX questioned whether HB 65 has any impact on
other public records that include personal information, such as
workers' compensation records or voters registration lists.
REPRESENTATIVE COGHILL offered his understanding that there are
certain public records within the various departments that would
become more secure. However, public lists, such as the voters'
registration list, would most likely not be affected. He
pointed out that a person's name and address are public record,
and most phone numbers are published. He opined that when it
comes to information such as social security numbers and credit
card numbers, which are sensitive to personal economic well-
being, this information should be protected. In regard to
workers' compensation information, he noted that this issue is
being addressed by a different piece of legislation. He stated
that HB 65 addresses process protection issues with regard to
social security and credit information.
REPRESENTATIVE GARDNER asked whether this would affect how
businesses are required to dispose of an applicant's personal
information.
REPRESENTATIVE COGHILL shared his understanding that credit card
information must be disposed of in a certain way, although he
does not know how specific the disposal section is. He stated
that he would be interested to hear more from the Department of
Law (DOL) regarding this issue.
REPRESENTATIVE GARDNER questioned whether HB 65 applies to all
businesses, or only those that deal with data collection
services.
REPRESENTATIVE COGHILL replied that certain areas of the bill do
apply to all businesses, while other areas apply to those that
specifically deal in data collection and distribution. He
stated that these businesses are needed, and the intention is to
ensure that the "firewalls are very secure." He commented that
the electronic transfer of information is common, and stated
that barriers need to be in place. He said that insurance
companies and banks require this type of information, and
pointed out that most of these businesses are regulated under
the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.
He said that states are responsible for implementing the rules
set forth by these acts, and HB 65 does this.
4:33:30 PM
REPRESENTATIVE GARDNER inquired as to the differences between HB
65, and the bill that was introduced during the previous
legislative session.
REPRESENTATIVE COGHILL explained that HB 65 contains the
language that passed the House of Representatives. He stated
that any proposed amendments would first be denied, until the
various industries have proven that the amendments are
necessary.
REPRESENTATIVE GARDNER, referring to the fiscal note, pointed
out that HB 65, "if enacted in its current form, could result in
the imposition of extremely large financial penalties for the
state of Alaska," in the event of a security breach.
REPRESENTATIVE COGHILL agreed that this is correct, and
explained that this is considering the worst case scenario. He
stated that the standard should be determined, in order to
determine what the consequences of a security breach should be.
He commented that it may be costly for the responsible party to
notify individuals of a security breach. He said that if a
company has good security measures that are "demonstrably
secure," he is unsure that the company would be held
responsible, adding that if there is a security breach due to a
lack of security, the company should be held responsible for
this. He stated that while he is open to hearing how the state
intends to follow through on this, he is "very unsympathetic."
REPRESENTATIVE GATTO asked whether the state would be held
liable for an incorrect media representation that referenced
statements made by a legislator on the public record.
REPRESENTATIVE COGHILL replied that this is outside the scope of
HB 65, and clarified that this bill only applies to personal
information such as credit and social security information. He
stated that the legislature is exempt from slander laws, adding
that legislators are "public targets." In response to an
additional question, he reiterated that a person's name would
not be protected.
4:43:03 PM
SENATOR GENE THERRIAULT, Alaska State Legislature, explained
that he began working on consumer protection legislation in
2005. Senator Gretchen Guess and Senator Johnny Ellis had
introduced similar legislation, and during the interim, the
three collaborated on a new piece of legislation, which was
introduced in 2006. He explained that due to the debate on gas
pipeline issues during the 2006 legislative session, Senator
Guess did most of the technical work, and worked with the
stakeholders involved. While she was not able to incorporate
all concerns and suggestions for alternative language, he opined
that the parties affected by the bill were "fairly comfortable"
that they had been treated fairly. He agreed that amendments
would be denied until adequate explanation is given, and said "I
have told representatives of different industry segments ...
that ... I want to understand what their concerns with the
printed words on the page are. I want to understand what their
suggested change is, and I want to understand the reasoning."
If the concern is legitimate, a "fix" will be crafted. He
expressed hope that the changes would not create loopholes or
remove an entire section from the bill, and shared his
understanding that industry representatives are willing to
engage in this discussion.
SENATOR THERRIAULT, in response to an earlier question from
Representative Gardner regarding personal employment paperwork,
stated that this paperwork is most likely going to contain the
individual's social security number and date of birth. He
explained that the bill requires that this information be
thoroughly disposed of, so that this information cannot be
accessed by others. Referring to Page 5, lines 15-16, he stated
that this would include a business owner who takes job
applications or retains personal information for payroll taxes.
It is suggested that this information be kept in a locked file
drawer, and if purged, this information should be shredded or
burned completely. He then referred to a Dateline NBC program
titled "To Catch an ID Thief," and stated that it was startling
to see how quickly large bills can be run up, once the personal
information is obtained. He commented that Alaska needs to have
protection for this information.
4:49:36 PM
SENATOR THERRIAULT went on to say that HB 65 is patterned after
numerous other states. There are also sections that are
"cutting edge," and he opined that these sections may be more
objectionable to companies in the data brokerage business.
[Chair Olson turned the gavel over to Vice-Chair Neuman]
4:50:46 PM
KENTON BRINE, Property Casualty Insurers Association of America
(PCI), stated that while PCI is not opposed to HB 65, it does
have concerns regarding the sections relating to the credit
score security freeze. He said that amendatory language has
been submitted to Representative Coghill and Senator Therriault,
and expressed hope that the committee would consider amending
the bill to allow insurers and other non-lending related
businesses to view credit reports that have been frozen. He
explained that credit freeze laws began to be enacted in 2003,
and the first 6 states did not include specific exemptions.
However, in the past year, 20 more states have enacted
legislation that allows insurers and businesses that are looking
at credit reports for other purposes to have access to frozen
credit reports. The PCI believes this makes it easier for
employers to complete the job application process, as well as
obtaining accurate insurance rate quotes. He stated that PCI is
open to working with the House Labor and Commerce Standing
Committee to possibly include this language.
[Vice-Chair Neuman returned the gavel to Chair Olson]
4:53:27 PM
MICHELLE JUN, Staff Attorney, Consumers Union, stated that
Consumers Union has worked with Representative Coghill and
Senator Therriault, and is in support of HB 65. She said that
Consumers Union is "delighted" that the sponsors will remain
firm with any amendments that are proposed. In regard to
insurance exemptions, she expressed hope that any exemptions are
limited to underwriting purposes.
4:54:38 PM
STEVE CLEARY, Executive Director, Alaska Public Interest
Research Group (AkPIRG), stated that AkPIRG is in support of HB
65, and expressed appreciation for the work done by the
sponsors. He went on to say that it is time for Alaska to pass
identity theft protection. Referring to a security breach in
February of 2005, he pointed out that according to the Privacy
Rights Clearinghouse, over 100 million data records of US
residents have been exposed due to security breaches since this
occurred. The Federal Trade Commission (FTC) has data on
identity theft and fraud. In 2005, he said, Alaskans were
number one for fraud complaints with the FTC, adding that it
cost the average complainant over $1,000. In 2006, Alaskans
were number 5, although the price paid per complainant went up
to almost $4,000. He stated that identity theft costs consumers
and businesses "an incredible amount of money each year." He
pointed out the increasing complexity and speed of the
technological society, and said that as this increases, so will
the complexity of identity thieves. He shared a story regarding
a state employee who had her identity stolen while on maternity
leave. This resulted in difficulty reestablishing personal
identity, in addition to establishing her child's identity. He
stated that consumers spend an average of 175 hours trying to
reestablish identity. He pointed out that 25 states currently
have laws that allow consumers to restrict access to their
credit report, which AkPIRG feels is one of the most important
aspects of HB 65. Additionally, 34 states require notification
of a security breach, which he opined is essential to ensure
that consumers' identity is not stolen. He said that while
AkPIRG teaches consumers how to protect against identity theft,
the state needs to put common sense protections in place to
ensure that identity thieves do not have the upper hand. In
regard to the certified mail requirement in order to lift the
security freeze, he said that generally, states do not have this
requirement, although some states do require certified mail to
place the freeze. He shared his understanding that Alaska would
be unique in this requirement, and expressed concern that this
might deter some consumers from taking this step. He reiterated
that AkPIRG is in support of HB 65, and would like to see
consumers better protected from identity theft in Alaska.
4:59:30 PM
PAT LUBY, Advocacy Director, AARP Alaska, stated that AARP is in
strong support of HB 65. He said that suggestions based on
other states would be sent to Representative Coghill and Senator
Therriault; however, AARP Alaska will stay in support of the
bill regardless of whether these suggestions are adopted. In
regard to the seriousness of identity theft, he stated that
individuals who are victims of identity theft have a higher
mortality rate than those that are not. In response to
Representative Gatto, he stated that he is unsure of the
mortality rate of identity thieves.
5:01:02 PM
CHAIR OLSON indicated that HB 65 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:01 PM.
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