Legislature(1995 - 1996)

03/18/1996 03:12 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                          
                         March 18, 1996                                        
                           3:12 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Pete Kott, Chairman                                            
 Representative Norman Rokeberg, Vice Chairman                                 
 Representative Beverly Masek                                                  
 Representative Jerry Sanders                                                  
 Representative Brian Porter                                                   
 Representative Kim Elton                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Gene Kubina                                                    
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL NO. 482                                                            
 "An Act relating to state procurement practices and procedures; and           
 providing for an effective date."                                             
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 HOUSE BILL NO. 439                                                            
 "An Act relating to minerals, including coal, to the statewide                
 bonding pool for the reclamation activities imposed on mining                 
 operations, and to the statewide bonding pool's use for surface               
 coal mining projects."                                                        
                                                                               
      - PASSED CSHB 439(L&C) OUT OF COMMITTEE                                  
                                                                               
 HOUSE BILL NO. 533                                                            
 "An Act relating to the board of directors of the Alaska Aerospace            
 Development Corporation."                                                     
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 CS FOR SENATE BILL NO. 197(L&C)                                               
 "An Act relating to insurance covering an insured who is a victim             
 of domestic violence and requiring certain disclosures by an                  
 insurer."                                                                     
                                                                               
 Confirmation of Governors Appointments:  Real Estate Commission               
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 482                                                               
 SHORT TITLE: STATE PROCUREMENT PRACTICES & PROCEDURES                         
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 02/09/96      2686    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/09/96      2686    (H)   L&C, STATE AFFAIRS, FINANCE                       
 02/09/96      2687    (H)   2 FISCAL NOTES (ADM, DOT)                         
 02/09/96      2687    (H)   5 ZERO FNS (2-ADM, DCED, DCRA, CORR)              
 02/09/96      2687    (H)   5 ZERO FNS (DOE, DEC, F&G, GOV, DHSS)             
 02/09/96      2687    (H)   5 ZERO FNS (LABOR, LAW, DMVA, DNR, DPS)           
 02/09/96      2687    (H)   2 ZERO FNS (REV, UA)                              
 02/09/96      2687    (H)   GOVERNOR'S TRANSMITTAL LETTER                     
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 BILL:  HB 439                                                               
 SHORT TITLE: MINING BONDING POOL & ADVISORY COM'N                             
 SPONSOR(S): REPRESENTATIVE(S) BRICE,Kelly                                     
                                                                               
 JRN-DATE     JRN-PG                  ACTION                                   
 01/22/96      2507    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/22/96      2507    (H)   RESOURCES, LABOR & COMMERCE, FINANCE              
 01/31/96      2587    (H)   COSPONSOR(S): KELLY                               
 02/05/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 02/05/96              (H)   MINUTE(RES)                                       
 02/05/96      2626    (H)   RES RPT  2DP 2NR 2AM                              
 02/05/96      2627    (H)   DP: NICHOLIA, AUSTERMAN                           
 02/05/96      2627    (H)   NR: WILLIAMS, GREEN                               
 02/05/96      2627    (H)   AM: OGAN, KOTT                                    
 02/05/96      2627    (H)   FISCAL NOTE (DNR)                                 
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 BILL:  HB 533                                                               
 SHORT TITLE: ALASKA AEROSPACE DEVELOPMENT CORP. BOARD                         
 SPONSOR(S): COMMUNITY AND REGIONAL AFFAIRS                                    
                                                                               
 JRN-DATE     JRN-PG                  ACTION                                   
 02/28/96      2913    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/28/96      2913    (H)   LABOR & COMMERCE                                  
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 BILL:  SB 197                                                               
 SHORT TITLE: INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES                         
 SPONSOR(S): SENATOR(S) DONLEY, Ellis, Salo, Duncan, Pearce,                   
 Zharoff, Lincoln; REPRESENTATIVE(S) Davies                                    
                                                                               
 JRN-DATE     JRN-PG                  ACTION                                   
 01/05/96      2058    (S)   PREFILE RELEASED - 1/5/96                         
 01/08/96      2058    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/08/96      2058    (S)   LABOR & COMMERCE                                  
 01/16/96      2144    (S)   COSPONSOR(S):  DUNCAN                             
 02/15/96              (S)   L&C AT  1:30 PM BELTZ ROOM 211                    
 02/15/96              (S)   MINUTE(L&C)                                       
 02/20/96              (S)   MINUTE(L&C)                                       
 02/23/96      2512    (S)   L&C RPT  CS  5DP          NEW TITLE               
 02/23/96      2513    (S)   ZERO FISCAL NOTE TO SB & CS (DCED)                
 02/26/96              (S)   RLS AT 12:45 PM FAHRENKMAP RM 203                 
 02/26/96              (S)   MINUTE(RLS)                                       
 02/28/96      2568    (S)   RULES TO CALENDAR & 1NR      2/28/96              
 02/28/96      2571    (S)   READ THE SECOND TIME                              
 02/28/96      2572    (S)   L&C  CS ADOPTED UNAN CONSENT                      
 02/28/96      2572    (S)   COSPONSOR(S):  PEARCE, ZHAROFF, LINCOLN           
 02/28/96      2572    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 02/28/96      2572    (S)   READ THE THIRD TIME  CSSB 197(L&C)                
 02/28/96      2572    (S)   PASSED Y18 N- E2                                  
 02/28/96      2579    (S)   TRANSMITTED TO (H)                                
 02/29/96      2955    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/29/96      2956    (H)   LABOR & COMMERCE, FINANCE                         
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/18/96      3186    (H)   CROSS SPONSOR(S): DAVIES                          
 03/20/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/20/96              (H)   MINUTE(L&C)                                       
 03/22/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 DUGAN PETTY, Director                                                         
 Division of General Services                                                  
 Department of Commerce and                                                    
   Economic Development                                                        
 P.O. Box 110204                                                               
 Juneau, Alaska 99811-0204                                                     
 Telephone:  (907) 465-2250                                                    
 POSITION STATEMENT:  Testified on HB 482.                                     
                                                                               
 FRED PASCO, Legislative Secretary                                             
   to Representative Tom Brice                                                 
 Alaska State Legislature                                                      
 Capitol Building, Room 426                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3466                                                    
 POSITION STATEMENT:  Gave sponsor statement on HB 439.                        
                                                                               
 CHARLIE BODDY                                                                 
 Usibelli Coal Mine, Incorporated                                              
 Fairbanks, Alaska                                                             
 Telephone:  Not provided                                                      
 POSITION STATEMENT:  Testified on HB 439.                                     
                                                                               
 JULES TILESTON, Director                                                      
 Division of Mining and Water Management                                       
 Department of Natural Resources                                               
 3601 "C" Street, Suite 800                                                    
 Anchorage, Alaska 99503-5935                                                  
 Telephone:  (907) 269-8624                                                    
 POSITION STATEMENT:  Testified in HB 439.                                     
                                                                               
 CLIFF STONE, Legislative Assistant                                            
   to Representative Alan Austerman                                            
 Alaska State Legislature                                                      
 Capitol Building, Room 434                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-6588                                                    
 POSITION STATEMENT:  Gave sponsor statement on HB 533.                        
                                                                               
 JEFF BUSH, Deputy Commissioner                                                
 Department of Commerce and Economic Development                               
 P.O. Box 110800                                                               
 Juneau, Alaska 99811                                                          
 Telephone:  (907) 465-2500                                                    
 POSITION STATEMENT:  Testified in support of the concept of HB 533.           
                                                                               
 PAT LADNER, Executive Director                                                
 Alaska Aerospace Development Corporation                                      
 3601 "C" Street                                                               
 Anchorage, Alaska 99503                                                       
 Telephone:  (907) 561-3338                                                    
 POSITION STATEMENT:  Testified in support of HB 533.                          
                                                                               
 SENATOR DAVE DONLEY                                                           
 Alaska State Legislature                                                      
 Capitol Building, Room 11                                                     
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3892                                                    
 POSITION STATEMENT:  Sponsor of SB 197.                                       
                                                                               
 MICHAEL LESSMEIER, Attorney                                                   
 Lessmeier and Winters                                                         
 One Sealaska Plaza, Suite 303                                                 
 Juneau, Alaska 99801-1249                                                     
 Telephone:  (907) 586-5912                                                    
 POSITION STATEMENT:  Testified against SB 197.                                
                                                                               
 BEVERLY BOWERS                                                                
 Bering Sea Womens Group                                                       
 Box 1596                                                                      
 Nome, Alaska 99762                                                            
 Telephone:  (907) 443-5491                                                    
 POSITION STATEMENT:  Testified in support of SB 197.                          
                                                                               
 JOHN GEORGE, Lobbyist                                                         
 American Council of Life Insurance                                            
 3328 Fritz Cove Road                                                          
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 789-0172                                                    
 POSITION STATEMENT:  Testified against SB 197.                                
                                                                               
 LAUREE HUGONIN, Executive Director                                            
 Alaska Network on Domestic Violence                                           
   and Sexual Assault                                                          
 130 Seward Street, Number 501                                                 
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-3650                                                    
 POSITION STATEMENT:  Testified in support of CSSB 197(L&C).                   
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-23, SIDE A                                                            
 Number 001                                                                    
                                                                               
 The House Labor and Commerce Standing Committee was called to order           
 by Chairman Pete Kott at 3:12 p.m.  Members present at the call to            
 order were Representatives Masek, Sanders, Elton, Rokeberg and                
 Kott.  Representative Porter arrived at 3:14 p.m.                             
                                                                               
 HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES                           
                                                                               
 CHAIRMAN KOTT announced the first order of business would be HB               
 482, "An Act relating to state procurement practices and                      
 procedures; and providing for an effective date."                             
                                                                               
 Number 083                                                                    
                                                                               
 DUGAN PETTY, Director, Division of General Services, Department of            
 Commerce and Economic Development, came before the committee to               
 address HB 482.  He explained that at the conclusion of the last              
 legislative session, Commissioner Boyer gave him a packet of                  
 information which was the 1994 Federal Acquisition Streamlining               
 Act.  He was asked to review the information and note things that             
 we could do in our state procurement practices to make them more              
 efficient and a more results oriented process.  He was also asked             
 to incorporate some of the reform measures that have taken place in           
 the 1994 Act.  Mr. Petty informed the commissioner that HB 116 had            
 just passed through the legislature which removed the Alaska                  
 Seafood Marketing Institute (ASME) from the procurement code.  In             
 each committee the bill went through somebody raised a concern as             
 to whether or not ASME should be removed from the procurement code            
 or whether something should be done to reform and make the                    
 procurement code more streamlined and responsive.  Mr. Petty                  
 explained he told the commissioner that he believed this was a good           
 time to look at reform in the procurement code.  He said he also              
 told the commissioner we are fortunate to have a relatively new               
 procurement law which is based on the model procurement code, and             
 many of the changes the federal government had to make, we didn't             
 have to do because we enjoy the benefit of a more straight forward            
 and simpler process.  Mr. Petty pointed out that we live in complex           
 times and the market is changing.  We live in a rapidly evolving              
 market with electronic interconnects which really changed our                 
 procurement process in many ways.  He said he believes we need to             
 look at our processes and how we do them to make them responsive to           
 today's changing market.  We also need to look at the resources we            
 have available to see what can be done to bring about a more                  
 effective procurement given the resources we have and given the               
 fact that we are not likely to get more resources in the future.              
                                                                               
 MR. PETTY said in an effort to bring about those efficiencies,                
 Commissioner Boyer began a streamline initiative during the summer.           
 One of the major impetuses of that initiative was to form a                   
 procurement advisory council.  This council is made up of                     
 stakeholders, procurement practitioners within and outside of state           
 government, people from ARCO, vendors and representatives of small            
 business advocacy groups.  He said they started looking at                    
 practices from their regulations, from statute, from policy as well           
 as nonresponsive procurement processes and see if they couldn't               
 situationally re-engineer those to be more responsible to today's             
 state procurement needs.  He said the council has met a number of             
 times and came forward with a list of about 34 recommendations to             
 Commissioner Perkins and Commissioner Boyer.  They reviewed the               
 recommendations.  They took some out and they made some                       
 suggestions.  What the committee has before it is suggested changes           
 by the procurement advisory council and the two commissioners,                
 which is advanced to try and build a foundation for beginning to              
 streamline our procurement process.                                           
                                                                               
 Number 384                                                                    
                                                                               
 MR. PETTY said he would review changes by hitting the significant             
 sections.  He said this is not inclusive of all sections; however,            
 there are a number of the changes in statutes that move one section           
 of existing statute to another location or, because of changes that           
 are proposed, affect other sections.                                          
                                                                               
 MR. PETTY referred to Section 3 and Section 38 and said they simply           
 permit the commissioner of the Department of Administration to                
 delete names of vendors that are suspended or debarred.  If they              
 are suspended or debarred, which is currently provided for in                 
 statute, this eliminates an inconsistency in statute.                         
                                                                               
 MR. PETTY said Section 4 would allow the department to acquire                
 small leased office space, which would be identified as 5,000                 
 square feet or less, under small procurement rules.  This means you           
 could get three proposals and award to the low responsive                     
 responsible bidder, taking into account Alaska bidder preferences.            
                                                                               
 MR. PETTY explained Section 5 would authorize extensions of leases            
 up to ten years in return for rent concessions.  He said this may             
 seem similar to a bill that passed the legislature a couple of                
 years ago.  There was about an 18 month window where the department           
 was authorized to extend leases for five years in return for rent             
 concessions of up to 10 percent.  That proved to be very successful           
 in driving down the costs of the leasing budget.  The bill would              
 ask to basically do the same thing on a permanent basis in statute,           
 but give the department the ability to go up to ten years rather              
 than five.  Mr. Petty pointed out that many lessors have said five            
 years didn't offer them the opportunity to refinance.  They felt              
 they could drive better prices by refinancing on a longer term and            
 the state might take advantage of better savings.                             
                                                                               
 MR. PETTY referred to Sections 6 and 7 and said they would allow              
 for the lease/purchase acquisition of real property when the annual           
 payments did not exceed $500,000 or the total value of the                    
 lease/purchase agreement does not exceed $2.5 million.  Currently,            
 any acquisition of real property through a lease financing                    
 arrangement requires notice to the legislature and the enactment of           
 the law.                                                                      
                                                                               
 Number 553                                                                    
                                                                               
 MR. PETTY explained Sections 8 and 12 would allow bidders for                 
 services and supply contracts to not list their subcontractors                
 within five days of bid opening and would give them more                      
 flexibility to change subcontractors.  He said he would note that             
 the provision, as it relates to current construction contracts,               
 would not change.  This would only change the subcontractor notice            
 requirement for services and supplies.                                        
                                                                               
 MR. PETTY said Section 9 would permit the procurement officer                 
 issuing a request for proposal (RFP) or a bid to shorten the                  
 circulation period.  The statute requires a 21 day notice.  It may            
 currently be shortened under a determination by the chief                     
 procurement officer.  This would empower the person who is actually           
 issuing the bid or proposal to make the decision as to what                   
 adequate circulation is for notice and they would have to do a                
 determination that it is advantageous to the state and adequate               
 competition is anticipated.                                                   
                                                                               
 MR. PETTY explained Section 10 is an amendment of a section that              
 actually had it genesis in this committee last year.                          
 Representative James had a bill extending the procurement                     
 preference to certain entities.  As the bill came through the House           
 Labor and Commerce Committee, there was some discussion about a               
 trend in (indisc.) bidder preferences.  The department actually               
 worked with the sponsor on a committee substitute to try and ensure           
 that the bidder, if they were to receive the bidder preference, had           
 maintained a place of business for six months of the bid selling              
 the kind of product and service for which the state was issuing the           
 bid for.  This provision is intended to resolve a current issue               
 that they have with brokering of the bidders preference.  It is               
 effectively the same provision that was amended in HB 288 last year           
 in the House Labor and Commerce Committee.                                    
                                                                               
 Number 695                                                                    
                                                                               
 MR. PETTY explained Section 11 would make the use of RFPs an easier           
 threshold to meet.  Currently, the chief procurement officer must             
 make the determination if the use of competitive sealed proposals             
 is appropriate.  This would allow the commissioner of the                     
 Department of Transportation and Public Facilities to make that               
 determination for construction and would allow the procurement                
 officer to make a determination when the RFP process is most                  
 advantageous to the state.  Mr. Petty explained this is one of the            
 ways current reform trend in public procurement seeks to try and              
 include past vender performance as a criteria in making an award              
 and also seeks to make awards best value procurement rather than              
 low bid procurement.                                                          
                                                                               
 MR. PETTY referred to Section 14 and said when a RFP is cancelled             
 prior to notice of intent, the state would maintain a list of                 
 proposals received, but would return the proposals to the bidder.             
 Currently, when an RFP is cancelled, those bids and proposals must            
 remain with the procurement officer, which after the procurement is           
 cancelled, becomes public information.  Bidders can get this                  
 information and then view another bidders proposal.  He said they             
 would want, if an RFP is cancelled, to return the proposals back to           
 the bidders.                                                                  
                                                                               
 MR. PETTY explained Section 16 would make the term "sole source               
 requirement" more flexible.  There has been circumstances with a              
 relatively rigid requirement where there must be clear and                    
 convincing evidence that only one source exists where agencies will           
 spend a tremendous amount of time and effort documenting that there           
 is only one source that appears reasonable because the other source           
 is out of state or is out of the country and it is much more                  
 expensive.  That doesn't meet the test as it currently exists in              
 statute.  He said they have had situations where they'll spend a              
 lot of time and effort trying to document it, not meet it, go out             
 to bid and wind up doing business with the one bidder that they               
 assumed they'd be doing business with.  This seeks to free that up            
 and would allow you to enter into a single source after there was             
 a determination that it was not practical to go through the normal            
 competitive bid process in a determination that a single source               
 contract would be in the state's best interest.  Mr. Petty said it            
 also permits the chief procurement officer to delegate this to                
 other procurement officers.                                                   
                                                                               
 MR. PETTY said Section 17 would allow the chief procurement officer           
 to delegate the limited competition requirement as a method of                
 source selection when it is contrary to the state's best interest             
 to enter into a contract under the normal procurement process.  The           
 chief procurement officer may determine that a limited competition            
 situation exists.  This would allow the chief procurement officer             
 to delegate it.  Mr. Petty pointed out another feature of Section             
 17 is that for legal services contracts, the attorney general would           
 be named as the person determining when it was appropriate to enter           
 into a legal source for just legal services contracts.                        
                                                                               
 Number 909                                                                    
 MR. PETTY referred to Section 19 and said it would create another             
 method of source selection which is called the innovative                     
 procurement method.  There is a recognition that in today's rapidly           
 evolving procurement environment in the marketplace that the                  
 invitation to bid process, which has been the mainstay of public              
 procurement for 100 years or better, and the RFP process doesn't              
 always work.  We need to have innovative thinking to figure out               
 better ways of getting the job done.  This would establish an                 
 innovative procurement track which would challenge procurement                
 officials in the state to do some "outside the box thinking."  He             
 said they would have to have the procurement plan reviewed, as to             
 form, by the Department of Law.  They would have to have the chief            
 procurement officer determine that it is advantageous to the state            
 to use an innovative procurement process.  Mr. Petty said the idea            
 is if we can document some successful uses that innovate                      
 procurement processes, we could come back and institutional it.               
 Public procurement throughout the United States is struggling with            
 trying to make the procurement process responsive.  This is one way           
 that we could build innovation into the system, but it is                     
 controlled and they would be expected to report on it to compile              
 those successes and failures as well.                                         
                                                                               
 Number 985                                                                    
                                                                               
 MR. PETTY said Section 22 would expand the requirement of                     
 independently examining material facts when determining that a                
 limited competition procurement or a sole source for emergency                
 competition procurement is required.  He said Section 22 fits with            
 Section 16 and 17.  If we're going to give procurement officers               
 more empowerment and authority under 16 and 17, then 22 also makes            
 them accountable for the independent verification of the material             
 facts and also would extend the penalties of a class A misdemeanor            
 to those state officials who might make that determination and not            
 just the chief procurement officer.                                           
                                                                               
 MR. PETTY explained Section 23 would increase the threshold                   
 requirements for use of the small procurement process, which is a             
 simplified process compared to the invitation to bid (ITB) and                
 RFP process.  Currently, ITBs and RFPs must be used if the                    
 material, construction or service is to be over $25,000.  This                
 would expand, for services and supplies, the requirement to use an            
 ITB or RFP when it trips $50,000, and for construction when it                
 trips $100,000.  He said that is the threshold that has been                  
 established under the 1994 Federal Streamlining Act.  Theirs, if              
 you use electronic commerce, would go higher than those thresholds.           
                                                                               
 Number 1072                                                                   
                                                                               
 MR. PETTY said Section 29 allows the commissioner of the Department           
 of Administration to establish, by regulation, a simplified                   
 procurement process.  Currently, we have a two tiered process which           
 brings the initial protest to the contracting officer with the                
 ability to appeal that decision to the commissioner of                        
 Administration as a second tier.  The third tier would be to appeal           
 the commissioner's decision to the court.  That process takes time            
 and effort not only by the state but also by the contractors that             
 use it.  It is the only process we have in statute even if it's a             
 small procurement that is being protested.  He said they would want           
 to establish a more streamline simplified protest process that                
 would be consistent with whatever the threshold would be set in               
 statute for the use of small procurement.                                     
                                                                               
 MR. PETTY informed the committee that Section 30 would require that           
 an invitation that is a protest for solicitation of an RFP or an              
 ITB be brought to the state within ten days before bid opening.  He           
 said that is currently a practice of what is done in regulation.              
 Mr. Petty said they want to require bidders to make sure they read            
 it and bring that forward at an early stage where something can be            
 done with the bids to make changes without causing a delay such as            
 extending the bid opening because it was a late protest.  Those               
 delays not only affect the state, but they affect the vendors that            
 are submitting bids on it as well.                                            
                                                                               
 Number 1196                                                                   
                                                                               
 MR. PETTY said Sections 31, 32, 34 and 35 all have to do with the             
 protest process.  Currently, we have sort of nonstandard time                 
 frames for responses for when the protest report has to be                    
 submitted by either the procurement officer or the protester.  This           
 seeks to make them more standard with a 10-15-30 day scenario.  It            
 is more consistent with court rules and it would be easier for the            
 procurement officials as well as the vendors who are involved in              
 the protest to follow.  There is no advantage gained one way or the           
 other with that.  It is just a matter of trying to standardize                
 these rules.                                                                  
                                                                               
 MR. PETTY explained Sections 36 and 37 would require a contract               
 claim to be brought against the state under a contract controversy            
 within 30 days from the date that the contractor becomes aware of             
 it or the date that they should have become aware of it.                      
 Currently, under their contract controversies, there is no statute            
 of limitations for bringing a claim against the state.  Mr. Petty             
 said there are lessors who have brought claims as much three years            
 after the award of the lease which makes it difficult for the state           
 to protect its interests.                                                     
                                                                               
 Number 1268                                                                   
                                                                               
 MR. PETTY said Section 33 would limit the protestors' damages to              
 reasonable bid preparation costs or proposal preparation costs.               
 That has been consistent with court settlements for a number of               
 years.  He noted they have been advised that was a bit different              
 and the Department of Law has recommended that we protect ourselves           
 by including this in the statute.                                             
 MR. PETTY informed the committee that Section 39 would exempt the             
 operation, protection and disposal of assets acquired from the                
 agricultural revolving loan fund that go to the Department of                 
 Natural Resources.  Mr. Petty said an example he is aware of is               
 Matanuska Maid which is operating under a foreclosure.  Arguably,             
 it could be said that the operation should be under the procurement           
 law and any disposal of that would be under the procurement process           
 the way the law currently reads.                                              
                                                                               
 MR. PETTY explained Section 40 exempts lobbying public relations              
 and advertising contracts by the Office of the Governor.  That is             
 a recognition that there are times when it is necessary to get                
 people that can be effective in lobbying, either in Washington,               
 D.C., or advertising in local markets, where the RFP or ITB process           
 simply breaks down and doesn't work.  He noted this would not                 
 extend to line agencies of government.  Mr. Petty said another part           
 of Section 40 exempts the acquisition of livestock by Alaska                  
 Correctional Industries.  The Mount McKinley meat packing plant in            
 the Matanuska Valley, operated by Alaska Correctional Industries,             
 has an obligation to buy livestock that farmers bring into them.              
 It is not possible for them to put out an invitation to bid or                
 quotes for that livestock coming in.  It is a barter type                     
 situation.  This would try to rectify that inaccuracy.                        
                                                                               
 Number 1370                                                                   
                                                                               
 MR. PETTY explained Section 41 clarifies that it is specifically              
 permissible to use general services' administration supply                    
 schedules for purchases.  In the Federal Acquisition Streamlining             
 Act of 1994, the federal government made available for the first              
 time, under their cooperative purchases, the use of federal GSA               
 supply schedules by state and local governments.  Mr. Petty said              
 many state and local governments aren't particularly excited about            
 that if they are big and do a lot of high volume purchasing because           
 they can drive pretty good pricing if they have the resources.  He            
 said the state needs to take a look at that because we don't have             
 the volume purchasing that a lot of the larger states have.  These            
 prices could actually be better prices than what we get on our term           
 contracts.  Mr. Petty said he would see that working in such a way            
 that we would be gatekeeper for those contracts.  Where we have               
 existing term contracts in place for the items, we wouldn't use               
 those contracts.  But where we don't and we go out to bid, we'd               
 like to be able to use those contracts as benchmarks and say, "Here           
 is what the GSA pricing schedule is and if you can't beat that                
 price, we'd want to go with the GSA pricing schedule."  Mr. Petty             
 said he would be happy to answer questions.                                   
                                                                               
 Number 1444                                                                   
                                                                               
 REPRESENTATIVE BRIAN PORTER referred to the lease/purchase change             
 and said he was under the impression that the legislature had to              
 approve lease/purchases over $10 million.  He asked if it is                  
 something different for those under that amount.                              
                                                                               
 MR. PETTY explained that there has been a number of changes to                
 statute over the past five or six years in that area.  If it is               
 simply an operational lease, the legislature has to approve it if             
 it is over $500,000 a year or $2.5 million over the term of the               
 lease.  He said that information is provided in their budget                  
 process.  The statute says that approval of the budget covers that.           
 Mr. Petty said on the lease/purchase agreement side, where the                
 lessor would go out and issue certificates for participation or if            
 there is some method of lease financing, the difference at the end            
 is we would have an ownership interest in it.  Currently, the                 
 threshold is zero.  If we are to do any lease/purchase of real                
 estate, it requires notice to legislature and a law to be passed              
 authorizing it.                                                               
                                                                               
 Number 1528                                                                   
                                                                               
 REPRESENTATIVE NORMAN ROKEBERG asked Mr. Petty for the citation of            
 the statue as it relates to the legislative approval for any                  
 operating lease.                                                              
                                                                               
 MR. PETTY responded it is 36.30.080.                                          
                                                                               
 REPRESENTATIVE ROKEBERG questioned what the rationale was about               
 being exempt from legislative approval if there is a $2.5 million             
 lease/purchase agreement.                                                     
                                                                               
 MR. PETTY explained that they need the ability, if there is a lease           
 that they are into that can be converted to a lease/purchase                  
 agreement and it makes sense to purchase and is good business for             
 the state, there needs to be some ability to seize those                      
 opportunities.                                                                
                                                                               
 REPRESENTATIVE ROKEBERG said, "Seize on the opportunity - I mean              
 these things are -- these windows are to me very narrow.  I don't             
 think that is necessarily the case.  I'm not sure why you can't go            
 through the existing statutory procedure.  If there is a good                 
 enough deal you can bring it to the LBA Committee and ask them for            
 authority to proceed - can you not?                                           
                                                                               
 MR. PETTY indicated it requires a law and LB&A wouldn't meet the              
 requirement to actually pass the law.                                         
                                                                               
 Number 1615                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said, "In Section 5 on page 2 you have the            
 lease extension authorization.  I'm really concerned about this               
 entire clause.  Number 1, the maximum extension of ten years and              
 then these thresholds of savings of only 5 and 10 percent.  I mean            
 I think these are really not the proper numbers frankly, based on             
 my experience in the commercial real estate....  The 10 percent is            
 not, you know, in the real world is relatively a marginal savings             
 and I can see this being abused or has a possibility of abuse,                
 cause there doesn't seem to be a deep enough discount (indisc.) the           
 reason for an extension.  Plus the other thing about the ten year             
 extension is that if you are in a falling marketplace, as we are              
 now, if you go in and tie up a leasehold interest for ten years,              
 you're not going to be in a position to benefit from any other                
 reductions that may be coming in the future.  The converse                    
 obviously is true for the business sense and it is very unusual for           
 the state of Alaska -- in the state of Alaska even for commercial             
 enterprises to enter into a ten year leasehold interest unless it             
 is build-to-suit type situation.  Very very unusual.  At this point           
 I'm going to be very outspokenly against this particular section.             
 Also, you mentioned Section 36.  You said that the -- 30 days the             
 claim must be filed within 30 days.  It's on page 14.  You said               
 that -- you brought up an example about lessees or leasehold                  
 interests here again where there would be claims.  Would this be              
 like for the claim on the part of a landlord for escalation                   
 adjustments for utilities and things like that.  Or what were you             
 referring to?  Do you know?"                                                  
                                                                               
 Number 1715                                                                   
                                                                               
 MR. PETTY said what he was referring to in a three year issue,                
 although he believes it probably could cover Representative                   
 Rokeberg's issues, was it is just a claim where the contractor came           
 in and said, "You owed me more money because I built this building            
 this way instead of that way in response to your lease."  Mr. Petty           
 said it's not that they don't believe that they should be addressed           
 but they should be addressed timely.                                          
                                                                               
 REPRESENTATIVE ROKEBERG said there could be a dispute about the               
 specifications and sometimes that doesn't come to light until the             
 project is significantly underway.  He said 30 days seems like an             
 awfully short period of time.                                                 
                                                                               
 MR. PETTY said he believes it could be extended.  The point is to             
 have some statute of limitations.  He said as they read the bill,             
 an argument could be made that the contractor should be aware of              
 that claim, at least within the contract period.  They would have             
 a right during that contract period or as much as 30 days after the           
 exploration of the contract to bring it.  He said what they are               
 trying to prevent is a situation where a contractor brings a claim            
 two or three years after the contractual relationship ended.                  
                                                                               
 Number 1911                                                                   
                                                                               
 MR. PETTY said he would address Representative Rokeberg's earlier             
 concern about the lease extension.  He said they were able to use             
 the flexibility they had in the lease extension for the 18 month              
 window effectively.  Mr. Petty pointed out they did not, in all               
 cases, agree to extend the lease for five years for a 10 percent              
 reduction.  In some cases they said, "Ten percent doesn't work for            
 you, Mr. Lessor, because the market dictates a stronger savings               
 than that," and negotiated higher savings.  He said they have                 
 applied this in a way that it has to make good business sense.                
 Just because it meets the requirements of the law and doesn't make            
 good business sense, doesn't mean that they ought to enter into it.           
 He said he believes the department has been responsible on how they           
 dealt with this in the past and he wouldn't see that changing even            
 though the bill would allow them to enter into agreements.                    
                                                                               
 Number 1958                                                                   
                                                                               
 REPRESENTATIVE KIM ELTON said he made an assumption that may have             
 been an erroneous assumption and that is that a lot of the real               
 property leases that the department may enter into are for three              
 year periods with the possibility of additional one year                      
 extensions.  He said he didn't read this in terms of signing a ten            
 year real property lease.  He asked if a ten year real property               
 lease is common or is it more common to have a real property lease            
 of three or five years with the possibility of one year extensions.           
                                                                               
 MR. PETTY said ten years ago they would say that three years and              
 five years is about as long as they would go.  The fact of the                
 matter is that if they bid on those short turnaround basis today,             
 the moving, cabling and loss of productivity costs would simply eat           
 them alive.  He said particularly in the office lease area we have            
 to try and go for longer term leases to prevent the costs of the              
 moves which are becoming more and more expensive.  Years ago it               
 used to be relatively cheap to box up stuff and move.  That is not            
 the case today.  Mr. Petty referred to a decline in market and said           
 while that is true, we can drive good prices on long term leases.             
 He said the average is probably five years for a lease, but if they           
 were going out for a 20,000 square foot lease in today's market, he           
 would look for at least a ten year lease agreement.                           
                                                                               
 Number 2045                                                                   
                                                                               
 REPRESENTATIVE ELTON said Section 4 allows for the use of a small             
 procurement process for leases of 5,000 square feet and said he               
 would have expected that the standard would be cost and not                   
 necessarily the number of square feet.  If you are doing a ten year           
 lease, the cost could be considerable even though you've got 5,000            
 or less.  He asked for an explanation of why the size of the foot             
 print of the real property is the standard rather than the cost.              
                                                                               
 MR. PETTY said if you define leases in terms of size, they are                
 hoping that keeps the size down on leases and is an easier way to             
 deal them.  The cost issue escalates up if we're saying that small            
 leases of a certain size makes sense to do in an expedited                    
 procurement process regardless of the relative values going up or             
 down over the years.  He said this is the threshold the department            
 has proposed.  There may be a threshold that makes better sense to            
 the committee.  There ought to be a more streamline approach to               
 acquiring small offices.  Mr. Petty said he believes that the                 
 department does an excellent job at what they do and it tends to be           
 a very contentious environment.  He said this will go a long way to           
 give them the flexibility to get the job done with the resources              
 they have available to use.                                                   
                                                                               
 Number 2129                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG referred to Section 5 and said the impact             
 of the marketplace is very substantial particularly if there is a             
 leasehold interest coming through a natural expiration.  To use               
 this particular thing and put it in statute on an ongoing basis               
 would have a very devastating impact on the nature of the                     
 marketplace within an area like Anchorage.  He said this is like              
 granting yourself a renewal option in statute.  Renewal option are            
 100 percent in favor of the tenant.  He said he will be adamantly             
 opposed to this.  Representative Rokeberg said he thinks these                
 types of clauses are good when conditions are such that the state             
 can take advantage of them, but he believes they should be limited            
 in scope and only for a short period of time.  The lease should               
 come to the end of its natural expiration and (indisc.) marketplace           
 and let competition and other landlords and building owners bid on            
 it.                                                                           
                                                                               
 MR. PETTY said he wishes they had the staff resources to be                   
 replacing all their leases timely when they expire.                           
                                                                               
 REPRESENTATIVE ROKEBERG suggest lengthening the leases.  He said              
 there is a lot of things they could do.                                       
                                                                               
 MR. PETTY explained the statute does not permit them to extend a              
 lease beyond its expiration.  He said he believes Representative              
 Rokeberg has valid points and that he understands the real estate             
 and the commercial leasing market.  Mr. Petty said one of the                 
 problems they have when there is an expiring lease is most lessees            
 enjoy the benefit of being able to go back and negotiate with the             
 current lessor to gain rent concessions rather than to go back out            
 in the marketplace.  He explained there is a significant cost to go           
 back out into the marketplace.  Mr. Petty said the state could be             
 caught in a situation when they go back out in the marketplace,               
 lose a lot of productivity and spend a lot of money to move down              
 the street for a small savings.  If they could effectively                    
 negotiate a better deal than what they believe the market would               
 yield, they ought to be able to do that.  Under the current                   
 statute, it is not possible.                                                  
                                                                               
 Number 2263                                                                   
                                                                               
 CHAIRMAN KOTT said in a rising market this would give Mr. Petty the           
 opportunity to extend that lease at a 5 or 10 percent savings                 
 depending on the case.  He said in response to Representative                 
 Rokeberg's comment, the operative word if "may."  There is no                 
 guarantee that the state won't try to go out there and enter into             
 a 10 percent savings if there is a (indisc.) drop in the real                 
 estate market.                                                                
                                                                               
 REPRESENTATIVE ROKEBERG referred to Section 30, relating to the               
 protest of ten days and said he has concerns with the way it is               
 drafted where if there are an improprieties you have to give ten              
 days notice.  As a practical matter, it is difficult.  He said he             
 understands the reasoning for the clause.  One of the major                   
 concerns and problems with the procurement code is how disruptive             
 it gets when you have certain vendors who specialize in state                 
 (indisc.) because they know the (indisc.) and they delight in                 
 things that can hold up the process or slow it down if it doesn't             
 go their way.  He said he doesn't understand the use of "alleged              
 improprieties."                                                               
                                                                               
 MR. PETTY said that language, in his view, means that if the bidder           
 believes that we've done something wrong in the bid document or in            
 the process or if there is an ambiguity in the solicitation that              
 they would bring that within ten days before the bid opening.  It             
 distinguishes between the protest award.  They would clearly have             
 the right to protest the award afterwards because it was a separate           
 issue.  If there is something wrong with a bid or an RFP, they                
 certainly have the right to protest it.  They are just trying to              
 get them to bring it forward within ten days of the bid opening.              
                                                                               
 Number 2299                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG questioned how the new additional language            
 is consistent with the existing language.  He asked if they are               
 exclusive.                                                                    
                                                                               
 MR. PETTY said they are not exclusive.  He referred to the current            
 language and said they have to protest that award within ten days             
 after the notice of intent to award.  The current statute doesn't             
 address the time frame for bringing a protest, a solicitation or              
 the document itself.  This attempts to use that same ten day                  
 standard.                                                                     
                                                                               
 CHAIRMAN KOTT referred to Section 30 and said the ten day                     
 requirement is something that is currently being practiced based on           
 regulations.                                                                  
                                                                               
 MR. PETTY confirmed they currently do have that in their                      
 regulations.                                                                  
                                                                               
 Number 2411                                                                   
                                                                               
 REPRESENTATIVE ELTON questioned the time period is between the                
 request for a proposal and the time a proposal must be submitted.             
                                                                               
 MR. PETTY said, "That is a 21 day period by statute from the time             
 that the proposal is put out on the street or the ITB is awarded or           
 put out on the street, the time we open the bid or the due date on            
 the submission of the proposal is 21 days.  To shorten that,                  
 currently the law requires a determination by the chief procurement           
 officer to reduce that period."  [END OF TAPE]                                
                                                                               
 TAPE 96-23, SIDE B                                                            
 Number 036                                                                    
                                                                               
 CHAIRMAN KOTT referred to wording in Section 43, "If the                      
 procurement officer determine in writing that a shorter notice                
 period is advantageous."  He said that 21 day period could be cut             
 down to something less if adequate competition is anticipated.  He            
 asked if there would ever be a case where that period of time could           
 be shortened to 11 days and affect Section 30 where it says we must           
 have a filing within ten days.                                                
                                                                               
 MR. PETTY said that issue was raised in the Senate State Affairs              
 Committee.  He explained the department's inclination to deal with            
 that is to have that ten day rule only when the pool solicitation             
 notice is in effect, but if there has been a shortened circulation            
 period simply to require a protest of solicitation to be brought              
 before the bid opening.  It would simply have to be brought before            
 the bid opening.  That would seem to give somebody as much                    
 opportunity as possible to protest the solicitation in advance and            
 give the department a chance to delay the process.                            
                                                                               
 Number 093                                                                    
                                                                               
 REPRESENTATIVE PORTER asked if in some cases do they pre-bid                  
 conferences that all bidders go to.                                           
                                                                               
 MR. PETTY said that is a practice used primarily for more complex             
 or high dollar volume term contracts or bids.  He said they do use            
 the proposal of the pre-bid conference process.                               
                                                                               
 REPRESENTATIVE PORTER referred to Section 30 and said if this                 
 conference were scheduled more than ten days after the bid had been           
 let, they would not be precluded from trying to square away                   
 ambiguities.  That is what that conference is for.                            
                                                                               
 MR. PETTY said that is true; however, what they typically find is             
 the shortened circulation bids are usually for the off-the-shelf              
 less controversial type items.  If there is a proposal or pre-bid             
 conference, it would be unusual that it would be a short                      
 circulation type situation.   He said Section 30, as it is written,           
 would apply to any bidder proposal.  Usually those more complicated           
 ones have a longer period.                                                    
                                                                               
 REPRESENTATIVE PORTER said Section 30 says that if you have a                 
 concern about ambiguity that you must file that ten days before the           
 due date.  He asked if the statute would preclude the ability to              
 clear up an ambiguity at a pre-bid conference that was something              
 less than ten days.                                                           
                                                                               
 MR. PETTY said he doesn't believe it would because if that came out           
 in a pre-bid conference at a mark less than ten days, it would be             
 knowledge that the contracting officer would have and it would be             
 hard for them to ignore that knowledge and not act on it.  He                 
 explained that his reading of the Cliff Berg decision is that the             
 contracting officer must act on the knowledge he has.  He said he             
 doesn't think that would be any kind of a basis to not deal with              
 the protest on its merit.  He said if that was an issue the                   
 committee wanted to address, he is sure they could look at amending           
 this to have a pre-bid conference exception to that rule.                     
                                                                               
 REPRESENTATIVE PORTER indicated that would be helpful to him.                 
                                                                               
 Number 201                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG told Mr. Petty he thinks the department is            
 doing a good job in terms of trying to come to grips with the                 
 procurement code.  The vendors and business people of the state               
 hate it.  He explained his concern is with the innovative                     
 procurement idea and asked Mr. Petty to give an example.                      
                                                                               
 MR. PETTY said, "I can give you an example.  The two live examples            
 that it is my understanding that the Procurement Advisory Council             
 would be addressed by this.  One of them is the Exxon Valdez oil              
 spill procurements that have taken place for their research and               
 project studies.  We met with a group of procurement officers                 
 several years back to try and figure out, within the state                    
 procurement laws, a way that we could go out and competitively                
 acquire, in accordance with 36.30, these unique requirements that             
 they had for studies.  And we couldn't figure out a way that                  
 satisfied the Exxon Valdez Trustee Oil Spill Council because they             
 wanted, at one point, before awarding and before completing the               
 evaluation on the RFPs, to make the proposals public.  Our                    
 procurement process, for a good reason prevents that.  It prevent             
 that because if we disclose a proposal to another proposer before             
 we have had a discussion stage, that would give them an unfair                
 advantage.  So it's appropriate that it should prevent that from              
 happening.  But in this case, we could not figure out a way to                
 acquire what they needed and meet the requirements.  In the end,              
 the federal contracting officers wound up buying those studies                
 under a federal procurement practice known as a broad agency                  
 announcement which allowed them to do what they needed to get the             
 job accomplished and still had a (indisc.) procurement process.  I            
 felt, frankly, frustrated because one of our goals is to help                 
 agencies get their job done in accordance with the law and we just            
 simply weren't able to make that happen.  That is a case where we             
 could have developed an innovative procurement process that would             
 have accomplished the end result.  We wouldn't have heard, `Well              
 the procurement law won't let us do it,' and had the accountability           
 and the competition that we believe the law intended to have.                 
                                                                               
 MR. PETTY said, "Another case and point that I have been advised of           
 is that the actual procurement of the new ferry was exempted by the           
 legislature some years back would have actually fit under this                
 innovative procurement process but couldn't technically have been             
 done under the ITB or the RFP rules in the procurement process."              
                                                                               
 MR. PETTY said he wouldn't suggest that this should be used all the           
 time, but it is an avenue where procurement professionals can                 
 figure out a better approach to getting the job done.  He said in             
 state government, we need to encourage some innovative thought                
 processes when we can, yet maintain the controls and the                      
 accountability.  He said it allows them, when there is a unique               
 requirement or when there is a value that can be achieved, to                 
 employ that kind of process.  He said he would not think they would           
 undertake this lightly.                                                       
                                                                               
 Number 357                                                                    
                                                                               
 REPRESENTATIVE ELTON said the purpose is to permit latitudes that             
 allow professions to do their jobs.  He said he thinks when you try           
 to apply a cookie cutter recipe to each of the individual                     
 situations that a procurement officer is going to face, that is               
 very very difficult.  While there may be individual parts that can            
 be fine tuned on this bill, the purpose of the bill is really                 
 noble.  He said this does allow the professionals in the field                
 latitude to accomplish some things that are very difficult to                 
 otherwise achieve with a cookie cutter approach.  He said he would            
 also note that the latitude always comes with danger and the                  
 danger, in this instance, would be legislative audits and other               
 things that may sway legislative opinion on the way an agency                 
 (indisc.).  Representative Elton said professional latitude gets              
 right to the heart of this.                                                   
                                                                               
 Number 438                                                                    
                                                                               
 CHAIRMAN KOTT said HB 482 would be held until Wednesday.                      
                                                                               
 HB 439 - MINING BONDING POOL & ADVISORY COM'N                               
                                                                               
 Number 470                                                                    
                                                                               
 CHAIRMAN KOTT announced the committee would address HB 439,                   
 "An Act relating to minerals, including coal, to the statewide                
 bonding pool for the reclamation activities imposed on mining                 
 operations, and to the statewide bonding pool's use for surface               
 coal mining projects."                                                        
                                                                               
 FRED PASCO, Legislative Secretary to Representative Tom Brice,                
 Alaska State Legislature, read the following statement on behalf of           
 Representative Brice:                                                         
                                                                               
 "House Bill 439 originally sought to open the statewide bonding               
 pool participation of Alaska's coal industry, in addition to                  
 creating a commission to evaluate the Alaska coal program.  The               
 matter of the bonding pool was addressed in a subsequent piece of             
 legislation initiated in the other body and now in the House.                 
 However, there are issues beyond the statewide bonding pool                   
 affecting the coal industry in Alaska                                         
                                                                               
 "The Alaska coal program is currently included in the proposed                
 operating budget for FY 97, but Representative Brice strongly feels           
 that the issues surrounding surface coal mining in Alaska with                
 state regulatory primacy is the most effective approach to them,              
 compel us to look to the long term impact of the state coal program           
 with respect to federal primacy of over this resource.                        
                                                                               
 "The CS proposes to establish a temporary commission tasked with              
 evaluating the Alaska coal program under the state Surface Coal               
 Mining Control and Reclamation Act as it relates to the federal act           
 and the Office of Surface Mining.  This will open discussion on the           
 issue during the life of the commission and enlarge the base for              
 future decisions regarding state primacy with respect to regulation           
 of surface coal mining in Alaska.                                             
                                                                               
 "Once again, Representative Brice thanks you, Mr. Chairman, and the           
 members of the Labor and Commerce Committee for the opportunity to            
 present this legislation."                                                    
                                                                               
 Number 542                                                                    
                                                                               
 REPRESENTATIVE ELTON referred to page 1, line 8, of the proposed              
 committee substitute which said, "The commission shall be composed            
 of individuals not employed by government at any level..."  He                
 asked what the rationale is of having a commission that is                    
 (indisc.) commission exclusively rather than a commission that also           
 has a representative or two on a nine member commission that                  
 understands the application of regulations as well as serving under           
 the regulations.  He questioned why they can't be employed by                 
 government at any level.                                                      
                                                                               
 MR. PASCO said when the commission we first discussed, they were              
 looking at an original fiscal note of $75,000.  Partially, an                 
 approach to this was looked at from the standpoint of the industry            
 hoping to finance some of the undertaking of the commission.  With            
 an arrangement that the Department of Natural Resources, Division             
 of Mining and the Coal Association had discussed, they came to an             
 understanding that through private sector members of the commission           
 being funded, per diem and travel costs by the industry, this is              
 one mechanism which would lower the cost to the state.  In                    
 addition, the publishing of the report would make it available to             
 the division for its analysis.                                                
                                                                               
 REPRESENTATIVE ELTON said he would be a little bit bothered,                  
 whether they're members of the commission or not, if they don't               
 show up they are not going to be assets to the commission from                
 (indisc.).                                                                    
                                                                               
 CHAIRMAN KOTT noted there may be somebody on teleconference that              
 could address that issue.                                                     
                                                                               
 Number 661                                                                    
                                                                               
 REPRESENTATIVE SANDERS moved to adopt the proposed committee                  
 substitute for HB 439, Version K, dated 2/22/96.                              
                                                                               
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, CSHB            
 439 was before the committee.                                                 
                                                                               
 Number 685                                                                    
                                                                               
 CHARLIE BODDY, Usibelli Coal Mine, Incorporated, testified via                
 teleconference.  He informed the committee he is also                         
 Secretary/Treasurer of the Alaska Coal Association.  Mr. Boddy                
 informed the committee that the bill before the committee is a bill           
 the Alaska Coal Association has worked on through the Minerals                
 Commission for about six years.  The importance of the legislation            
 at this time is that there has been major legislation at the                  
 federal level.  One piece of federal legislation is HR 2372,                  
 sponsored by Wyoming Representative Barbara Cubin.  He said there             
 is another piece of legislation in the Senate.  This legislation              
 would turn control of the surface coal mining and reclamation in              
 states that have primacy programs, which Alaska has, back to the              
 state.  Mr. Boddy noted Usibelli would get together with the state            
 and federal agencies to work through exactly how that role change             
 would occur.  He referred to the composition of the commission and            
 how the appointments would go and said they believe there should be           
 certain members selected from the House and Senate, and the                   
 Governor will have (indisc.) appointed.                                       
                                                                               
 Number 827                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked why the pooling was taken out of the            
 committee substitute.                                                         
                                                                               
 CHAIRMAN KOTT said he believes the pooling has been removed because           
 SB 240 is now in the House.  He referred to the selection of the              
 members of the commission and said the current bill indicates that            
 the Governor shall make the appointments to the commission.                   
 Chairman Kott said he doesn't see anything that indicates some of             
 the members will be from the Senate or House.                                 
                                                                               
 MR. BODDY clarified that as those individuals are selected,                   
 possibly there should be a division in that the Governor should not           
 be selecting all nine members.  He suggested that maybe the                   
 Governor, the House and the Senate should all select three members.           
                                                                               
 Number 909                                                                    
                                                                               
 JULES TILESTON, Director, Division of Mining and Water Management,            
 Department of Natural Resources, was next to testify via                      
 teleconference from Anchorage.  He said he has reviewed the                   
 committee substitute.  The Administration has proposed returning              
 primacy of the Alaska Coal Program to the federal government.  As             
 a result of that DNR has been working very closely with                       
 representatives of the Alaska Coal Association and the federal                
 government to make sure something doesn't drop through the cracks             
 should that primacy shift actually take place.  This included a               
 series of informal discussions at which time they identified                  
 several processing of decision points that needed fine tuning.  He            
 said they held a two day coal reclamation workshop with members of            
 the industry, consultants and Alaskan scientists who are familiar             
 with reclamation practices in Alaska.  There is a follow up meeting           
 scheduled for next week.  Mr. Tileston explained that last week the           
 Administration amended its proposed fiscal 97 budget to retain in             
 the state primacy of the coal program.  He said he would give the             
 committee a "What if" scenario.  If you assume that the Alaska Coal           
 Program is to be retained, then we have already underway a series             
 of steps that would do that and then the issue becomes one of what            
 do we gain in relationship and there is a modest cost that goes               
 with it.  However, if you assume that the Alaska Coal Program                 
 cannot be funded, and that is a budget decision, then a sunsetted             
 organization appointed by the Governor would serve a useful                   
 mechanism to ensure that the federal government listens to and                
 fairly considers the specific challenges of producing coal in                 
 Arctic and SubArctic environments.  Alaska is not like Canada or              
 West Virginia and that is how the federal program is presently                
 structured.                                                                   
                                                                               
 Number 1032                                                                   
                                                                               
 REPRESENTATIVE ELTON said it seems odd to him that we are creating            
 a commission of nine members to study this issue and to deal with             
 primacy issues, none of whom would end up being agency people who             
 were the applicators of the regulation.  He asked if it would be              
 helpful to have one or two members of this nine member commission             
 actually be the people who apply regulations instead of industry              
 people.                                                                       
                                                                               
 MR. TILESTON said the basic thing they did in concert with the                
 Alaska Coal Association at Representative Brice's request is take             
 a very hard look at the fiscal note.  A large percentage of that              
 cost is when you start adding commissioners or these sorts of                 
 levels of staff.  He said they were looking at a program that would           
 assure industry the opportunity to pull together what they thought.           
 He noted this is very similar to the way the way the Alaska                   
 Minerals Commission now operates.  The costs go up as you add state           
 government officials to the commission.                                       
                                                                               
 REPRESENTATIVE ELTON questioned whether there would be agency                 
 people in attendance when the commission meets.                               
                                                                               
 MR. TILESTON said the fiscal note does contemplate that there would           
 be staff support.  He said he anticipates that one month of staff             
 support would be required for each of the two years that the                  
 commission would be in operation.  Mr. Tileston said they are                 
 working daily and his presumption at this point is that the coal              
 program primacy will remain in the state.  He said the department             
 works daily with the various coal organizations and lessees.                  
                                                                               
 Number 1143                                                                   
                                                                               
 REPRESENTATIVE ELTON said it has been noted that this is a two year           
 project.  The committee substitute says it sunsets on July 1, 1999.           
 He said the way he reads it, it would be three years.                         
                                                                               
 MR. TILESTON said Representative Elton is correct.                            
                                                                               
 Number 1256                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said in the sponsor statement there is an             
 indication that there would be as much as $1.6 million with a                 
 $123,000 match.  He asked what is happening in terms of the funds             
 and what impact the bill has on those funds as well as the                    
 Governor's amended budget recommendation.                                     
                                                                               
 MR. TILESTON said the Administration originally deleted the coal              
 program and that was for general funding.  There was a very                   
 substantial federal (indisc.) program that went with it.  He said             
 Representative Brice's figures were indeed in the Administration's            
 original budget.  Last week, the Administration adjusted that                 
 budget and the adjustments were made from other agencies within the           
 Department of Natural Resources to come up with the general fund              
 match money.  The coal program, as far as the Administration, has             
 been restored to its budget.  The general fund amount was                     
 approximately $123,000 and in return, there was a combination of              
 funds not only from federal match but from another entirely                   
 separate program called the Abandon Mine Lions Program.  That has             
 about $4 million, 100 percent federal kitty that is currently                 
 available to the state.  He said right now they'll be contracting             
 for "dirt work" to reclaim former areas mined by coal, (indisc.)              
 track will be up in the Sutton area.                                          
                                                                               
 REPRESENTATIVE ROKEBERG said this isn't all related to the Healey             
 area.                                                                         
                                                                               
 MR. TILESTON explained that the only producing coal mine today is             
 at healey, the reclamation is not.                                            
                                                                               
 REPRESENTATIVE ROKEBERG questioned whether Usibelli benefit from              
 this federal money.                                                           
                                                                               
 MR. TILESTON said he would say the state as a whole benefits from             
 it because part of it deals with the permitting, which is done in             
 his shop, as opposed to Denver if the federal government takes it             
 on.  The fact that areas which are currently being used for                   
 recreation in the Sutton area have high walls that do indeed pose             
 health hazards.  They'll be reduced as a result of the AML program.           
                                                                               
 Number 1352                                                                   
                                                                               
 CHAIRMAN KOTT referred to the issue of the sunsetting clause and              
 asked if that was a typographical error.                                      
                                                                               
 MR. TILESTON said it was an improper addition on his part.                    
                                                                               
 CHAIRMAN KOTT said we're giving them two years and on the third               
 year, if they need it, they're on their own.  He referred to                  
 testimony given in the House Resources Committee, and said                    
 according those who testified in the industry, two years was                  
 sufficient enough.                                                            
                                                                               
 MR. TILESTON said the wrong fiscal year was inadvertently inserted.           
                                                                               
 Number 1394                                                                   
                                                                               
 REPRESENTATIVE ELTON moved on page 2, line 6, substitute 1998 for             
 1999.                                                                         
                                                                               
 REPRESENTATIVE PORTER objected for the purpose of discussion.  He             
 said if it is that the committee wants to entertain the notion of             
 putting three, three and three rather than all nine coming from               
 Governor, they might need this time for that process to fully be              
 completed.  He said we wouldn't be able to make our appointments              
 until next year.                                                              
                                                                               
                                                                               
 REPRESENTATIVE ROKEBERG questioned why the Senate President and               
 House Speaker make the appointment.                                           
                                                                               
 REPRESENTATIVE PORTER said, "Because they generally would like to             
 check with us."                                                               
                                                                               
 Number 1394                                                                   
                                                                               
 REPRESENTATIVE ELTON said if there is going to be an amendment to             
 change the appointment process, he would withdraw his amendment.              
                                                                               
 CHAIRMAN KOTT said the amendment is withdrawn and asked if there              
 was further discussion.                                                       
                                                                               
 Number 1465                                                                   
                                                                               
 REPRESENTATIVE PORTER moved that on page 1, line 11, the committee            
 delete the phrase, "The governor shall appoint the member of the              
 commission.  Each member serves at the pleasure of the governor."             
 and insert "Three members of the commission shall be appointed by             
 the governor, three by the Speaker of the of the House and three by           
 the Present of the Senate whose members shall serve at the pleasure           
 of their appointer."                                                          
                                                                               
 REPRESENTATIVE ELTON objected for the purpose of discussion.  He              
 said, "A guess the only concern that I have, I don't know frankly             
 if it is a valid concern or not, but we've got a commission in                
 which we're requiring that the people all have knowledge of the               
 surface coal mining industry.  My guess is there is not an awful              
 lot of -- not a large pool of people out there that may be                    
 available.  I guess we're making an assumption also that this will            
 bring balance to it.  I don't know that it does.  I guess somebody            
 would have to convince me that we're going to end up with                     
 appointees that are better or worse under the old system.  It just            
 doesn't make an awful -- essentially what we're saying is we don't            
 trust the Governor to do this so we're going to complicate the                
 process and I don't know if that's a fair assumption."                        
                                                                               
 REPRESENTATIVE PORTER said what he is saying by the amendment is              
 that regardless of who is in office at this particular time when              
 these kinds of commissions are appointed, they are either confirmed           
 or made by the legislature in balance with appointments made by the           
 Executive Branch.  Since there are no provisions for confirmation,            
 he would offer the alternative of appointments from both groups.              
 These kinds of commissions should, as much as possible, represent             
 a balance of philosophies and points of view in addition to the               
 requirement of a particular expertise.                                        
                                                                               
 CHAIRMAN KOTT asked Mr. Boddy to comment as to how many applicants            
 we really have out there and how difficult it would be to acquire             
 the nine members.                                                             
                                                                               
 Number 1650                                                                   
                                                                               
 MR. BODDY said he believes that there would be a sufficient number            
 of people probably to commission three or four times depending on             
 the expertise you wanted to draw from.                                        
                                                                               
 REPRESENTATIVE ROKEBERG said he still isn't clear on the amendment            
 in terms of the appointments by the House and Senate.  He asked if            
 that is the Speaker and President, and then without confirmation so           
 there wouldn't be a problem with that.                                        
                                                                               
 REPRESENTATIVE PORTER said as the bill currently stands, it would             
 be a three year commission.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said given the short duration of this                 
 commission, they should be appointed and get to work right away               
 rather than wait for the next session to be confirmed.                        
                                                                               
 Number 1734                                                                   
                                                                               
 REPRESENTATIVE ELTON said we're recreating a situation where we're            
 recreating the same problem we've had with other appointments.                
 Representative Elton pointed out the effective date of the bill is            
 July 1, and asked if the existing Speaker and the existing Senate             
 President would the ones that are going to be allowed to appoint              
 six members of the committee despite the fact that their term in              
 office goes for another three or four months.  He said he isn't               
 sure that makes sense, yet he doesn't want get into the situation             
 where we wait until there is a new Speaker and Senate President to            
 do the appointments.                                                          
                                                                               
 REPRESENTATIVE ROKEBERG said he wasn't aware that they lost their             
 titles and positions until the end of the year.                               
                                                                               
 REPRESENTATIVE ELTON pointed out the new legislature will elect the           
 new presiding officers.                                                       
                                                                               
 CHAIRMAN KOTT said there is still a motion before the committee and           
 asked for a roll call vote.  Representatives Sanders, Masek, Porter           
 Rokeberg and Kott were in favor of the motion.  Representative                
 Elton was against the motion.  Representative Kubina was absent.              
 So the amendment was adopted.                                                 
                                                                               
 REPRESENTATIVE PORTER explained he was anticipating that there                
 would be discussion about confirmation and we'd end up that way.              
 He said that is why he wanted to leave that option open.                      
 Representative Porter said he wouldn't be opposed to an amendment             
 to shorten this time period considering the method for appointment            
 the committee just adopted.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said he would support Representative                  
 Elton's motion.                                                               
                                                                               
 REPRESENTATIVE ELTON said he just withdrew it.  He said if somebody           
 offers it, he may vote for it.  He said we've created a situation             
 in which we may have delayed the appointment process.                         
                                                                               
 Number 1897                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG moved on page 2, line 6, to substitute 1998           
 for 1999.                                                                     
                                                                               
 CHAIRMAN KOTT said there is a motion to change the sunset date from           
 July 1, 1998, to 1999.  He asked if there was objection.  Hearing             
 none, the motion was adopted.                                                 
                                                                               
 Number 1931                                                                   
                                                                               
 REPRESENTATIVE ELTON made a motion to move HB 439, as amended, with           
 the attached new fiscal note, out of committee with individual                
 recommendations.                                                              
                                                                               
 CHAIRMAN KOTT said there is a motion before the committee to move             
 CSHB 439 out of committee with individual recommendations and the             
 attached fiscal note.  He said the motion needs to be amended as              
 there is a draft fiscal note.  Chairman Kott said the committee has           
 to adopt the draft fiscal note.                                               
                                                                               
 REPRESENTATIVE ROKEBERG made a motion to adopt the fiscal note                
 attached to CSHB 439(L&C), as amended, before the committee.                  
                                                                               
 CHAIRMAN KOTT said there is a motion to adopt the draft fiscal note           
 as the fiscal note that will be forwarded to House Finance.  He               
 asked if there was an objection.  Hearing none, the draft fiscal              
 note was adopted.                                                             
                                                                               
 Number 1143                                                                   
                                                                               
 REPRESENTATIVE ELTON moved that CSHB 439, as amended, with the new            
 fiscal note, out of committee.  Hearing no objection, CSHB 439, as            
 amended, was moved out of the House Labor and Commerce Committee.             
                                                                               
 HB 533 - ALASKA AEROSPACE DEVELOPMENT CORP. BOARD                           
                                                                               
 Number 2061                                                                   
                                                                               
 CHAIRMAN KOTT announced the committee would address HB 533, "An Act           
 relating to the board of directors of the Alaska Aerospace                    
 Development Corporation."                                                     
                                                                               
 CLIFF STONE, Legislative Assistant to Representative Alan                     
 Austerman, sponsor of HB 533, read the following statement into the           
 record:                                                                       
                                                                               
 "The Alaska Aerospace Development Corporation (AADC) is a young               
 organization that has energetically pursued its charge to bring a             
 new industry and new opportunities to Alaska.  Its first task was             
 to bring talented people with significant experience in the                   
 aerospace industry to Alaska as employees and consultants.  It has            
 done that.  Through their efforts, the AADC has won federal                   
 contracts, generated significant industrial interest, and brought             
 Alaska international recognition as a potential center for a major            
 growth industry.  The probability for success is extremely high and           
 the prospects for Alaska's economy are exceptional.                           
                                                                               
 "AADC's focus has been on two projects.  The development of a                 
 rocket launch complex in Kodiak and the location of satellite                 
 ground stations in the Fairbanks area.  AADC has also pursued                 
 educational opportunities throughout the state and global                     
 warehousing and manufacturing possibilities in Anchorage.                     
                                                                               
 "The present board of directors of the AADC has served the state of           
 Alaska extremely well, in directing the purposes of the                       
 corporation.  The professional, technical and scientific expertise            
 provided by the University of Alaska members of the board, have               
 guided the start up phase of this endeavor.                                   
                                                                               
 "As we move into the construction phase of this operation and                 
 beyond, it is imperative that the board be restructured to include            
 specific members of the business community.  These individuals                
 should have experience in and an understanding of economic                    
 development and marketing analysis, based on their existing or                
 previous participation in private enterprise.                                 
                                                                               
 "Additionally, the CS and new comparison charts that you have                 
 before you would allow two more individuals who have or currently             
 hold positions in the commercial space industry to serve on the               
 board."                                                                       
                                                                               
 MR. STONE said as an ex officio member, Representative Austerman              
 feels this would lend credence to the space industry and puts more            
 expertise on the board as we move into the operational phase of               
 this project.                                                                 
                                                                               
 Number 2270                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG asked if the legislative ex officio is                
 already included in the statute.                                              
                                                                               
 MR. STONE said he believes that is in statute, under the education            
 section, 14.40.830, subsection (d), "In addition to the members of            
 the board or directors described in (a) of this section, two                  
 members of the legislature shall serve as ex officio nonvoting                
 members..."  He said the Speaker of the House made a decision to              
 appoint Representatives Austerman and Therriault.  Senator Frank              
 was appointed as the nonvoting member.                                        
                                                                               
 Number 2355                                                                   
                                                                               
 REPRESENTATIVE SANDERS made a motion to adopt CSHB 533, work draft            
 9-LS1737/C.                                                                   
                                                                               
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, the             
 committee substitute was adopted.                                             
                                                                               
 Number 2403                                                                   
                                                                               
 REPRESENTATIVE PORTER indicated concern regarding a board having an           
 even amount of members.                                                       
                                                                               
 MR. STONE said the addition of the tenth member is a nonvoting                
 member.  He said Mr. Ladner with Alaska Aerospace felt that it                
 would be a good addition to the board to have an international                
 member so there would be connections to the Pacific Rim and beyond.           
 He said the board would be a nine voting member board.  [END OF               
 TAPE]                                                                         
                                                                               
 TAPE 96-24, SIDE A                                                            
 Number 037                                                                    
                                                                               
 MR. STONE noted Representative Austerman would like the committee             
 to consider three amendments.                                                 
                                                                               
 Number 051                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved Amendment 1, which follows:                     
                                                                               
      Page 2, line 1 and 2, following "(4)":                                   
                                                                               
           Delete "the executive director of the Alaska Science and            
           Technology Foundation;"                                             
                                                                               
      Renumber the following subsections on page 2:                            
                                                                               
            Line 3; (5) becomes (4)                                            
                                                                               
            Line 5; (6) becomes (5)                                            
                                                                               
            Line 12; (7) becomes (6).                                          
                                                                               
 Number 070                                                                    
                                                                               
 CHAIRMAN KOTT objected for the purpose of hearing Representative              
 Rokeberg describe the amendment.                                              
                                                                               
 REPRESENTATIVE ROKEBERG said the amendment would delete director of           
 the Alaska Science and Technology Foundation (ASTF).  He said he              
 would defer to Mr. Stone.                                                     
                                                                               
 Number 106                                                                    
                                                                               
 MR. STONE said it was felt that because of HB 315, which passed               
 last year, ASTF now has the authority to grant Alaska Aerospace up            
 to $5 million to get the project off the ground.  Although legal              
 counsel says there is no conflict of interest with the executive              
 director of that entity sitting on the board, Representative                  
 Austerman felt it might be in the best interest to delete the                 
 executive director of ASTF and allow some more expertise from                 
 either the business world or from the commercial space industry.              
 REPRESENTATIVE ELTON said the ASTF executive director would be                
 deleted and substituted with an additional person from a commercial           
 space industry.                                                               
                                                                               
 MR. STONE explained the executive director of ASTF would be                   
 deleted, then two corporate officers would be added to the top of             
 the list.  He noted that is in the proposed Amendment 2.                      
                                                                               
 Number 277                                                                    
                                                                               
 CHAIRMAN KOTT withdrew his objection to Amendment 1.                          
                                                                               
 Number 296                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved that Amendment 2 be adopted which               
 follows:                                                                      
                                                                               
      Page 1, line 8 and 9, following "(1)":                                   
                                                                               
           Delete "one state resident who have recently held or who            
           are currently holding positions in a private corporation            
           as a president, "                                                   
                                                                               
           Insert "two state residents who have recently held or who           
           are currently holding positions in a private corporation            
           as a president,"                                                    
                                                                               
      Renumber the following:                                                  
                                                                               
           Page 2, line 20, following "in":                                    
                                                                               
                Delete "(a)(1), (6), and (7)"                                
                                                                               
                Insert "(a)(1), (5), and (6)"                                
                                                                               
           Page 2, lines 23 and 24, following "in":                            
                                                                               
                Delete "(a)(1), (6), and (7)"                                
                                                                               
                Insert "(a)(1), (5), and (6)"                                
                                                                               
                                                                               
 CHAIRMAN KOTT said hearing no further objection to Amendment 1, it            
 has been adopted.  He said there has been a motion to adopt                   
 Amendment 2, and asked if there was objection.                                
                                                                               
 REPRESENTATIVE ELTON objected for the purpose of a question.  He              
 said this means we now would have two state residents who probably            
 won't have any expertise at all in the field.  He asked for an                
 explanation.  He referred to a University of Alaska facility member           
 that is involved in research and asked why that wouldn't be just as           
 valuable a second corporate officer.                                          
 MR. STONE said in his mind, it certainly is.  The person who sits             
 on the existing board has been a valuable asset to the Aerospace              
 Board.  When his rotation came up, it was felt that going into the            
 construction and then the eventual operational phase of the launch            
 facility and the satellite down link, people with the business                
 sense - marketing analysis, economic development expertise, could             
 better guide us to bring in the customers to further the mission of           
 the corporation.                                                              
                                                                               
 Number 408                                                                    
                                                                               
 REPRESENTATIVE ELTON said he would lift his objection with the                
 observation that 50 percent of the people that direct private                 
 corporations are in the lower half of their field.  He noted he is            
 not sure that he is totally comfortable with the notion that one is           
 better than the other.                                                        
                                                                               
 REPRESENTATIVE ROKEBERG asked if perhaps the addition of the word             
 "chairman" or "president" may be appropriate.                                 
                                                                               
 MR. STONE said it goes on to say, "private corporation as                     
 president, vice-president, corporate officer, financial officer..."           
 It is broad and lists four or five individuals.  He said to address           
 Representative Elton's concerns, the thinking was that at least               
 people in those positions should have a good working knowledge of             
 what it takes to run a corporation.                                           
                                                                               
 Number 511                                                                    
                                                                               
 REPRESENTATIVE ELTON reiterated his intent to withdraw his                    
 objection.                                                                    
                                                                               
 CHAIRMAN KOTT said there being no further objection, Amendment 2              
 was adopted.                                                                  
                                                                               
 Number 552                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved Amendment 3, which follows:                     
                                                                               
      Page 2, following line 25:                                               
                                                                               
           Insert "Sec. 4.  AS 14.40.831 is amended to read:"                  
                                                                               
           Chair and vice-chair.  [THE PRESIDENT OF THE UNIVERSITY             
           OF ALASKA OR THE DESIGNEE OF THE PRESIDENT SHALL BE THE             
           CHAIR OF THE BOARD OF DIRECTORS OF THE CORPORATION.  THE            
           COMMISSIONER OF COMMERCE AND ECONOMIC DEVELOPMENT OR THE            
           DESIGNEE OF THE COMMISSIONER SHALL BE VICE-CHAIR.]  The             
           board of directors of the corporation shall select a                
           chair and vice-chair from among all voting members of the           
           board of directors of the corporation.                              
                                                                               
      Renumber the following section on Page 2:                                
                                                                               
           Change "Sec. 4. TRANSITIONAL PROVISION. to Sec. 5.                  
           TRANSITIONAL PROVISION."                                            
                                                                               
 CHAIRMAN KOTT asked if there was an objection to the adoption of              
 Amendment 3.                                                                  
                                                                               
 REPRESENTATIVE ELTON said, "I hate to object because it sounds like           
 that's what I really am."  He referred to Amendment 3 and said he             
 doesn't understand the "Chair and vice-chair."  Representative                
 Elton said he doesn't see how the language would fit.                         
                                                                               
 Number 643                                                                    
                                                                               
 MR. STONE said Section 4 is almost the statute in total.  He noted            
 he should have provided a copy of the statute to the committee                
 members.  The president of the University of Alaska or the designee           
 of the president shall be the chair of the board of directors of              
 the corporation.  The commissioner of Commerce and Economic                   
 Development or the designee of the commissioner shall be vice-chair           
 of the board of directors of the corporation.  Mr. Stone indicated            
 that there is one more sentence that he can't bring to mind.  He              
 said the feeling was if you lost president Jerome Komisar to one              
 event or anther, somebody else coming in could be from out-of-state           
 or could be an in-state person.  Representative Austerman's feeling           
 was that in discussions with Mr. Ladner, the board of directors of            
 the corporation could then, amongst themselves, pick the best                 
 qualified individual.                                                         
                                                                               
 Number 711                                                                    
                                                                               
 REPRESENTATIVE ELTON withdrew his objection to Amendment 3.                   
                                                                               
 CHAIRMAN KOTT said hearing no further objection, Amendment 3 has              
 been adopted.                                                                 
                                                                               
 Number 750                                                                    
                                                                               
 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic           
 Development, said the Administration generally and basically                  
 supports the concept behind the bill.  He stated the department               
 generally concurs with the approach taken and the amendments that             
 were just adopted.  He noted they were amendments outlined in his             
 proposed testimony.  Mr. Bush said the board and the department               
 foresaw they would have the commissioner of Commerce and Economic             
 Development, the president of the university or his designee.  The            
 department then would recommend that there be seven public members            
 appointed.  Of those seven members, the department would recommend            
 that at least three would have space expertise.  The language in              
 the committee substitute is fine except he would recommend one                
 change, and that is the removal of the word, "commercial" in the              
 phrase "commercial space industry."  He said it concerns them only            
 because there may be people with expertise in the space industry              
 but not necessarily in the commercial space industry who may be               
 qualified to be on the board.  Mr. Bush said they would recommend             
 it be changed to the number of at least three.                                
                                                                               
 MR. BUSH said another change would be the removal of the director             
 of the Geophysical Institute of the University of Alaska, and make            
 that another public appointee as well.  He said the board would be            
 seven public appointees, at least three of which would have space             
 expertise and two of which would have expertise on financial                  
 matters.  Mr. Bush said that would leave two positions that are not           
 specifically designated at this point in time.  The reason is the             
 Governor has indicated he would like to appoint someone from the              
 local community that is most affected by the project so that there            
 is local interest.                                                            
                                                                               
 Number 987                                                                    
                                                                               
 PAT LADNER, Executive Director, Alaska Aerospace Development                  
 Corporation, testified via teleconference from Anchorage.  He said            
 his board should be congratulated for the fine work it has done.              
 Mr. Ladner said the launch site was originally supposed to be at              
 Poker Flat, but due to flight safety considerations, they had to do           
 an evaluation and find another site.  Originally, the board had a             
 large contingency from the university and rightfully                          
 so.  He said they are now moving into the next phase and he thinks            
 they now need more corporate input.  Mr. Ladner said his chairman             
 believes that there are two options.  You can leave the board the             
 way it is because of all the things that are going on right now.              
 You could ask the board to come up with a recommended change                  
 structure or you can change the board.                                        
                                                                               
 MR. LADNER said if it is the determination of the legislature to              
 change the board, then the board should be changed and have a                 
 quantum leap upgrade from the outstanding people that currently               
 serve.  To do that, a good portion of the people need to have                 
 commercial space experience.  He said he thinks the commercial                
 space area is what they need as they are doing commercial ground              
 stations in Fairbanks.  They are looking at a vast majority of the            
 launches and Kodiak is (indisc.) commercial space and not military.           
 Mr. Ladner said by bringing the people from the commercial space              
 industry on to the board, they would bring a lot of expertise and             
 recognizable credibility to what they are doing.  Also, some of the           
 people they were working with to create partnerships and possibly             
 equity financial investments, you'd want to have a position on the            
 board for those people.                                                       
                                                                               
 REPRESENTATIVE ROKEBERG said Mr. Ladner had indicated the                     
 "commercial" space industry and said there had been concerns about            
 the "commercial" space industry.  He said the existing statute has            
 the words, "experience understanding the aerospace or commercial              
 space industry."  He asked if there are enough commercial space               
 industry companies in operation that they could draw from.                    
 Representative Rokeberg asked if there isn't also the potentiality            
 of some competitive advantages or disadvantages if these people               
 were on the board.                                                            
                                                                               
 Number 1197                                                                   
                                                                               
 MR. LADNER said it could be that way but there are a lot of real              
 notable aerospace or commercial space people.  He said you would              
 have people like Tom Stafford, who was on Apollo 14 and 15, and is            
 very well respected, but is not associated with any one company.              
 He is recognized throughout the world and would bring extreme                 
 credibility to any organization he is associated with.  He said he            
 thinks the option should be made.  Mr. Ladner said if somebody came           
 in and said, "Hey, I'll put in $15 million but I want a seat on the           
 board," the right answer would be, "You have a seat on the board."            
                                                                               
 REPRESENTATIVE ROKEBERG asked if it is his intention to try to use            
 the board seats as marketing tools.                                           
                                                                               
 MR. LADNER said absolutely not.  He pointed out there are currently           
 people on the board who are not connected with any major space                
 industry but they bring a lot to the board.  Mr. Ladner said they             
 need more of those types of people on the board, along with the               
 corporate people, the financial officers, and chief executive                 
 officers.                                                                     
                                                                               
 REPRESENTATIVE ROKEBERG asked Mr. Ladner if he has seen the                   
 committee substitute.                                                         
                                                                               
 MR. LADNER indicated he didn't have the committee substitute or the           
 amendments.                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said rather than delete "commercial space             
 industry" it should read "aerospace or commercial space industry."            
                                                                               
 MR. LADNER indicated that would be fine with him.  Mr. Ladner                 
 explained on February 29, they held their final design review for             
 the Kodiak launch complex in Washington, D.C.  He said over 105               
 people attended from the aerospace industry, and government people            
 from the Air Force and NASA.  Mr. Ladner noted there was a midway             
 point design review September, a year ago.  At the most recent                
 design review Senator Stevens gave the welcoming and opening                  
 remarks, followed by Senator Murkowski.  Representative Young's               
 chief of staff provided some comments.  The Governor provided an              
 excellent VHS video that welcomed everyone to the meeting and                 
 expressed his support and willingness to work with the industry.              
                                                                               
 MR. LADNER referred to the satellite ground stations in Fairbanks             
 and said one company has purchased or leased land on Chena Hot                
 Springs road called "Earth watch" and they should be starting their           
 ground station shortly.  Space Imaging International is in the                
 process of finalizing their lease agreement on the Richardson                 
 Highway.  Mr. Ladner said they are also working with Orvil (Sp.?)             
 Science - Orv Image, for another ground station in the Fairbanks              
 area.  The Air Force has also identified a place in Fairbanks.  He            
 referred to the cottage industry possibilities and said they are              
 really good.  Space Imaging could employ anywhere from 10 to 30               
 people depending on what type of operation they establish.                    
                                                                               
 MR. LADNER said a lot of this is the remote sensing which they                
 would have access to within the state to satisfy a lot of our                 
 natural resources mapping and planning for governmental agencies.             
                                                                               
 MR. LADNER referred to the Kodiak launch complex and said they are            
 putting together the construction request for proposals package.              
 They are also finishing up the environmental process.  Hopefully,             
 construction will start before the end of the construction season.            
                                                                               
 Number 1515                                                                   
                                                                               
 There being no further questions or testimony, CHAIRMAN KOTT closed           
 public testimony on HB 533.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG moved Amendment 4.  He explained the                  
 amendment would be on page 2, line 5, add the words "aerospace or".           
 It would then read, "four members who have held or currently hold             
 positions in the aerospace or commercial space industry..."                   
                                                                               
 CHAIRMAN KOTT asked if there was an objection to the amendment.               
 Hearing none, Amendment 4 was adopted.                                        
                                                                               
 Number 1559                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG made a motion to move CSHB 533(L&C), as               
 amended, Version C, with individual recommendations and a zero                
 fiscal note, out of committee.                                                
                                                                               
 REPRESENTATIVE ELTON objected.  He asked which committee the bill             
 would go to next.                                                             
                                                                               
 CHAIRMAN KOTT indicated Labor and Commerce is the last committee of           
 referral.                                                                     
                                                                               
 Number 1593                                                                   
                                                                               
 REPRESENTATIVE ELTON said the committee dealt with a bill earlier             
 which reduces state costs by eliminating state positions.  Now                
 there is a bill before the committee where they could also reduce             
 costs.  With the adoption of Amendment 4, on page 2, line 12, we              
 provide for one nonvoting member who has recognized prominence and            
 influence within the international aerospace industry.  He said he            
 doesn't feel strongly about this because he thinks that sometimes             
 cost is initially (indisc.).  Now that people can be added from the           
 noncommercial part of the aerospace industry, why not just add four           
 people, provided that one is a person who has recognized prominence           
 and influence within the international aerospace industry.  That              
 way nine people would be brought to the board meetings rather than            
 ten and that person, with that stated area of expertise, would be             
 allowed to vote.  He said the person could be someone we're                   
 bringing in from Great Britain, Germany or Seattle.  We don't know            
 who or where, but why fly somebody from some place down south for             
 these meetings when they don't get a chance to vote.                          
                                                                               
 CHAIRMAN KOTT asked Representative Elton if he still maintains his            
 objection.                                                                    
                                                                               
 REPRESENTATIVE ELTON said he will maintain his objection.  He                 
 indicated he will think about this and maybe bring an amendment to            
 the floor.                                                                    
                                                                               
 CHAIRMAN KOTT asked Representative Rokeberg to withdraw his motion.           
 He then asked Representative Elton to think about it over the next            
 two days and bring something back to the committee at the next                
 meeting.                                                                      
                                                                               
 REPRESENTATIVE ELTON said he would draft an amendment for the                 
 committee's consideration.                                                    
                                                                               
 CHAIRMAN KOTT said the bill would be held over until the following            
 Wednesday.                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG suggested that the committee might want to            
 consider if the Kodiak public member also....                                 
                                                                               
 SB 197 - INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES                           
                                                                               
 Number 1745                                                                   
                                                                               
 CHAIRMAN KOTT announced the committee would address CSSB 197(L&C),            
 "An Act relating to insurance covering an insured who is a victim             
 of domestic violence and requiring certain disclosures by an                  
 insurer."                                                                     
                                                                               
 Number 1750                                                                   
                                                                               
 SENATOR DAVE DONLEY, sponsor of the measure, said SB 197 would                
 prohibit discrimination against victims of domestic violence by               
 insurance carriers in Alaska.  This has been a very serious problem           
 in the Lower 48, and although insurance companies assure us that              
 they don't currently practice this in Alaska and we don't have any            
 evidence of it being in Alaska, we want to keep it from becoming a            
 problem like it has outside Alaska.  Representative Donley said               
 there has been such a serious problem that seven to ten other                 
 states have already adopted similar legislation that is pending               
 before Congress.  He said he thinks four other states currently               
 have legislation pending before them.  Representative Donley said             
 the bill has the support of many many public interest groups around           
 the state.                                                                    
                                                                               
 Number 1795                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG questioned what the bill does.                        
                                                                               
 SENATOR DONLEY explained the bill says that if you're an insurance            
 company you cannot deny insurance, increase rates or otherwise                
 discriminate against a victim of domestic violence if that is your            
 only reason for doing so.  He said the bill has been carefully                
 drafted in consultation with the Division of Insurance to make sure           
 that the word "only" is included.  So if they didn't know that a              
 person was the victim of domestic violence, they wouldn't be in               
 violation for any of those things because it wouldn't be the only             
 reason they were making the decision they made if they were                   
 adjusting the rates.  Senator Donley said some of the testimony in            
 the record regarding some of the concerns from insurance companies,           
 the division feels they are totally addressed by making sure the              
 word "only" is kept in the bill.                                              
                                                                               
 REPRESENTATIVE ROKEBERG asked what type of insurance.  He asked               
 what an example of the problem.                                               
                                                                               
 SENATOR DONLEY explained the bill extends to all types of                     
 insurance.  The biggest problem currently in the Lower 48 is what             
 our statutes refer to as disability insurance which is commonly               
 referred to as health insurance.  He noted in the committee files             
 there are some examples of what has happened in other areas.  He              
 indicated he has been asked, "If this hasn't been a problem in                
 Alaska, why do you want to do it?"  He said it is basically to keep           
 it from happening in Alaska.                                                  
                                                                               
 Number 1925                                                                   
                                                                               
 REPRESENTATIVE SANDERS asked if it is possible that by the passage            
 of the bill, it will encourage victims of domestic violence to                
 remain in that situation rather than to encourage them to get out             
 of the situation.                                                             
                                                                               
 SENATOR DONLEY said one thing that happens today is people are                
 afraid to report domestic violence because they fear they would               
 jeopardizing their access to insurance.  He said he has heard that            
 from men and women's groups and the shelters around the state.                
 They actually think there could be a problem in the state right               
 now, but the victims are afraid to report it because they are                 
 afraid they'll lose their insurance.  That is another reason it               
 would be difficult for them to get out of their situation.                    
                                                                               
 Number 1966                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG referred to a letter in his committee file            
 from Lessmeier and Winters regarding State Farm's position.  He               
 asked Senator Donley to comment.                                              
                                                                               
 SENATOR DONLEY said he believes they recommended some different               
 language.                                                                     
                                                                               
 CHAIRMAN KOTT informed Representative Rokeberg that somebody from             
 Lessmeier and Winters was on teleconference.                                  
                                                                               
 Number 2004                                                                   
                                                                               
 CHAIRMAN KOTT asked Senator Donley how you would determine whether            
 or not a person was a victim of domestic violence.  He noted the              
 question is in regards to releasing the records by the insurer.  He           
 read from the bill page 1, line 13, "except with the permission of            
 the applicant or the insured as required by a court of competent              
 jurisdiction."  He asked how a company would know whether or not              
 this would be record that would fall within this category.                    
                                                                               
 SENATOR DONLEY said he would like to have the Division of Insurance           
 answer that question as he worked with them in coming up with the             
 language.  He said it was a specific request from the Network on              
 Domestic Violence and Sexual Assault.  Senator Donley said he was             
 asked by Representative Masek's staff how it would be enforced.  He           
 explained it would be the same provision as any other insurance               
 provisions.  The division would identify that something is going on           
 or they'd be responding to a complaint from a consumer.  They would           
 then have to do some sort of finding of fact that there was a                 
 domestic violence situation and then we'd proceed from that point.            
                                                                               
 Number 2097                                                                   
                                                                               
 MICHAEL LESSMEIER, Attorney, Lessmeier and Winters, testified via             
 teleconference.  He informed the committee he was testifying on               
 behalf of State Farm.  Mr. Lessmeier explained State Farm has a               
 serious concern about domestic violence and as a result of that               
 concern, they've done a number of things across the country.  One             
 is to support tougher penalties for partner violence. Another thing           
 that State Farm has done is they have initiated the corporate                 
 alliance to end partner violence which is a program of (indisc.)              
 companies that is intended to increase public awareness for                   
 domestic violence.  Another thing they have done is supported                 
 legislation that prohibits discrimination against victims of                  
 domestic violence.  Mr. Lessmeier said they support what Senator              
 Donley is trying to do, but they don't agree with how he is going             
 about doing it.                                                               
                                                                               
 MR. LESSMEIER explained a concern is that the current version of SB           
 197 doesn't clearly state that an insurer must be allowed to                  
 underwrite or rate for a medical condition, the same as they would            
 for someone who is not a victim of domestic abuse.  Our concern is            
 that it should be a non-factor; it shouldn't be a positive or                 
 negative factor.  The language in the bill is not clear on that               
 issue.  He said they suggested some language that would solve that            
 problem.                                                                      
                                                                               
 MR. LESSMEIER said the second is that SB 197 is, in their view, are           
 very unnecessary and very burdensome, for example subsection (b),             
 which addresses the records disclosure.  In many instances they               
 don't know if somebody is a victim of domestic violence because               
 there is nothing in their applications that so indicates.  It is              
 not one of their underwriting criteria.  The question is, "What are           
 we supposed to do in that situation."  There are currently court              
 rules, (indisc.) rules, that deal with physician/patient privilege.           
 Mr. Lessmeier said their concern is they don't know how one would             
 read, in years down the road, the provision that is set forth in              
 subsection (b).                                                               
                                                                               
 MR. LESSMEIER said another problem is the subsection dealing with             
 required disclosure.  That is a major underwriting change that                
 would literally apply across all lines of insurance.  If the intent           
 is a concern about domestic violence, this provision is extremely             
 broad and goes far beyond that.  Mr. Lessmeier said one of the                
 questions they have is, "What are the needs for this?"  If there is           
 a need for it, why not try to accomplish this in another less                 
 burdensome way.  For example, have required disclosure only if                
 there is a request for it.                                                    
                                                                               
 MR. LESSMEIER said their final concern is the bill applies to all             
 lines of insurance.  It doesn't just apply to the lines where there           
 have been problems.  Those lines of insurance are life, health and            
 disability.  Mr. Lessmeier said that to their knowledge, there have           
 been no complaints about any problems in Alaska.  Mr. Lessmeier               
 referred to the legislature passing a bill and said to use language           
 that is specific and is applicable to the problems that have                  
 occurred.  He noted the committee has their written comments.                 
                                                                               
 Number 2268                                                                   
                                                                               
 REPRESENTATIVE ELTON noted he was provided with the written                   
 comments.  He referred to Mr. Lessmeier's concern with subparagraph           
 (b) and said he doesn't understand what the problem is.  He said if           
 you don't know, then you can't violate provisions of subparagraph             
 (b) because you can't release information that you don't know                 
 about.  Representative said he doesn't understand the problem Mr.             
 Lessmeier has with that paragraph.                                            
                                                                               
 MR. LESSMEIER explained the difficulty is that indeed they may not            
 know and may not have reason to know, but that still might not                
 prevent somebody from taking action against (indisc.) that we                 
 shouldn't know.  Those are the kinds of things that occur in the              
 legal arena all day long.  Mr. Lessmeier said the point they want             
 to make is there is a legitimate concern about discrimination in              
 this area.  In attempting to solve that problem, lets not create so           
 many other problems that we've created a larger problem than we               
 saw.                                                                          
                                                                               
 Number 2320                                                                   
                                                                               
 REPRESENTATIVE ELTON said he remains unconvinced because the                  
 subparagraph says that you may not disclose that information.  He             
 said he is having a difficult time understanding that if it is a              
 prohibitive subparagraph that you may not disclose information, he            
 has a tough time understanding why there is a problem Mr. Lessmeier           
 may have with not disclosing information he knows nothing about.              
                                                                               
 MR. LESSMEIER said that is not what the language says.  The                   
 language says, "Records that reflect the fact."  It doesn't say,              
 for example, "a statement by someone that is a victim of domestic             
 violence."  He stated another concern they have, as a result of               
 that, is they oftentimes in litigation may see, for example,                  
 different issues where there was a question about the causation of            
 a particular injury; and, in looking back at the causation of a               
 particular injury, they come upon records that indicate that there            
 had been a preexisting injury and that the preexisting injury was             
 allegedly caused by an instance of domestic violence.  In that                
 instance, one of the questions they would have is if you have                 
 (indisc.) license, could they go back and use that prior                      
 information.  Mr. Lessmeier explained what he is saying is that we            
 are creating an area where there is certainly potential for                   
 litigation.  He said it is their belief that it is happening                  
 unnecessarily.                                                                
                                                                               
 MR. LESSMEIER said when you look (indisc.) domestic violence and              
 you look at the concept, what you will see is an insurer,                     
 particularly a property and causality insurer, is the least likely            
 to know about an instance of domestic violence.  People in the work           
 place, neighbors, family and friends are more likely to know than             
 the insurance company is.  They are also the least likely to                  
 disclose it.                                                                  
                                                                               
 Number 2320                                                                   
                                                                               
 REPRESENTATIVE ELTON asked Mr. Lessmeier to expand on the arguments           
 regarding the types of lines of insurance offered and expand on the           
 fact that if there is no problem in some lines, then why would we             
 need exclusion language in the bill.                                          
                                                                               
 MR. LESSMEIER said if the bill is to solve a specific problem that            
 is (indisc.), why not go after the problem where everybody thinks             
 it is most likely to occur.  He noted in Alaska, we're dealing with           
 an abstract problem.  Mr. Lessmeier said he doesn't think there has           
 been any evidence that there has even been a complaint about this             
 in Alaska.  [END OF TAPE]                                                     
                                                                               
 TAPE 96-24, SIDE B                                                            
 Number 047                                                                    
                                                                               
 REPRESENTATIVE ELTON referred to the first paragraph of the letter            
 from Mr. Lessmeier and said he notes that although State Farm                 
 strongly supports legislation that prohibits discrimination, you              
 want to be sure that any legislative prohibition doesn't prevent an           
 insurer from underwriting a rating for a medication condition, he             
 assumed, not related to domestic violence.                                    
                                                                               
 MR. LESSMEIER stated that it doesn't matter what it is related to.            
 He said they just want to be able to underwrite for the medical               
 industry.  If they can't do that what happens is they end up in a             
 situation where they may be discriminating for a condition as                 
 opposed to treating them neutrally.  Once that happens, then they             
 discriminate against other people that may have a condition that is           
 unrelated to this particular condition.                                       
                                                                               
 REPRESENTATIVE ELTON said he understands the concern, but the                 
 difficulty he is having is a portion of the bill provides for a               
 required disclosure on what elements constitute the refusal of                
 offering the insurance.  He said it would seem to him that if you             
 go through and make a decision based on other medical facts, you              
 would disclose that, therefore, precluding any assertion that the             
 denial was based on the fact this person was victim of domestic               
 violence.                                                                     
                                                                               
 MR. LESSMEIER said he thinks there is a concern about that being an           
 issue with or without the required disclosure.  There either is or            
 there isn't evidence of underwriting based on a status separate and           
 apart from this issue.  He said if that is going on it would be               
 easy to detect.  If that is a legitimate concern, you solve that              
 problem based on a specific situation rather then what this bill              
 does which requires disclosure anytime there is a denial of                   
 coverage.                                                                     
                                                                               
 REPRESENTATIVE ROKEBERG referred to the letter which included                 
 suggested language from Mr. Lessmeier, "(3) An insurer is granted             
 immunity for criminal or civil liability resulting from compliance            
 with this statute."  He asked Mr. Lessmeier if he thinks he is                
 putting himself in harms way of being sued because he would try to            
 enforce the provisions of the statute.                                        
                                                                               
 MR. LESSMEIER said that is one of the concerns he has and that is             
 why he wanted that language in the bill.                                      
                                                                               
 REPRESENTATIVE ROKEBERG asked Mr. Lessmeier to give him an example            
 of how that would occur.                                                      
                                                                               
 MR. LESSMEIER explained a possible example would be someone                   
 claiming that this information should have been disclosed to                  
 someone else in order to protect someone.                                     
                                                                               
 Number 150                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG said he isn't sure he understand the entire           
 concept of customary business practice in the insurance industry as           
 far as disclosures of records and the files on a client.  He asked            
 what the industry standard is for this type of thing.                         
                                                                               
 MR. LESSMEIER said he doesn't know of any disclosure that occurs in           
 the matter of course except, for example, the property and casualty           
 business.  He explained the only disclosure he is aware of that               
 would occur would be in the context of litigation and once someone            
 litigates an issue, then things are disclosed as a matter of course           
 in the context of that litigation.  He stated he isn't aware of any           
 other disclosures.                                                            
                                                                               
 REPRESENTATIVE ROKEBERG asked if anybody can make inquiries about             
 what is in his client's files.                                                
                                                                               
 MR. LESSMEIER said they can make inquiries, but that information is           
 typically not released.  The only exception he knows of would be              
 inquiries that are made by the Division of Insurance.  He explained           
 they are required to keep records and certain documentation to                
 satisfy the Division of Insurance.  The other exception to that               
 would occur in instances of fraud where there is suspicion of                 
 fraud.                                                                        
                                                                               
 REPRESENTATIVE ROKEBERG asked if the requirement in the bill is to            
 provide confidentiality for those records.  He also asked if that             
 is a burden on the industry.                                                  
                                                                               
 MR. LESSMEIER explained part of the problem is that it is unclear             
 to him as to what this would mean.  He asked if they would be                 
 required to search records.  For example, if there is a concern               
 about fraud, would they be prevented from providing records to the            
 national bureau that investigates those things or shares                      
 information.  If they are involved in a civil case, would they be             
 prevented from somehow using cases in the civil case.  He stated              
 that, as a matter of practice, people treat these records as                  
 confidential.                                                                 
                                                                               
 CHAIRMAN KOTT announced the next person to testify would be Beverly           
 Bowers.                                                                       
                                                                               
 Number 294                                                                    
                                                                               
 BEVERLY BOWERS, Bering Sea Womens Group, was next to testify via              
 teleconferece from Nome.  She said in listening to Mr. Lessmeier's            
 testimony she can appreciate what he is saying, but he is talking             
 almost as though his very reasons are reasons to pass the bill.  He           
 said there hasn't been any complaints in Alaska but there are                 
 complaints in other places.  This discrimination against victims of           
 domestic violence is being done in other states and we know it can            
 be done here in Alaska.  Discrimination is very widespread in many            
 different ways.  As we talk of insurance we forget it also covers             
 medical care and in going to get medical care, the reason for the             
 injury is stated when a woman comes to the emergency room.  The               
 insurance company is aware of this.  Nothing is ever kept a                   
 secrete, we know this is going to come out in some way.  Ms. Bowers           
 said this is a very widespread problem and we need to take this               
 step to prevent this very thing from coming to Alaska.  Alaska has            
 a reputation of protecting its women and doing things in advance.             
 Ms. Bowers urged passage of the legislation.                                  
                                                                               
 Number 397                                                                    
                                                                               
 JOHN GEORGE, Lobbyist, American Council of Life Insurance, was next           
 to address SB 197.  He explained the American Council of Life                 
 Insurance is a life insurance trade association representing                  
 virtually all of the life insurance companies that do business in             
 the state of Alaska.  He informed the committee his clients have              
 provided him with about a four page list of changes they would like           
 made to the bill.  Mr. George said he has also reviewed Mr.                   
 Lessmeier's shorter version of recommended changes and those                  
 changes accomplish virtually everything his clients have tried to             
 do in their four pages of suggested changes.  He said he is                   
 prepared to throw their support totally behind State Farm's                   
 proposal.                                                                     
                                                                               
 REPRESENTATIVE ROKEBERG asked Mr. George how the concept of the               
 bill would affect the life insurance underwriting industry in                 
 Alaska.                                                                       
                                                                               
 MR. GEORGE said there are several ways.  For instance, we know that           
 there are cases where a spouse has procured insurance on their                
 spouse in order to collect should that person die, which could be             
 from domestic violence.  There are cases where the policy was                 
 purchased years ago, but now we have this insurance policy out                
 there and we could collect a lot of money if our spouse were to               
 die.  He said there may actually be a case where an insurer could             
 be sued for writing a policy because that encouraged a murder.  Mr.           
 George noted the life insurers are also writers of health                     
 insurance.  Mr. George said the things Mr. Lessmeier talked about             
 being supportive of a domestic violence bill, something that is               
 going to preclude insurers from discriminating.  He said they have            
 no problem and encourage that.                                                
                                                                               
 Number 510                                                                    
                                                                               
 REPRESENTATIVE ELTON apologized for having to leave the meeting               
 earlier for a few minutes.  He indicated that when he came back it            
 seemed he walked in on an argument against life insurance.  He said           
 it seems to him there are many reasons not to issue or even have a            
 life insurance (indisc.) if we stretch as far as saying that may be           
 a cause for murder.  Representative Elton asked if he missed                  
 something.                                                                    
                                                                               
 MR. GEORGE said there are a number of reasons the life insurance              
 industry is commenting on this bill.  That is one of the things.              
 As he recalls, there is a probate bill that deals with that and               
 precludes a spouse from collecting benefits under a life insurance            
 policy if they were the cause of the death.  The disclosure of                
 information is a concern to them as well.  They don't generally               
 know about these things, they don't go and ask the question, but              
 the way the bill is worded it might infer from a pattern of prior             
 injuries that they were a result of abuse.  Mr. George referred to            
 disclosing that information and said there are not exceptions in              
 law for who you can disclose it to unless you have permission of              
 the insured or a court order.  So arguably, if the Division of                
 Insurance wanted to see those, and he believes they have a right to           
 look at any record an insurance company has, then there is the                
 question of whether they can have it or not.  You better go get a             
 court order.                                                                  
                                                                               
 MR. GEORGE explained insurance companies reinsure risks.  So they             
 might take their entire book of business and ask another insurance            
 company to take a portion of it.  The other insurance company might           
 say, "We want to see your underwriting files."  They're possibly              
 going to become an insurer but they're not the insurer on the                 
 business.  He asked if it permissible to share that underwriting              
 information or do you have to go through the entire book of                   
 business and pull those pieces out.  Mr. George said the State Farm           
 proposal is simple, it's straight forward, and it protects the                
 victims of domestic violence from discrimination.                             
                                                                               
 Number 666                                                                    
                                                                               
 LAUREE HUGONIN, Executive Director, Alaska Network on Domestic                
 Violence and Sexual Assault, was next to address SB 197.  Ms.                 
 Hugonin explained that advocates working to end violence against              
 women encourage battered women to document their injuries by                  
 seeking medical care and by requesting that the violent incident be           
 noted in their medical records.  She said health care providers are           
 usually the first service professional and sometime non-family                
 member to have contact with women who have been abused and are in             
 a unique position to identify victims of domestic violence.  If we            
 are able to identify abused women through routine screening and               
 accurate diagnosis, this can help in breaking the cycle of                    
 violence.  Early prevention can prevent or ameliorate many of the             
 long-term health and social consequences associated with                      
 victimization.  Ms. Hugonin explained that she would review what              
 they are doing in Alaska to help medical providers recognize                  
 domestic violence and to be able to identify it.                              
                                                                               
 MS. HUGONIN gave committee members a pamphlet called "One in Five             
 Women," which is a pamphlet for health care providers to be able to           
 know about domestic violence.  She explained in 1995, the Division            
 of Public Health, Maternal, Child and Family Health Section,                  
 receive a three year federal grant to train medical professionals             
 and to develop a sustainable training team in the state.  She said            
 this is only one of two projects that were funded in the country              
 and the only state project that was funded.                                   
                                                                               
 MS. HUGONIN informed the committee that nationally, the American              
 Medical Association, the American College of Obstetrics and                   
 Gynecology, the American College of Physicians, the American Trauma           
 Society, the American Association of Emergency Physicians, and                
 several other organizations are working to reduce injuries, prevent           
 domestic violence and save lives by development of other                      
 professional medical educational materials.  National health                  
 initiatives require medical institutions to develop domestic                  
 violence protocols, plans for training and improving their                    
 facilities response to domestic violence.  She said battered women            
 are finding the courage to reach out for their medical care and               
 documentation.  Medical care givers have now become committed to              
 prevention of this lethal crime through identification and                    
 documentation.  Unfortunately, in the Lower 48 medical care givers            
 now know that doing the right and responsible thing of identifying            
 and documenting abuse may result not only in the loss of health               
 insurance coverage, but other important protection such as life,              
 disability and home owners insurance.  The reality is that every              
 women is at risk of becoming a victim of domestic violence.  Just             
 as there is no excuse for that violence, legal or otherwise, there            
 is no excuse for the insurance industry to justify this                       
 discriminatory practice.  Ms. Hugonin said her organization is                
 aware that currently it has not been identified as a problem in               
 Alaska.  We don't know that that means it doesn't exist.  There is            
 considerable concern that people are not coming forward with it as            
 a problem because of a consequence of losing their insurance.                 
 Several states have passed legislation prohibiting discrimination             
 and several other states have legislation pending.  She urged                 
 support of SB 197 in its current form.                                        
                                                                               
 Number 928                                                                    
                                                                               
 REPRESENTATIVE ELTON made a motion to adopt HCSCSSB 197(L&C).                 
                                                                               
 CHAIRMAN KOTT asked if there was an objection.                                
                                                                               
 REPRESENTATIVE ROKEBERG objected.                                             
                                                                               
 Number 962                                                                    
                                                                               
 REPRESENTATIVE ELTON withdrew his motion.                                     
                                                                               
 CHAIRMAN KOTT said the committee would address the committee                  
 substitute the following Wednesday.                                           
                                                                               
 Number 975                                                                    
                                                                               
 CHAIRMAN KOTT said the committee would address the appointment of             
 Clair Ramsey to the Real Estate Commission.  He noted the Governor            
 has also added Gorden Severson, from Anchorage, to another one of             
 the vacant positions.  He said he would like to move these names              
 forward if there is no objection to the two member.                           
                                                                               
 REPRESENTATIVE ROKEBERG said there is no objection.                           
                                                                               
 CHAIRMAN KOTT said those two names would be moved out of committee            
 with the recommendation that they go forward before the whole body.           
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 1010                                                                   
                                                                               
 CHAIRMAN KOTT adjourned the meeting at 5:57 p.m.                              
                                                                               

Document Name Date/Time Subjects