Legislature(1997 - 1998)

05/05/1997 03:28 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                        
                            May 5, 1997                                        
                             3:28 p.m.                                         
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative John Cowdery                                                   
 Representative Bill Hudson                                                    
 Representative Jerry Sanders                                                  
 Representative Joe Ryan                                                       
 Representative Tom Brice                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Gene Kubina                                                    
                                                                               
 OTHER HOUSE MEMBERS PRESENT                                                   
                                                                               
 Representative Con Bunde                                                      
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 Oversight Hearing:  Deprivatization of State Recorder's Office                
                     Activities                                                
                                                                               
 CS FOR SENATE BILL NO. 88(L&C)                                                
 "An Act relating to the Board of Public Accountancy; extending the            
 termination date of the Board of Public Accountancy; and providing            
 for an effective date."                                                       
                                                                               
      - MOVED CSSB 88(L&C) OUT OF COMMITTEE                                    
                                                                               
 HOUSE BILL NO. 203                                                            
 "An Act relating to actions for unlawful trade practices."                    
                                                                               
      - MOVED CSHB 203(L&C) OUT OF COMMITTEE                                   
                                                                               
 * SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 142                                   
 "An Act relating to the sale or transfer of new or used motor                 
 vehicles; relating to the confidentiality of certain information              
 related to attorney general investigations of unlawful trade                  
 practices and antitrust activities; establishing additional                   
 unlawful trade practices; relating to the exemptions from                     
 telephonic solicitation regulation; regulating the sale of business           
 opportunities; amending Rules 4 and 73, Alaska Rules of Civil                 
 Procedure; and providing for an effective date."                              
                                                                               
      - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE                               
                                                                               
                                                                               
 HOUSE BILL NO. 178                                                            
 "An Act relating to letters of credit under the Uniform Commercial            
 Code; and providing for an effective date."                                   
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
                                                                               
 CS FOR SENATE BILL NO. 126(FIN)                                               
 "An Act relating to the retirement incentive program for state                
 employees; and providing for an effective date."                              
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  SB 88                                                                  
 SHORT TITLE: BOARD OF PUBLIC ACCOUNTANCY                                      
 SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT                  
                                                                               
 JRN-DATE      JRN-PG                 ACTION                                   
 02/14/97       356    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/14/97       357    (S)   L&C, STA                                          
 03/06/97              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 03/06/97              (S)   MINUTE(L&C)                                       
 03/07/97       626    (S)   L&C RPT  CS  4DP     SAME TITLE                   
 03/07/97       626    (S)   DP: LEMAN, MACKIE, HOFFMAN, KELLY                 
 03/07/97       626    (S)   FISCAL NOTE TO SB & CS (DCED)                     
 03/07/97       626    (S)   FIN REFERRAL ADDED                                
 04/10/97              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 04/10/97              (S)   MINUTE(STA)                                       
 04/15/97              (S)   STA AT  4:30 PM BELTZ ROOM 211                    
 04/15/97              (S)   MINUTE(STA)                                       
 04/16/97      1161    (S)   STA RPT  3DP  (L&C)CS                             
 04/16/97      1161    (S)   DP: GREEN, MACKIE, WARD                           
 04/16/97      1161    (S)   ZERO FN TO L&C CS (DCED)                          
 04/24/97              (S)   FIN AT  8:30 AM SENATE FINANCE 532                
 04/24/97              (S)   MINUTE(FIN)                                       
 04/24/97              (S)   MINUTE(FIN)                                       
 04/25/97      1472    (S)   FIN RPT  6DP  (L&C)CS                             
 04/25/97      1472    (S)   DP: PEARCE, SHARP, PHILLIPS, ADAMS,               
 04/25/97      1472    (S)   PARNELL, DONLEY                                   
 04/25/97      1473    (S)   ZERO FISCAL NOTE TO CS (DCED)                     
 04/28/97              (S)   RLS AT 10:45 AM FAHRENKAMP RM 203                 
 04/28/97              (S)   MINUTE(RLS)                                       
 04/28/97      1514    (S)   RULES TO CALENDAR  4/28/97                        
 04/28/97      1515    (S)   READ THE SECOND TIME                              
 04/28/97      1515    (S)   L&C  CS ADOPTED UNAN CONSENT                      
 04/28/97      1515    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 04/28/97      1516    (S)   READ THE THIRD TIME  CSSB 88(L&C)                 
 04/28/97      1516    (S)   PASSED Y19 N- E1                                  
 04/28/97      1516    (S)   EFFECTIVE DATE(S) SAME AS PASSAGE                 
 04/28/97      1531    (S)   TRANSMITTED TO (H)                                
 04/30/97      1393    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/30/97      1393    (H)   LABOR & COMMERCE                                  
 05/02/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 05/02/97              (H)   MINUTE(L&C)                                       
 05/05/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
                                                                               
 BILL:  HB 203                                                                 
 SHORT TITLE: ACTIONS FOR UNLAWFUL TRADE PRACTICES                             
 SPONSOR(S): REPRESENTATIVE(S) DYSON, Croft                                    
                                                                               
 JRN-DATE      JRN-PG                 ACTION                                   
 03/18/97       738    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/18/97       738    (H)   L&C, JUDICIARY                                    
 04/23/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 04/23/97              (H)   MINUTE(L&C)                                       
 05/05/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
                                                                               
 BILL:  HB 142                                                                 
 SHORT TITLE: BUSINESS PRACTICE REGULATIONS                                    
 SPONSOR(S): REPRESENTATIVE(S) DAVIS, Croft                                    
                                                                               
 JRN-DATE      JRN-PG                 ACTION                                   
 02/17/97       374    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/17/97       374    (H)   L&C, JUDICIARY                                    
 02/19/97       408    (H)   COSPONSOR(S): CROFT                               
 04/08/97      1025    (H)   SPONSOR SUBSTITUTE INTRODUCED-REFERRALS           
 04/08/97      1025    (H)   LABOR & COMMERCE, JUDICIARY                       
 05/02/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 05/02/97              (H)   MINUTE(L&C)                                       
 05/05/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 ROBERT MOTZNIK                                                                
 Motznik Computer Services                                                     
 8301 Briarwood                                                                
 Anchorage, Alaska 99516                                                       
 Telephone:  (907) 344-6254                                                    
 POSITION STATEMENT:  Oversight Hearing:  Deprivatization of State             
                      Recorder's Office Activities.                            
                                                                               
 NICO BUS, Chief                                                               
 Financial Services                                                            
 Division of Support Services                                                  
 Department of Natural Resources                                               
 400 Willoughby Avenue                                                         
 Juneau, Alaska 99801-1724                                                     
 Telephone:  (907) 465-2406                                                    
 POSITION STATEMENT:  Oversight Hearing:  Deprivatization of State             
                      Recorder's Office Activities.                            
                                                                               
 SHARON YOUNG, State Recorder                                                  
 State Recorder's Office                                                       
 Division of Support Services                                                  
 Department of Natural Resources                                               
 3601 "C" Street, Suite 1180                                                   
 Anchorage, Alaska 99503-5947                                                  
 Telephone:  (907) 269-8882                                                    
 POSITION STATEMENT:  Oversight Hearing:  Deprivatization of State             
                      Recorder's Office Activities.                            
                                                                               
 REPRESENTATIVE FRED DYSON                                                     
 Alaska State Legislature                                                      
 Capitol Building, Room 428                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-2199                                                    
 POSITION STATEMENT:  Sponsor of HB 203.                                       
                                                                               
 REPRESENTATIVE ERIC CROFT                                                     
 Alaska State Legislature                                                      
 Capitol Building, Room 430                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-4419                                                    
 POSITION STATEMENT:  Answered questions regarding CSHB 203(L&C).              
                                                                               
 CATE REMME, Consumer Advocate                                                 
 Alaska Public Interest Research Group                                         
 P.O. Box 101093                                                               
 Anchorage, Alaska 99510                                                       
 Telephone:  (907) 278-3661                                                    
 POSITION STATEMENT:  Testified in support of CSHB 203(L&C) and                
                      SSHB 142.                                                
                                                                               
 PEGGY MULLIGAN                                                                
 Capital City Task Force of the                                                
   American Association of Retired Persons                                     
 Box 240335                                                                    
 Douglas, Alaska 99824                                                         
 Telephone:  (907) 364-3144                                                    
 POSITION STATEMENT:  Testified in support of CSHB 203(L&C) and                
                      commented on SSHB 142.                                   
                                                                               
 VERA GAZAWAY                                                                  
 Older Person's Action Group                                                   
 Address not provided                                                          
 Juneau, Alaska                                                                
 Telephone:  (907) 586-1777                                                    
 POSITION STATEMENT:  Testified in support of CSHB 203(L&C).                   
                                                                               
 DAVEED SCHWARTZ, Assistant Attorney General                                   
 Commercial Section                                                            
 Civil Division                                                                
 Department of Law                                                             
 1031 West Fourth Avenue, Suite 200                                            
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 269-5265                                                    
 POSITION STATEMENT:  Testified on CSHB 203(L&C) and SSHB 142.                 
                                                                               
 REPRESENTATIVE GARY DAVIS                                                     
 Alaska State Legislature                                                      
 Capitol Building, Room 513                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-2693                                                    
 POSITION STATEMENT: Sponsor of SSHB 142.                                      
                                                                               
 ANGELA ARD                                                                    
 924 East 45th Court, Number 1                                                 
 Anchorage, Alaska 99503                                                       
 Telephone:  (907) 563-4819                                                    
 POSITION STATEMENT:  Testified in support of SSHB 142.                        
                                                                               
 CHRYSTAL SMITH, Legislative Liaison                                           
 Civil Division                                                                
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-0300                                                     
 Telephone:  (907) 465-3600                                                    
 POSITION STATEMENT:  Testified in support of SSHB 142.                        
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 97-56, SIDE A                                                            
 Number 001                                                                    
                                                                               
 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                  
 Standing Committee to order at 3:28 p.m.  Members present at the              
 call to order were Representatives Rokeberg, Cowdery, Sanders and             
 Hudson.  Representative Brice arrived at 3:29 p.m. and                        
 Representative Ryan arrived at 5:15 p.m.                                      
                                                                               
 OVERSIGHT HEARING:  DEPRIVATIZATION OF STATE RECORDER'S OFFICE                
 ACTIVITIES                                                                    
                                                                               
 Number 174                                                                    
                                                                               
 CHAIRMAN ROKEBERG announced the first order of business would be an           
 oversight hearing of the Department of Natural Resources (DNR)                
 State Recorder's Office.                                                      
                                                                               
 ROBERT MOTZNIK, Motznik Computer Services, came before the                    
 committee.  He explained his business has processed all the DNR               
 State Recorder's Office information on his computer for eleven                
 years.  He indicated his business has done most of the distribution           
 of that data to the people who need it such as title companies,               
 banks, collection agencies, state and federal agencies, et cetera.            
 Mr. Motznik indicated he wrote the original recording office system           
 in 1971 for the state and has written every program that has ever             
 processed the Recording Office information.                                   
                                                                               
 MR. MOTZNIK said when he first started putting the information on-            
 line he went to the state, as they were still using the key punch             
 card system, and informed them that he would write their programs             
 and performing their processing on his computer, at no cost, if               
 they would key into his computer.  That would get the data more up            
 to date.  He noted at that time they were two months behind in                
 getting a document through the old system.  The Recorder's Office             
 agreed to do that which resulted in what is called a "zero based"             
 contract.  Mr. Motznik informed the committee members that the key            
 to that contract was that he would have no rights to the data.  It            
 would be a public file and the Recorder's Office would be                     
 responsible for the content of the data.  He said he did the                  
 programming and the processing.  It was agreed that he would cover            
 the cost of the programming to the DNR State Recorder's Office                
 specifications.  The DNR State Recorder's Office wrote the                    
 specifications for the system and he did the designing and                    
 programming.  The key to that was the state would pay for the                 
 enhancements after the original writing of the system.  The state             
 was also to pay for additional disk space, printing and a few more            
 things.  Mr. Motznik said that gradually, over the years, his                 
 company dropped those requirements.  They went to a cooperative               
 agreement in 1991, as opposed to a zero based contract so that it             
 would be easier for the state to pay part of the cost of                      
 enhancements.  Mr. Motznik explained he performed the enhancements            
 at no cost.                                                                   
                                                                               
 Number 385                                                                    
                                                                               
 MR. MOTZNIK indicated that DNR is saying that they are asking for             
 $1.2 million do the system themselves because his company would not           
 do all the enhancements that DNR wanted at no cost.  He noted that            
 was never in their contract and that the state was supposed to pay            
 for enhancements.  He noted he has provided enhancements and                  
 several of them were at no cost and he was never obligated to do              
 so.                                                                           
                                                                               
 Mr. MOTZNIK stated that DNR has made several attempts to perform              
 this processing on their own.  The last attempt was $1.2 million in           
 the current budget, last year it was $440,000 and a few years                 
 before that it was $330,000.  Mr. Motznik informed the committee              
 members that it is his understanding that the DNR did not receive             
 the $1.2 million.                                                             
                                                                               
 Number 454                                                                    
                                                                               
 MR. MOTZNIK explained he has a letter from Commissioner John                  
 Shively that says effective July 1, 1997, the department is going             
 to take over the system on their own.  They're going to make a                
 skeletal system on the state's machine.  The letter states that               
 they will have a hard time doing that and there will be disruptions           
 in the DNR State Recorder's Office data and backlogs.  Mr. Motznik            
 said to him, that is very irresponsible.  He stated he has run this           
 system since 1971, and there has never been a data interruption and           
 a self-induced one, as a threat to get funding, is irresponsible.             
                                                                               
 MR. MOTZNIK said part of the DNR's press release is that the reason           
 they have to do this on July 1, is because he has refused to                  
 continue processing for free.  Mr. Motznik stated that is not true.           
 He informed the committee members that about two years ago, the               
 recorder changed the procedures they use in entering names and                
 addresses in their index system.  He compared the index system to             
 a phone book which is an alphabetical list to find a name to see if           
 there is a judgement against someone.  Mr. Motznik explained there            
 are thousands of documents out there that can't be found because of           
 indexing errors.  He said documents are being indexed under first             
 names.  Mr. Motznik indicated the state recorder has instructed               
 that names be keyed exactly as they are on the document.  So if the           
 document says "C Street Auto," you can't find that document under             
 C, you have to look under ".  He stated this is a big thing.  There           
 was already one court case a year ago where Sharon Young had to               
 write an affidavit that the document was indexed under the wrong              
 name and under the wrong property description.  Mr. Motznik stated            
 the bankruptcy court ruled that was equivalent of not being                   
 recorded.  Pacific Rim Title was told they did not have to pay                
 title insurance because the end document was completely indexed               
 wrong, therefore, was equivalent of not being recorded.  Mr.                  
 Motznik said, "The title companies have also been trying to get Ms.           
 Young to clean this up.  For quite awhile she would not acknowledge           
 it.  He stated in his letter to Ms. Young he said he would continue           
 processing after July 1, 1997, for free, but he wants them to                 
 address the errors in the data that is being keyed.  Key it as                
 accurately as it has historically been and he would process it for            
 free.                                                                         
                                                                               
 Number 738                                                                    
                                                                               
 MR. MOTZNIK said the state conducted a very extensive campaign for            
 the $1.2 million.  Ms. Young would call the title companies                   
 regularly and then he would receive a call from the title companies           
 saying, "Hey, now she says this."                                             
                                                                               
 MR. MOTZNIK said he wrote a letter to the legislature.  Mr. Nico              
 Bus wrote a letter back saying a lot of the statements in the                 
 Motznik letter were not correct.                                              
                                                                               
 MR. MOTZNIK referred to the system the state wanted the $1.2                  
 million for and said in the state's promotion of trying to get the            
 users to support that new system.  They said the new system will              
 produce an index and image of the data.  The users would be able to           
 dial in and get the service from the state.  Mr. Motznik said a               
 bank wrote a letter supporting Ms. Young's request and then called            
 him the next day and apologized for writing the letter.  The bank             
 said the reason they wrote the letter was it affected their bottom            
 line.  The state was promising services, for free, that they now              
 pay for.  In the letter Mr. Bus wrote, he said the new system                 
 wouldn't compete with Mr. Motznik's system.  Mr. Motznik said if              
 the state will provide the service for free, then they would put              
 him out of business.  He noted Western Microfilm currently                    
 distributes the images of the documents as they microfilm the                 
 documents.  If somebody wants a copy of a document, they can call             
 Western Microfilm, their title company or contact the DNR State               
 Recorder's Office.  He stated if the state is going to provide all            
 the images for free, then Western Microfilm will be out of business           
 too.  If the state received the $1.2 million in funding, they would           
 have provided many services that are currently provided by private            
 enterprise.  Mr. Motznik said the DNR has basically tried to                  
 deprivatize the system for years.  Currently, his business saves              
 the state quite a bit of money.  He said if he is providing a                 
 service that's free to the state and then the state agency says "No           
 thank you," something is wrong.  Imaging is not the issue,                    
 deprivatization is the issue.  He said this is a turf fight.  The             
 state wants to provide the services that he is currently providing            
 and pay for it with public money.  Mr. Motznik asked if he is right           
 or wrong.                                                                     
                                                                               
 Number 935                                                                    
                                                                               
 REPRESENTATATIVE JOHN COWDERY said Mr. Motznik has been providing             
 these services for 11 years.  He asked how many state workers his             
 service displaces.                                                            
                                                                               
 MR. MOTZNIK indicated the state would need one good systems analyst           
 with a programmer for a year to replace what they are currently               
 getting for free.  Mr. Motznik indicated Mr. Bus has complained               
 that the department doesn't own the software.  He said that is the            
 state's option.  Mr. Motznik said when this system first started,             
 he wrote the programs and the state didn't want to pay anything for           
 them.  So he said, "Fine, I'll write the programs that you don't              
 pay anything for them, but you don't own them.  So if you want to             
 own them, pay me."                                                            
                                                                               
 Number 1033                                                                   
                                                                               
 REPRESENTATIVE COWDERY referred to the present system being                   
 discontinued June 30, 1997, and asked what would be in place July             
 1, that the public entities could use.                                        
                                                                               
 MR. MOTZNIK said all he knows is he received a letter from                    
 Commissioner Shively saying, "Thank you very much, you're done July           
 1."  Mr. MOTZNIK read from a press release from the DNR, "DNR                 
 Commissioner Shively announced that the department will attempt to            
 create an interim indexing program as a stopgap measure to all the            
 recording offices to function until a long term solution can be               
 implemented.  This will be a very bare bones temporary solution.              
 The public should anticipate there will be some disruption in                 
 service and possible backlogs as a result of having to create this            
 interim system."  Mr. Motznik said at the end of the statement,               
 Commissioner Shively urges the recording system users to make their           
 concerns known to the legislators as soon as possible to help                 
 mitigate this potential crisis situation.  Mr. Motznik said he                
 can't see how the DNR would have a system by July 1.                          
                                                                               
 Number 1209                                                                   
                                                                               
 NICO BUS, Chief, Financial Services, Division of Support Services,            
 Department of Natural Resources, was next to address the committee.           
 He said he would like to acknowledge Mr. Motznik's excellent                  
 service over the past 11 years.  He has done the state a great                
 service by providing this information for free.  He explained the             
 DNR State Recorder's Office was transferred to the DNR from the               
 Court System.  He said the department had very poor equipment and             
 Mr. Motznik stepped in and helped out.  The department ended up               
 with surplus terminals.  Mr. Motznik wrote a computer program and             
 got the department where they were operational on the system they             
 are currently using.                                                          
                                                                               
 MR. BUS informed the committee in 1990, the first agreement was up            
 for renewal.  Mr. Motznik said he would do it again.  Mr. Bus said            
 the department talked to Mr. Motznik about the terms and                      
 conditions.  He said the one thing Mr. Motznik says is that it is             
 a no cost agreement, no cost to the state, but a lot of cost to him           
 that has been beneficial to the state.  Mr. Bus said the one                  
 problem they have run into is Mr. Motznik is driving a lot of the             
 improvements the state would like to see.  Often times, the DNR               
 would ask for these improvements in making the system more                    
 responsive to the users or for state employees and Mr. Motznik said           
 he would have to evaluate whether or not he had the time or if                
 there were costs.  Mr. Motznik has expressed repeatedly that he               
 would like to see some reimbursement for that service.  Mr. Bus               
 stated he would like to do that so they would have a contractual              
 agreement that would be beneficial to both parties.                           
                                                                               
 Number 1347                                                                   
                                                                               
 MR. BUS said the department is trying to make some efficiencies in            
 their office, specifically in relation to the way they do their               
 operating budget.  The DNR State Recorder's Office has a tight                
 budget and operates 14 different offices, many of which have a                
 single staff person.  Mr. Bus said over the past few years, the DNR           
 has worked very diligently to clean up their internal processes and           
 get the system to be more responsive, accurate and to the point               
 where they can not only do the recording, but also do their                   
 archiving responsibility.  He noted they are very backlogged in               
 their archiving.                                                              
                                                                               
 MR. BUS referred to industry standards and said the DNR looked at             
 other recording offices.  Many offices are switching to new                   
 technology and different software systems.  Many counties are using           
 package software and imaging technology.  He said imaging is a very           
 useful tool as the department could save 10 percent to 15 percent             
 of their staff time and rededicate that time to their archiving               
 responsibilities.  The department could improve service to the                
 customers as they customer could receive the data faster.  He noted           
 when you keypunch, there will be errors.  Imaging would be a letter           
 perfect picture of what the customer presents to the department.              
 Mr. Bus explained the legislature didn't fund that last year.  The            
 Office of Management and Budget (OMB) decided to do a management              
 audit on the operation for the DNR State Recorder's Office.  They             
 determined that there were many things that had been done that were           
 correct.  Mr. Bus said the department came to the legislature last            
 year and legislation was approved to clean up some of the recording           
 statutes which has helped save a lot of time and effort.                      
                                                                               
 Number 1502                                                                   
                                                                               
 MR. BUS informed the committee members that in 1996, the contract             
 with Mr. Motznik expired.  Mr. Motznik agreed to continue without             
 a formal signed agreement.  In the meantime, the department asked             
 repeatedly that certain enhancements be made.  Some of the                    
 enhancements Mr. Motznik agreed to make.  Mr. Motznik invested in             
 some equipment and, again, the issue of cost came up.  Because it             
 was a no cost agreement, the department could not go and pay Mr.              
 Motznik for his services without going to a competitive bid to give           
 other vendors an equal chance at it.  He said the situation was               
 explained to Mr. Motznik and he agreed to continue.  When the                 
 contract expired last year, Commissioner Shively suggested issuing            
 a request for interest to see who else would be interested in doing           
 an arrangement similar to Mr. Motznik's and to find out what else             
 is out there in terms of technology.  This was done in September,             
 and there were seven responses.  Those responses said they would              
 either provide the service Mr. Motznik is providing for free or               
 they had software that was state of the art that could be used.               
 Mr. Bus indicated that most of the people who said they would do it           
 for free would do it only based on the criteria that they would               
 have sole right to the data.  Mr. Bus pointed out Mr. Motznik is              
 correct in that he doesn't own the data.  He has written the                  
 computer software program, which is his propriety right, but the              
 data that comes out of it is public information.                              
                                                                               
 MR. BUS referred to the oversight hearing and said the state of               
 Alaska feels that privatization is really important issue.  The               
 department put out a request for interest to see if people were               
 willing to do something like Mr. Motznik has been doing.  He noted            
 Mr. Motznik did not respond to the request for information.  He               
 stated the department will continue to talk to Mr. Motznik about              
 the arrangement.  However, the department is in a situation where             
 they need to see what can be done.  The no cost arrangement with              
 Mr. Motznik is currently to the point where it does cost the state            
 a lot of money.  Mr. Bus said the cost is basically an issue of               
 control and when the state wants to make changes and when it can be           
 done.  He said his preference is that the operating budget be                 
 adequate to pay for the service Mr. Motznik is providing, without             
 that, other alternatives need to be looked at.                                
                                                                               
 Number 1666                                                                   
                                                                               
 MR. BUS informed the committee members that the department's plan             
 with their proposed capital budget was to spend $1.2 million which            
 was basically for all the equipment that it would take to modernize           
 the DNR State Recorder's Office.  It was not necessarily to replace           
 the Motznik system, but to have a system that will work for the               
 state which will speed up the recordation, do the archiving                   
 function and make the data available to the public at large.  The             
 department feels their customers pay for that.  Mr. Bus pointed out           
 that the DNR State Recorder's Office operating budget is fully                
 funded by the users and there are no general funds going into the             
 operation.  The customers pay for recordation and, over the last              
 five years, they have put well over $7 million in excess of what it           
 takes to fund the recording.  Mr. Bus explained that Mr. Motznik              
 agrees imaging will speed things up, but his idea is we should wait           
 awhile in that the time will come where the cost of imaging                   
 technology will come down.                                                    
                                                                               
 Number 1734                                                                   
                                                                               
 MR. BUS informed the committee members that the department has done           
 surveys with the National Association of County Recorders and the             
 larger counties are switching to imaging and most counties are                
 currently using imaging technology.  Imaging technology will make             
 public data available to more people in a digital format.  Mr.                
 Motznik has said that will deprive him of some business.  Mr. Bus             
 stated it is a library and everybody should have access to the                
 information.  The department wants to make access to the                      
 information easier.  It also would allow employees in the DNR State           
 Recorder's Office the ability to sort and get information that                
 currently Mr. Motznik does provide and charges a fee for.                     
                                                                               
 MR. BUS said if their budget is funded, a system would be provided            
 to people like Mr. Motznik, who are service providers and do                  
 specialized service for the title and banking industries.  The                
 proposed capital project would make a major leap into new                     
 technology.                                                                   
                                                                               
 Number 1862                                                                   
                                                                               
 MR. BUS said the question of what will happen on July 1, is an                
 important question.  He said, "We need to get either to a system              
 where somebody steps in, from the private sector, and does it all             
 for free or takes stuff so they can make their money on the side,             
 or we need to get to a system that we make it available to                    
 everybody and then they can choose what they want to do."  Mr. Bus            
 said over the last year there are people and organizations that               
 have asked for the information.  He said if they go to imaging                
 technology he believes it will speed up commerce and a lot of                 
 things.                                                                       
                                                                               
 Number 1994                                                                   
                                                                               
 REPRESENTATIVE COWDERY said if the Recorder's Office isn't keeping            
 up with their work now, how will they keep up later.                          
                                                                               
 MR. BUS explained what he commented on was that the department                
 aren't keeping up with their archival responsibilities, but they              
 are keeping up with the recording responsibilities.  He noted those           
 duties are two distinct separate issues.  He indicated some of                
 their old books are falling apart and some of the microfilm isn't             
 very readable.  Mr. Bus pointed out that a couple of years ago the            
 legislature did fund a new camera so they can go back and film the            
 old records.  He noted they have rooms that are filled with old               
 records at $2 to $3 a square foot.  He said in the current                    
 situation of no cost, the department is completely dependent on Mr.           
 Motznik.  The department can't say, "Tomorrow we'd like to change             
 all these programs.  Could you please do it?"  He stated the                  
 department has asked Mr. Motznik to do so and he has been very                
 accommodating.  He has said, "He'll get to it on his schedule."               
 Mr. Motznik said to the point he feels it is important to his                 
 operation, he can make those decisions.  Mr. Bus said, "What I'm              
 saying as a public servant is that we, as the managers of that                
 record, we'd like to be in the driver's seat and we feel it is                
 important to improve that record and pay Mr. Motznik for it.                  
 That's the preferred option."  The department looked for                      
 alternatives and that is why they came up with the $1.2 million for           
 a capital project.  They feel that would significantly improve                
 accessibility to all the records plus the archival function for               
 everybody.                                                                    
                                                                               
 Number 2135                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Bus to make available to the committee            
 a copy of the request for interest.                                           
                                                                               
 MR. BUS said he would do so and also make available a copies of the           
 responses.                                                                    
                                                                               
 CHAIRMAN ROKEBERG said Mr. Bus' testimony was that he had seven               
 responses, but his understanding of what was said was there were              
 seven nonresponsive bidders because they didn't meet the specs of             
 no cost and they desired the sole exclusive rights to the data.               
 That wouldn't have been responsive.                                           
                                                                               
 MR. BUS said there were seven people who responded to the request             
 for interest.  He referred to the criteria in which they responded            
 and said there was different feedback.  Some of them said they                
 would do it at "no cost" with the condition that they would get               
 sole propriety rights to the records.  One even said, "If you can             
 get copies of all of Mr. Motznik's computer programs, we'd be happy           
 to do this."  Mr. Bus stated his point is that Mr. Motznik has seen           
 the wisdom of running this for the past 11 years and when the                 
 department asks for anything, they need to see at least if anybody            
 else is interested in doing something similar.                                
                                                                               
 Number 2192                                                                   
                                                                               
 REPRESENTATIVE COWDERY said Mr. Bus is asking for $1.2 million in             
 capital funding.  He asked if with or without the funding, the                
 department would proceed.                                                     
                                                                               
 MR. BUS indicated that is incorrect.  He said what the $1.2 million           
 would do is completely retool their offices.  They would get                  
 imaging equipment with all the hardware it would take.  Currently,            
 they don't have the funding so they have the option of duplicating            
 Mr. Motznik's system.  He said he has talked to the department's              
 computer people and they feel they can make it work.  Mr. Motznik             
 is skeptical.  He noted without the funding, the department feels             
 they can continue the service they have been providing in relation            
 to the recording.  They would not do the imaging and digitizing the           
 $1.2 million would provide for.                                               
                                                                               
 REPRESENTATIVE COWDERY asked if hard copies and everything that is            
 microfilmed would continue to be available to the private sector.             
                                                                               
 MR. BUS stated that is correct.                                               
                                                                               
 Number 2256                                                                   
                                                                               
 CHAIRMAN ROKEBERG said for the purposes of the discussion, Mr. Bus            
 should assume the department wouldn't get the $1.2 million.                   
                                                                               
 MR. BUS stated he is assuming that.  He said on July 1, without the           
 $1.2 million, the department will build a system that is like Mr.             
 Motznik's system and they would make the tapes available to Mr.               
 Motznik and he can keep doing what he is doing with the title                 
 industry.  That would give the department the control to update the           
 program as they see fit and whenever they see fit.                            
                                                                               
 Number 2278                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Bus how many scanners he thinks he                
 could buy for about $7,200.                                                   
                                                                               
 MR. BUS responded without the software to run whatever is scanned,            
 the scanner won't do anything.                                                
                                                                               
 CHAIRMAN ROKEBERG said the reason he asked the question is because            
 he would like to know why the department raised the state                     
 recorder's salary range from range 20 to a range 22 last year.                
                                                                               
 MR. BUS said most everybody in the DNR State Recorder's Office is             
 a range 10 or a range 12.  The recording responsibility is a very             
 serious responsibility.  The Department of Administration asked for           
 a complete analysis of all the positions in the DNR State                     
 Recorder's Office.  They classified those positions and Sharon                
 Young, as the state recorder and the responsibility that she has as           
 a section chief, was classified at a range 22.  He noted that is              
 what all other section chiefs in the state of Alaska are paid.  Ms.           
 Young is responsible for a staff of 50 people and has 14 offices.             
 She also has a significant judiciary responsibility for all of the            
 records.  The Department of Administration classification system              
 decided that she was never paid correctly, therefore, they                    
 classified her as a range 22.                                                 
                                                                               
 Number 2352                                                                   
                                                                               
 REPRESENTATIVE COWDERY asked Mr. Bus if the department intends to             
 duplicate Mr. Motznik's system whether they receive the money or              
 not.                                                                          
                                                                               
 MR. BUS responded that they intend to automate the DNR State                  
 Recorder's Office system that is currently run by Mr. Motznik.                
                                                                               
 REPRESENTATIVE COWDERY asked if they intend to do this without any            
 disruption to the public.                                                     
                                                                               
 MR. BUS said that is the department's  plan.                                  
                                                                               
 REPRESENTATIVE COWDERY asked how the department can afford to                 
 duplicate a system that has been in place for so long within their            
 own budget.                                                                   
                                                                               
 MR. BUS explained the no cost agreement goes at a great cost in               
 their operation.  They decided that was worth the effort to get               
 control of the system so they could streamline the operation.  He             
 noted they are continually facing downward pressures.  Mr. Bus said           
 they have done layoff notices in the office.  He said Mr. Motznik             
 has done a great job, but the DNR State Recorder's Office system is           
 not always Mr. Motznik's priority.  He referred to the changes the            
 office might ask for and said if there is a cost to Mr. Motznik, he           
 makes the decision as to whether or not to make that enhancement.             
                                                                               
 Number 2429                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked who will pay and where will the software              
 come from.                                                                    
                                                                               
 MR. BUS referred to the software and explained that is what they              
 are writing between now and June 30.                                          
                                                                               
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Bus if he has ever consulted with the             
 Church of Latter-Day Saints about using them as a free source of              
 microfilming the records of the state of Alaska.                              
                                                                               
 MR. BUS indicated he has not personally contacted them.                       
                                                                               
 TAPE 97-56, SIDE B                                                            
 Number 001                                                                    
                                                                               
 REPRESENTATIVE BILL HUDSON said there are two separate interests              
 that the department is trying to achieve.  One is the recorder's              
 responsibility that exists by statute and the other is the archival           
 responsibility.  He said to him like what the department is aiming            
 for is one fix that would handle both.  Representative Hudson                 
 indicated that this is difficult for him to follow even though he             
 was the commissioner of the Department of Administration when the             
 DNR State Recorder's Office was in that department.  He said he               
 believes it would be a good idea to put something down in language            
 that separates the recording and archiving.  It should state where            
 the department is and what they are looking for.  This would help             
 understand where the problem is.  Representative Hudson said it               
 sounds like the department is preparing to take care of the matter            
 anyway.  They are going to rewrite the programs.  He asked if that            
 is for not only the recording responsibilities, but also for the              
 archiving.                                                                    
                                                                               
 MR. BUS responded it would be just for the recording side.  He                
 invited the committee members to tour the operation so they can get           
 a firsthand view.                                                             
                                                                               
 Number 100                                                                    
                                                                               
 SHARON YOUNG, State Recorder, State Recorder's Office, Division of            
 Support Services, Department of Natural Resources, testified via              
 teleconference from Anchorage.  She referred to privatizing any of            
 the recording functions and said her office isn't opposed to doing            
 so.  In fact, they feel that making the recording information                 
 available to a wider number of customers in a multitude of media              
 formats would actually stimulate entrepreneurial activity                     
 throughout the state.  Ms. Young stated there are many vendors who            
 already purchase copies of recording and filing information from              
 the Recorder's Office in both case and microfilm format.  She said            
 those vendors are able to market a value-added product that is                
 unaffected by the acquisition of a new system and that new system             
 could be designed to streamline their internal operations and                 
 improve customer service.                                                     
                                                                               
 MS. YOUNG referred to the indexing system, which is maintained by             
 Motznik Computer Services, is only one function of many functions             
 that are preformed by the DNR State Recorder's Office.  She pointed           
 out that there are may layers of functions and some of them are               
 manual.  There is also lot of duplication of data entry, but each             
 of these functions are required by statute and are essential to the           
 recording process.                                                            
                                                                               
 MS. YOUNG referred to what they have learned by observing and                 
 studying other new technology in other jurisdictions is that there            
 are comprehensive systems that combine all of the functions,                  
 recording, stamping, receiving, indexing, scanning, filming and               
 document returns, into a single system.  Ms. Young said by                    
 eliminating the layers of this process is the only way they can               
 streamline the work flow enough to create efficiencies in that                
 process and enable they to do more with (indisc.) in the future.              
                                                                               
 MS. YOUNG informed the committee the current process is very labor            
 intensive.  She noted there are about 250,000 documents that come             
 through the office each year.  Each document is handled on an                 
 average of 10 to 12 times throughout the process which takes weeks            
 to complete.  She said it is not a matter of just adding, for                 
 example, imaging technology to an existing layered system.  You               
 have to be able to combine the functions and work laterally in                
 order to distribute the workload and create efficiencies.                     
                                                                               
 Number 237                                                                    
                                                                               
 MS. YOUNG indicated a point she would like to follow up on is that            
 this has been a valuable function that has been served by the                 
 operation of the indexing system by the private sector, but it has            
 not been without cost to the state.  There have been operational              
 costs associated with duplicate data entry.  They have to enter the           
 material into Mr. Motznik's system and then input much of the same            
 information into the state revenue and billing system.  She stated            
 that there is loss in terms of the duplication that occurs and the            
 many manual processes on which this indexing system depends.  Ms.             
 Young said they also have an inability to obtain specified                    
 management reports to meet specific criteria to support their                 
 operations or to respond to customers who come to them for specific           
 report information out of the public record.  Ms. Young said they             
 continue to have to refer those customers to Mr. Motznik for                  
 customized extractions or other information that he might be able             
 to provide with the state's information.                                      
                                                                               
 MS. YOUNG stated she would like to emphasize that they did                    
 undertake a customer survey questionnaire over a two year period.             
 The results of the survey are summarized in the OMB audit, which              
 was a very expensive and thorough audit of their entire operation.            
 She said the survey questions indicated that there is quite a                 
 discomfort level among their customers when it comes to using the             
 existing computer system for locating the records through that                
 system.  Out of all the questions that were included in the                   
 customer survey, that question yielded a negative response in about           
 one out of every four responses.  She said that was a concern to              
 her office, it continues to be a concern and they are trying to do            
 everything they can to improve the operation and make more                    
 information available to a wider number of customers in the formats           
 they require.                                                                 
                                                                               
 Number 354                                                                    
                                                                               
 REPRESENTATIVE COWDERY asked if the department has put out a                  
 request for proposals (RFP) and how long it would take to finalize            
 it.                                                                           
                                                                               
 MS. YOUNG explained they are working on an RFP, but given the grim            
 situation involving the capital budget, the timetable may have to             
 be pushed back.  She stated they had originally envisioned having             
 an RFP ready by June 1.  Unfortunately, if it comes to pass that              
 they do not proceed with the modernization of the system there                
 wouldn't be an RFP until a later time.  Ms. Young stated they have            
 not issued an RFP, but they have done exhaustive studies.                     
                                                                               
 REPRESENTATIVE COWDERY asked Ms. Young if they have determined what           
 the annual cost will be to maintain a new system and what costs               
 will be eliminated.  He indicated he would like an answer in                  
 writing.                                                                      
                                                                               
 Number 478                                                                    
                                                                               
 CHAIRMAN ROKEBERG said given the present circumstances and the fact           
 that the department probably won't receive the capital budget                 
 monies that the department requested, the commissioner has gone so            
 far as to say in an April 25, 1997, press release, that creating              
 this interim indexing program is going to be a stopgap measure.  It           
 is going to be a very bare bones temporary solution and will cause            
 disruptions in service and possible backlogs as a result including            
 service disruptions and backlogs.  Chairman Rokeberg said he                  
 doesn't understand why they state would be going down this path               
 when they can anticipate these types of disruptions and the further           
 accumulation of backlogs.  He questioned what the reason is.                  
                                                                               
 MS. YOUNG responded, "Our intent is, at this time, that the                   
 privatization would be fully transparent to the public.  That there           
 would be no adverse impact of any kind, but until we see this                 
 system up and running and have it tested and can ensure that it is            
 doing what the Motznik system has done as far as indexing                     
 information, and in many respects improving the functions under the           
 current system.  Until we can see that tested, we cannot be sure              
 there will be no backlog, but it's our intent that they be                    
 minimized and as transparent as possible for the public as well as            
 for our internal operations."                                                 
                                                                               
 Number 562                                                                    
                                                                               
 CHAIRMAN ROKEBERG said it can't be transparent.  He noted in the              
 press release admits that it won't be transparent.  Chairman                  
 Rokeberg asked Ms. Young how she can in seven weeks create a                  
 transparent seamless transition.  He said he thinks it is                     
 impossible.                                                                   
                                                                               
 Number 573                                                                    
                                                                               
 MS. YOUNG responded that the programmers are in the computer                  
 section of the Support Services Division and aren't part of the DNR           
 State Recorder's Office component.  She said she would have to                
 defer to Mr. Bus regarding the time frames and the time that is               
 associated with developing the product.                                       
                                                                               
 Number 619                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Motznik to come before the committee to           
 respond to questions and comments that were made.                             
                                                                               
 MR. MOTZNIK referred to the figure of $1.2 million for imaging and            
 said that would not at all solve indexing errors.  In indexing, you           
 have to look at the document, you have got to find the name and key           
 the name in right.  That does not change if you are doing imaging             
 or microfilming.  He stated the indexing errors are something that            
 needs to be addressed.  Mr. Motznik said in continuing the free               
 service, he really wants the DNR State Recorder's Office to start             
 looking at the errors that are made in the indexing.  He said he              
 doesn't see any way in the world they can get the system going as             
 there are man years of effort in writing the programs.                        
                                                                               
 Number 662                                                                    
                                                                               
 CHAIRMAN ROKEBERG questioned if there is already existing software            
 that can be used or does a program have to specifically designed.             
                                                                               
 MR. MOTZNIK explained it has to be compatible with the existing               
 system.  You cannot start up a new recording office system and then           
 say, "Well I'm going to search the title up to this point, until              
 July, 1997.  Now I'm going to go this new system."  He said that              
 would be a mess.                                                              
                                                                               
 Number 679                                                                    
                                                                               
 REPRESENTATIVE COWDERY asked how can the state afford to duplicate            
 something that Mr. Motznik may have worked on for 20 or 30 years.             
                                                                               
 MR. MOTZNIK said, "My understanding of the state data center they             
 would not even allow them to do what all we do."  He said the Nome            
 Recorder's Office can request a granter/grantee index of a range of           
 serial numbers.  He informed the committee members that he wrote              
 the software that creates that on-line print on their printer in              
 their office.  It is his understanding that the state data center             
 will not allow it to route print at a printer at a remote location            
 immediately.  He referred to the duplication of the current system            
 and said he doesn't think that even if the programmers could write            
 it that the state data processing shop would support it.                      
                                                                               
 Number 730                                                                    
                                                                               
 MR. MOTZNIK referred to Mr. Bus saying that one of the reasons for            
 doing this is they need to get control.  Mr. Motznik said he has              
 been doing this for many years.  Five years ago, there was a                  
 proposal from the DNR for $330,000 to write the existing system on            
 their system.  At that time, they had to agree that they couldn't             
 do it as well as he was doing it.  The reason was that they wanted            
 to get control.  Mr. Motznik said he would like to assure the                 
 committee members that this is a turf war.  He said he has offered            
 to make a proposal to incorporate imaging into the current system             
 and they weren't interested.  Mr. Motznik noted he could probably             
 provide the system they want at maybe half of what they are going             
 to have pay on their own and they aren't interested.                          
                                                                               
 MR. MOTZNIK said Ms. Young keeps talking about duplicate entry.  He           
 said when the system was first started, the DNR State Recorder's              
 Office didn't account for each transaction.  They keyed the dollars           
 that they charged into his system.  Mr. Motznik said he produced an           
 accounting report and they used that to make their general ledger             
 increase.  About five or six years ago, they decided they have to             
 issue a receipt to each individual that comes in.  The question was           
 should it be done through the Motznik system or through the state's           
 system.  The DNR decided they would do it on the state's system.              
 As soon has they had it up, they would drop keying the information            
 into his system.  Mr. Motznik said they had trouble.  They got it             
 onto the state's system to issue receipts, but the programmers                
 could never get the statistics they needed out of the state's                 
 system.  That is why they do the duplicate entry.  They do the                
 duplicate entry because the first decision did not follow through.            
 Mr. Motznik said, "If they keyed information into my system, I'm on           
 a mainframe the state's on a mainframe, I can dump that information           
 and go into the current accounting system.  There is no reason for            
 her to be doing the duplicate entry, but she is not interested in             
 stopping the duplicate entry."  He stated this is a turf war                  
 because the state isn't interested in solving the things that have            
 been complained about.                                                        
                                                                               
 Number 849                                                                    
                                                                               
 REPRESENTATIVE JERRY SANDERS said, "This looks to me like a high              
 tech version of laying off the road grader.  They're not getting              
 their money.  They're going to lay you off.  The public is going to           
 be mad and come back..."                                                      
                                                                               
 MR. MOTZNIK said there is going to be a crises.  The public is                
 going to demand that the legislature give the DNR State Recorder's            
 Office the money to fix the crises and it will be millions.                   
                                                                               
 Number 910                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked Mr. Bus to come back before the committee.            
 He said, "There has been some comments in the public that Ms. Young           
 has been telling certain institutions, banks and all and perhaps              
 title companies and so forth in the Anchorage area, that I'm aware            
 of, that they're going to -- if they would get behind the state's             
 endeavors that they're going to be getting their information free             
 which here to fore they've been purchasing from Mr. Motznik.  Is              
 that correct?"                                                                
                                                                               
 MR. BUS responded, "The proposal that we had in the capital project           
 was that if you wanted that information, you could just come our              
 office and get whatever you wanted and that was how you could get             
 it for free.  If there would be manipulation by any of our staff,             
 we would not do that.  We would defer to the service providers and            
 say `Do that.'  But it's like in anything if you have a database              
 and you can call that database up, then you can use that data for             
 whatever.  It's like the way we go to our public libraries right              
 now.  You can go on the Internet.  You can get a lot of information           
 for free.  It's all public records.  Our public records are                   
 available for the public and if they want to look it up, that's               
 fine.  If they want prints or they want any extra work, they would            
 have to pay for that.  The free reference was to the fact that the            
 software had certain manipulation capabilities and search                     
 capabilities that people could do on their own.  They would not               
 necessarily have to go to a service provider because they say,                
 `Okay, give me all the National Bank of Alaska transactions.'  They           
 could push the button and they could thumb through it just like any           
 search engine on a database.  And that's -- right now the system              
 doesn't allow that.  So that's an enhancement in the system.  The             
 free -- I want to clarify again, the customer pays to get the data            
 recorded.  So the customer paid for it in the first place.  Then if           
 they want to get to that and they want to spend the time and effort           
 to look it up, and that is available to them as long as it doesn't            
 require our interaction, that would be free.  If there would be               
 manipulation for title agent or whatever we say, `Go see Mr.                  
 Motznik, go see GeoNorth - whoever the service provider is.'"                 
                                                                               
 Number 999                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated it is third parties mostly who would be              
 looking at the information.  It wouldn't be the customer who paid             
 the recording fees.  Normally, the public would retain certain                
 service organizations.  The public would maintain a service                   
 provider to look up that information for a specific purpose.                  
                                                                               
 MR. BUS noted it is the public record.  The public record is                  
 available to everyone who spends the time to look it up.  Mr. Bus             
 urged the committee to look at how different counties do it in the            
 Lower 48.  He said he feels it will enhance commerce.                         
                                                                               
 Number 1088                                                                   
                                                                               
 CHAIRMAN ROKEBERG stated the committee would be issuing a letter on           
 this issue.  He suggested the department return to the bargaining             
 table so there isn't a crises that could interrupt the commerce of            
 the activities of the state of Alaska.                                        
                                                                               
 MR. BUS said he would be happy to talk to Mr. Motznik and the                 
 committee members.                                                            
                                                                               
 CHAIRMAN ROKEBERG closed the oversight hearing.                               
                                                                               
 CSSB 88(L&C) - BOARD OF PUBLIC ACCOUNTANCY                                    
                                                                               
 Number 1122                                                                   
                                                                               
 CHAIRMAN ROKEBERG announced the committee would address CSSB
 88(L&C), "An Act relating to the Board of Public Accountancy;                 
 extending the termination date of the Board of Public Accountancy;            
 and providing for an effective date."  He noted the committee has             
 addressed HB 140, which is the same bill.  He said he would                   
 entertain a motion to move CSSB 88(L&C).                                      
                                                                               
 REPRESENTATIVE COWDERY made a motion to move CSSB 88(L&C), Version            
 E, out of committee with a zero fiscal note and individual                    
 recommendations.  Hearing no objection, CSSB 88(L&C) moved out of             
 the House Labor and Commerce Standing Committee.                              
                                                                               
 HB 203 - ACTIONS FOR UNLAWFUL TRADE PRACTICES                                 
                                                                               
 Number 1190                                                                   
                                                                               
 CHAIRMAN ROKEBERG said the next order of business would be HB 203             
 "An Act relating to actions for unlawful trade practices."                    
                                                                               
 REPRESENTATIVE FRED DYSON, sponsor of HB 203, indicated he has                
 supplied the committee members with a committee substitute dated              
 April 24, 1997.  He said he introduced the bill because of concerns           
 from people he has spoken with who are struggling because of                  
 consumer business fraud.  The Office of the Attorney General isn't            
 currently a part of this business and the Better Business Bureau              
 has limited capacity.  He stated when the bill was previously                 
 heard, several concerns came up.  He referred the committee to page           
 2 of the committee substitute.                                                
                                                                               
 CHAIRMAN ROKEBERG asked if the committee substitute is Version L.             
                                                                               
 REPRESENTATIVE DYSON indicated that was correct.                              
                                                                               
 Number 1300                                                                   
                                                                               
 REPRESENTATIVE HUDSON moved to adopt CSHB 203(L&C), dated 4/24/97,            
 Version L, for the purpose of discussion.                                     
                                                                               
 CHAIRMAN ROKEBERG asked if there was an objection.  Hearing none,             
 CSHB 203(L&C) was before the committee.                                       
                                                                               
 Number 1320                                                                   
                                                                               
 REPRESENTATIVE DYSON referred the committee to page 2, lines 29               
 through 31, and said he believes this wording takes care of                   
 concerns brought up by Chairman Rokeberg.                                     
                                                                               
 CHAIRMAN ROKEBERG said a subsection (b) was added to correspond               
 with the award that would be made to the plaintiff in subsection              
 (a).                                                                          
                                                                               
 REPRESENTATIVE DYSON said that is correct.  He said it levels the             
 playing field in that if the cause of action isn't justified, then            
 the defendant has a recovery mechanism.  Mr. Dyson said he has                
 thought about how someone could use this kind of an action in a               
 competitive advantage.  He said he added subparagraph (c) on page             
 3, "In an action brought under AS 45.50.471 - 45.50.561, if the               
 court finds that the action was brought by the plaintiff to obtain            
 a competitive business advantage and the plaintiff is not the                 
 prevailing party, the court shall award the defendant costs as                
 provided by court rule, full reasonable attorney fees at the                  
 prevailing reasonable rate, and any damages suffered by the                   
 defendant as a result of the plaintiff's allegations."                        
 Representative Dyson noted he doesn't remember anybody on the                 
 committee directing him to do something with this paragraph.  He              
 said it seems reasonable to him.                                              
                                                                               
 CHAIRMAN ROKEBERG referred to the term "by court rule" and asked if           
 this is rule 82 or if there is another court rule that would apply.           
                                                                               
 Number 1475                                                                   
                                                                               
 REPRESENTATIVE ERIC CROFT came before the committee.  He referred             
 to full cost and said it is understanding from the drafter of the             
 bill that there is a question about whether that requires changing            
 a court rule.  There is a difference of opinion as to whether the             
 court rule on cost needed to be changed.  He said rather than                 
 getting into the area, they just said you are due costs as defined            
 by the applicable court rule to avoid conflict.  Representative               
 Croft stated, "I read the court rules as saying anytime you are               
 entitle to them, this is what we mean by costs, but not really                
 getting into the area of when you are or not entitled to them.  But           
 it's a little ambiguous, so they thought that wording would avoid             
 us getting conflict...."                                                      
                                                                               
 Number 1546                                                                   
                                                                               
 CATE REMME, Consumer Advocate, Alaska Public Interest Research                
 Group, testified via teleconference from Anchorage.  She said she             
 was asked by her membership to come and testify in support of the             
 legislation which would put consumer protection language back in              
 the state of Alaska.  She said she would like to compliment Daveed            
 Schwartz for his hard work and also for HB 142.  Ms. Remme stated             
 consumers crime is a serious crime and affects people's lives.                
 There is a tendency to treat this crime as white collar crime and             
 not as seriously as people who are victimized by violence.                    
                                                                               
 MS. REMME indicated earlier in the week, she met with some high               
 school students and their consensus is that the state of Alaska               
 does not prosecute white collar crime in the same way that they               
 prosecute crimes that are committed with weapons or where violence            
 was involved.  The students do realize that in many cases that                
 people's lives are seriously affected and, in some cases, destroyed           
 by being conned.  She said she receives many calls asking what                
 people can do, if there is a law or is there consumer protection in           
 the attorney generals office.  Ms. Remme said she thinks that                 
 because of the (indisc.) laws, regardless of their profession or              
 their class of economic status, we should recognize the presence of           
 a legal force from the Attorney General's office.  That is                    
 absolutely mandatory in deterring this type of crime.  Ms. Remme              
 said her organization has produced a report on consumer protection            
 titled "The Alaska Perspective," written by Dr. Jammie Campbell and           
 indicated she would be happy to send a copy of it to the committee.           
 She noted it contains statistics gathered from other states that              
 have consumer protection.                                                     
                                                                               
 Number 1756                                                                   
                                                                               
 REPRESENTATIVE HUDSON asked Representative Dyson if the CS includes           
 the amendments the committee members have.                                    
                                                                               
 REPRESENTATIVE DYSON indicated the CS doesn't include the                     
 amendments.  He noted the amendments are in response to a concern             
 Representative Ryan brought up.                                               
                                                                               
 CHAIRMAN ROKEBERG said the committee would continue with testimony            
 and then address the amendments.                                              
                                                                               
 Number 1798                                                                   
                                                                               
 PEGGY MULLIGAN, Capital City Task Force of the American Association           
 of Retired Persons, came before the committee to testify.  She                
 stated she testified a couple of weeks ago in support of the                  
 measure and she also supports the committee substitute.                       
                                                                               
 REPRESENTATIVE DYSON asked Ms. Mulligan if it is her sense with the           
 seniors that they are being approached and preyed upon by                     
 predators.                                                                    
                                                                               
 MS. MULLIGAN indicated she believes this is taking place.  She said           
 her organization's priority for the summer is to put out knowledge            
 about telemarketing fraud.  She said they feel they can educate the           
 public about consumer fraud.  Ms. Mulligan stated she definitely              
 believes there is a problem.                                                  
                                                                               
 Number 1876                                                                   
                                                                               
 VERA GAZAWAY, Older Person's Action Group, testified from Juneau.             
 She said her organization also supports the committee substitute.             
                                                                               
 CHAIRMAN ROKEBERG suggested moving the proposed amendment for the             
 purpose of discussion.                                                        
                                                                               
 Number 1918                                                                   
                                                                               
 REPRESENTATIVE COWDERY made a motion to move the following                    
 Amendment 1 for the purpose of discussion:                                    
                                                                               
      Page 1, lines 9 - 10:                                                    
           Delete ",or who is otherwise aggrieved,"                            
                                                                               
      Page 2, lines 3 - 7:                                                     
           Delete all material.                                                
                                                                               
      Renumber the following bill sections accordingly.                        
                                                                               
 CHAIRMAN ROKEBERG clarified the amendment would delete subsection             
 (f) of AS 45.50.531.                                                          
                                                                               
 REPRESENTATIVE DYSON informed the committee members this was a                
 concern that was raised.  The amendment deletes the wording "or who           
 is otherwise aggrieved."  It takes out any award of damages for               
 anything subjective.  He said, "It is not a material damage,                  
 quantifiable, then it's eliminated."  Representative said page 2              
 lines 3 through 7 would delete Section 3.  It eliminates the                  
 subparagraph (f) to make it consistent.                                       
                                                                               
 Number 2116                                                                   
                                                                               
 DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section,              
 Civil Division, Department of Law, was next to testify via                    
 teleconference from Anchorage.  He noted he doesn't have a copy of            
 the committee substitute and said he is at a loss to give specific            
 feedback.  He said with respect to what has been discussed                    
 regarding the attorney fees, it sounds like the section addresses             
 the concerns that were brought up previously.                                 
                                                                               
 CHAIRMAN ROKEBERG referred to Section 45.50.537 and said a                    
 subsection (b) has been added.  He continued to read the section,             
 "In an action brought under AS 45.50.471 - 45.50.561, the court               
 shall award the defendant costs as provided by court rule and full            
 reasonable attorney fees at the prevailing reasonable rate if the             
 action is found to be frivolous."  Chairman Rokeberg referred to              
 there being no vexatious litigation statute, he asked if there is             
 a common law definition of frivolous.                                         
                                                                               
 MR. SCHWARTZ explained rule 82, in the Alaska Rules of Civil                  
 Procedure, does contain a subsection dealing with vexatious and               
 frivolous litigation.  Judges make this kind of determination all             
 the time under rule 82.  He said he believes case law discusses               
 numerous instances in which litigation has been found to be                   
 vexatious or frivolous.  Mr. Schwartz said he thinks there is                 
 common understanding in the superior, district and supreme court of           
 Alaska as to what constitutes vexatious or frivolous litigation.              
 He said he thinks it is a determination the courts make on a                  
 routine basis whether or not the litigation is frivolous in order             
 to assess rule 82 fees at this time.  He stated he doesn't believe            
 it will be a new concept at all.                                              
                                                                               
 Number 2207                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "In regard to the terms used in what you              
 have in the original bill the under attorney fees, costs and                  
 damages, the terms `by court rule,' which is used as it relates to            
 the defendant also now, would that be rule 82 or are we talking               
 about the full costs?  We've got the court rule and `for reasonable           
 attorney fees.'  Now what are we talking about here?"                         
                                                                               
 Number 2291                                                                   
                                                                               
 MR. SCHWARTZ said he believes under rule 82, a court could rule for           
 reasonable attorney fees.                                                     
                                                                               
 CHAIRMAN ROKEBERG asked if it wouldn't be a percentage of the fees.           
                                                                               
 MR. SCHWARTZ said that is a routine award under rule 82.  It is               
 generally 20 percent of attorney fees, but rule 82 also allows a              
 court to adjust the attorney fees depending on the circumstances.             
                                                                               
 CHAIRMAN ROKEBERG asked Representative Dyson if that was his                  
 intent.                                                                       
                                                                               
 REPRESENTATIVE DYSON said, "Our intent was, Mr. Chair, that the               
 defendant who prevails in a course of action..."                              
                                                                               
 TAPE 97-57, SIDE A                                                            
 Number 001                                                                    
                                                                               
 REPRESENTATIVE DYSON asked Mr. Schwartz if there is any way the               
 language could be strengthened to accomplish their purpose.                   
                                                                               
 MR. SCHWARTZ responded he thinks the existing language does provide           
 the level paying field that he understood the committee wanted in             
 the bill from the discussion at the prior hearing on the bill.                
                                                                               
 Number 061                                                                    
                                                                               
 REPRESENTATIVE CROFT said there was a concern about the wording               
 "costs by court rule."  He said what the drafter told him was that            
 was necessary to invoke and not contradict rule 68 defining what              
 court costs are.                                                              
                                                                               
 MR. SCHWARTZ indicated he was confused earlier.  He apologized and            
 said he believes that appraised by court rule actually applies to             
 the award of costs and the award of costs is addressed in Alaska              
 Civil Rules of Procedure number 79.  Full costs are routinely                 
 awarded regardless of whether you've got a rule 82 attorney fee               
 situation or a full reasonable attorney fee situation.  He said the           
 "by court rule" phrase refers to the award of costs under rule 79             
 and does not relate to the award of full attorney fees.                       
                                                                               
 Number 170                                                                    
                                                                               
 CHAIRMAN ROKEBERG said there was no further witnesses to testify              
 and closed the public hearing.  He asked if the sponsor agrees with           
 the intent of Amendment 1.                                                    
                                                                               
 REPRESENTATIVE DYSON indicated he does agree.                                 
                                                                               
 Number 187                                                                    
                                                                               
 REPRESENTATIVE HUDSON moved to adopt Amendment 1.                             
                                                                               
 CHAIRMAN ROKEBERG asked if there was an objection.  Hearing none,             
 Amendment 1 was adopted.                                                      
                                                                               
 Number 209                                                                    
                                                                               
 REPRESENTATIVE HUDSON moved and asked unanimous consent to move               
 CSHB 203, Version L, as amended, out of committee with individual             
 recommendations and a zero fiscal note.                                       
                                                                               
 CHAIRMAN ROKEBERG asked if there was an objection.  Hearing none,             
 CSHB 203(L&C) moved out of the House Labor and Commerce Standing              
 Committee.                                                                    
                                                                               
 Number 257                                                                    
                                                                               
 CHAIRMAN ROKEBERG called for a brief at-ease at 5:11 p.m.  He                 
 called the meeting back to order at 5:13 p.m.                                 
                                                                               
 SSHB 142 - BUSINESS PRACTICE REGULATIONS                                      
                                                                               
 Number 267                                                                    
                                                                               
 CHAIRMAN ROKEBERG announced the next order of business would be               
 SSHB 142, "An Act relating to the sale or transfer of new or used             
 motor vehicles; relating to the confidentiality of certain                    
 information related to attorney general investigations of unlawful            
 trade practices and antitrust activities; establishing additional             
 unlawful trade practices; relating to the exemptions from                     
 telephonic solicitation regulation; regulating the sale of business           
 opportunities; amending Rules 4 and 73, Alaska Rules of Civil                 
 Procedure; and providing for an effective date."                              
                                                                               
 Number 315                                                                    
                                                                               
 REPRESENTATIVE GARY DAVIS, prime sponsor of SSHB 142, came forward            
 to explain the bill.  He informed the committee members the bill              
 was initiated, drafted and introduced quite awhile ago.  He said              
 the reason a request to hear the bill was just recently submitted             
 to the committee was because there has been a lot of work done                
 between him and the department to get a clean bill.  He informed              
 the committee they ran into complications with the Automobile                 
 Dealers Association.  He indicated he attended the Automobile                 
 Dealers Association meeting held in Juneau.  Representative Davis             
 stated he understands a lot of the association's concerns and also            
 agrees with a lot of their concerns as indicated in the sponsor               
 statement.  A large portion of the test in the bill relates to used           
 car dealers and how they expose problems that may exist on a                  
 vehicle.  At the Automobile Dealers Association meeting, the                  
 association indicated that over the years there has been numerous             
 pieces of legislation that deal with the used car dealers.  Of                
 course a lot of people will associate used car dealers reputations            
 right along with politicians.  So there is a lot of public concern            
 with how things are dealt with.                                               
                                                                               
 REPRESENTATIVE DAVIS said it would be his recommendation to                   
 simplify the bill and delete Section 2, that deals with public                
 disclosure.  This section is questionable and probably needs some             
 work.  He indicated he thinks the department will agree with the              
 change.  Representative Davis said, "Section 2 of the bill that               
 deals with problems with the vehicles that not only the used car              
 dealers, but new car dealers and manufacturers must convey, what is           
 felt in a reasonable fashion in the bill, to the consuming public."           
                                                                               
 Number 576                                                                    
                                                                               
 REPRESENTATIVE DAVIS pointed out Section 1 deals with the                     
 inspection/emissions certification that is required in Anchorage              
 and Fairbanks.  There have been some problems.  Some people would             
 say significant problems and others would say they are relatively             
 minor problems.  He indicated there are people to testify.                    
                                                                               
 REPRESENTATIVE DAVIS said, "The other sections of the bill relate             
 to some consumer problems that have come up in court cases and also           
 some tweaking of recent legislation that the Consumer Affairs                 
 Section of the Department of Law, I believe is how it can be                  
 presented - I'm not exactly who - what Daveed Schwartz office is              
 called, but they've come across some problems that I believe are              
 just some housekeeping measures in the bill relating to catalog               
 sales.  And our telemarketing legislation that we passed, I believe           
 last year, they found a loophole in the catalog exemption sales or            
 it's not addressed properly.  That's being addressed in here.  It's           
 just closing a loophole there.  Then in some recent situations                
 around the state with some of these business opportunity sales                
 people that come in and give some high power speeches in how to go            
 into business and make a quick buck and they're the ones making the           
 quick buck and there isn't much chance for anybody else.  So that's           
 being addressed also.  So of course having being familiar with the            
 sections, I feel there is just some technicalities being cleaned              
 up, but of course I hope I can convince the committee of the same             
 and other testifiers of the same."                                            
                                                                               
 Number 745                                                                    
                                                                               
 REPRESENTATIVE COWDERY asked if the legislation would also pertain            
 to private transactions.                                                      
                                                                               
 REPRESENTATIVE DAVIS said the same question came up by the                    
 Automobile Dealers Association.  He noted that is not addressed in            
 Section 2.  It should be addressed if that section stays in the               
 bill.                                                                         
                                                                               
 Number 780                                                                    
                                                                               
 CHAIRMAN ROKEBERG said he would like to take public testimony.  He            
 noted it is his intention to move the bill to a subcommittee for              
 interim study as it is a very broad and major bill dealing with               
 consumer protection in other areas.                                           
                                                                               
 CHAIRMAN ROKEBERG said, "As it relates to Section 2, as suggested             
 by the sponsor, it is the desire of the chair right now to leave              
 that in the bill because we want to review to see, if in all                  
 probability reviewing it, that perhaps another bill would be                  
 generated out of it to make sure that those concerns are properly             
 covered in whatever vehicle.  We'll be working with the bill                  
 sponsor on that."                                                             
                                                                               
 Number 865                                                                    
                                                                               
 ANGELA ARD testified via teleconference on behalf of herself as a             
 citizen of Anchorage.  She read the following statement into the              
 record:                                                                       
                                                                               
 "On July 29, 1996, I purchased an $11,000 GMC Sierra from a well-             
 known Anchorage known Anchorage used auto dealer.  During                     
 negotiations, I indicated that I would like to take the vehicle to            
 a mechanic for an inspection before purchasing it.  I was told by             
 the salesman that an inspection wasn't necessary and the truck was            
 in great shape.  I proceeded to close the deal.  The following                
 morning, upon attempting to start the truck, it made a horrible               
 grinding noise and had to be towed back to the dealership for                 
 repairs.  I was informed by the dealership that the truck would not           
 pass I/M certification and had to have part of the engine repaired            
 because of extensive smoke damage.  Had I known that this $11,000             
 vehicle would not pass I/M certification, I never would have                  
 purchased it.  The dealership, however, required me to sign a                 
 disclosure guaranteeing that my trade-in auto would pass I/M                  
 certification, and that if it failed, I would pay to fix it.  They            
 offered no such guarantee on the truck they were selling me.                  
                                                                               
 "After the dealership made the necessary repairs to the truck, I              
 took it to a mechanic for an inspection and learned that the truck            
 had been in a prior wreck and had no air conditioning.  I had asked           
 a mechanic at the dealership why the air wasn't working, and he               
 told me to, quote, let it run a little longer.  In actuality, the             
 entire air conditioning system had been removed from the vehicle              
 because of the wreck it had suffered.                                         
                                                                               
 "After failing to find me a decent vehicle, I asked the dealership            
 to unwind the deal.  They refused.  I finally sought legal                    
 assistance, at which time they unwound the deal.                              
                                                                               
 "It was very frustrating and disappointing to be mislead and taken            
 advantage of by this auto dealership.  If this bill were in effect            
 when I was in the market for purchasing a used vehicle, it would              
 have saved me from purchasing this `lemon.'"                                  
                                                                               
 Number 986                                                                    
                                                                               
 CHAIRMAN ROKEBERG said Ms. Ard's fact pattern is very similar to              
 something he heard last session.                                              
                                                                               
 REPRESENTATIVE COWDERY asked Ms. Ard if she bought the vehicle from           
 a dealer in Anchorage.                                                        
                                                                               
 MS. ARD said that is correct.                                                 
                                                                               
 REPRESENTATIVE COWDERY asked if he was right in saying the                    
 dealership wouldn't make the deal good until after she sought legal           
 assistance.                                                                   
                                                                               
 MS. ARD responded that was correct.  She noted several times they             
 tried to give another vehicle which they keep increasing in price.            
 She stated she had those vehicles checked out and they had several            
 mechanical problems.  She said she spoke to Mr. Schwartz and he               
 spoke and wrote a letter to the dealership.  The dealership then              
 agreed to unwind the deal after that.                                         
                                                                               
 REPRESENTATIVE COWDERY questioned if the dealer is still in                   
 business.                                                                     
                                                                               
 MS. ARD indicated they are still in business.                                 
                                                                               
 Number 1077                                                                   
                                                                               
 CATE REMME, Consumer Advocate, Alaska Public Interest Research                
 Group, testified via teleconference from Anchorage in support of              
 SSHB 142.  She stated he has the same feelings as Ms. Ard.  She               
 referred to Representative Davis' discussion regarding removing               
 Section 2 and said the whole concept of consumer protection                   
 revolves around the notion consumers should get what they paid for,           
 be aware of the contents of the items when purchased, be guaranteed           
 the safety of those products and be aware of any policies and                 
 practices affecting the finances of their private lives and have              
 recourse for breaches of any of these principles.  Ms. Remme said             
 without legal recourse, these consumer issues are very often                  
 unresolved.                                                                   
                                                                               
 REPRESENTATIVE COWDERY informed the committee he owns four                    
 vehicles.  He said he sells them when he starts seeing that the               
 repair bills increase, but there isn't anything particularly wrong            
 at the time.  Representative Cowdery asked Ms. Remme if the                   
 legislature should address this kind of a scenario towards the                
 private section.                                                              
                                                                               
 MS. REMME said it is her understanding that there is no                       
 jurisdiction over private sale.  One of the major complaints they             
 receive is dealers, who are posing as private citizens, sell                  
 previously wrecked vehicles that have been totaled by insurance               
 companies.  They create very dangerous driving situations.  She               
 said she doesn't have answer to Representative Cowdery's question,            
 but currently there is no jurisdiction that addresses that.                   
                                                                               
 Number 1183                                                                   
                                                                               
 REPRESENTATIVE DAVIS said he would like to assure Ms. Remme if                
 Section 2 does get deleted from the bill, the issue will still be             
 looked at, but may not be a part of this legislation.                         
                                                                               
 PEGGY MULLIGAN, Capital City Task Force of the American Association           
 of Retired Persons, testifying from Juneau, stated she thinks her             
 organization will probably support the legislation.  Ms. Mulligan             
 stated she would like to wait to testify until the bill comes out             
 of the subcommittee.                                                          
                                                                               
 Number 1225                                                                   
                                                                               
 CHRYSTAL SMITH, Legislative Liaison, Civil Division, Department of            
 Law, came before the committee.  She stated she would like to                 
 express the division's support for SSHB 142.  Ms. Smith said she              
 reviewed the bill from the view of a consumer.  She stated she                
 would like to make it clear that nothing in the bill is intended to           
 harm honest straight forward business people.  It is her belief               
 that people who are in business in Alaska are doing it according to           
 the rules.  If there are bad actors in a profession, it harms those           
 who are not bad actors.                                                       
                                                                               
 MS. SMITH said the bill has five parts.  One is the emissions                 
 certificate that would let a person know what the status is before            
 a sales contract is signed.  She noted that cleans up legislation             
 which was passed in 1992.                                                     
                                                                               
 MS. SMITH referred to Section 2 and said it deals with                        
 confidentiality of investigative records for consumer protection              
 antitrust cases.                                                              
                                                                               
 MS. SMITH referred to the telemarketing and said there has been               
 problems with people saying that they were exempt from the                    
 telemarketing registration requirement because they were mail order           
 catalog people.  Ms. Smith stated there are certain requirements              
 for being a legitimate mail order business.                                   
                                                                               
 MS. SMITH referred to the question of business opportunities and              
 said, "I guess it wasn't one of you although I'm sure you have all            
 had this experience with your constituents, we did get a call                 
 recently - somebody saying - a legislator saying `Well what can we            
 do about these, quote, business opportunities?'  The one that I               
 think Representative Davis said they're making more money off them            
 then the folks we get taken in by the deals.  So there is a                   
 comprehensive statute included in this bill that would require                
 registration of business opportunity people."  Ms. Smith indicated            
 the department would also would be willing to work on the bill over           
 the interim.                                                                  
                                                                               
 Number 1404                                                                   
                                                                               
 REPRESENTATIVE COWDERY said when he was a legislator in the 1980s,            
 the "lemon law" was established.  He asked if SSHB 142 would impact           
 that law.                                                                     
                                                                               
 MS. SMITH said it is her understanding that this legislation would            
 supplement the "lemon law."  She noted that as she understands, the           
 "lemon law" is for new vehicles.                                              
                                                                               
 Number 1443                                                                   
                                                                               
 REPRESENTATIVE RYAN said when he was a young man, there were many             
 jokes going around about the fellow that bought the horse.  He said           
 it seems to him it has now moved to automobiles.  You have to                 
 really be careful of what you're buying because if you don't, you             
 could get stuck with something.  He asked where the responsibility            
 comes on the person who is laying their money down.                           
                                                                               
 MS. SMITH informed Representative Ryan that she just bought a used            
 car.  She went to every dealer in Juneau.  She said she felt                  
 uncomfortable enough in that she went to her mechanic and asked him           
 to help her find a used car because she believes if a person                  
 doesn't know something in a specific area, you can get taken                  
 advantage of.                                                                 
                                                                               
 Number 1586                                                                   
                                                                               
 DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section,              
 Civil Division, Department of Law, testified via teleconference               
 from Anchorage.  He said he would give technical comments on the              
 legislation when it comes up in the subcommittee.  Mr. Schwartz               
 said he believes Ms. Smith has articulated the philosophy behind              
 the Department of Law's interest in supporting the legislation.               
                                                                               
 MR. SCHWARTZ explained Section 1 ensures that a person who is                 
 buying a used car, that requires an auto emissions inspection, is             
 going to be notified up front prior to the sale of the emissions of           
 the status of the vehicle.  He said Ms. Ard's testimony illustrates           
 the need for Section 1.  Mr. Schwartz noted he personally deals               
 with the Anchorage I/M Office frequently regarding problems and               
 they have told him that on an average, over a year, they receive              
 about ten complaints per month from people who buy a used car from            
 a used car dealer.  They find out after they have obligated                   
 themselves to the sale that the car will not pass I/M and they will           
 have to invest quite a bit of additional funds to get it to pass              
 I/M so they can register it and legally drive the vehicle.                    
                                                                               
 Number 1659                                                                   
                                                                               
 MR. SCHWARTZ referred to Section 2 and said there are all kinds of            
 situations that arise in terms of the failure to disclose damage              
 that used car dealers may know that a vehicle has.  The Office of             
 the Attorney General prevailed in a three week jury trial against             
 a major Anchorage auto dealer, who was found to be liable on 18 of            
 22 counts of civil fraud in that he failed to disclose that 8                 
 vehicles that had been sold were previously wrecked and totalled.             
 He noted some of the vehicles were extreme safety hazards.                    
                                                                               
 MR. SCHWARTZ referred to Sections 4, 5 and 6 and said these                   
 sections clarify the existing state of affairs with regard to the             
 confidentiality in the investigative records in the Office of the             
 Attorney General for consumer protection antitrust investigations.            
 It would ensure sure that businesses that have alleged to have                
 violated the law don't have their names (indisc.) about simply                
 because there are allegations that may turn out to be unfounded.              
 It also ensure that witnesses who may want to testify for or                  
 against business that have been alleged to have violated the law              
 will not be subjected to a lot of publicity simply because they               
 have offered testimony to the Office of the Attorney General.                 
                                                                               
 MR. SCHWARTZ explained Section 7 deals with clarification of the              
 existing exemptions, the provision that deals with the mail order             
 catalog exemption to the telemarket or registration law.  He said             
 there was a case involving a San Diego telemarketer who had a                 
 catalog that they only distributed in San Diego, but they were                
 telemarketing to Alaskans.  They refused to register under our 1993           
 Telemarketing Registration Act.  The Alaska supreme court agreed in           
 January of this year that the mail order catalog exemption did not            
 cover that particular instance.  He said they are now trying to               
 clarify the existing statute to make sure that everyone knows what            
 it takes to qualify as a mail order catalog operation and,                    
 therefore, be exempt from telemarketing registration.                         
                                                                               
 Number 1774                                                                   
                                                                               
 MR. SCHWARTZ informed the committee that Section 8 is the                     
 Comprehensive Business Opportunities Disclosure Act legislation               
 which will get primarily at the Lower 48 business opportunity                 
 sellers who largely work with sales kits/business kits to Alaskans,           
 particularly around permanent fund dividend time.  They then use              
 the sale of the kits, which usually range anywhere from $500 to               
 several thousands of dollars, as an entree to sell Alaskans even              
 more services that range up to $10,000 to $15,000 per year.  This             
 would require registration, disclosure, bonding and other                     
 protections for people who have an entrepreneurial spirit, but                
 really get caught up in the excitement and high pressure sales that           
 occur in the large hotel ballroom where most of these sales of                
 business opportunity (indisc.) are pitched.                                   
                                                                               
 Number 1826                                                                   
                                                                               
 CHAIRMAN ROKEBERG said, "I've got a really significant concern here           
 because this committee is in the process of rewriting the entire              
 real estate statute, if I can only recall the title right now, but            
 business opportunities are something that, in part but not                    
 exclusively, have been handled by real estate brokers.  And I                 
 appreciate at what you're getting at here - those folks who                   
 advertise on late night T.V. for these seminars I guess is the                
 thrust of your thing here.  I'm kind of concerned about the sweep             
 here and what you're getting into as it relates to some of these              
 other things and, in essence, creates some type of kinds of a                 
 defacto licensure, if you will, or something going here that might            
 more properly be under another title or something.  What you're               
 getting at is -- are you endeavoring to prohibit these types of               
 sales activities, regulate them or infringe on real estate brokers?           
 What's the thrust here?"                                                      
                                                                               
 MR. SCHWARTZ indicated he is not trying to do that at all.  The               
 bill actually has a series of exemptions and tend to be exact.  He            
 noted that they can be found on page 17, line 8 through page 18,              
 line 11.  He pointed out the tenth exemption deals with if the                
 seller or the buyer is licensed as a real estate broker, associate            
 real estate broker or real estate sales person under Title 8 of the           
 Alaska statutes and the sales or offers regulated by Title 8.  He             
 said it is not their intent to create a new licensure for real                
 estate agents, brokers or other people already regulated.  Mr.                
 Schwartz said this whole registration scheme is modeled after the             
 existing telemarketing registration law.  The two policies driving            
 the exemptions in the telemarketing law and in this bill for                  
 business opportunity registration would be that there would be no             
 attempt to require registration of those activities that are                  
 otherwise regulated by statute in a similar way.  Also, there would           
 be no attempt to require registration of activities that don't seem           
 to pose a problem.  He noted the last thing the Department of Law             
 wants to do is to duplicate existing registration and regulations.            
                                                                               
 Number 1951                                                                   
                                                                               
 CHAIRMAN ROKEBERG questioned which department they register with.             
                                                                               
 MR. SCHWARTZ referred to telemarketing and said the bill would                
 require registration with the Office of the Attorney General.                 
                                                                               
 CHAIRMAN ROKEBERG asked if it is correct to say that if you weren't           
 a member of the Bar or if you weren't a licensed real estate                  
 broker, you would have to registered with the Office of the                   
 Attorney General to do something like selling businesses.                     
                                                                               
 MR. SCHWARTZ responded that there are some exemptions, but he would           
 have go over each and every exemption with the committee members.             
 He said, "After you get past the exemptions, what this bill really            
 gets at is the kind of sale where it's advertised on a late night             
 T.V. info commercial and what they're selling are T-shirt                     
 businesses, 900 number businesses, distress merchandise businesses            
 for anywhere from $500 to $3,000 or more and it's that kind of sale           
 that this registration is aimed at rather than activities that are            
 already regulated or don't seem to pose a problem.  One exemption,            
 for example, is the sale of a business opportunity to an ongoing              
 business, just as an example of the many (indisc.) exemptions to              
 narrow the scope of this registration requirement.  The goal here             
 would be to really target the problem."                                       
                                                                               
 Number 2019                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked if it is a new Chapter 66.                            
                                                                               
 MR. SCHWARTZ responded it would be a new chapter in the Consumer              
 Protection Act.                                                               
                                                                               
 CHAIRMAN ROKEBERG asked if the areas about down payments, escrow              
 accounts only relates to this particular chapter.                             
                                                                               
 MR. SCHWARTZ responded that was correct.  He continued by saying              
 Section 8 goes from page 6, line 31, to page 21, line 8.  Mr.                 
 Schwartz said he would answer any questions the committee may have.           
                                                                               
 Number 2073                                                                   
                                                                               
 CHAIRMAN ROKEBERG said it is his intention to appoint a                       
 subcommittee to look into the legislation, SSHB 142, during the               
 interim.  He then appointed himself, Representative Ryan and                  
 Representative Brice to the subcommittee.  He closed the public               
 hearing.                                                                      
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 2118                                                                   
                                                                               
 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing             
 Committee meeting at 5:44 p.m.                                                
                                                                               

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