Legislature(1999 - 2000)

03/15/1999 03:15 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
    HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                                 
                   March 15, 1999                                                                                               
                     3:15 p.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Norman Rokeberg, Chairman                                                                                        
Representative Andrew Halcro, Vice Chairman                                                                                     
Representative Jerry Sanders                                                                                                    
Representative Lisa Murkowski                                                                                                   
Representative John Harris                                                                                                      
Representative Tom Brice                                                                                                        
Representative Sharon Cissna                                                                                                    
MEMBERS ABSENT                                                                                                                  
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                              
HOUSE BILL NO. 123                                                                                                              
"An Act exempting individuals who provide ski patrol services on a                                                              
voluntary basis from the requirement for payment of minimum wage                                                                
and overtime compensation; and providing for an effective date."                                                                
     - MOVED CSHB 123(L&C) OUT OF COMMITTEE                                                                                     
* HOUSE BILL NO. 128                                                                                                            
"An Act relating to lease-purchases of personal property."                                                                      
     - MOVED HB 128 OUT OF COMMITTEE                                                                                            
* HOUSE BILL NO. 110                                                                                                            
"An Act relating to the sale, offer to sell, and labeling of fluid                                                              
milk, meat, and meat products."                                                                                                 
     - HEARD AND HELD                                                                                                           
* HOUSE BILL NO. 17                                                                                                             
"An Act relating to the calculation of employee contributions and                                                               
credited service in the public employees' retirement system for                                                                 
noncertificated employees of school districts, regional educational                                                             
attendance areas, the Alaska Vocational Technical Center, and the                                                               
state boarding schools; and providing for an effective date."                                                                   
     - MOVED HB 17 OUT OF COMMITTEE                                                                                             
(* First public hearing)                                                                                                        
PREVIOUS ACTION                                                                                                                 
BILL: HB 123                                                                                                                    
SHORT TITLE: EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE                                                                           
SPONSOR(S): LABOR & COMMERCE BY REQUEST                                                                                         
Jrn-Date    Jrn-Page           Action                                                                                           
 3/03/99       342     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/03/99       342     (H)  L&C                                                                                                 
 3/10/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/10/99               (H)  HEARD AND HELD                                                                                      
 3/12/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/15/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
BILL: HB 128                                                                                                                    
SHORT TITLE: LEASE-PURCHASE OF PERSONAL PROPERTY                                                                                
SPONSOR(S): REPRESENTATIVES(S) MURKOWSKI                                                                                        
Jrn-Date    Jrn-Page           Action                                                                                           
 3/05/99       368     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/05/99       368     (H)  L&C                                                                                                 
 3/15/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
BILL: HB 110                                                                                                                    
SHORT TITLE: SALE/LABELING OF MEAT/MILK PRODUCTS                                                                                
SPONSOR(S): REPRESENTATIVES(S) HARRIS, Dyson                                                                                    
Jrn-Date    Jrn-Page           Action                                                                                           
 2/24/99       300     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/24/99       300     (H)  L&C, JUD                                                                                            
 3/10/99       418     (H)  COSPONSOR(S): DYSON                                                                                 
 3/15/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
BILL: HB 17                                                                                                                     
SHORT TITLE: PERS CREDIT FOR NONCERTIFICATED EMPLOYEES                                                                          
SPONSOR(S): REPRESENTATIVES(S) BRICE, Phillips, Smalley, Cissna,                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/19/99        22     (H)  PREFILE RELEASED 1/8/99                                                                             
 1/19/99        22     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/19/99        22     (H)  LABOR & COMMERCE, HES                                                                               
 2/12/99       210     (H)  COSPONSOR(S): PHILLIPS                                                                              
 2/24/99       308     (H)  COSPONSOR(S): SMALLEY                                                                               
 3/03/99       350     (H)  COSPONSOR(S): CISSNA                                                                                
 3/05/99       378     (H)  COSPONSOR(S): CROFT                                                                                 
 3/12/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/12/99               (H)  L&C MEETING CANCELLED                                                                               
 3/15/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
WITNESS REGISTER                                                                                                                
DWIGHT PERKINS, Deputy Commissioner                                                                                             
Department of Labor                                                                                                             
P.O. Box 21149                                                                                                                  
Juneau, Alaska 99802-1149                                                                                                       
Telephone:  (907) 465-2700                                                                                                      
POSITION STATEMENT:  Explained Version H committee substitute for                                                               
HB 123.                                                                                                                         
BRADLEY W. DENISON, Senior Vice President                                                                                       
   and General Counsel                                                                                                          
Rent-a-Center, Incorporated                                                                                                     
5700 Tennyson Parkway                                                                                                           
Plano, Texas 75024                                                                                                              
Telephone:  (907) 972-801-1111                                                                                                  
POSITION STATEMENT:  Testified on HB 128.                                                                                       
JOHN W. WAGNER, President                                                                                                       
Far North Venture, Limited                                                                                                      
  d.b.a. Premier Rental Purchase                                                                                                
418 Third Street, Number 9                                                                                                      
Fairbanks, Alaska 99701                                                                                                         
Telephone:  (907) 456-2023                                                                                                      
POSITION STATEMENT:  Testified in support of HB 128 as owner of                                                                 
rental stores in Anchorage and Fairbanks.                                                                                       
PETE FELLMAN, Researcher                                                                                                        
  for Representative John Harris                                                                                                
Alaska State Legislature                                                                                                        
Capitol Building, Room 110                                                                                                      
Juneau, Alaska 99801                                                                                                            
Telephone:  (907) 465-4859                                                                                                      
POSITION STATEMENT:  Explained HB 110.                                                                                          
JANICE ADAIR, Director                                                                                                          
Division of Environmental Health                                                                                                
Department of Environmental Conservation                                                                                        
555 Cordova Street                                                                                                              
Anchorage, Alaska 99501                                                                                                         
Telephone:  (907) 269-7644                                                                                                      
POSITION STATEMENT:  Testified on HB 110.                                                                                       
BERT GORE, DVM, State Veterinarian                                                                                              
Animal Industries                                                                                                               
Division of Environmental Health                                                                                                
Department of Environmental Conservation                                                                                        
500 South Alaska Street, Suite A                                                                                                
Palmer, Alaska 99645-6399                                                                                                       
Telephone:  (907) 745-3236                                                                                                      
POSITION STATEMENT:  Testified on HB 110.                                                                                       
BELINDA CLIFTON, Environmental Health Officer II                                                                                
Animal Industries                                                                                                               
Division of Environmental Health                                                                                                
Department of Environmental Conservation                                                                                        
500 South Alaska Street, Suite A                                                                                                
Palmer, Alaska 99645-6399                                                                                                       
Telephone:  (907) 745-3236                                                                                                      
POSITION STATEMENT:  Testified on HB 110.                                                                                       
JULIE KOEHLER                                                                                                                   
P.O. Box 21106                                                                                                                  
Juneau, Alaska 99802-1106                                                                                                       
Telephone:  (907) 586-6070                                                                                                      
POSITION STATEMENT:  Testified in support of HB 110.                                                                            
DONALD LINTELMAN                                                                                                                
Northern Lights Dairy                                                                                                           
HC 60 Box 3300                                                                                                                  
Delta Junction, Alaska 99737                                                                                                    
Telephone:  (907) 895-4824                                                                                                      
POSITION STATEMENT:  Testified in support of HB 110.                                                                            
MARGARET CARR                                                                                                                   
3505 Woodland Park Drive                                                                                                        
Anchorage, Alaska 99517                                                                                                         
Telephone:  (907) 243-4234                                                                                                      
POSITION STATEMENT:  Testified in support of HB 110.                                                                            
MICHELLE WILSON                                                                                                                 
Alaska Conservation Voice                                                                                                       
809 West 20th Avenue                                                                                                            
Anchorage, Alaska 99503                                                                                                         
Telephone:  (907) 279-0777                                                                                                      
POSITION STATEMENT:  Testified in support of HB 110 on behalf of                                                                
the Alaska Conservation Voice and herself as a new mother.                                                                      
BOB SHAVELSON                                                                                                                   
P.O. Box 1498                                                                                                                   
Homer, Alaska 99603                                                                                                             
Telephone:  (907) 235-4068                                                                                                      
POSITION STATEMENT:  Testified in support of HB 110.                                                                            
RICK HELMS, Southeast Political Alternate                                                                                       
Board of Directors                                                                                                              
Alaska Public Employees Association/                                                                                            
   Alaska Federation of Teachers                                                                                                
P.O. Box 32912                                                                                                                  
Juneau, Alaska  99803                                                                                                           
Telephone:  (907) 789-5951                                                                                                      
POSITION STATEMENT:  Testified in support of HB 17.                                                                             
JOHN CYR, President                                                                                                             
114 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
Telephone:  (907) 586-3090                                                                                                      
POSITION STATEMENT:  Testified in support of HB 17.                                                                             
GUY BELL, Director                                                                                                              
Division of Retirement and Benefits                                                                                             
Department of Administration                                                                                                    
P.O. Box 110203                                                                                                                 
Juneau, Alaska 99811-0203                                                                                                       
Telephone:  (907) 465-4471                                                                                                      
POSITION STATEMENT:  Provided information on HB 17, brought forward                                                             
alternate wording.                                                                                                              
BARBARA HUFF TUCKNESS, Director                                                                                                 
Governmental and Legislative Affairs                                                                                            
General Teamsters Local 959 State of Alaska                                                                                     
520 East 34th Avenue                                                                                                            
Anchorage, Alaska 99503                                                                                                         
Telephone:  (907) 565-8122                                                                                                      
POSITION STATEMENT:  Testified in support of HB 17.                                                                             
ACTION NARRATIVE                                                                                                                
TAPE 99-23, SIDE A                                                                                                              
Number 0001                                                                                                                     
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                                                                    
Standing Committee meeting to order at 3:15 p.m.  Members present                                                               
at the call to order were Representatives Rokeberg, Halcro, Harris                                                              
and Brice.  Representatives Sanders, Cissna and Murkowski arrived                                                               
at 3:19 p.m., 3:21 p.m. and 3:25 p.m. respectively.                                                                             
Number 0030                                                                                                                     
CHAIRMAN ROKEBERG called a brief at-ease at 3:16 p.m.  The                                                                      
committee came back to order at 3:19 p.m.                                                                                       
HB 123 - EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE                                                                               
Number 0053                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's first order of business                                                             
is HB 123, "An Act exempting individuals who provide ski patrol                                                                 
services on a voluntary basis from the requirement for payment of                                                               
minimum wage and overtime compensation; and providing for an                                                                    
effective date."  He noted the existence of a new committee                                                                     
substitute (CS), Version H, labeled 1-LS0577\H, Cramer, 3/11/99.                                                                
The chairman stated this version comes to the committee courtesy of                                                             
the Department of Labor and he invited Mr. Perkins forward.                                                                     
Number 0101                                                                                                                     
DWIGHT PERKINS, Deputy Commissioner, Department of Labor, came                                                                  
forward.  He noted the committee's previous discussion of HB 123                                                                
[March 10, 1999] and mentioned his further discussion with Mr. Carr                                                             
of the Department of Labor's Wage and Hour section in Anchorage.                                                                
Mr. Perkins indicated the department is in favor of exempting                                                                   
volunteer ski patrollers from potential liability regarding wage                                                                
and overtime hour laws, in light of the great service they perform                                                              
and the desire expressed for this exemption by the ski patrollers                                                               
and the committee.  The department thinks an appropriate fit is in                                                              
subsection (16) [AS 23.10.055(16)] concerning emergency medical                                                                 
services, rather than as an additional subsection (17).  The                                                                    
department would encourage the committee to accept this and move                                                                
forward.  Section 2 of Version H reads:                                                                                         
     * Sec. 2.  AS 23.10.055(16) is amended to read:                                                                            
          (16) an individual who                                                                                                
               (A) provides emergency medical services only on                                                                  
     a voluntary basis;                                                                                                         
               (B) [OR AN INDIVIDUAL WHO] serves with a                                                                         
     full-time fire department only on a voluntary basis; or                                                                    
               (C) provides ski patrol services on a voluntary                                                                  
MR. PERKINS commented, in addition, the department has broadened                                                                
the entire issue regarding nonprofits in the language before the                                                                
committee [Section 1, subsection (6)].  He indicated he believes                                                                
Version H both accomplishes the department's goals regarding the                                                                
problem of nonprofits and assists with the ski patrol issue.                                                                    
Number 0211                                                                                                                     
CHAIRMAN ROKEBERG confirmed the language in subsection (6) is                                                                   
unchanged from the previous version [Version G], and the ski                                                                    
patrollers have been added as a new portion rather than as a new                                                                
subsection.  Chairman Rokeberg mentioned he felt particularly proud                                                             
having this bill in hand after events the previous Friday at                                                                    
Alyeska Ski Resort [avalanche, March 12, 1999].  The chairman asked                                                             
if there were further questions or comments, noting he would                                                                    
entertain a motion.                                                                                                             
REPRESENTATIVE HARRIS confirmed from Mr. Perkins that the                                                                       
Department of Labor is in full support of the legislation.                                                                      
Number 0287                                                                                                                     
CHAIRMAN ROKEBERG confirmed Mr. Ross in Anchorage has seen Version                                                              
H of HB 123 and finds it acceptable [Chris Ross, Alaska Division                                                                
Director, National Ski Patrol].  Chairman Rokeberg confirmed Mr.                                                                
Carr in Anchorage [Department of Labor] did not feel the need to                                                                
testify.  Confirming there was no other testimony, the chairman                                                                 
closed the public hearing on HB 123.                                                                                            
Number 0359                                                                                                                     
REPRESENTATIVE HALCRO made a motion to move the proposed CS for HB
123 out of committee with the attached zero fiscal note and                                                                     
individual recommendations.  There being objections, CSHB 123(L&C)                                                              
moved out of the House Labor and Commerce Standing Committee.                                                                   
Number 0382                                                                                                                     
CHAIRMAN ROKEBERG called a brief at-ease at 3:24 p.m.  The                                                                      
committee came back to order at 3:25 p.m.                                                                                       
HB 128 - LEASE-PURCHASE OF PERSONAL PROPERTY                                                                                    
Number 0395                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 128, "An Act relating to lease-purchases of personal                                                                      
property."  He invited the bill sponsor, Representative Murkowski,                                                              
to introduce the legislation.                                                                                                   
Number 0415                                                                                                                     
REPRESENTATIVE MURKOWSKI said the committee members might wonder                                                                
why this subject is being addressed.  The rent-to-own or                                                                        
lease-purchase business is relatively new to the state and there                                                                
are not that many businesses here.  However, it is a strongly                                                                   
growing business nationwide; there are approximately 8,000 stores                                                               
across the country.  Representative Murkowski surmised that it is                                                               
just a matter of time before more such businesses are seen in                                                                   
Alaska.  Currently there is no uniformity for those consumers                                                                   
interested in renting personal property through a rent-to-own store                                                             
in terms of disclosures.  Representative Murkowski explained the                                                                
rent-to-own business mainly consists of consumer products like                                                                  
stereo equipment or washers and dryers.  It is typically a                                                                      
less-than-four-month rental allowing the consumer some flexibility                                                              
in terms of obtaining something immediately without a significant                                                               
initial cost.  House Bill 128 specifically requires up-front                                                                    
disclosure from the lease-purchase business so that the consumer                                                                
knows in advance what the required payments would be, the number of                                                             
payments, and when ownership would be achieved.  The legislation                                                                
before the committee is patterned after model legislation from                                                                  
other states; 44 states have adopted legislation.  Representative                                                               
Murkowski indicated an industry member was present to answer                                                                    
specific industry-related questions.  She additionally noted this                                                               
legislation would be a new chapter in the Alaska Statutes; these                                                                
purchases do not fall within the Alaska Retail Installment Sales                                                                
Act [AS 45.10] or within the leases section of the statutes.  There                                                             
really are not any statutory guidelines if a person needs to bring                                                              
an action against someone in the rent-to-own business.                                                                          
Number 0647                                                                                                                     
CHAIRMAN ROKEBERG asked why this doesn't fit into the Alaska Retail                                                             
Installment Sales Act.                                                                                                          
REPRESENTATIVE MURKOWSKI replied that a lease-purchase is basically                                                             
a four-month or less rental agreement allowing the person the                                                                   
option to purchase at the end of the agreement.  With retail                                                                    
installment, someone is basically purchasing on credit; with                                                                    
lease-purchase, it is a rental until the person makes the decision                                                              
that he or she wants to purchase at the end.                                                                                    
Number 0720                                                                                                                     
BRADLEY W. DENISON, Senior Vice President and General Counsel,                                                                  
Rent-a-Center, Incorporated, came forward to testify.  He said                                                                  
Rent-a-Center is the largest rent-to-own company in the United                                                                  
States; it has approximately 2,100 stores with stores in all 50                                                                 
states.  Mr. Denison described that leases of one week or one month                                                             
are most common, although the definition of rent-to-own in this                                                                 
legislation and most other states' is a lease of four months or                                                                 
less.  A customer at a rent-to-own store fills out a very short                                                                 
application that mainly asks for name, address, employer and                                                                    
several personal references.  If approved, the person pays one                                                                  
week's rent which would be, for example, between $5 and $10 for a                                                               
20-inch television.  The company delivers the item to the customer.                                                             
He noted Rent-a-Center does not charge for delivery.  At the end of                                                             
the first week the customer can either continue to rent or return                                                               
the item.  If returned, Rent-a-Center picks up the item without                                                                 
charge.  If the person continues to rent, Rent-a-Center provides                                                                
all service for the merchandise during the terms of the rental                                                                  
including "loaner" merchandise if necessary.  At the end of a                                                                   
predetermined rental period the customer automatically becomes the                                                              
owner of the goods.  This period might be 70 or 78 weeks.  Mr.                                                                  
Denison noted Rent-a-Center has a very diverse customer base                                                                    
ranging from executives on temporary assignment to working people                                                               
unsure of the future.  In some cases Rent-a-Center provides a                                                                   
service to people without credit or access to credit, allowing them                                                             
to obtain a major appliance.                                                                                                    
Number 0870                                                                                                                     
MR. DENISON indicated Rent-a-Center's customers always have other                                                               
alternatives like saving or buying used, but may have had bad                                                                   
experiences with purchasing used items.  Thirty-one percent of                                                                  
their customers have household incomes of $36,000-plus on a                                                                     
nationwide average.  Mr. Denison commented their "bread and butter"                                                             
customer is generally a blue collar worker who wants something                                                                  
extra like a big screen television in his or her life.  In Alaska,                                                              
Rent-a-Center's transactions are considered leases, not retail                                                                  
installment sales because Rent-a-Center's customers are never                                                                   
obligated to pay past that first period.  The Alaska Retail                                                                     
Installment Sales Act and most other states' Acts have a basically                                                              
two-pronged approach to determining whether a lease is a sale:  1)                                                              
a customer signs an agreement obligating him or her to pay the                                                                  
value of the goods; 2) the customer can get the goods at the end                                                                
for no or nominal consideration.  Even though it's structured as                                                                
lease, it would be considered a sale.  Because Rent-a-Center's                                                                  
customers never obligate themselves to pay more than one week or                                                                
one month, these are not considered retail installment sales under                                                              
Alaska law.  Mr. Denison noted, as Representative Murkowski had                                                                 
said, that HB 128 provides a number of consumer protections.  The                                                               
disclosure provision is probably the most important; it would                                                                   
ensure that all rental dealers are providing customers with the                                                                 
information needed to make informed decisions.  The legislation                                                                 
also provides for advertising disclosures so that companies have to                                                             
disclose certain information about the transaction in any                                                                       
Number 0997                                                                                                                     
MR. DENISON indicated, additionally, certain prohibitions are                                                                   
placed on rental dealers.  They would be prohibited from taking                                                                 
confessions of judgement, negotiable instruments that could be                                                                  
cashed later, wage assignments, or Alaska Permanent Fund Dividend                                                               
assignments.  Dealers would also be prohibited from breaching the                                                               
peace or obtaining an agreement to enter the customer's home.  Mr.                                                              
Denison indicated most of Rent-a-Center's customers don't use their                                                             
services to buy merchandise.  He stated a typical lease averages                                                                
four months and that only 25 percent of their leases go full term.                                                              
On average, his business's inventory goes out 2.5 times.  Mr.                                                                   
Denison agreed they do charge more than retail.  They do so because                                                             
their expenses are higher:  delivery costs, service costs, the cost                                                             
of allowing someone to take merchandise for six months and return                                                               
it no questions asked.  He indicated Rent-a-Center thinks Alaskan                                                               
consumers, in order to make this practice consumer-friendly, need                                                               
legislation detailing what information and services dealers are                                                                 
required to provide.  He stated Rent-a-Center thinks HB 128 does                                                                
this, and does it adequately.                                                                                                   
Number 1085                                                                                                                     
REPRESENTATIVE HALCRO referred to Section 45.35.030(b)(3) of HB 128                                                             
["(3) the reasonable costs of picking up and redelivering the                                                                   
property if the lessor has picked up the property from the                                                                      
consumer; and"].  He asked what Mr. Denison's company charged to                                                                
pick something up.                                                                                                              
MR. DENISON stated his company did not charge.  He commented there                                                              
is a measure of practicality that enters into any transaction.  If                                                              
a customer doesn't want the item or can't afford the next payment,                                                              
Rent-a-Center wants to pick up the merchandise and be done with it                                                              
so that the customer would be comfortable entering into a future                                                                
Number 1135                                                                                                                     
CHAIRMAN ROKEBERG asked about the level of delinquency.                                                                         
MR. DENISON replied it is very, very small.  He noted it is done by                                                             
store and he does not have those exact numbers.  Below 10 percent                                                               
of their accounts are delinquent.  In response to the chairman's                                                                
comment about the stereotyped "thug" image of Mr. Denison's                                                                     
industry, Mr. Denison said he supposes that may have been true of                                                               
some dealers at some point in the industry's history but he thinks                                                              
the vast majority of rental dealers have realized the right way to                                                              
do business, and the way to keep a business going perpetually and                                                               
profitably, is to absolutely take care of one's customers.  Mr.                                                                 
Denison stated he is very proud of his company's customer record:                                                               
his company and most of the other companies belonging to their                                                                  
national association representing almost 4,000 stores voluntarily                                                               
follow the Fair Debt Collection Practices Act [15 U.S.C. Sec. 1692]                                                             
even though that doesn't apply to their industry.  He commented                                                                 
some bad media regarding a few cases exists, but noted that ignores                                                             
thousands and thousands of transactions with very satisfied                                                                     
Number 1248                                                                                                                     
REPRESENTATIVE HARRIS asked how long the rent-to-own business has                                                               
been operating in Alaska.                                                                                                       
MR. DENISON apologized that he didn't know.  He explained                                                                       
Rent-a-Center has been recently acquired by a company owning a                                                                  
store in Alaska.                                                                                                                
REPRESENTATIVE HARRIS indicated he had referred to the                                                                          
lease-purchase philosophy, not a specific business, commenting he                                                               
has certainly dealt with lease-purchase in the equipment business.                                                              
Representative Harris confirmed from Mr. Denison that this                                                                      
legislation would give some legal parameters to this type of                                                                    
business as far as state law goes, to deal with repossessions or                                                                
just business practices.  He further confirmed that Rent-a-Center                                                               
is simply looking for some uniformity nationwide.                                                                               
Number 1308                                                                                                                     
REPRESENTATIVE MURKOWSKI added that the lease-purchase companies in                                                             
Alaska have been receptive to what is being proposed here:  that                                                                
there be some uniformity within the disclosures.  It not only                                                                   
provides protection for the consumer, but also for those in the                                                                 
CHAIRMAN ROKEBERG confirmed that Mr. Denison, as general counsel,                                                               
had looked at the contract used by his company's firm in Alaska.                                                                
The chairman asked how this legislation would modify that current                                                               
MR. DENISON indicated he had not done a line by line analysis, but                                                              
said he didn't believe the legislation would substantially modify                                                               
that agreement, except that it would allow them to provide                                                                      
automatic ownership of the merchandise at the end.  In response to                                                              
the chairman's comment about the grace period, Mr. Denison said he                                                              
had omitted the reinstatement provision from his testimony.  He                                                                 
explained the legislation provides a reinstatement provision:  a                                                                
customer can terminate the agreement, giving up the goods, but has                                                              
the option to resume within certain time frames.  The company would                                                             
have to disclose these parameters in its rental agreement, as well                                                              
as the early purchase option formula.                                                                                           
Number 1423                                                                                                                     
CHAIRMAN ROKEBERG asked if he was correct in thinking there is no                                                               
statutory grace period required in the state of Alaska.                                                                         
MR. DENISON agreed; he believes there is no law specifically                                                                    
regulating rental-purchase.                                                                                                     
CHAIRMAN ROKEBERG asked Mr. Denison to explain the grace periods of                                                             
two and five days.                                                                                                              
MR. DENISON replied that if a customer calls the rental store                                                                   
requesting the merchandise be picked up within that time period,                                                                
then the customer has the right to reinstate his or her agreement                                                               
for 21 or 45 days without losing his or her place.  The 21 or 45                                                                
days is determined by how long the customer has rented the goods.                                                               
If someone has rented for six months and calls within the five day                                                              
period on a monthly agreement, Rent-a-Center will pick up the                                                                   
merchandise and the customer can pick up on a newer rental                                                                      
agreement, receiving six month's worth of credit, so to speak.                                                                  
CHAIRMAN ROKEBERG confirmed this bill provides a grace period that                                                              
is not currently in law, although it could be company policy.                                                                   
Number 1487                                                                                                                     
MR. DENISON agreed.  All the company is asking is that the customer                                                             
inform the company and allow it to pick up the merchandise, and the                                                             
company will let the customer pick up where he or she left off.                                                                 
Economically, it is a good deal for the customer.                                                                               
CHAIRMAN ROKEBERG asked how Mr. Denison would characterize this                                                                 
legislation:  Is this a consumer protection bill or a pro-business                                                              
bill?  The chairman questioned why Mr. Denison's company is                                                                     
supporting the legislation.                                                                                                     
MR. DENISON responded he believes it is a very pro-consumer bill.                                                               
The reason Rent-a-Center is promoting this legislation is because                                                               
it and members of the Association of Progressive Rental                                                                         
Organizations believe taking care of the customers is the way for                                                               
a business to last and prosper.  They believe having uniformity in                                                              
the information available to the customer between different rental                                                              
businesses, so the customer can compare, is the right way to do                                                                 
business and will ultimately benefit the industry.                                                                              
CHAIRMAN ROKEBERG noted the committee would next hear testimony                                                                 
from John Wagner.                                                                                                               
Number 1573                                                                                                                     
JOHN W. WAGNER, President, Far North Venture, Limited, d.b.a.                                                                   
Premier Rental Purchase, testified via teleconference off-net from                                                              
Anchorage in support of HB 128.  Mr. Wagner stated he has had                                                                   
rental stores in Anchorage and Fairbanks since October 1985.                                                                    
CHAIRMAN ROKEBERG questioned how this would affect Mr. Wagner's                                                                 
MR. WAGNER replied the only thing he noticed different from his                                                                 
business's current practices is the holding the items for 45 days                                                               
- his business holds it longer.  He indicated he echoed Mr.                                                                     
Denison's comments about retaining the customers, stating, "The                                                                 
last thing I want to do is go to someone's house and pick up the                                                                
merchandise and not let them have it back.  ... We definitely work                                                              
with people, especially with Alaska being a transient state -                                                                   
seasonal workers, paychecks sporadic, ... people that work in the                                                               
fishing industry, the construction industry ... We hold stuff for                                                               
people until they get back on their feet, you know, that sort of                                                                
thing."  Mr. Wagner commented he still has customers today that he                                                              
had the first month he opened, noting his business has a pretty                                                                 
loyal following.                                                                                                                
Number 1639                                                                                                                     
REPRESENTATIVE SANDERS asked if there is a current problem in                                                                   
Alaska bringing forward this legislation or if this is just a                                                                   
preemptive strike.                                                                                                              
MR. WAGNER responded he knew of nothing derogatory regarding this                                                               
legislation, at least in his operation.  He commented Rent-a-Center                                                             
is a large and very good operation, noting its stockholders have                                                                
been around the business for a long time.  Mr. Wagner indicated he                                                              
thinks it is just good business practices; something he would like                                                              
to see, but did not have the resources to put together himself.                                                                 
REPRESENTATIVE MURKOWSKI addressed Representative Sanders' concern,                                                             
stating there is not a current problem within the industry from                                                                 
what they understand; it is more of a preemptive strike recognizing                                                             
the likelihood that the numbers of these business will be                                                                       
increasing in Alaska as they already have in the Lower 48.  She                                                                 
noted the up-front full disclosure requirement is the primary                                                                   
reason for the legislation's introduction.                                                                                      
Number 1703                                                                                                                     
CHAIRMAN ROKEBERG asked Mr. Wagner if the large military population                                                             
in both Anchorage and Fairbanks is a significant part of his                                                                    
MR. WAGNER replied it had been when he opened up in Fairbanks.  He                                                              
described, however, that the military base now allows "in-home                                                                  
layaway," so his store there no longer has the military presence it                                                             
used to.  Mr. Wagner noted he thinks this is one of the only                                                                    
military bases in the country with this practice.  He clarified for                                                             
the chairman that "in-home layaway" allows military personnel to                                                                
purchase goods from the "PX" or base store, take the goods home,                                                                
and payments are automatically taken out of the military member's                                                               
check.  In response to the chairman's comments, he noted his                                                                    
business's name is Premier Rental Purchase and that the committee                                                               
has received a letter from him and a copy of his rental agreement.                                                              
CHAIRMAN ROKEBERG confirmed Mr. Wagner would not have to modify his                                                             
rental agreement as a result of this legislation.  The chairman                                                                 
questioned how Mr. Wagner currently handled the grace period with                                                               
his clients.                                                                                                                    
MR. WAGNER replied it depends on the situation.  Normally their                                                                 
delinquency runs anywhere from 6 to 11 percent.  They play                                                                      
"catch-up" during January because people tend to overspend during                                                               
the holidays.  He commented his business works with the customers.                                                              
Mr. Wagner indicated his business would not have to change anything                                                             
if this legislation passes.                                                                                                     
Number 1799                                                                                                                     
CHAIRMAN ROKEBERG questioned whether anyone else wished to testify                                                              
on HB 128.  The chairman asked Representative Murkowski if she had                                                              
contacted any of the music stores in the Anchorage area to see if                                                               
they had any interest in this legislation.                                                                                      
REPRESENTATIVE MURKOWSKI responded she did not believe so.                                                                      
MR. WAGNER indicated he believed Mr. Denison had referred to APRO,                                                              
the Association of Progressive Rental Organizations.  He commented                                                              
some local music stores are renting musical instruments to own but                                                              
he does not believe the stores are members of APRO, and it is a                                                                 
very small percentage.                                                                                                          
CHAIRMAN ROKEBERG stated his intention to close the public hearing                                                              
on HB 128, noting to Representative Murkowski he had a concern that                                                             
these music stores would be impacted and might not be aware of                                                                  
that.  He commented this is the legislation's only committee of                                                                 
REPRESENTATIVE MURKOWSKI stated she would be happy to contact music                                                             
stores that are rent-to-own businesses and solicit their comments.                                                              
Number 1866                                                                                                                     
CHAIRMAN ROKEBERG indicated he was in agreement with that.  He                                                                  
asked the will of the committee.                                                                                                
REPRESENTATIVE HALCRO indicated he was satisfied with                                                                           
Representative Murkowski's presentation of the legislation, felt                                                                
there was time in the legislation's progress for possible input                                                                 
from those music stores, and was in favor of moving the legislation                                                             
because he thinks it is a good, pro-consumer bill that creates a                                                                
level playing field.                                                                                                            
CHAIRMAN ROKEBERG confirmed there were no further comments.                                                                     
Number 1910                                                                                                                     
REPRESENTATIVE HALCRO made a motion to move HB 128 out of committee                                                             
with two attached zero fiscal notes and individual recommendations.                                                             
There being no objections, HB 128 moved out of the House Labor and                                                              
Commerce Standing Committee.                                                                                                    
Number 1918                                                                                                                     
CHAIRMAN ROKEBERG called an at-ease at 3:53 p.m.  The committee                                                                 
came back to order at 3:57 p.m.                                                                                                 
HB 110 - SALE/LABELING OF MEAT/MILK PRODUCTS                                                                                    
Number 1923                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 110, "An Act relating to the sale, offer to sell, and                                                                     
labeling of fluid milk, meat, and meat products."                                                                               
Number 1929                                                                                                                     
REPRESENTATIVE HARRIS, as the bill sponsor, said he has been asked                                                              
to introduce this legislation by Alaskan dairy farmers.  The bill                                                               
does two things: 1) it institutes a pull date on milk for shelf                                                                 
life in Alaska; 2) it gives a niche market for milk produced                                                                    
without hormones in Alaska.  He commented he thinks all milk                                                                    
produced in the state is produced without the use of synthetic                                                                  
hormones, unlike a lot of milk produced outside Alaska and sold in                                                              
the state.  The bill provides a penalty if milk is labeled as                                                                   
produced without hormones but does contain them; it would be false                                                              
advertising.  He understands that there is a market for                                                                         
non-hormone-induced milk and this provides a penalty if producers,                                                              
especially Alaskan producers, label their milk falsely in this                                                                  
respect.  Representative Harris indicated Pete Fellman would                                                                    
provide the committee with more detail.  He commented Mr. Fellman                                                               
has been working with the dairy farmers and is a dairy farmer                                                                   
Number 2016                                                                                                                     
PETE FELLMAN, Researcher for Representative John Harris, Alaska                                                                 
State Legislature, came forward to explain HB 110.  He commented                                                                
Representative Harris had said everything he had intended to say.                                                               
Mr. Fellman noted a March 15, 1999, Monsanto Company letter in the                                                              
bill packet indicates voluntary labeling of milk as                                                                             
non-hormone-induced is legal and is happening in the Lower 48.  The                                                             
letter further indicates Monsanto supports the labeling as long as                                                              
it meets the guidelines set forth.  Mr. Fellman said there is milk                                                              
labeled non-hormone-induced for sale in Alaska, in Juneau.  The                                                                 
authority to regulate this comes from the state where the milk is                                                               
produced.  He believes the milk sold in Juneau comes from                                                                       
Minnesota, therefore Minnesota sets the standard for the                                                                        
regulations and enforcement.  Alaska has no such law.  Mr. Fellman                                                              
indicated the intent is to support Alaskan agriculture which is                                                                 
small and 40 years behind the Lower 48.  The hope is to put this                                                                
legislation through as a consumer-choice bill.  Whether bST [bovine                                                             
somatotropin, also called bovine growth hormone] is harmful or not                                                              
is not the issue, the issue is the choice to not drink milk                                                                     
produced by a synthetic hormone.   Consumers currently have that                                                                
choice from milk produced outside the state; the intent is to allow                                                             
the same choice with milk produced in the state.  This will create                                                              
niche markets.  Mr. Fellman stated he personally is attempting to                                                               
build a cheese plant and would like to be able to label his cheese                                                              
non-hormone-induced.  He commented they cannot compete with Lower                                                               
48 thousand-cow dairy farms, and noted he believes about 72 percent                                                             
[of these farms] use bST to increase milk production.  By creating                                                              
markets for milk and meat producers, HB 110 will help protect                                                                   
Alaska's already substantial investment in agriculture.  Mr.                                                                    
Fellman said they are looking for ways to secure agriculture and                                                                
the state's investment.                                                                                                         
Number 2168                                                                                                                     
CHAIRMAN ROKEBERG asked where Mr. Fellman's dairy farm is located.                                                              
MR. FELLMAN replied Delta Junction.                                                                                             
REPRESENTATIVE HARRIS asked Mr. Fellman if he has read the letter                                                               
from Monsanto and has any answers to their questions.  [The March                                                               
15, 1999, letter from Michael J. Diamond, Associate Director,                                                                   
Monsanto State Government Affairs, to Chairman Rokeberg reads:                                                                  
     On behalf of Monsanto, I am pleased to provide you with                                                                    
     some additional information concerning the voluntary                                                                       
     labeling of milk, dairy and other meat products as                                                                         
     proposed by HB 110.  While Monsanto does not oppose                                                                        
     voluntary labeling, we do express our concerns over the                                                                    
     way in which labeling is addressed.                                                                                        
     Attached, please find some information which I think you                                                                   
     will find helpful in discussing the issue of milk/dairy                                                                    
     safety.  I would, however, like to point out the                                                                           
     following points, which I believe merit serious                                                                            
     1. The federal Food and Drug Administration determined                                                                     
     there is no significant difference between dairy products                                                                  
     produced by cows administered with rBGH and cows not                                                                       
     administered with rBGH.  The products are essentially the                                                                  
     same, and in fact, no differentiation can be made.                                                                         
     2. In a 1997 court ruling in Illinois, Ben & Jerry's                                                                       
     Homemade Inc. was prohibited from placing a "no rBGH"                                                                      
     label on their product because it was deemed misleading                                                                    
     to consumers.                                                                                                              
     3. The FDA has reaffirmed its 1993 finding that rBGH is                                                                    
     safe for human consumption.  A letter from Health                                                                          
     Secretary Donna Shalala to House Minority Leader Gephardt                                                                  
     stated that "the lack of oral activity of rBST/rBGH and                                                                    
     insulin [-like] growth factor 1 (IGF-1) and the low level                                                                  
     and non-toxic nature of the residues of these compounds,                                                                   
     even at exaggerated doses, results in an extremely large                                                                   
     margin of safety for humans consuming dairy produced from                                                                  
     rBST-treated cows.["?]  In 1998, the Joint Food and                                                                        
     Agricultural Organization/World Health Organization                                                                        
     Expert Committee on Food Additives (JECFA) reaffirmed the                                                                  
     safety of milk and meat from treated cows.                                                                                 
     4. Current law already permits producers to engage in                                                                      
     voluntary labeling, provided their claims are truthful                                                                     
     and not misleading, nor do they make a claim they cannot                                                                   
     Additional concerns, which should be considered, include:                                                                  
     1. Are the state's Agricultural Department or Health                                                                       
     agencies capable of testing milk, meat, or dairy products                                                                  
     for the presence of rBGH?  Unlikely, since the products                                                                    
     are essentially identical and BST is a naturally                                                                           
     occurring protein found in cows - hence, it would be                                                                       
     impossible to support a claim that any product is, in                                                                      
     effect, "BST-Free."                                                                                                        
     2. What kind of affidavit would be needed to guarantee                                                                     
     compliance by dairy producers?                                                                                             
     3. Finally, who is liable in a situation where a producer                                                                  
     sells a milk/dairy product from a treated cow, despite                                                                     
     claiming that his product is rBGH free?  The producer?                                                                     
     The packager?  Or the State?                                                                                               
     Monsanto does not oppose voluntary labeling, since it is                                                                   
     already legally permissible - however, we do maintain                                                                      
     that any voluntary labeling must follow FDA guidelines,                                                                    
     and be entirely truthful and verifiable.]                                                                                  
Number 2178                                                                                                                     
MR. FELLMAN replied he received this information about an hour                                                                  
before the hearing and commented he has spoken with Mr. Diamond.                                                                
Monsanto is not against this labeling, the company is concerned the                                                             
bill itself meets the criteria.  Mr. Fellman indicated he believes                                                              
it might be possible to address this language in the Alaska                                                                     
Administrative Code if such legislation is enacted.                                                                             
REPRESENTATIVE HALCRO referred to a letter in opposition to HB 110                                                              
in the bill packet from the National Food Processors Association                                                                
(NFPA).  He noted part of the letter says that HB 110 is                                                                        
unnecessary because voluntary disclosure is already permitted under                                                             
FDA [Food and Drug Administration] rules.  He asked if Mr. Fellman                                                              
is aware of this.                                                                                                               
MR. FELLMAN answered in the affirmative, but his research shows                                                                 
that individual states have the right to regulate milk and milk                                                                 
labeling.  There is a federal milk quality guideline that must be                                                               
met for bacteria, pasteurization, et cetera, but the state sets                                                                 
certain limits and can set certain guidelines.                                                                                  
Number 2255                                                                                                                     
REPRESENTATIVE HALCRO pointed out that criminal sanctions are being                                                             
proposed when bST is a naturally-occurring hormone and it might be                                                              
in any given cow.  He asked if Mr. Fellman could address this.                                                                  
MR. FELLMAN replied he has talked to Monsanto's veterinarians at                                                                
length and has entertained the idea himself over the years of                                                                   
injecting his cows because it is profitable.  The bST in the milk                                                               
cannot be distinguished from naturally-occurring bST, although the                                                              
levels are higher.  However, a veterinarian can examine the known                                                               
injection sites:  at the tail-head or in the shoulders.  Mr.                                                                    
Fellman indicted the cows develop a small cyst because the product                                                              
is oil-based and is slowly released into the bloodstream.  If there                                                             
was a consumer complaint, the state veterinarian could exhume that                                                              
cyst and, if all or many of a farmer's cows had these cysts, make                                                               
a reasonable determination or correlation that the cattle were                                                                  
being given bST.                                                                                                                
Number 2328                                                                                                                     
CHAIRMAN ROKEBERG stated he believes the question is:  If it is                                                                 
naturally occurring, how do you differentiate and why make it                                                                   
MR. FELLMAN referred to information in the bill packet on the                                                                   
milk-cancer connection ["Milk and the Cancer Connection," Hans R.                                                               
Larsen, MSc ChE, International Health News, Editor/Publisher: Hans                                                              
R. Larsen].  Mr. Fellman stated there is evidence the higher levels                                                             
change some of the components in milk.  He said when that happens,                                                              
"IGF" [IGF-1, insulin-like growth factor 1] changes.  Mr. Fellman                                                               
indicated there may be possible connections to breast cancer.  All                                                              
they are speaking of is giving people the right to choose.                                                                      
REPRESENTATIVE HALCRO questioned whether Alaska has a state                                                                     
veterinarian that would actually go out and enforce this.                                                                       
MR. FELLMAN indicated the farms are inspected on a regular basis by                                                             
the state veterinarian.  He confirmed for Representative Halcro                                                                 
that there is an enforcement mechanism in place; the state vet                                                                  
could be called in if there would be a complaint.                                                                               
Number 2384                                                                                                                     
REPRESENTATIVE SANDERS asked if Mr. Fellman markets his milk                                                                    
through Matanuska Maid [Matanuska Maid, Incorporated].                                                                          
MR. FELLMAN replied they market their milk through Northern Lights                                                              
Dairy in Delta Junction; their milk goes to Fairbanks.  He                                                                      
confirmed for Representative Sanders that the labeling would be on                                                              
the carton and would be voluntary.  Mr. Fellman mentioned that a                                                                
small producer in the "Valley" [Trytten Farms, Wasilla, Matanuska                                                               
Valley, letter of support in bill packet] would like to start its                                                               
own processing plant.  Since the owner milks his own cows and is                                                                
there for all aspects of the process, he would be able to purchase                                                              
a carton stating he does not use hormones in his milk.  However,                                                                
"Mat-Maid" [Matanuska Maid, Incorporated] could not use the label                                                               
because 70 percent of its milk comes from out-of-state.  This milk                                                              
is pooled with Alaskan-produced milk.  There is no way to tell if                                                               
that 70 percent has been produced with bST; therefore Mat-Maid                                                                  
would not be able to use the label.  Mr. Fellman noted it is                                                                    
essentially a voluntary label for small family farmers.                                                                         
Number 2433                                                                                                                     
CHAIRMAN ROKEBERG asked if North Star Dairy imported milk.                                                                      
MR. FELLMAN stated all of their milk is produced in Delta from five                                                             
dairy farms.  Everything they have goes into fluid milk right into                                                              
the market.  Mr. Fellman noted the decision to use the label would                                                              
be up to Don Lintelman, the owner of Northern Lights Dairy.  If so,                                                             
Mr. Lintelman and all the farmers would have to sign a statement                                                                
guaranteeing they are not using the hormone.  Mr. Fellman noted he                                                              
doesn't think Mr. Lintelman is interested in using the label, but                                                               
he himself and others in the state are interested in attacking the                                                              
small niche markets.                                                                                                            
Number 2479                                                                                                                     
REPRESENTATIVE MURKOWSKI returned to the enforcement aspect and the                                                             
associated criminal negligence penalties.  She asked, "If you have                                                              
a small dairy, say you only have five cows, and you inject four of                                                              
them, and you get caught, all you..." [TESTIMONY INTERRUPTED BY                                                                 
TAPE CHANGE]                                                                                                                    
TAPE 99-23, SIDE B                                                                                                              
Number 0001                                                                                                                     
REPRESENTATIVE MURKOWSKI continued, "... hang over somebody's head                                                              
without the enforcement aspect being clear.  So if you can help me                                                              
out with that I'd appreciate it."                                                                                               
MR. FELLMAN commented there is going to be an element of honesty                                                                
here.  He doesn't know anyone milking five cows who is selling                                                                  
their milk legally.  Normally, anybody who is milking five cows is                                                              
not pasteurizing or homogenizing their milk, and does not have a                                                                
"Grade A" permit to start with.                                                                                                 
Number 0024                                                                                                                     
CHAIRMAN ROKEBERG noted Department of Environmental Conservation                                                                
(DEC) personnel were available via teleconference for questions.                                                                
REPRESENTATIVE BRICE said they might want to move from a Class A                                                                
misdemeanor  to a violation, to possibly address Representative                                                                 
Murkowski's concern and for Representative Harris's consideration.                                                              
With a violation, a ticket could be written and the farmer could be                                                             
penalized economically.                                                                                                         
CHAIRMAN ROKEBERG announced the committee would go to                                                                           
teleconference testimony.                                                                                                       
Number 0076                                                                                                                     
JANICE ADAIR, Director, Division of Environmental Health,                                                                       
Department of Environmental Conservation testified via                                                                          
teleconference from Anchorage.  She noted Bert Gore is the state                                                                
veterinarian and Belinda Clifton is the division's dairy                                                                        
specialist.  Both are present for technical questions.                                                                          
CHAIRMAN ROKEBERG pointed out that HB 110 includes meat and                                                                     
products as well as milk.  The chairman asked Mr. Fellman why this                                                              
had been expanded to meat products.                                                                                             
MR. FELLMAN replied that rBGH [synthetic bovine growth hormone] is                                                              
being used to induce growth in beef cattle.  Instead of an                                                                      
injection, the hormone is most commonly introduced through an                                                                   
implant in the steer's ear for sustained release, enhancing the                                                                 
cow's growth.                                                                                                                   
Number 0129                                                                                                                     
REPRESENTATIVE BRICE asked if Mr. Fellman could show him where                                                                  
cheese would be included in the legislation regarding the labeling.                                                             
He noted it appeared to speak to fluid milk.                                                                                    
MR. FELLMAN said he thought it covered cheese, and with                                                                         
Representative Halcro's assistance noted page 2, line 6.  [This                                                                 
subsection reads:                                                                                                               
     * Section 1.  AS 17.20.005 is amended to read:                                                                             
          Sec. 17.20.005.  Powers and duties of commissioner.                                                                   
     To carry out the requirements of this chapter, the                                                                         
     commissioner may issue orders, regulations, permits,                                                                       
     quarantines, and embargoes relating to ...                                                                                 
               (4) labeling, subject to AS 17.20.013 and                                                                        
     17.20.015, and grading of milk and milk products and                                                                       
     standards of sanitation for dairies offering to the                                                                        
     public or selling milk or milk products to at least he                                                                     
     minimum of current recommendations of the United States                                                                    
     Public Health Service pasteurized milk ordinance as it                                                                     
     may be periodically revised;]                                                                                              
Number 0167                                                                                                                     
CHAIRMAN ROKEBERG asked if Ms. Adair or her support staff wished to                                                             
comment on the legislation.                                                                                                     
Number 0171                                                                                                                     
MS. ADAIR answered in the affirmative and began her formal                                                                      
testimony as director of the Division of Environmental Health,                                                                  
Department of Environmental Conservation.  Food safety issues fall                                                              
within this division.  She said the legislation essentially has two                                                             
aspects: 1) the pull date for milk, 2) the bST labeling.  The                                                                   
division finds the milk pull date problematic:  there are new                                                                   
pasteurization techniques that can give milk a 65 to 70 day shelf                                                               
life.  There are also pasteurization techniques that give                                                                       
shelf-stable product not requiring refrigeration.  A scenario could                                                             
be set up where a lot of good milk would be thrown away because it                                                              
would not be bad after 18 days.  The division also wonders how this                                                             
would affect shipment into rural Alaska, where the milk products                                                                
could be arriving in villages around the pull date.                                                                             
Number 0212                                                                                                                     
MS. ADAIR noted there is guidance from the FDA regarding synthetic                                                              
hormone labeling.  This is something which has been the subject of                                                              
many court suits and has generated a lot of consumer interest.  The                                                             
FDA does not oppose labeling of milk or meat products as not being                                                              
produced using bST.  It does oppose the labeling "bST-free" but                                                                 
that is not being proposed here, to Ms. Adair's understanding.                                                                  
However, the FDA says labeling must be truthful and not misleading                                                              
in any way.  Ms. Adair stated there is no health effect from bST;                                                               
the milk from bST-supplemented cows is the same in every way -                                                                  
safety, composition, (indisc.) nutrition - as milk from other cows.                                                             
She indicated very low levels of bST occur naturally in milk.  The                                                              
division would have no way to test a milk product and determine                                                                 
whether or not it was obtained from a bST-induced cow.  Bovine                                                                  
somatotropin (bST) has no effect on people; it is destroyed during                                                              
digestion just like any other protein.  Ms. Adair noted, therefore,                                                             
no safety reason has been found to label products as not being from                                                             
bST-induced cows.                                                                                                               
Number 0275                                                                                                                     
MS. ADAIR confirmed it would be possible for Dr. Gore to determine                                                              
whether or not a living cow had been induced with bST.  Because the                                                             
injection location is part of the animal discarded during                                                                       
slaughtering, according to Ms. Adair's understanding, it is                                                                     
unlikely Dr. Gore could make this determination for a nonliving                                                                 
animal.  Ms. Adair stated, therefore, the division is unsure it                                                                 
could fairly enforce this.  Because of these problems, the FDA                                                                  
recommends that states require firms using such claims to establish                                                             
a plan, maintain records to substantiate the claim, and make those                                                              
records available for inspection.  Ms. Adair said she would hate to                                                             
see them establish a large recordkeeping requirement for a                                                                      
voluntary label but she is not sure they would be able to ensure                                                                
the label was accurately used any other way.                                                                                    
CHAIRMAN ROKEBERG confirmed that concluded Ms. Adair's testimony.                                                               
He asked about the zero fiscal note and its relation to her last                                                                
Number 0327                                                                                                                     
MS. ADAIR indicated the fiscal note is zero because she is not                                                                  
really sure how the division could deal with the legislation.  She                                                              
confirmed to the chairman that an indeterminate [fiscal note] might                                                             
be a better characterization.  Ms. Adair added that the Department                                                              
of Law had been considering submitting a fiscal note because of                                                                 
potential legal challenges based on some issues with interstate                                                                 
commerce.  She was not sure what that department had decided, if it                                                             
had decided.                                                                                                                    
CHAIRMAN ROKEBERG asked about the problems regarding the issue of                                                               
meat and meat products.                                                                                                         
MS. ADAIR replied that, as she understands it, they would not be                                                                
able to tell if the meat was from cattle "injected with bST."  She                                                              
stated, "The injection site on the animal is not saved, and, as was                                                             
testified previously, that is one of the things the state vet would                                                             
need to look for in order to tell if a cow had been injected, and                                                               
that wouldn't be available to him."                                                                                             
Number 0385                                                                                                                     
REPRESENTATIVE HALCRO asked if it is correct that in other states                                                               
with these voluntary labeling requirements, it is basically up to                                                               
the individual farmer or cattle raiser to keep records that would                                                               
be audited if there is a question.                                                                                              
MS. ADAIR replied she understands that is what the FDA recommends                                                               
but the division has not checked into other states' practices.  To                                                              
Representative Halcro's further question, Ms. Adair answered that                                                               
she is not aware of any other states with criminal penalties for                                                                
false labeling on this issue, but she has not checked with all 49                                                               
other states.                                                                                                                   
Number 0441                                                                                                                     
MR. FELLMAN said he wanted to address the pasteurization issue.  He                                                             
noted there are two types of pasteurization:  ultrapasteurization                                                               
and high-temperature pasteurization.  Ultrapasteurization is fairly                                                             
new technology.  Regarding the issue of interstate commerce, he                                                                 
brought up Florida's 12-day milk pull date and Georgia's 18-day                                                                 
pull date.  The only problem occurs if Georgia wants to send milk                                                               
to Florida; in this situation Georgia must label its milk                                                                       
accordingly.  Most of the milk Alaska imports comes from Washington                                                             
State; Washington is presently at 18 days.  Mr. Fellman indicated                                                               
the 18-day labeling requirement in the legislation is set because                                                               
of Washington's date.  Mr. Fellman noted, "But we did include                                                                   
high-temperature pasteurization [ultrapasteurization?].  Like I                                                                 
stated before, we are 40 years behind here in Alaska and it will be                                                             
a long time before any producers can afford the technology for                                                                  
high-temperature pasteurization [ultrapasteurization?].  So, if we                                                              
don't support the small farmer now, ... if the small farmer cannot                                                              
compete with longer shelf life, then the state of Alaska has lost                                                               
everything that it has invested in agriculture."                                                                                
REPRESENTATIVE MURKOWSKI indicated that almost completely answered                                                              
her question regarding ultrapasteurization, the technology                                                                      
improvements, et cetera.  However, the language in Section 2 of the                                                             
bill speaks about 18 days after the date of ultrapasteurization or                                                              
high-temperature pasteurization.  She thought Mr. Fellman had said                                                              
because it was 40 years behind Alaska was not to that                                                                           
ultrapasteurization point.                                                                                                      
Number 0538                                                                                                                     
MR. FELLMAN replied this is correct but some of the milk coming                                                                 
from Washington State has been ultrapasteurized.  The largest                                                                   
percentage is still high-temperature pasteurization and has an                                                                  
18-day shelf life.  Mr. Fellman cited that he has been given                                                                    
anywhere from 25 to 90 days for ultrapasteurization shelf life.                                                                 
REPRESENTATIVE MURKOWSKI questioned whether it is reasonable to                                                                 
pull ultrapasteurized milk off the shelf when it still has another                                                              
25 or 50 good days left.  She asked if there couldn't be two                                                                    
different categories, one for regular pasteurized and one for                                                                   
MR. FELLMAN said there are two categories, but the problem is that                                                              
as ultrapasteurization becomes more and more prevalent, the Alaskan                                                             
farmer is going to be pushed out of the market.  Alaskan milk will                                                              
only have an 18-day shelf life, but out-of-state ultrapasterized                                                                
milk will have a much longer shelf life.  Mr. Fellman commented it                                                              
is a tough position but said the state has the right to set the                                                                 
standard although the technology may be different.                                                                              
Number 0619                                                                                                                     
CHAIRMAN ROKEBERG indicated there are a number of people who wish                                                               
to testify.                                                                                                                     
REPRESENTATIVE CISSNA asked if any portion of the bill has problems                                                             
with interstate commerce provisions.                                                                                            
CHAIRMAN ROKEBERG noted the question was good.  He emphasized there                                                             
were witnesses waiting to testify for both this and the following                                                               
MR. FELLMAN said, regarding interstate commerce, there isn't a                                                                  
problem as long as Alaska's standard for imported milk is the same                                                              
as wherever the milk is being imported from.                                                                                    
CHAIRMAN ROKEBERG asked if Mr. Gore and Ms. Clifton wished to add                                                               
anything before the committee proceeded to local testimony.                                                                     
Number 0673                                                                                                                     
BERT GORE, DVM, State Veterinarian, Animal Industries, Division of                                                              
Environmental Health, Department of Environmental Conservation,                                                                 
testified next via teleconference from Anchorage.  He is located in                                                             
Palmer and gets out to the farms probably two to four times a year.                                                             
Dr. Gore said he does not understand the controversy with bST                                                                   
regarding called a synthetic hormone.  It is usual and customary                                                                
practice for the farmers to use the following synthetic hormones in                                                             
their cows on a regular basis.  These hormones are exempt drugs                                                                 
that do not require a veterinary prescription and have no                                                                       
withholding period for the milk or the meat.  Oxytocin - the most                                                               
commonly used one; it is used to let the milk down and can cause                                                                
increased uterine contractions during labor.  Lutalyse - the second                                                             
most prevalent hormone used.  It is used for estrus synchronization                                                             
in heifers, induces ovulation in cows, causes uterine contractions                                                              
to expel the afterbirth and fluids associated with endometritis.                                                                
It is an abortifacient in cattle and can cause abortion if handled                                                              
by pregnant women.  Cystorelin - used to lyse cysts in cows that                                                                
have nymphomaniac ovaries [used to lyse ovarian follicles which                                                                 
cause nymphomania in dairy cattle].  ECP [estradiol cypionate] - a                                                              
synthetic estrogen used to tone the uterus.  Dexamethasone - a                                                                  
synthetic steroid used quite frequently.  It is for use in horses                                                               
and dogs but also given to cattle.  Dr. Gore noted these are few of                                                             
the synthetic hormones and steroids used in our milk cows.  He does                                                             
not understand what makes bST different, and he guesses the big                                                                 
problem is that bST is manufactured in a biochemistry lab not the                                                               
chemistry lab.  He commented bST is a naturally occurring protein                                                               
secreted in the pituitary, it has no residue in the milk or meat.                                                               
Like its naturally-occurring counterpart, rbST [bST produced using                                                              
fermentation technology] has the same characteristics.  Dr. Gore                                                                
indicated it is not detectable.  Its purpose is to allow the cow to                                                             
produce more milk.  Dr. Gore further indicated it seems this would                                                              
be desirable if the state is supposed to become more                                                                            
self-sufficient in agriculture.                                                                                                 
Number 0787                                                                                                                     
BELINDA CLIFTON, Environmental Health Officer II, Animal                                                                        
Industries, Division of Environmental Health, Department of                                                                     
Environmental Conservation, testified next via teleconference from                                                              
Anchorage.  Ms. Clifton stated there are four pasteurization                                                                    
processes used in the Lower 48 allowed by the "pasteurized milk                                                                 
ordinance" which Alaska has adopted.  1) High-temperature                                                                       
short-time pasteurization which usually starts at 161 degrees for                                                               
15 seconds.  2) High-heat short-time pasteurization which allows                                                                
milk to be pasteurized at a minimum of 191 degrees for 1 second.                                                                
3) Ultrapasteurization short-time which requires temperatures of                                                                
290 degrees for 2 seconds.  4) Ultrapasteurized short-time                                                                      
temperature with an aseptic process filler; this is a packaging                                                                 
process where the product goes into a hermetically-sealed container                                                             
that keeps the milk sterile and shelf-stable for non-refrigerated                                                               
conditions.  Ms. Clifton mentioned this last product is used quite                                                              
a bit by the United States Army and also probably goes out to Bush                                                              
Alaska.  Ms. Clifton said these pasteurization processes used in                                                                
the Lower 48 are highly technical and she agreed with Mr. Fellman                                                               
that Alaska is about 40 or more years behind in these processes.                                                                
CHAIRMAN ROKEBERG asked if state regulations currently determine                                                                
the pull date of milk.                                                                                                          
MS. CLIFTON answered in the negative.                                                                                           
CHAIRMAN ROKEBERG asked what determines the pull date in Alaska.                                                                
Number 0871                                                                                                                     
MS. CLIFTON replied that in Alaska it is left up to the processing                                                              
facility.  This is pretty much how it is handled throughout the                                                                 
entire United States.  The facility determines what type of quality                                                             
it wants at the end of its pull date.  For the majority of the                                                                  
facilities, the pull date will usually be about a week before the                                                               
milk will spoil.  Ms. Clifton said a lot of the Texas processing                                                                
plants have a 14-day pull date; that is simply because they want                                                                
their milk to be good a full week after.  The pull date depends on                                                              
the quality the plant wants to give to the consumer.                                                                            
CHAIRMAN ROKEBERG asked if the plant dictates where the milk is                                                                 
MS. CLIFTON answered in the positive.                                                                                           
CHAIRMAN ROKEBERG commented, then, there is a lack of state                                                                     
regulation and statute in regard to pull dates.                                                                                 
MS. CLIFTON replied, "I'm not aware of any that actually require                                                                
certain states to have mandated pull dates, especially with the                                                                 
higher pasteurization process, like the ultrapasteurization process                                                             
and the aseptic processing."                                                                                                    
Number 0938                                                                                                                     
CHAIRMAN ROKEBERG announced the committee would take testimony in                                                               
Juneau on HB 110.                                                                                                               
Number 0961                                                                                                                     
JULIE KOEHLER came forward to testify in Juneau in support of HB
110.  Ms. Koehler stated she lives in Juneau and is testifying on                                                               
her own behalf.  She believes this bill is an important step in the                                                             
public's right to know about what ingredients are, or are not, in                                                               
our food products.  This labeling gives her the information                                                                     
necessary to make purchasing decisions as an individual about                                                                   
foods, products, and brands.  Ms. Koehler mentioned known                                                                       
carcinogens in today's world.  She is concerned because she has                                                                 
heard differing information about whether or not this hormone is a                                                              
carcinogen.  She buys organic as much as possible to protect                                                                    
herself and her family, reading labels to find out whether or not                                                               
things are added and specifically checking for that hormone.  Ms.                                                               
Koehler noted the government never addresses the cumulative amounts                                                             
of all these small amounts of carcinogens, so she, as an                                                                        
individual, can address the cumulative effects of all of those                                                                  
things in her foods by reading the labels and making purchasing                                                                 
decisions.  She asked the committee to amend the bill to make the                                                               
punishment to the farmer for false labeling a fine large enough to                                                              
hurt.  She commented a small fine, a misdemeanor of $1,000 or                                                                   
whatever, could just be considered a cost of business.  All the                                                                 
organic products are sold at a higher price; this is why the                                                                    
farmers want to be able to say it is free of the hormone.  Ms.                                                                  
Koehler indicated a higher fine that couldn't be considered a cost                                                              
of doing business would protect the individual.  She mentioned that                                                             
the enforcement is a matter of honesty.  Ms. Koehler stated she is                                                              
willing to pay that higher price and she hoped the committee would                                                              
pass the legislation.                                                                                                           
Number 1102                                                                                                                     
DONALD LINTELMAN, Northern Lights Dairy, testified next via                                                                     
teleconference from Delta Junction in support of HB 110.  He stated                                                             
they pick up milk from five farms and, at this point, do not use                                                                
these hormones in the milk and would like to be able to label the                                                               
milk that way because he thinks they could end up with more sales.                                                              
Mr. Lintelman indicated at some time the Fairbanks newspaper had                                                                
mentioned bST was coming up and there were some legal problems with                                                             
the state of Minnesota.  He indicated people had called his dairy                                                               
saying they wouldn't buy the milk because it contained bST.  Mr.                                                                
Lintelman said he needs every customer he has, so he assures these                                                              
people it is not in there.  He reiterated his support for the                                                                   
CHAIRMAN ROKEBERG asked what restricts him from labeling that now.                                                              
MR. LINTELMAN replied that he did not know.  He indicated there                                                                 
aren't any laws in Alaska regarding this and he would be worried                                                                
about being sued.  He added, " And I would like to see this                                                                     
hormones (indisc.) for this area, at least for this present time."                                                              
CHAIRMAN ROKEBERG said he understands and appreciates Mr.                                                                       
Lintelman's point, noting some people think we have too many laws.                                                              
Number 1187                                                                                                                     
REPRESENTATIVE HALCRO confirmed Mr. Lintelman buys milk from five                                                               
independent farms.  He further confirmed Mr. Lintelman had heard                                                                
the state veterinarian's testimony about the enforcement problems                                                               
with the legislation and the veterinarian's own disagreement with                                                               
the concern over bST.  Representative Halcro then asked Mr.                                                                     
Lintelman if he wouldn't have some liability, some exposure, if,                                                                
giving an example, one of his farmers is caught misrepresenting his                                                             
MR. LINTELMAN agreed.  He said it would probably put him out of                                                                 
CHAIRMAN ROKEBERG commented he has been following the Matanuska                                                                 
Valley dairy industry for a long time.  He asked how many dairy                                                                 
farmers are left in the "Mat Valley."                                                                                           
MR. LINTELMAN guessed five, noting he has no idea at this point.                                                                
Number 1263                                                                                                                     
MARGARET CARR came forward to testify in Juneau in support of HB
110.  Ms. Carr noted she lives in Anchorage and is testifying on                                                                
her own behalf.  She thinks this bill is a step in the right                                                                    
direction for both the consumers and the farmers in Alaska.  First,                                                             
it supports her right to know and choose as a consumer.  There are                                                              
too many instances where we do not know what is going into the                                                                  
products we eat and drink.  Encouraging the labeling of milk that                                                               
does not contain bovine growth hormone, for example, allows us to                                                               
make decisions regarding which products we would like to purchase.                                                              
In addition, Ms. Carr thinks those Alaskan farms not using the                                                                  
bovine growth hormone can create a positive niche and attract a                                                                 
greater consumer base.  She indicated she personally would like to                                                              
support the business of these farmers.  Ms. Carr echoed Ms.                                                                     
Koehler's request for an amendment providing a more severe penalty                                                              
to those mislabelling their products.  She urged the committee to                                                               
support the legislation.                                                                                                        
CHAIRMAN ROKEBERG confirmed Ms. Carr is a natural foods consumer,                                                               
not a marketer.                                                                                                                 
Number 1360                                                                                                                     
MICHELLE WILSON, Alaska Conservation Voice, came forward to testify                                                             
next in Juneau in support of HB 110.  Ms. Wilson stated she was                                                                 
representing both the Alaska Conservation Voice and herself as a                                                                
new mother.  She is part of that market niche being discussed                                                                   
today.  Ms. Wilson emotionally expressed her concern that it had                                                                
not been that long ago that committees discussed "DDT" and said                                                                 
there were no long-term health problems with "DDT" and other                                                                    
chemicals.  Ms. Wilson is learning that there are many studies                                                                  
showing that this hormone is affecting cows.  Cows are having more                                                              
heart attacks.  It worries her that all these people are being                                                                  
exposed to this hormone, the long-term effects are not known, and                                                               
there are all these cancers currently in our society linked to the                                                              
food we are eating.  Ms. Wilson said Alaskans have to celebrate                                                                 
that small Alaskan family farmers are not using this hormone yet.                                                               
She indicated small Alaskan family farmers need the kind of support                                                             
the legislature can give so that they can keep their farms healthy,                                                             
allowing Alaskans to buy Alaskan-grown food and healthy food.  Ms.                                                              
Wilson indicated she saw some contradictions in the DEC's Ms. Adair                                                             
first saying there are no known health effects of bST and Ms.                                                                   
Adair's later statement that her knowledge is not necessarily                                                                   
complete.  Ms. Wilson emphasized that the long-term effects [of                                                                 
bST] are not known.                                                                                                             
Number 1547                                                                                                                     
BOB SHAVELSON came forward to testify next in Juneau in support of                                                              
HB 110.  Mr. Shavelson stated he is representing himself and he is                                                              
from Homer.  He said some of the earlier testimony made him think                                                               
he was listening to a Monsanto commercial.  He thinks it is                                                                     
accurate to depict the debates going on here as a raging debate                                                                 
going on throughout the country as to whether rbGH, or bovine                                                                   
growth hormone, is safe to use.  Mr. Shavelson commented he thinks                                                              
it is safe to say a lot of the Monsanto-supported research shows                                                                
this.  Recently there has been a very serious debate in the Vermont                                                             
legislature and elsewhere in that state, and evidence is coming out                                                             
that it is not safe.  Mr. Shavelson noted Ms. Wilson's testimony                                                                
that the cows get sicker; as a result of that, increases in                                                                     
antibiotic use are seen.  Mr. Shavelson said there are also                                                                     
problems in our society with the influx of those chemicals in the                                                               
environment, and in our bodies.  He perceives a dichotomy between                                                               
the zero fiscal note and "then all of a sudden it becomes ... this                                                              
great burden."  He does not know what transpired at DEC to cause                                                                
this great shift in the administrative burden.  One possible                                                                    
solution is that anyone distributing rbGH in the state be required                                                              
to report who it is being sold to.  Mr. Shavelson does not think                                                                
that would create a great administrative burden for anyone to                                                                   
handle.  He indicated the legislation supports the consumer's right                                                             
to know and right to choose between his or her food products.  He                                                               
added, "Just because some large, multinational chemical corporation                                                             
is telling us it's safe based on their studies, I don't think                                                                   
Alaskans need to bow to that pressure.  I think we should have the                                                              
right to choose and support our local farmers."                                                                                 
Number 1656                                                                                                                     
MR. SHAVELSON commented on a couple of items not mentioned, but                                                                 
that he considers relevant.  Monsanto is moving forward with a                                                                  
"terminator" seed:  genetically-altered products meant to be                                                                    
sterile after one or two seasons.  There is great concern there                                                                 
that this will affect wild seed stocks across the world.  Monsanto                                                              
is also developing a special chemically-resistant strain of cotton                                                              
and other products to be marketed with its pesticide Roundup.  Mr.                                                              
Shavelson concluded that Monsanto has a vested interest in making                                                               
a profit and selling these items to consumers; the company will not                                                             
want to reveal there may be some problems with this.  Monsanto                                                                  
vigorously litigates anybody that opposes them.  There was extended                                                             
litigation in the situation with Ben and Jerry's mentioned earlier                                                              
[3/15/99 Monsanto letter]. Mr. Shavelson indicated the issues of                                                                
the terminator seed and the Roundup-dependent crops comes back to                                                               
the rbGH  labeling.  He stated, "This is just common-sense stuff.                                                               
We have a right to know what's in our food and we have a right to                                                               
choose, and I would encourage you to pass this bill out of the                                                                  
Number 1738                                                                                                                     
REPRESENTATIVE HALCRO commented Mr. Shavelson had raised a good                                                                 
question as far as disclosure, but there is the state                                                                           
veterinarian's testimony that several "synthetics" [hormones] can                                                               
be purchased without a veterinarian's assistance.  Representative                                                               
Halcro asked how disclosure could be mandated when any farmer could                                                             
just buy these things over the counter.                                                                                         
MR. SHAVELSON replied he does not pretend to know all the                                                                       
mechanisms of the distribution of these hormones.  He imagines it                                                               
is a fairly discrete market and the distribution within the state                                                               
could be tracked.  Mr. Shavelson continued, "The other idea where                                                               
typically in a policy matter where we have a difficulty enforcing                                                               
something, we do tend to elevate the penalty for it ... The                                                                     
disincentive increases as the monetary penalty increases ...."                                                                  
CHAIRMAN ROKEBERG confirmed there were no further questions for Mr.                                                             
Shavelson.  The chairman stated the public testimony on HB 110 is                                                               
concluded for this hearing but would be kept open.  He indicated he                                                             
is concerned about the pull date requirement because of the new                                                                 
technology, and is wondering if, since the private sector has been                                                              
doing this, why it can't be left to them.  The chairman indicated                                                               
the committee might want to hear from Matanuska Maid and some of                                                                
the others involved in the Alaska dairy business.                                                                               
Number 1868                                                                                                                     
REPRESENTATIVE CISSNA commented she sees a variety of Alaskan                                                                   
markets, some wanting to know there are no artificial hormones, et                                                              
cetera, preferring an Alaskan product and something that is not                                                                 
ultrapasterized; others, especially in more remote areas of the                                                                 
state, seeking a product with as long a shelf life as possible.                                                                 
She indicated she thinks it is important they ensure that Alaskan                                                               
consumers have a variety of choices and that is her problem with                                                                
the legislation's pull date requirement.                                                                                        
Number 1927                                                                                                                     
REPRESENTATIVE BRICE noted for Representative Harris that the                                                                   
labeling statutes in Section 1 are subject to AS 17.20.013 and AS                                                               
17.20.015 which refer specifically to fluid milk.  This would not                                                               
allow for the labeling of cheese products or other milk products.                                                               
Representative Brice commented there has been conflicting                                                                       
testimony, asking the sponsor to check into this because he                                                                     
(Representative Brice) thinks there is a niche market for these                                                                 
products.  He indicated he would like to make sure the legislation                                                              
includes these products.                                                                                                        
CHAIRMAN ROKEBERG commended the bill to the sponsor for further                                                                 
work, noting the committee would hear the legislation again when                                                                
the sponsor is ready.  The chairman said he is supportive of                                                                    
anything that can help the state's small businesses and farmers.                                                                
He indicated the labeling issue has certain merit, but said there                                                               
are a lot of problems that need to be worked out with the DEC, the                                                              
dairy industry, et cetera.  The chairman commented the meat aspects                                                             
of the legislation had not been addressed except by Mr. Fellman.                                                                
Number 2097                                                                                                                     
CHAIRMAN ROKEBERG called an at-ease at 4:54 p.m.  The committee                                                                 
came back to order at 4:57 p.m.                                                                                                 
TAPE 99-24, SIDE A                                                                                                              
HB 17 - PERS CREDIT FOR NONCERTIFICATED EMPLOYEES                                                                               
Number 0001                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 17, "An Act relating to the calculation of employee                                                                       
contributions and credited service in the public employees'                                                                     
retirement system for noncertificated employees of school                                                                       
districts, regional educational attendance areas, the Alaska                                                                    
Vocational Technical Center, and the state boarding schools; and                                                                
providing for an effective date."  The chairman confirmed from                                                                  
Representative Brice that the legislation had been heard the                                                                    
previous legislative session as "HB 223" [HB 323].  He noted the                                                                
bill had been completely rewritten in the House Finance Standing                                                                
Number 0087                                                                                                                     
REPRESENTATIVE BRICE indicated the changes had been made to address                                                             
AVTEC [Alaska Vocational Technical Center] but the bill had not                                                                 
been completely rewritten.  Representative Brice stated HB 17                                                                   
addresses an inequity within the Alaska's school districts between                                                              
certificated and noncertificated employees.  Certificated                                                                       
employees, teachers and principals, receive a year's credit for a                                                               
nine-month contract year.  This additional cost is split between                                                                
the school district and the employee.  Noncertificated employees                                                                
such as janitors and secretaries receive a day-for-day credit in                                                                
their retirement system.  This means they have to work 40 years to                                                              
receive a 30-year retirement if they are on a nine-month contract.                                                              
House Bill 17 would allow the employees the option of buying that                                                               
extra three months of credit, covering the entire cost themselves.                                                              
It is applicable to state boarding schools, school districts, REAAs                                                             
[Rural Education Attendance Areas] and "Alaska Voc-Tech Centers."                                                               
It is voluntary, the employee chooses to participate.  In response                                                              
to questions from Representatives Halcro and Murkowski based on                                                                 
NEA-Alaska's position paper in the bill packet, Representative                                                                  
Brice noted that position paper also refers to other legislation.                                                               
[The sponsor statement for HB 17 reads:                                                                                         
     Alaska has many noncertificated employees in its schools                                                                   
     who work nine, ten or eleven months out of the year along                                                                  
     with their certificated counterparts.  The certificated                                                                    
     employees receive full year credit for the part of the                                                                     
     year they work while the noncertificated employee only                                                                     
     get credit for the actual time worked.  Because of this,                                                                   
     a nine month employee has to work 40 years to receive a                                                                    
     30-year retirement.                                                                                                        
     This bill addresses the inequity in state law and PERS                                                                     
     system [Public Employees' Retirement System] by giving                                                                     
     noncertificated school employees who work a comparable                                                                     
     amount of days the option to use the same retirement                                                                       
     formula that certificated employees use.  This bill will                                                                   
     allow those noncertificated school district employees to                                                                   
     receive the same amount of credit toward retirement as                                                                     
     those certificated employees who work the same amount of                                                                   
     time and receive a full year of credit toward retirement.                                                                  
     The cost of changing the PERS system, under this bill,                                                                     
     will be supported by the employees, rather than                                                                            
     increasing the burden to school districts.  Employees                                                                      
     currently active in the system will have 180 days to opt                                                                   
     into the new program.  New employees will have the option                                                                  
     to participate within 90 days of inception.  That is                                                                       
     within beginning employment within the system.]                                                                            
Number 0381                                                                                                                     
REPRESENTATIVE HARRIS referred to the comment in the fiscal note,                                                               
"The $72.4 [$72,400] is needed to hire contractors to update the                                                                
division's computer system to accommodate the proposed changes."                                                                
Representative Harris questioned what the obligation of the                                                                     
education units described here would be to these employees for                                                                  
their retirement.  He asked if there would be added financial                                                                   
responsibility for those institutions.                                                                                          
REPRESENTATIVE BRICE responded there is no added financial                                                                      
responsibility in terms of the retirement system itself.  He                                                                    
indicated there might be a cost of a couple hundred to a thousand                                                               
dollars to provide the paperwork for an employee to elect in.  He                                                               
stated there is no financial obligation to the school district; the                                                             
school employee shoulders the entire burden of the change to ensure                                                             
actuarial soundness of the system.  In response to the chairman's                                                               
question about the whether the fiscal note was a disappointment                                                                 
and/or surprise, Representative Brice indicated there is some                                                                   
question with the Department of Administration about the costs of                                                               
developing the tracking and estimating computer programming.  On                                                                
the other hand, he noted those are non-general fund dollars; the                                                                
employees would pay for the cost of those changes.  Representative                                                              
Brice agreed with the chairman that that could be discussed in the                                                              
House Finance Standing Committee.                                                                                               
Number 0548                                                                                                                     
RICK HELMS, Southeast Political Alternate, Board of Directors,                                                                  
Alaska Public Employees Association/Alaska Federation of Teachers                                                               
(APEA/AFT), came forward to testify in support of HB 17.  He asked                                                              
for the committee's support, noting this legislation would benefit                                                              
the approximately 600 APEA/AFT members who work nine months out of                                                              
the year.  These members are professionals just like the teachers                                                               
and administrators; they should not be penalized for choosing this                                                              
career.  Referring to Representative Brice's comments, Mr. Helms                                                                
said it takes 37.5 years of work for 30 years of service.  He                                                                   
commented a companion Senate bill, SB 9, has already passed out of                                                              
the Senate Labor and Commerce Standing Committee, and he encouraged                                                             
this committee to do the same.  Mr. Helms noted, as Representative                                                              
Brice had also mentioned, this legislation had passed the previous                                                              
session as HB 323, which died on the Senate floor due to late                                                                   
action.  Mr. Helms expressed the hope that with sooner action, HB
17 or SB 9 might be passed into law this year.                                                                                  
Number 0667                                                                                                                     
JOHN CYR, President, NEA-Alaska, came forward to testify in support                                                             
of HB 17.  He noted NEA-Alaska, the National Education Association                                                              
of Alaska, represents about 11,000 employees.  Three thousand of                                                                
these are classified employees:  janitors, classroom aides, food                                                                
service workers.  House Bill 17 would directly affect these                                                                     
employees' lives.  Mr. Cyr noted the committee has NEA-Alaska's                                                                 
position statement.  He said this has been a priority of NEA and                                                                
its members for a number of years.  They believe they have finally                                                              
worked out a way to do this where the employees would bear the                                                                  
total costs and he reiterated NEA-Alaska's support for the                                                                      
REPRESENTATIVE MURKOWSKI asked who would actually be covered under                                                              
this plan.                                                                                                                      
Number 0722                                                                                                                     
MR. CYR replied that it covers anyone who works in a school who is                                                              
not certified.  Teachers, principles and administrators are                                                                     
certified employees and are in TRS [Teachers' Retirement System].                                                               
CHAIRMAN ROKEBERG confirmed with Mr. Cyr that the classified                                                                    
employees would be under the state program, PERS.  The chairman                                                                 
asked if they receive any SBS [Supplemental Benefits System] and                                                                
whether it varies by district.                                                                                                  
MR. CYR replied some districts get SBS and some do not.  For                                                                    
example, the classified employees in "Mat-Su" [Matanuska-Susitna                                                                
Borough] are eligible.  He believes that was a one-time opt-in                                                                  
provision districts had.                                                                                                        
CHAIRMAN ROKEBERG questioned if the employees have social security,                                                             
or if they are not allowed.                                                                                                     
MR. CYR replied he thinks they do not have social security,                                                                     
indicating he is not really familiar with PERS.  Referring to the                                                               
previous questions about the NEA-Alaska position statement, Mr. Cyr                                                             
indicated he believes the inability of classified employees to                                                                  
collect unemployment during layoff does have a bearing on HB 17                                                                 
because custodians and secretarial staff used to be year-round                                                                  
employees in Alaska.  However now because of budget cuts, et                                                                    
cetera, they are nine-month, and some even less.  The employees are                                                             
laid off, cannot collect unemployment, and do not receive                                                                       
retirement for that period.  Mr. Cyr stated that to NEA-Alaska this                                                             
really is equity:  if the classified employees are willing to pay                                                               
their own way, the state should allow them to do so.                                                                            
CHAIRMAN ROKEBERG invited Guy Bell and Bill Church forward [Bill                                                                
Church, Retirement Supervisor, Division of Retirement and Benefits,                                                             
Department of Administration].                                                                                                  
Number 0885                                                                                                                     
GUY BELL, Director, Division of Retirement and Benefits, Department                                                             
of Administration, came forward to testify on HB 17.  Mr. Bell said                                                             
he has little to add to Representative Brice's testimony.  He noted                                                             
a couple of small points:  this will be prospective only; it would                                                              
apply from the date of passage forward.  Those people in the system                                                             
today would be able to, within six months of the bill's effective                                                               
date, elect to pay a higher charge for the future service they                                                                  
would accrue.  New employees would have 90 days to make that                                                                    
determination.  In working on the bill last year with                                                                           
Representative Brice, Mr. Bell indicated the concern was expressed                                                              
to the division that this be a fixed charge to the employee, so the                                                             
employee would know the charge from year to year.  This concern was                                                             
brought to the division's actuaries in the development of the rate                                                              
calculation.  The revised number given last week by the actuaries                                                               
is approximately 1.25 percent.  Mr. Bell explained that if a person                                                             
wants this service they would be paying approximately 8 percent of                                                              
their salary as opposed to 6.75 percent, the current PERS                                                                       
contribution.  He confirmed to the chairman that it is an                                                                       
irrevocable election; once the decision is made it cannot be                                                                    
changed.  In response to the chairman's further question about what                                                             
kinds of problems a revocable decision would add to the                                                                         
administration, Mr. Bell said he thinks technically it would become                                                             
more difficult to administer because each year the employee would                                                               
have to be asked his or choice for that year; he thinks that why it                                                             
was drafted as irrevocable.                                                                                                     
Number 1011                                                                                                                     
CHAIRMAN ROKEBERG said this is done all the time with benefits and                                                              
health insurance, noting elections and open periods.                                                                            
MR. BELL stated, "Our thought was to try to keep this as benign as                                                              
possible and the way we thought about administering it is develop                                                               
a form in our division [and] send it out to the school districts.                                                               
When the people come in on the job at the beginning of the school                                                               
year, they would provide that form with some basic education, sign                                                              
the form and that's the time they make their decision.  Certainly                                                               
it could be done otherwise, it would -- the bill would need to be                                                               
changed if that were the decision."                                                                                             
Number 1044                                                                                                                     
REPRESENTATIVE BRICE indicated that there have been other systems                                                               
where a move was made from a 30-year retirement plan to a 20-year                                                               
plan, specifically correctional officers.  This vote [election] has                                                             
been patterned along that same irrevocable system to insure that                                                                
the administrative costs would stay very low.  The intention is to                                                              
minimize the impact as much as possible.                                                                                        
CHAIRMAN ROKEBERG asked Mr. Bell if there are problems with Section                                                             
1 regarding the contribution surcharge.  He mentioned the                                                                       
stipulated amount.                                                                                                              
MR. BELL indicated that, since it will be a fixed cost, the                                                                     
alternative could be the deletion of the second sentence in Section                                                             
1 which discusses the way the calculation would be made and the                                                                 
insertion "of 1.25 percent" on page 1, line 11, after "surcharge".                                                              
It does the same thing, it just says it more directly.  In response                                                             
to the chairman's question about where the 1.25 percent comes from,                                                             
Mr. Bell noted it comes from the language in the second sentence.                                                               
It is the actuarial cost of that additional benefit the employees                                                               
would receive if they made the selection.                                                                                       
CHAIRMAN ROKEBERG asked if it could vary by contract.                                                                           
MR. BELL explained that the actuary did it on a universal charge                                                                
basis, which means it may vary slightly from individual to                                                                      
individual.  However, in the aggregate, that is the cost arrived at                                                             
if a fixed rate which would apply to the entire group is being                                                                  
sought.  Doing it on an individual-by-individual basis would                                                                    
produce something similar but it would also be much more costly                                                                 
because characteristics and status - age, salary, et cetera - would                                                             
have to be examined for each individual.                                                                                        
Number 1190                                                                                                                     
REPRESENTATIVE BRICE indicated there has been some discussion on                                                                
whether a specific percentage should be included, or not included                                                               
"but ... have one number generated that every employee would have                                                               
to kick in if they wanted to opt to discuss."  It comes down to the                                                             
possibility of a future change that might affect the actuarial                                                                  
soundness of the system, whether an increase or decrease in                                                                     
contribution.  Representative Brice noted he wants to ensure that                                                               
a number is not set in statute and then left to the political whims                                                             
of the legislature:  if that number were to increase and the                                                                    
administration has no authority to increase that number.  He                                                                    
commented he is willing enter into this discussion, and added that                                                              
the fiscal note had not surprised him, it is the same or very close                                                             
to the previous session's.                                                                                                      
CHAIRMAN ROKEBERG commented on the apparent size of the fiscal note                                                             
this year as compared to the previous year.                                                                                     
MR. BELL said the fiscal note is smaller this year.                                                                             
Number 1289                                                                                                                     
REPRESENTATIVE MURKOWSKI asked if HB 17 is basically the same bill                                                              
that went through last year.                                                                                                    
REPRESENTATIVE BRICE answered it is very substantially the same.                                                                
He thinks there was one change on page 1, line 10, and that the                                                                 
first word, "and", should probably be "or" for complete clarity.                                                                
Representative Brice indicated "or" was used in the previous                                                                    
legislation but legislative legal counsel feels it can be either                                                                
one.  [HB 17, page 1, lines 9 and 10, "of a state boarding school,                                                              
of a school district or regional educational attendance area, and                                                               
of the Alaska Vocational Technical Center determined by reference                                                               
CHAIRMAN ROKEBERG stated that AVTEC was added.                                                                                  
REPRESENTATIVE BRICE explained that the addition of AVTEC was the                                                               
primary change from last year's House Labor and Commerce Standing                                                               
Committee version.  He indicated the changes were made last year in                                                             
the House Finance Standing Committee.                                                                                           
CHAIRMAN ROKEBERG commented lightly he probably shouldn't take it                                                               
personally that the entire bill had been changed after leaving                                                                  
House Labor and Commerce the previous session.                                                                                  
REPRESENTATIVE BRICE replied that the election of participation had                                                             
come from discussions with the Administration, and the addition of                                                              
AVTEC from other discussions.  He indicated it was the continuation                                                             
of the committee process.                                                                                                       
Number 1390                                                                                                                     
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative                                                                   
Affairs, General Teamsters Local 959 State of Alaska, came forward                                                              
to testify in support of HB 17.  She referred to a letter of                                                                    
support in the bill packet in lieu of giving more detailed                                                                      
testimony.  Ms. Huff Tuckness noted HB 17 would have an impact on                                                               
several hundred members within the Anchorage School District                                                                    
including food service employees, bus drivers, and a few                                                                        
maintenance workers.  [The March 8, 1999, letter mentioned is to                                                                
the committee from Gerald L. Hood, Secretary-Treasurer, Teamsters                                                               
Local 959, and reads:                                                                                                           
     Teamsters Local 959 represents non-certified employees                                                                     
     most predominantly in the Anchorage School District.                                                                       
     Several hundred of those members actually work less than                                                                   
     twelve months of the year due to the nature of their                                                                       
     jobs.  As we understand HB 17, it would allow those                                                                        
     members, by individual choice, the opportunity to receive                                                                  
     the same credited year as their certified counterparts                                                                     
     for purposes of retirement.  Any increased cost under                                                                      
     this bill would be born by the employee, not the employer                                                                  
     (Anchorage School District).                                                                                               
     We urge your support and passage of this bill to allow,                                                                    
     by employee choice, the opportunity to increase their                                                                      
     credited service time as is currently the option for the                                                                   
     certified employees.]                                                                                                      
Number 1426                                                                                                                     
CHAIRMAN ROKEBERG indicated to Representative Brice that there had                                                              
been conversations about some special education personnel.                                                                      
REPRESENTATIVE BRICE replied there had been some talk by SESA, the                                                              
Special Education Service Agency [stated as "Special Education                                                                  
Support Agency"], at the end of the previous session.  He noted                                                                 
SESA is a function of state government [Department of Education],                                                               
not necessarily of a school district.  Representative Brice said he                                                             
had been contacted after the end of the previous session but had                                                                
not heard from the organization in three months.  He indicated he                                                               
would be happy to follow this up if the chairman wished.                                                                        
Number 1493                                                                                                                     
CHAIRMAN ROKEBERG responded it was just something that had been                                                                 
brought to his attention and that he did not have an opinion on.                                                                
Confirming there were no further witnesses, Chairman Rokeberg                                                                   
announced the public testimony on HB 17 was closed.  He commented                                                               
on the absence of a supporting letter from the Anchorage School                                                                 
District (ASD) in the bill packet.                                                                                              
REPRESENTATIVE BRICE replied that Larry Wiget [Director, Government                                                             
Relations, Anchorage School District] had said there is no problem                                                              
with the bill during an informal discussion.  Representative Brice                                                              
noted this discussion had been after the strike.  However, he                                                                   
indicated he does not know if the Anchorage School District has                                                                 
taken a formal position on HB 17.                                                                                               
CHAIRMAN ROKEBERG indicated ASD was not in opposition to the                                                                    
Number 1606                                                                                                                     
REPRESENTATIVE HARRIS made a motion to move HB 17 out of committee                                                              
with individual recommendation and the attached fiscal note.  There                                                             
being no objection, HB 17 moved out of the House Labor and Commerce                                                             
Standing Committee.                                                                                                             
Number 1632                                                                                                                     
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing                                                               
Committee at 5:22 p.m.                                                                                                          

Document Name Date/Time Subjects