Legislature(2003 - 2004)

05/09/2003 03:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                          May 9, 2003                                                                                           
                           3:40 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Bob Lynn, Vice Chair                                                                                             
Representative Nancy Dahlstrom                                                                                                  
Representative Carl Gatto                                                                                                       
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
Real Estate Commission                                                                                                        
                                                                                                                                
     Z. Kent Sullivan, Esq. - Fairbanks                                                                                         
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
HOUSE BILL NO. 288                                                                                                              
"An Act changing the name of the Department of Community and                                                                    
Economic Development."                                                                                                          
                                                                                                                                
     - MOVED CSHB 288(STA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 272                                                                                                              
"An Act relating to motor vehicle dealers."                                                                                     
                                                                                                                                
     - MOVED CSHB 272(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 305                                                                                                              
"An Act relating to the calculation and payment of unemployment                                                                 
compensation benefits; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED HB 305 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 277                                                                                                              
"An Act  relating to the  powers of the Regulatory  Commission of                                                               
Alaska in  regard to intrastate pipeline  transportation services                                                               
and pipeline facilities, to the rate  of interest for funds to be                                                               
paid by pipeline shippers or carriers  at the end of a suspension                                                               
of  tariff   filing,  and  to  the   prospective  application  of                                                               
increased  standards on  regulated  pipeline utilities;  allowing                                                               
the  commission  to  accept  rates   set  in  conformity  with  a                                                               
settlement agreement between  the state and one  or more pipeline                                                               
carriers and  to enforce the  terms of a settlement  agreement in                                                               
regard  to  intrastate  rates; and  providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE BILL NO. 285                                                                                                              
"An  Act  adopting  the   Uniform  Electronic  Transactions  Act;                                                               
repealing  certain statutes  relating to  electronic records  and                                                               
electronic  signatures;  amending  Rule   402,  Alaska  Rules  of                                                               
Evidence; and providing for an effective date."                                                                                 
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HB 288                                                                                                                  
SHORT TITLE:CHANGING NAME OF DEPT OF COMM & ECON DEV.                                                                           
SPONSOR(S): REPRESENTATIVE(S)KOHRING                                                                                            
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/28/03     1156       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/28/03     1156       (H)        STA, L&C                                                                                     
05/06/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/06/03                (H)        Moved CSHB 288(STA) Out of                                                                   
                                   Committee                                                                                    
                                   MINUTE(STA)                                                                                  
05/08/03     1475       (H)        STA RPT CS(STA) NT 3DP 1DNP                                                                  
                                   3NR                                                                                          
05/08/03     1475       (H)        DP: DAHLSTROM, LYNN, HOLM;                                                                   
05/08/03     1475       (H)        DNP: BERKOWITZ; NR: SEATON,                                                                  
                                   GRUENBERG,                                                                                   
05/08/03     1475       (H)        WEYHRAUCH                                                                                    
05/08/03     1475       (H)        FN1: ZERO(CED)                                                                               
05/08/03     1478       (H)        CRA REFERRAL ADDED AFTER L&C                                                                 
05/09/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
BILL: HB 272                                                                                                                  
SHORT TITLE:MOTOR VEHICLE DEALERS                                                                                               
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH                                                                                          
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/16/03     1009       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/16/03     1009       (H)        L&C, STA                                                                                     
04/28/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/28/03                (H)        Scheduled But Not Heard                                                                      
04/30/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/30/03                (H)        Scheduled But Not Heard                                                                      
05/01/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/01/03                (H)        Scheduled But Not Heard                                                                      
05/05/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/05/03                (H)        Heard & Held                                                                                 
05/05/03                (H)        MINUTE(L&C)                                                                                  
05/07/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/07/03                (H)        <Bill Hearing Postponed to                                                                   
                                   5/9>                                                                                         
05/09/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
BILL: HB 305                                                                                                                  
SHORT TITLE:UNEMPLOYMENT COMPENSATION BENEFITS                                                                                  
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
05/07/03     1416       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
05/07/03     1416       (H)        L&C, FIN                                                                                     
05/09/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Z. Kent Sullivan, Esq., Appointee                                                                                               
to the Real Estate Commission                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified as appointee to the Real Estate                                                                 
Commission.                                                                                                                     
                                                                                                                                
REPRESENTATIVE VIC KOHRING                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of HB 288.                                                                                         
                                                                                                                                
EDGAR BLATCHFORD, Commissioner                                                                                                  
Department of Community & Economic Development (DCED)                                                                           
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Testified  in   support  of  HB  288  and                                                               
responded to questions.                                                                                                         
                                                                                                                                
LINDA SYLVESTER, Staff                                                                                                          
to Representative Bruce Weyhrauch                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   During  discussion  of  HB 272,  spoke  on                                                               
behalf of the sponsor, Representative Weyhrauch.                                                                                
                                                                                                                                
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General                                                                             
Fair Business Practices Section                                                                                                 
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During discussion  of  HB  272,  provided                                                               
comments and responded to questions.                                                                                            
                                                                                                                                
STEVE ALLWINE, Secretary                                                                                                        
Alaska Auto Dealers Association (AADA)                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in  support of HB 272, as amended,                                                               
and responded to questions.                                                                                                     
                                                                                                                                
CHRIS HESTER, Lyberger's Car and Truck Sales, LLC                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified in opposition to Section  1 of HB                                                               
272.                                                                                                                            
                                                                                                                                
CARROL LYBERGER, Lyberger's Car and Truck Sales, LLC                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   During  discussion of HB 272, remarked that                                                               
use of the word "current"  is problematic, provided comments, and                                                               
responded to questions.                                                                                                         
                                                                                                                                
TERI PETRAM, Lyberger's Car and Truck Sales, LLC                                                                                
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     During discussion  of  HB 272,  provided                                                               
comments and responded to a question.                                                                                           
                                                                                                                                
BRUCE MUSICK, Affordable Used Cars                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:    Provided comments during  discussion of HB                                                               
272.                                                                                                                            
                                                                                                                                
DIANA PFEIFFER, President                                                                                                       
Alaska Automobile Dealers Association (AADA);                                                                                   
President, Alaska Sales and Service                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 272.                                                                            
                                                                                                                                
DARRELL FRIESS, Budget Car & Truck                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:    During discussion of HB  272, testified in                                                               
opposition  to Section  1, provided  comments,  and suggested  an                                                               
amendment.                                                                                                                      
                                                                                                                                
MARTEN MARTENSEN, Continental Honda                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:    Provided comments during  discussion of HB                                                               
272.                                                                                                                            
                                                                                                                                
GREG O'CLARAY, Commissioner                                                                                                     
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:    Assisted  with the presentation of  HB 305                                                               
and responded to questions.                                                                                                     
                                                                                                                                
PATRICK SHIER, Employment Security Tax                                                                                          
Division of Employment Security                                                                                                 
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Responded to  questions during discussion of                                                               
HB 305.                                                                                                                         
                                                                                                                                
JOHN DAVID RAGAN                                                                                                                
Ester, Alaska                                                                                                                   
POSITION  STATEMENT:   Testified  in support  of  an increase  in                                                               
unemployment benefits during discussion of HB 305.                                                                              
                                                                                                                                
RON PECK, President                                                                                                             
Alaska Travel Industry Association (ATIA)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   During discussion  of HB 305, said that the                                                               
ATIA  is not  opposed  to the  bill, and  asked  that a  complete                                                               
analysis  by done  to  determine  how the  bill  will impact  the                                                               
tourist industry.                                                                                                               
                                                                                                                                
PAMELA LaBOLLE, President                                                                                                       
Alaska State Chamber of Commerce (ASCC)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided comments  during discussion  of HB                                                               
305.                                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-49, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order  at   3:40  p.m.    Representatives                                                               
Anderson, Lynn,  Rokeberg, Crawford, and Guttenberg  were present                                                               
at  the  call to  order.    Representatives Dahlstrom  and  Gatto                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                         
                                                                                                                                
Real Estate Commission                                                                                                        
                                                                                                                                
Number 0106                                                                                                                     
                                                                                                                                
CHAIR ANDERSON announced that the  committee would first consider                                                               
the  nomination of  Z. Kent  Sullivan, Esq.,  to the  Real Estate                                                               
Commission.                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG thanked Mr.  Sullivan for volunteering to                                                               
serve on  the Real Estate  Commission, and asked him  whether his                                                               
legal  experience has  included much  in the  way of  real estate                                                               
activities.                                                                                                                     
                                                                                                                                
Number 0211                                                                                                                     
                                                                                                                                
Z. Kent Sullivan, Esq., Appointee  to the Real Estate Commission,                                                               
replied:                                                                                                                        
                                                                                                                                
     It has,  extensively.  I'm  formerly from  Montana, and                                                                    
     practiced  law in  ... Montana  for five  years with  a                                                                    
     firm  ... that  focused  primarily on  real estate  and                                                                    
     property  law.    Our  firm  represented,  among  other                                                                    
     clients,  the Montana  Association of  Realtors [Inc.];                                                                    
     was  responsible for  representing not  only the  state                                                                    
     association   but  also   numerous   of  the   regional                                                                    
     associations  of  realtors  ...;  [and] did  a  lot  of                                                                    
     drafting of  legislation ... concerning  the regulation                                                                    
     of real estate licensees within the state.                                                                                 
                                                                                                                                
     Our firm  also handled  a real  estate hotline  for the                                                                    
     Montana Association  of Realtors  [Inc.], and  that was                                                                    
     something  that all  the real  estate licensees  in the                                                                    
     state could [use  to] call our firm  and pose questions                                                                    
     ... and receive a written  response on ... legal issues                                                                    
     that  they were  facing every  day in  the real  estate                                                                    
     industry.   And that's  what I did  with the  firm down                                                                    
     there.  Up  here, things aren't near  as specialized as                                                                    
     they  are  down  south,  and  while  I  still  practice                                                                    
     significantly in  the area of real  estate and property                                                                    
     law, I  do ...  a much more  general practice  up here,                                                                    
     primarily in  civil litigation -  all aspects  of civil                                                                    
     litigation.                                                                                                                
                                                                                                                                
MR. SULLIVAN, in response to  a question, relayed his belief that                                                               
his  current  legal practice  would  not  present a  conflict  of                                                               
interest with  serving on the  Real Estate Commission.   He noted                                                               
that his law firm here in  Juneau does not represent any local or                                                               
state  realtor organization,  and that  he has  never represented                                                               
any real  estate licensee regarding  license issues.  He  said he                                                               
does  not view  his expertise  in the  field of  real estate  and                                                               
property  law as  putting him  in  a position  of dominance  over                                                               
other members of the Real Estate  Commission.  One of the reasons                                                               
he sought  to be  appointed, he  remarked, was  so that  he could                                                               
offer his expertise to the Real Estate Commission's endeavors.                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  Mr.  Sullivan to  comment on  the                                                               
issue of dual agency.                                                                                                           
                                                                                                                                
Number 0540                                                                                                                     
                                                                                                                                
MR. SULLIVAN responded:                                                                                                         
                                                                                                                                
     I can  offer that  dual agency  is viewed  in different                                                                    
     ways depending  upon whose  position you're  viewing it                                                                    
     from.   From a real estate  licensee's perspective, for                                                                    
     the  most part,  I  think, licensees  generally are  in                                                                    
     favor of dual  agency because dual agency  allows for a                                                                    
     licensee to receive a dual  commission, in essence, and                                                                    
     not  have  a  commission  cut  in half.    And  when  a                                                                    
     licensee  is   out  there  working   as  hard   and  as                                                                    
     diligently as they do, that's  something that they view                                                                    
     as a  benefit, and if they  can serve as a  dual agent,                                                                    
     they're  more  than  happy  to  do that.    So  from  a                                                                    
     licensee's  perspective,   I  think   they're  probably                                                                    
     generally in favor of it.                                                                                                  
                                                                                                                                
     From  a consumer  standpoint, ...  I think  it's viewed                                                                    
     much  more  frequently  with confusion;  they  may  not                                                                    
     understand what the  role is of a dual  agent, they may                                                                    
     not  understand  what  their rights  are  [and]  what's                                                                    
     owing  to  them  by  the licensee  versus  the  parties                                                                    
     themselves.   From  a legal  perspective  and from  the                                                                    
     standpoint  of   an  attorney,  dual  agency   is  very                                                                    
     problematic;    it's    problematic   because    you're                                                                    
     representing conflicting  interests.  And in  the past,                                                                    
     across  the country,  the consensus  has been  to allow                                                                    
     dual  agency  and  to  deal   with  those  problems  in                                                                    
     different ways.                                                                                                            
                                                                                                                                
     I do  understand it's becoming  an issue in  Alaska and                                                                    
     [that] there are some concerns  about that, and I think                                                                    
     it probably  needs to be  dealt with.   I don't  have a                                                                    
     specific opinion as to whether  dual agency ought to be                                                                    
     abolished  [or]  whether  it ought  to  be  maintained;                                                                    
     that's an issue  that I think would take a  lot of time                                                                    
     to  resolve  and explain,  and  it's  something that  I                                                                    
     think   the  [Real   Estate]  Commission   is  probably                                                                    
     exploring currently.                                                                                                       
                                                                                                                                
REPRESENTATIVE  LYNN mentioned  that he  is a  licensed associate                                                               
broker  in Alaska.   He  observed that  licensees encounter  some                                                               
practical  problems  when  complying  with  the  full  disclosure                                                               
requirements  of dual  agency,  and offered  some  examples.   He                                                               
opined  that the  current laws  regarding this  contentious issue                                                               
need to be fixed and simplified.                                                                                                
                                                                                                                                
Number 0984                                                                                                                     
                                                                                                                                
MR.  SULLIVAN mentioned  that  he has  read  through the  current                                                               
"agency" statutes,  and opined that  they are confusing  and full                                                               
of  holes.   He  relayed  that  according  to his  experience  in                                                               
Montana, agency never really was  an issue, certainly not like it                                                               
appears  to  be  in  Alaska.     He  suggested  that  instead  of                                                               
promulgating  more statues  and  regulations, a  solution to  the                                                               
current problem  might be  to revamp,  clarify, and  simplify the                                                               
statutes already  in existence.   He surmised that  although some                                                               
licensees might have  a good understanding of  the current agency                                                               
statutes,  most  licensees don't  and  neither  does the  general                                                               
public.                                                                                                                         
                                                                                                                                
REPRESENTATIVE LYNN  suggested to  Mr. Sullivan  that he  take an                                                               
opportunity to  review all the  different forms that  real estate                                                               
firms in  Alaska have developed in  an effort to comply  with the                                                               
current laws regarding full disclosure of dual agency.                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG  noted that the real  estate industry has                                                               
established a task force that  is currently attempting to develop                                                               
some comprehensive language  to address the issue  of dual agency                                                               
disclosure.   After observing  that this  issue is  of particular                                                               
importance to those living in  rural Alaska, where there may only                                                               
be one  or two brokers for  an entire area, he  described some of                                                               
the  provisions of  his proposed  legislation pertaining  to this                                                               
issue.  Representative  Rokeberg asked Mr. Sullivan  if he thinks                                                               
it  would be  possible to  craft  legislation that  would make  a                                                               
distinction between  the general public  and what he  termed "the                                                               
sophisticated buyer."                                                                                                           
                                                                                                                                
MR. SULLIVAN replied:                                                                                                           
                                                                                                                                
     I  think it's  feasible  and would  certainly be  worth                                                                    
     looking  at.   I  think  one downside  to  it is  that,                                                                    
     again, if  what you're  attempting to do  is streamline                                                                    
     things and  make them completely  black and  white, the                                                                    
     more  distinctions  you  draw,  you  run  the  risk  of                                                                    
     complicating that or confusing that  a little bit.  So,                                                                    
     I don't  think it's  impossible; I think  it's entirely                                                                    
     possible.   Whether you  step over  that line  of maybe                                                                    
     going too far as far  as drawing too many distinctions,                                                                    
     if that's the only one,  then perhaps it's a lot easier                                                                    
     question   to  answer,   but   if   you  start   adding                                                                    
     distinction  upon distinction  throughout the  process,                                                                    
     you might  get right back to  where we are now.   But a                                                                    
     person would just have to look  at [it] and see how its                                                                    
     drafted.                                                                                                                   
                                                                                                                                
REPRESENTATIVE   ROKEBERG  suggested   that  the   interpretation                                                               
regarding  the common  law principles  of agency  has complicated                                                               
the issue.                                                                                                                      
                                                                                                                                
MR. SULLIVAN concurred.                                                                                                         
                                                                                                                                
Number 1263                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  made a motion to  advance from committee                                                               
the nomination  of Z.  Kent Sullivan, Esq.,  as appointee  to the                                                               
Real  Estate   Commission.    There   being  no   objection,  the                                                               
confirmation  was  advanced from  the  House  Labor and  Commerce                                                               
Standing Committee.                                                                                                             
                                                                                                                                
The committee took an at-ease from 3:45 p.m. to 3:48 p.m.                                                                       
                                                                                                                                
HB 288 - CHANGING NAME OF DEPT OF COMM & ECON DEV.                                                                            
                                                                                                                                
Number 1321                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL  NO.  288,  "An Act  changing  the  name  of  the                                                               
Department of  Community and Economic Development."   [Before the                                                               
committee was CSHB 288(STA).]                                                                                                   
                                                                                                                                
Number 1327                                                                                                                     
                                                                                                                                
REPRESENTATIVE  VIC KOHRING,  Alaska State  Legislature, sponsor,                                                               
said that HB 288 changes the  name of the Department of Community                                                               
&  Economic Development  to "Department  of  Commerce &  Economic                                                               
Development."  He opined that  the name "Department of Commerce &                                                               
Economic  Development" more  accurately  reflects  the goals  and                                                               
strategies  of that  department, adding  that its  mission is  to                                                               
promote commerce  and the  development of  Alaska's economy.   He                                                               
pointed out that Governor Murkowski,  in his "State of the State"                                                               
speech  in January,  announced that  his administration  would be                                                               
referring  to the  department as  the  "Department of  Commerce."                                                               
Representative  Kohring  said that  the  goal  of  HB 288  is  to                                                               
formalize that concept in statute.                                                                                              
                                                                                                                                
REPRESENTATIVE KOHRING opined that  using the name "Department of                                                               
Community  &  Economic   Development"  somewhat  complicates  the                                                               
state's   efforts  to   attract  investment.     He   listed  the                                                               
department's  goals  and  strategies   as  being  the  following:                                                               
promote  local economic  development and  crucial infrastructure,                                                               
market  Alaska's   goods  and  services  throughout   the  world,                                                               
organize  and  conduct  business  and trade  missions  to  expand                                                               
product sales  in current  markets and  develop new  markets, and                                                               
facilitate   the  exchange   of   information  between   Alaska's                                                               
exporters and potential customers.   He mentioned that many other                                                               
states have a  comparable department with the  word "commerce" in                                                               
its name.                                                                                                                       
                                                                                                                                
REPRESENTATIVE   CRAWFORD   noted   that   a   few   years   ago,                                                               
Representative  Kohring sponsored  the legislation  that combined                                                               
the Department of Community and  Regional Affairs (DCRA) with the                                                               
Department of  Commerce & Economic Development,  thereby creating                                                               
what  is now  known as  the  Department of  Community &  Economic                                                               
Development.   He asked what has  happened to the mission  of the                                                               
DCRA:   is  it  no  longer a  part  of  the current  department's                                                               
mission?  He  added that according to his  recollection, having a                                                               
portion of  each of  the old department  names combined  into the                                                               
new department  name was a  compromise which intended  to reflect                                                               
that the new department would carry  on with the missions of both                                                               
departments.    House  Bill  288  appears to  do  away  with  all                                                               
vestiges of the DCRA.                                                                                                           
                                                                                                                                
Number 1544                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING offered that the  former DCRA has not gone                                                               
away; instead,  it has become  a division within the  DCED called                                                               
the  Division   of  Community  and  Business   Development.    He                                                               
indicated that because it is  important to develop Alaska's rural                                                               
economy, it  is not  his intention  to hurt or  do away  with the                                                               
former DCRA's  programs.  Merging  the two departments  has saved                                                               
money by  eliminating duplication  and trimming  upper management                                                               
costs, he  opined, and  has thus ensured  the continuance  of the                                                               
programs important  to rural  Alaska.   He assured  the committee                                                               
that even  with a name  change, the department will  maintain its                                                               
Division of Community and Business Development.                                                                                 
                                                                                                                                
REPRESENTATIVE GUTTENBERG said he  is concerned that changing the                                                               
department's  name   will  leave  people  in   rural  communities                                                               
wondering  whether   their  needs  will  be   overlooked  by  the                                                               
administration.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  KOHRING, in  an  effort  to allay  Representative                                                               
Guttenberg's concern,  opined that the department's  track record                                                               
over  the last  four years  demonstrates  that the  DCED has  not                                                               
compromised  the aforementioned  programs  and  has instead  made                                                               
them better by becoming more efficient.                                                                                         
                                                                                                                                
Number 1683                                                                                                                     
                                                                                                                                
EDGAR  BLATCHFORD,   Commissioner,  Department  of   Community  &                                                               
Economic  Development   (DCED),  said  that   the  administration                                                               
supports HB  288.  He added  that the term "commerce"  is broader                                                               
and more  clearly reflects the  role of the department,  and that                                                               
the  administration believes  that  "commerce" includes  dealings                                                               
with governments  and all of  their subdivisions -  the boroughs,                                                               
the  unorganized   boroughs,  and   other  entities   within  the                                                               
unorganized boroughs.   After  mentioning that  he'd at  one time                                                               
served as  commissioner for  the DCRA, he  relayed that  with the                                                               
merger, the  DCED's mission is twofold:   one, continue to  be an                                                               
advocate  for  rural  Alaska  and   the  municipalities  in  both                                                               
organized and unorganized  boroughs; and, two, be  "somewhat of a                                                               
regulator"  regarding  occupational   licensing,  insurance,  and                                                               
investments.                                                                                                                    
                                                                                                                                
COMMISSIONER BLATCHFORD went on to say:                                                                                         
                                                                                                                                
      We feel that this will send a very clear message to                                                                       
       the people who are eager to do business, or [are]                                                                        
     thinking  about  doing  business, in  the  state,  that                                                                    
     Alaska is  open for  business and  that we  welcome the                                                                    
     opportunity  to discuss  business  activities, both  in                                                                    
     rural Alaska and  in the urban centers. ... I  was at a                                                                    
     conference  the other  day, and  it was  where you  had                                                                    
     financing agencies  from across the country  meeting in                                                                    
     Anchorage,   and  when   I  was   introduced  as   "the                                                                    
     commissioner  of the  soon to  be called  Department of                                                                    
     Commerce   and  Economic   Development,"  one   of  the                                                                    
     representatives  from  another  state leaned  over  and                                                                    
     said that is what their state  did two years ago - they                                                                    
     changed  the name  of the  department  to more  clearly                                                                    
     reflect what  the mission of  that department  was, and                                                                    
     that was  to encourage commercial  activities, business                                                                    
     activities, economic activities.                                                                                           
                                                                                                                                
COMMISSIONER  BLATCHFORD, in  response to  a question,  said that                                                               
when he  was commissioner of  DCRA, his  mission was to  serve as                                                               
the commissioner  of a department  that was dedicated,  heart and                                                               
soul, to rural  Alaska, to assist those  communities in accessing                                                               
government,   in   generating   economic   activities,   and   in                                                               
establishing local government entities.                                                                                         
                                                                                                                                
REPRESENTATIVE CRAWFORD  asked whether changing  the department's                                                               
name will result in those goals no longer being a focus.                                                                        
                                                                                                                                
COMMISSIONER  BLATCHFORD   said  that  the  development   of  the                                                               
Division of  Community and Business  Development within  the DCED                                                               
was intended  to ensure that  those goals  did remain a  focus of                                                               
the department.   He said  that the DCED  takes its role  in that                                                               
regard very  seriously, and  that the  Division of  Community and                                                               
Business Development  is the largest  section in  the department.                                                               
He went  on to say:   "The way  the department is  organized now,                                                               
you have the  regulators, so to speak, on one  side, and then you                                                               
have the advocates, so to speak,  on the other side, and we bring                                                               
the two together  to look at how we can  best ... foster economic                                                               
activities  throughout  the  state."    In  response  to  another                                                               
question, he said  that he did not see  changing the department's                                                               
name  as  creating a  problem.    He  opined  that in  order  for                                                               
Alaska's  communities to  become self  sufficient, there  must be                                                               
economic activity.   The DCED will continue to  work closely with                                                               
communities to  help them  develop a  strong private  sector, and                                                               
changing the  name of  the department, he  surmised, will  send a                                                               
strong message  that the  private sector is  the entity  that can                                                               
offer hope, economic opportunities, jobs, and responsibility.                                                                   
                                                                                                                                
Number 1957                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DAHLSTROM moved  to report  CSHB 288(STA)  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal note.                                                                                                               
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  whether   the  sponsor  and  the                                                               
commissioner had given consideration to other possible names.                                                                   
                                                                                                                                
COMMISSIONER BLATCHFORD  indicated that  they had  simply settled                                                               
on "the Department of Commerce & Economic Development."                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG asked how the  name change is going to be                                                               
perceived by those living in rural Alaska.                                                                                      
                                                                                                                                
COMMISSIONER BLATCHFORD replied:                                                                                                
                                                                                                                                
     I  think   ...  Alaska   has  changed.  ...   When  the                                                                    
     Department  of  Community   and  Regional  Affairs  was                                                                    
     created 30-some  years ago, ...  more of Alaska  was in                                                                    
     the  unorganized  borough,  and   a  large  portion  of                                                                    
     Alaska's  population was  in  the unorganized  borough.                                                                    
     That has changed  to some degree and you  now have more                                                                    
     boroughs,   certainly   more   communities,   organized                                                                    
     communities,  [and] second  class cities  recognized by                                                                    
     the state.   So ... I  think ... changing ...  the name                                                                    
     is a recognition that Alaska  has also changed and that                                                                    
     we're moving with the times ...  in this day and age of                                                                    
     budget cuts,  ... that we're seizing  the opportunities                                                                    
     to present a good public  image that we want commercial                                                                    
     activities, business activities, throughout the state.                                                                     
                                                                                                                                
[Chair Anderson turned the gavel over to Vice Chair Lynn.]                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  mentioned that he'd  considered offering                                                               
an  amendment to  change  the department's  name  in a  different                                                               
fashion, but had since changed his mind.                                                                                        
                                                                                                                                
Number 2120                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM again moved  to report CSHB 288(STA) out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying zero fiscal note.                                                                                                  
                                                                                                                                
Number 2130                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG  objected.  He indicated  that removing                                                               
"Community" from  the department's name is  a significant, albeit                                                               
symbolic, change because it shifts the focus from rural Alaska.                                                                 
                                                                                                                                
REPRESENTATIVE  CRAWFORD opined  that  the  proposed name  change                                                               
focuses the department's mission  away from communities - leaving                                                               
out  regional   affairs  -  and  that   "community  advocacy"  or                                                               
"regional   affairs"  should   be   included  as   part  of   the                                                               
department's name.                                                                                                              
                                                                                                                                
VICE CHAIR  LYNN opined  that commerce, in  both urban  and rural                                                               
areas, needs to be developed.                                                                                                   
                                                                                                                                
Number 2253                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG removed his objection.                                                                                
                                                                                                                                
Number 2257                                                                                                                     
                                                                                                                                
VICE CHAIR LYNN announced that  without objection, [CSHB 288(STA)                                                               
was  reported   from  the  House  Labor   and  Commerce  Standing                                                               
Committee].                                                                                                                     
                                                                                                                                
HB 272 - MOTOR VEHICLE DEALERS                                                                                                
                                                                                                                                
Number 2266                                                                                                                     
                                                                                                                                
VICE CHAIR LYNN  announced that the next order  of business would                                                               
be  HOUSE  BILL  NO.  272,  "An Act  relating  to  motor  vehicle                                                               
dealers."                                                                                                                       
                                                                                                                                
Number 2274                                                                                                                     
                                                                                                                                
LINDA SYLVESTER, Staff to  Representative Bruce Weyhrauch, Alaska                                                               
State  Legislature,   on  behalf  of   Representative  Weyhrauch,                                                               
sponsor, noted that Section 1  is the most controversial section,                                                               
and  that   Section  2  amends   statute  created  by   the  22nd                                                               
legislature's  HB 182.    She  offered that  Section  1 seeks  to                                                               
correct portions of current statute  that are unenforceable.  She                                                               
added:  "Currently  it's not  permitted  to  sell a  ...  current                                                               
year/model vehicle, and that section needs to be changed."                                                                      
                                                                                                                                
MS.  SYLVESTER  turned  attention  to  Amendment  1,  which  read                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Page 2, Line 7                                                                                                             
                                                                                                                                
     INSERT:    (3)  Purchased directly  from  consumer  for                                                                    
     purposes for resale; or                                                                                                    
                (4) Vehicle has been  in service with a bona                                                                    
     fide rental fleet for 6 months.                                                                                            
                                                                                                                                
MS. SYLVESTER  opined that Amendment  1 would allow  current year                                                               
models to  be sold  by car  rental agencies  that have  had those                                                               
cars in their  fleets for six months, and would  allow dealers to                                                               
sell cars that they've purchased  from consumers specifically for                                                               
the purpose of reselling them.                                                                                                  
                                                                                                                                
TAPE 03-49, SIDE B                                                                                                            
Number 2370                                                                                                                     
                                                                                                                                
MS.  SYLVESTER asked  that the  committee take  further testimony                                                               
before considering whether to adopt Amendment 1.                                                                                
                                                                                                                                
VICE  CHAIR LYNN  asked  whether the  paragraph  (4) proposed  by                                                               
Amendment 1 refers  to vehicles that have been in  service for at                                                               
least six months, exactly six months, or less than six months.                                                                  
                                                                                                                                
The committee took an at-ease from 4:27 p.m. to 4:28 p.m.                                                                       
                                                                                                                                
Number 2291                                                                                                                     
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR.,   Assistant  Attorney  General,  Fair                                                               
Business   Practices   Section,   Civil   Division   (Anchorage),                                                               
Department  of  Law  (DOL),  suggested   that  that  language  in                                                               
Amendment 1 should read "for at least six months."                                                                              
                                                                                                                                
MR. SNIFFEN  went on to say  that the eight sections  of the bill                                                               
focus  on two  primary  areas.   He said  that  Sections 2-8  are                                                               
clarifications to  the existing  law that  was passed  last year.                                                               
He added  that certain  provisions of HB  272 remove  portions of                                                               
existing  law that  he  felt  were not  necessary  given what  he                                                               
called "Alaska's auto  climate."  Turning attention  to Section 1                                                               
of HB 272, he said:                                                                                                             
                                                                                                                                
     There has  been a primary misconception  about what the                                                                    
     current  state  of  the  law  is in  Alaska.    As  Ms.                                                                    
     Sylvester pointed out, under  current Alaska law, it is                                                                    
     illegal  for   any  auto  dealer  to   sell  a  current                                                                    
     model/year  used  vehicle.   And  let  me repeat  that:                                                                    
     under current law, if you  do not have a manufacturer's                                                                    
     statement  of origin  for a  vehicle,  you cannot  sell                                                                    
     that  vehicle; whether  you're a  new car  dealer or  a                                                                    
     used car dealer, it makes no difference. ...                                                                               
                                                                                                                                
     What Section  1 does  is carve out  an exception  to at                                                                    
     least  allow  you  to  sell  some  current  model  used                                                                    
     vehicles if you receive them  in the ordinary course of                                                                    
     business   in  the   trade,  and   now,  through   this                                                                    
     amendment, perhaps  if it's a bona  fide rental vehicle                                                                    
     or if  you purchased it  from a consumer or  some other                                                                    
     means.  So it just  needs to be remembered that without                                                                    
     this amendment,  we go  back to  the existing  law; the                                                                    
     existing law says, if you're  a car dealer [and] you've                                                                    
     got  a current  model  used vehicle  on  your lot,  you                                                                    
     can't  sell it,  and I  can go  out there  tomorrow and                                                                    
     take all those off your lot.   So we do need to address                                                                    
     that  situation, we  don't take  a position  on whether                                                                    
     this language in  Section 1 is the best  way to address                                                                    
     that, but it's an attempt to do that.                                                                                      
                                                                                                                                
Number 2152                                                                                                                     
                                                                                                                                
MR. SNIFFEN continued:                                                                                                          
                                                                                                                                
     And  I want  to comment  briefly on  testimony received                                                                    
     from  the North  American Automobile  Trade Association                                                                    
     [NAATA] on  Monday, just so  the committee is  clear on                                                                    
     some of  the legal ramifications  of Section 1.   There                                                                    
     was  some  suggestion  that this  section  may  violate                                                                    
     provisions of  the North American Free  Trade Agreement                                                                    
     [NAFTA].   And  we've looked  through NAFTA;  there are                                                                    
     two  chapters of  NAFTA -  chapter 3  and chapter  15 -                                                                    
     that   address  themselves   to  trade,   tariffs,  and                                                                    
     antitrust issues.  Actually,  there's an annex to NAFTA                                                                    
     called Annex  300-A, that deals with  auto transactions                                                                    
     specifically.     And   our  review   of  those   NAFTA                                                                    
     provisions do  not suggest that anything  in that would                                                                    
     prohibit  this kind  of legislation.   And  if it  does                                                                    
     prohibit  this kind  of  legislation,  then we  already                                                                    
     have  a   problem  because  our  current   law  already                                                                    
     prohibits  the sale  of these  kinds of  vehicles.   So                                                                    
     that really is not a relevant issue.                                                                                       
                                                                                                                                
     Another  issue   raised  by  the  NAATA   folks  was  a                                                                    
     potential antitrust concern.   Antitrust laws in Alaska                                                                    
     are very complex, but there  is something about the law                                                                    
     that  [is] universally  agreed upon,  and that  is, our                                                                    
     laws do  not protect competitors; they  are intended to                                                                    
     protect  competition.     And  it's  only  [reasonable]                                                                    
     competition at that.   It is unclear  whether Section 1                                                                    
     of  HB 272  would have  any kind  of an  impact, or  at                                                                    
     least an  unreasonable impact, on competition  for this                                                                    
     very small and narrow segment  of automobiles.  To find                                                                    
     out if  it did, it  would require  that we engage  in a                                                                    
     very   lengthy   investigation   that   would   include                                                                    
     identification of product  markets, geographic markets,                                                                    
     relevant market power held by  the competitors in those                                                                    
     markets, and  we'd have to  weigh those  things against                                                                    
     other  market  forces  to   determine  whether  or  not                                                                    
     unreasonable  restraints  on  competition existed.    I                                                                    
     don't believe  NAATA has  done that  - we  haven't done                                                                    
     that; it's  just pure conjecture that  anything in this                                                                    
     bill would raise antitrust concerns.                                                                                       
                                                                                                                                
Number 2101                                                                                                                     
                                                                                                                                
MR. SNIFFEN went on to say:                                                                                                     
                                                                                                                                
     There was  another reference to some  litigation in the                                                                    
     Lower 48  that apparently  addresses itself to  some of                                                                    
     these concerns; that  is only one lawsuit,  that we are                                                                    
     aware   of,   that   has  been   filed   against   auto                                                                    
     manufactures  for  some  antitrust  behavior  that  has                                                                    
     nothing  to do  with the  issues  in this  bill.   That                                                                    
     lawsuit dealt  with a  potential conspiracy  among auto                                                                    
     dealers  in the  United States  and Canada  to prohibit                                                                    
     the  importation of  Canadian  automobiles.   And  that                                                                    
     lawsuit  does not  address itself  to legislation  like                                                                    
     this and  is really  irrelevant to  the issues  in this                                                                    
     bill, although  it does  point out  some of  the issues                                                                    
     that at least some consumers have a concern about.                                                                         
                                                                                                                                
     There  was also  some suggestion  that the  legislature                                                                    
     could  expose itself  to  liability  for enacting  this                                                                    
     kind  of  law.     That  (indisc.  -  paper  shuffling)                                                                    
     ridiculous;  the legislature  enjoys complete  immunity                                                                    
     for its actions here.  If  you do pass [the] law that's                                                                    
     contained in Section  1 ..., and it is found  out to be                                                                    
     either illegal  under NAFTA or our  antitrust laws, the                                                                    
     result  would be,  the  law  becomes unenforceable  and                                                                    
     this   legislature  does   not   concern  itself   with                                                                    
     liability.                                                                                                                 
                                                                                                                                
     Now,  if we  get to  the real  root of  what Section  1                                                                    
     tries  to do,  I'm  going  to have  to  let other  auto                                                                    
     dealers speak to how it  has impacted their business to                                                                    
     allow used auto  dealers and brokers to  import ... low                                                                    
     mileage  Canadian  vehicles  that   are  of  a  current                                                                    
     model/year,  and   how  they  have  a   difficult  time                                                                    
     competing with those kinds of  purchases.  It's not the                                                                    
     Department of  Law's job to  really regulate  that kind                                                                    
     of competition; we leave that  up to the competitors in                                                                    
     the  market  place.   It's  our  job  to look  out  for                                                                    
     consumers,  and  it  is  unclear  whether  or  not  the                                                                    
     disallowance of  these kinds  of transactions  would be                                                                    
     beneficial or harmful to consumers.                                                                                        
                                                                                                                                
Number 2027                                                                                                                     
                                                                                                                                
     We do  understand that somewhere in  the process, these                                                                    
     low mileage, current  model/year Canadian vehicles find                                                                    
     their  way to  the U.S.,  probably in  legal ways,  but                                                                    
     somewhere   in  the   chain  there's   an  illegitimate                                                                    
     transaction.    And  I  use that  word  instead  of  an                                                                    
     illegal   transaction  because   I  don't   doubt  that                                                                    
     perhaps, at every step in  the process, something legal                                                                    
     has occurred.   But we have  heard in our office  - and                                                                    
     we  have not  investigated this,  so I  don't have  any                                                                    
     hard  facts  -  that  exporters in  Canada  are  hiring                                                                    
     college kids,  for example,  to go  to car  dealers and                                                                    
     buy vehicles, or they're setting  up dummy companies to                                                                    
     take  vehicles  so they  can  get  them into  the  U.S.                                                                    
     [And] somewhere along the chain,  it appears that there                                                                    
     is  some  kind  of  an  illegitimate  transaction  that                                                                    
     results  in a  lot of  these vehicles  ... coming  into                                                                    
     Alaska.                                                                                                                    
                                                                                                                                
MR. SNIFFEN concluded:                                                                                                          
                                                                                                                                
     Whether that's good for consumers  or bad for consumers                                                                    
     is  a call  the legislature  will have  to make,  but I                                                                    
     believe  that the  new auto  dealers are  trying to  do                                                                    
     something to  address that situation.   So the language                                                                    
     in Section 1 is not  language the Department of Law has                                                                    
     proposed;  we  have  consulted with  the  [Alaska  Auto                                                                    
     Dealers  Association  (AADA)]  about the  language,  we                                                                    
     don't oppose  it, there might  be some  better language                                                                    
     that we  could come  up with to  deal with  this issue,                                                                    
     but we haven't been able  to come up with that language                                                                    
     in  our  department.  ... I  certainly  understand  the                                                                    
     concern  that  they're  trying  to  address,  [but]  we                                                                    
     simply don't have a position  on whether or not this is                                                                    
     the best  way to address that  or not.  And  with that,                                                                    
     I'd  be happy  to  answer any  questions the  committee                                                                    
     has.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GATTO  said  that  if  he wanted  to  buy  a  new                                                               
vehicle, he would want  it to truly be a new  vehicle.  He asked,                                                               
is it  a new  vehicle if it  was made in  Canada and  brought in?                                                               
Because it  might have  been made  in Canada,  in any  event, and                                                               
then sold  by "the  local distributor that's  franchised."   Is a                                                               
distinction being  made that  one vehicle is  new and  another is                                                               
not?                                                                                                                            
                                                                                                                                
MR. SNIFFEN replied:                                                                                                            
                                                                                                                                
     If your vehicle  is manufactured in Canada  for sale in                                                                    
     the United States,  and it comes to a  dealer here from                                                                    
     the manufacturer  with the manufacturer's  statement of                                                                    
     origin, it  is a new vehicle.   If your vehicle  is new                                                                    
     [and] it's purchased from a  consumer or an exporter in                                                                    
     Canada  from   a  Canadian   dealer,  because   it  was                                                                    
     manufactured for  a destination in  Canada - it  has 10                                                                    
     miles on  it and  then it's  brought across  the border                                                                    
     and  (Indisc.  -  coughing) used  car  dealer  here  in                                                                    
     Alaska, and you  go to that lot and it's  a ... 2003 or                                                                    
     2004 ...  Dodge 2500 (indisc.  - coughing) 10  miles on                                                                    
     it - it  is now a used  vehicle in the eyes  of the law                                                                    
     because it has been sold once and titled.                                                                                  
                                                                                                                                
Number 1867                                                                                                                     
                                                                                                                                
     And there  are some serious implications  to that fact;                                                                    
     you  might think  you're buying  the same  product, ...                                                                    
     but  because  it's a  used  vehicle,  you do  not  have                                                                    
     Alaska lemon  law protection, for example,  because our                                                                    
     lemon law  only applies to  new vehicles.  So  your low                                                                    
     mileage  Canadian   vehicle  is  now  a   used  vehicle                                                                    
     (indisc. - coughing) excluded  from making claims under                                                                    
     our lemon  law.   Somewhere in  that process,  too, the                                                                    
     odometer on that vehicle has  probably been changed; we                                                                    
     have  reports  that  a  lot   of  those  changes  don't                                                                    
     necessarily  happen in  conformance  with federal  law.                                                                    
     So  you don't  know if  the  miles on  that are  really                                                                    
     accurate or not,  although I suspect a lot  of them are                                                                    
     documented fairly well.                                                                                                    
                                                                                                                                
     And  there is  another recent  consumer issue  that has                                                                    
     come  to  the  attention   of  our  office,  that  your                                                                    
     manufacturers warranty  may not be valid  in the United                                                                    
     States.   Vehicles manufactured for sale  in Canada are                                                                    
     subject to  factory warranties so  long as  they remain                                                                    
     registered  in Canada;  as soon  as  you register  that                                                                    
     vehicle  in  the  United States,  manufacturers  aren't                                                                    
     required to honor  those warranties.  In  the past they                                                                    
     have,   [but]   I   understand   that   some   of   the                                                                    
     manufacturers are now declining to do that.                                                                                
                                                                                                                                
MR. SNIFFEN concluded:                                                                                                          
                                                                                                                                
     And  that's  information   that  (indisc.  -  coughing)                                                                    
     consumer  that the  fix  may not  be  to prevent  these                                                                    
     transactions,  the fix  may be  just to  provide better                                                                    
     consumer awareness, so the  consumer can evaluate those                                                                    
     risks  and then  determine  whether or  not  this is  a                                                                    
     transaction he'd like to make.                                                                                             
                                                                                                                                
REPRESENTATIVE  GATTO  asked  whether  total  disclosure  of  the                                                               
aforementioned  issues would  make  those  types of  transactions                                                               
acceptable.                                                                                                                     
                                                                                                                                
MR. SNIFFEN  said not under  current Alaska law, which  says that                                                               
as  soon as  that  manufacturer's statement  of  origin (MSO)  is                                                               
lost, that  sale is illegal.   So, current  law would have  to be                                                               
changed in order to make such transactions legal.                                                                               
                                                                                                                                
VICE  CHAIR LYNN  asked:   "How many  cars are  we talking  about                                                               
here? ... How big a problem is this?"                                                                                           
                                                                                                                                
MR. SNIFFEN offered an estimate of between 500 and 1,000 cars.                                                                  
                                                                                                                                
VICE  CHAIR LYNN  asked whether  all "Canadian  cars" conform  to                                                               
"American specs".                                                                                                               
                                                                                                                                
MR. SNIFFEN indicated that they did.                                                                                            
                                                                                                                                
Number 1678                                                                                                                     
                                                                                                                                
VICE CHAIR LYNN returned the gavel to Chair Anderson.                                                                           
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked whether Section  1 of the bill is                                                               
enforceable.                                                                                                                    
                                                                                                                                
MR. SNIFFEN  offered that  the controversy  of Section  1 centers                                                               
around whether or not used  car dealers should be prohibited from                                                               
selling current  model Canadian vehicles.   Current law prohibits                                                               
it under all  circumstances.  Section 1 would  modify current law                                                               
to  allow  certain types  of  such  transactions  to occur.    If                                                               
Section  1  were   to  be  deleted,  the  status   quo  would  be                                                               
maintained.  He added that  current law is problematic to enforce                                                               
because  he would  have  to go  to  every car  lot  and tell  all                                                               
dealers that  they cannot  sell any  current model  used vehicles                                                               
that don't have an MSO.                                                                                                         
                                                                                                                                
REPRESENTATIVE GUTTENBERG  turned attention  to page 6,  line 20,                                                               
and noted that 10 miles is being  changed to 100 miles.  He asked                                                               
whether  the  10-mile limit  has  been  problematic and,  if  so,                                                               
whether  providing  for  more  than a  100-mile  limit  would  be                                                               
better.                                                                                                                         
                                                                                                                                
MR. SNIFFEN  indicated that the  aforementioned change is  one of                                                               
the "cleanup  provisions" of the bill.   The change to  100 miles                                                               
will  allow dealers  in Wasilla,  for example,  to send  vehicles                                                               
received as trade-ins to Anchorage  for repairs or detailing.  He                                                               
opined that the  100-mile limit will be more  than sufficient for                                                               
that purpose and will still protect consumers.                                                                                  
                                                                                                                                
Number 1455                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN  referred  to  Amendment  1  [text  provided                                                               
previously], and indicated  that he wished to amend  it such that                                                               
the last line  would read, "(4) Vehicle has been  in service with                                                               
a bona fide rental fleet for  at least 6 months."  [The amendment                                                               
to Amendment 1 was treated as adopted.]                                                                                         
                                                                                                                                
Number 1428                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN  made a  motion  to  adopt Amendment  1  [as                                                               
amended].   There being  no objection,  Amendment 1  [as amended]                                                               
was adopted.                                                                                                                    
                                                                                                                                
Number 1412                                                                                                                     
                                                                                                                                
STEVE  ALLWINE,   Secretary,  Alaska  Auto   Dealers  Association                                                               
(AADA),  said that  the  AADA supports  HB 272  as  amended.   He                                                               
opined that the goal of the  bill is to provide clear and concise                                                               
corrections to  previous legislation while trying  to retain that                                                               
legislation's intent.  He went on to say:                                                                                       
                                                                                                                                
     I and the dealers that  I represent believe that HB 272                                                                    
     accurately  provides these  corrections.   With respect                                                                    
     to Section 1,  ... it is not our  intent, as automobile                                                                    
     dealers,  to preclude  used  car  dealers from  selling                                                                    
     current model used cars.   I have to echo Mr. Sniffen's                                                                    
     comments ...  that the statute  as it  currently exists                                                                    
     precludes  all dealers  from  selling  a current  model                                                                    
     used  vehicle.   With the  changes we've  proposed, all                                                                    
     dealers  -  not just  new  car  dealers, but  used  car                                                                    
     dealers  as well  - will  be  able to  take and  market                                                                    
     current used  [vehicles] when  they're traded  in, when                                                                    
     they're purchased from an  individual consumer, or when                                                                    
     they  come  from a  bona  fide  rental fleet  -  either                                                                    
     through an auction  or directly - when  they've been in                                                                    
     service for specified period of time.                                                                                      
                                                                                                                                
     Starting  at  the  beginning ...,  the  acquisition  of                                                                    
     these vehicles is legal, but  essentially it amounts to                                                                    
     the manufacturing of a used  vehicle.  I have given you                                                                    
     some attachments, one  of those is a  good indicator of                                                                    
     that - [it] is the  advertisement that says the vehicle                                                                    
     has  30 miles  on it.   That  is not  a bona  fide used                                                                    
     vehicle.    The  process  ...  can  involve  a  college                                                                    
     student, it  can involve somebody ...  handing somebody                                                                    
     $100 so  that the  vehicle is titled  in their  name in                                                                    
     Canada.    These vehicles  that  come  from Canada  are                                                                    
     built specifically  for sale and use  in their specific                                                                    
     country.   In  your attachment  you  have a  copy of  a                                                                    
     manufacturer's  invoice to  a dealer  that says  at the                                                                    
     bottom, in  our case, [that]  the vehicle is  built for                                                                    
     the U.S. market and is supposed to be sold there.                                                                          
                                                                                                                                
Number 1291                                                                                                                     
                                                                                                                                
MR. ALLWINE continued:                                                                                                          
                                                                                                                                
     Problems   when  the   vehicle  enters   this  country:                                                                    
     prerequisite is  the speedometer  must be  changed from                                                                    
     kilometers  to  miles.   Two  issues  and concerns  are                                                                    
     raised when this is done.   The first one:  an error in                                                                    
     the  mileage  of a  vehicle  will  render it  basically                                                                    
     worthless on  the retail market.   The stigma  of miles                                                                    
     unknown on  an odometer statement is  significant, it's                                                                    
     huge, and  it basically will render  the car worthless.                                                                    
     These mistakes  can happen,  and frequently,  when they                                                                    
     do these  type of conversions; however,  one mistake is                                                                    
     going to cost  the consumer thousands of  dollars.  The                                                                    
     second:   temptation for speedometer fraud  is strong -                                                                    
     the  difference  in a  popular  model  pickup truck  at                                                                    
     3,000 miles  versus 20,000 is  in excess of $600.   Oh,                                                                    
     by the way,  how do we change these  speedometers?  You                                                                    
     can buy  the equipment over  the Internet - you  have a                                                                    
     copy of the article - [for] about $1,800 ....                                                                              
                                                                                                                                
     Title fraud:   If you  bring a vehicle in  from Canada,                                                                    
     because  of  how  the title  is  transitioned,  if  the                                                                    
     vehicle has been totaled, if  it's been in a flood, you                                                                    
     don't  know.    And  ultimately  the  consumer  has  no                                                                    
     recourse;  there's  no   recourse  with  that  Canadian                                                                    
     importer.    Ever try  to  sue  a business  in  another                                                                    
     country?   Another problem is  manufacturer's warranty:                                                                    
     ... a  number of the manufacturers  have eliminated the                                                                    
     manufacturer's  warranty  from  their vehicles.    What                                                                    
     some of  the used  car dealers have  taken to  doing is                                                                    
     they have  said, "We're putting  a service  contract on                                                                    
     your vehicle."  However,  they're not indicating it's a                                                                    
     service contract;  they're stating  in this, in  the ad                                                                    
     that  you have  - [it's]  a classic  example -  they're                                                                    
     saying it's  a warranty.  There's  a difference between                                                                    
     a manufacturer's  warranty and a service  contract.  It                                                                    
     is  misleading,  it is  not  honest,  and it  does  not                                                                    
     provide the same coverage.                                                                                                 
                                                                                                                                
Number 1193                                                                                                                     
                                                                                                                                
MR. ALLWINE concluded:                                                                                                          
                                                                                                                                
     ... I  sent you a  letter; ... in my  closing paragraph                                                                    
     ...  I said  ...that  ultimately, if  the consumer  has                                                                    
     difficulty with a current model  used car, there's only                                                                    
     one  place they  go -  they come  to a  new car  dealer                                                                    
     because  a new  car dealer  has the  investment in  the                                                                    
     equipment and in  the tools and in the  training and in                                                                    
     the facilities.  If you've got  a car that's one or two                                                                    
     years  old,  and you  have  a  problem, your  used  car                                                                    
     dealer ...  is going to  say, "Well, that's  okay; it's                                                                    
     got a  warranty, it's got  a service contract,  take it                                                                    
     to a  new car  dealer."   It is  not appropriate  for a                                                                    
     used  car dealer  to have  the  ability to  sell a  new                                                                    
     vehicle   without   having    any   responsibility   or                                                                    
     obligation  after the  sale.   This  is a  manufactured                                                                    
     used car;  it is not the  same as what we're  trying to                                                                    
     correct here for bona fide used car commerce.                                                                              
                                                                                                                                
MR.  ALLWINE, in  response  to  a question,  said  that used  car                                                               
dealers have some obligation by  virtue of a service contract, if                                                               
they have  a facility, to fix  the vehicles they sell.   However,                                                               
99 out of 100  used car dealers do not have  the special tools or                                                               
the special training to fix current model vehicles.                                                                             
                                                                                                                                
REPRESENTATIVE GATTO asked whether a  new car dealer in Anchorage                                                               
has the  obligation to  honor the factory  warranty of  a vehicle                                                               
that was purchased new in Indiana, for example.                                                                                 
                                                                                                                                
MR. ALLWINE said yes.                                                                                                           
                                                                                                                                
REPRESENTATIVE GATTO asked  whether the same would be  true for a                                                               
vehicle purchased new in Canada.                                                                                                
                                                                                                                                
MR. ALLWINE said it would be true  if the owner of the vehicle is                                                               
a Canadian citizen.                                                                                                             
                                                                                                                                
REPRESENTATIVE GATTO  asked whether  a U.S.  citizen who  went to                                                               
Canada to  purchase a new vehicle  could expect a new  car dealer                                                               
in Anchorage to honor the manufacturer's warranty.                                                                              
                                                                                                                                
Number 1088                                                                                                                     
                                                                                                                                
MR. ALLWINE replied:                                                                                                            
                                                                                                                                
     The answer is that it would  be difficult for you, as a                                                                    
     consumer from  this country, to  go to Canada  and make                                                                    
     that purchase,  and would be  highly unlikely.   In the                                                                    
     event  you  did, because  that  vehicle  was built  and                                                                    
     manufactured for sale and use  in Canada, that vehicle,                                                                    
     in  many   cases,  would  not  have   a  manufacturer's                                                                    
     warranty.                                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG asked  whether the aforementioned service                                                               
contracts are insurance products or "underwritten separately."                                                                  
                                                                                                                                
MR. ALLWINE replied:                                                                                                            
                                                                                                                                
     Service   contracts,  in   a  number   of  cases,   are                                                                    
     underwritten  by  some  other  company.    But  service                                                                    
     contracts  are  not  like  warranties  in  as  much  as                                                                    
     they're not  all inclusive.   They will  cover specific                                                                    
     things, but  it is  incumbent on  the consumer  to find                                                                    
     somebody who is willing to  make that repair and accept                                                                    
     payment  from that  service contract  company.   In our                                                                    
     instance,  we  do  sell a  service  contract,  and  our                                                                    
     service  contract  is  backed  by  the  manufacturer  -                                                                    
     Daimler Chrysler.   Ford Motor Company  offers the same                                                                    
     thing as do  most of the manufacturers.   But there are                                                                    
     offshore and there are  independent companies that also                                                                    
     offer service contracts.                                                                                                   
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked whether  HB 272 prevents  a used                                                               
car dealer from selling a new car.                                                                                              
                                                                                                                                
MR. ALLWINE replied:                                                                                                            
                                                                                                                                
     The law prevents  a used car dealer from  selling a new                                                                    
     car.    A  new  car  is an  untitled  vehicle  that  is                                                                    
     purchased from the  manufacturer and is sold  by one of                                                                    
     the  manufacturer's agents.  ...  This  bill, with  the                                                                    
     recommended amendment, does not  preclude that used car                                                                    
     dealer  from selling  a bona  fide  current model  used                                                                    
     vehicle.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LYNN   asked  whether  extended   warranties  are                                                               
actually warranties or just service contracts.                                                                                  
                                                                                                                                
MR.  ALLWINE said  that  those are  just  service contracts,  and                                                               
indicated  that  the practice  of  calling  them "warranties"  is                                                               
misrepresentation.  In response to another question, he said:                                                                   
                                                                                                                                
     At  this  point  in  time,  you  will  see  rental  car                                                                    
     companies  starting  to  let loose  of  some  of  their                                                                    
     rental fleets,  which would be  current model.   And so                                                                    
     those  vehicles will  start to  show up.   The  current                                                                    
     statute, as  it exists, precludes anybody  from selling                                                                    
     a  current model  used vehicle.   What  we're proposing                                                                    
     allows everybody  to do it,  but it doesn't  permit the                                                                    
     wholesale manufacture of a used vehicle from Canada.                                                                       
                                                                                                                                
MR. ALLWINE reiterated  that a used vehicle is one  that has been                                                               
titled.                                                                                                                         
                                                                                                                                
Number 0690                                                                                                                     
                                                                                                                                
CHRIS   HESTER,    Lyberger's   Car   and   Truck    Sales,   LLC                                                               
("Lyberger's"), said that he strongly  believes that Section 1 of                                                               
HB 272 needs to be deleted.  He  offered an example of how HB 272                                                               
would affect the consumer:                                                                                                      
                                                                                                                                
     About  a year  ago, a  husband and  a wife  purchased a                                                                    
     current  model  vehicle  from  Lyberger's,  a  Canadian                                                                    
     vehicle that we  got from an auction.   The couple knew                                                                    
     that  it was  Canadian  because we  do have  disclosure                                                                    
     forms that  they signed.   Two months later,  the woman                                                                    
     came in almost in tears  and explained that her husband                                                                    
     was the man  who ran over an elderly  lady walking home                                                                    
     with her  husband.  This  was a  story that was  in the                                                                    
     newspapers, it  was on the news.   And she came  in and                                                                    
     she asked  John if  he would buy  the car  back because                                                                    
     her husband was going to  jail and she wouldn't be able                                                                    
     to afford this car payment.   Not only did John buy the                                                                    
     car back, he refunded 100 percent of her money.                                                                            
                                                                                                                                
     Now, if  Section 1 of HB  272 was in effect,  she would                                                                    
     only be able to purchase  that vehicle at the franchise                                                                    
     dealership  and,  with  her  unforeseen  circumstances,                                                                    
     would have no other alternative  but to take it back to                                                                    
     the  franchise   dealership  to   sell  it   back;  the                                                                    
     franchise dealer,  knowing that  it was the  only place                                                                    
     she could  get rid of  the vehicle and knowing  how bad                                                                    
     she  needed to  get rid  of it,  would have  a monopoly                                                                    
     advantage ...  and would probably give  her the lowest,                                                                    
     rock-bottom  price.   This would  not have  helped this                                                                    
     lady  in  her circumstances.    Not  only is  this  how                                                                    
     Lyberger's  treats their  customers, but  it shows  you                                                                    
     that we are  there for the consumer.  And  this bill is                                                                    
     definitely not  there helping them  in any  way, shape,                                                                    
     or form.  Thank you.                                                                                                       
                                                                                                                                
Number 0574                                                                                                                     
                                                                                                                                
CARROL LYBERGER, Lyberger's Car and Truck Sales, LLC, remarked                                                                  
that the problematic word in HB 272 is the word "current".  She                                                                 
went on to say:                                                                                                                 
                                                                                                                                
     There is a  difference between a new  and used vehicle.                                                                    
     [With] a new  vehicle that is sold ...  to a franchised                                                                    
     dealer,  from the  manufacturer,  the manufacturer  got                                                                    
     paid  for  that  vehicle  [and]  it  was  sent  to  the                                                                    
     franchised  dealer.    The franchised  dealer,  whether                                                                    
     it's U.S.  or Canadian, was  paid for that  vehicle the                                                                    
     price they  were asking.   I know  what a  used vehicle                                                                    
     is:  as soon  as it is sold, it is used  - the value of                                                                    
     that vehicle will never be the same.                                                                                       
                                                                                                                                
     To Steve  [Allwine], I am  a member of the  Alaska Auto                                                                    
     Dealers Association  [but] was  never informed  of this                                                                    
     Section 1 in  [HB 272]; I learned of it  last week.  As                                                                    
     far  as  the  warranty  and service  contract  goes,  a                                                                    
     warranty  is free.    A service  contract  is what  the                                                                    
     consumer buys -  the consumer pays for  ... the service                                                                    
     contract.   That is the  difference between  a warranty                                                                    
     and a service contract. ...                                                                                                
                                                                                                                                
     As  far  as the  independent  [which  some claim]  that                                                                    
     nobody can  possibly find  - a  mechanic that  would be                                                                    
     able to  work on the  newer models - there  are several                                                                    
     independent  mechanics  that  do  have  very  expensive                                                                    
     equipment in  their shops, and  they do  warranty work.                                                                    
     Even a  lot of the new  cars stores will sublet  out to                                                                    
     some of your  independents on stuff.  I  believe it was                                                                    
     about  two years  ago  that  the independent  mechanics                                                                    
     sued the  manufacturers for the codes  because they had                                                                    
     the  equipment  but  the  codes could  not  go  to  the                                                                    
     independents  until about  six months  to a  year after                                                                    
     that vehicle came out.  So  now they're able to get the                                                                    
     codes  whenever  the  manufacturers   give  it  to  the                                                                    
     franchised dealers and mechanics. ...                                                                                      
                                                                                                                                
MS. LYBERGER concluded:                                                                                                         
                                                                                                                                
     This bill,  when they say current,  there is definitely                                                                    
     a difference between current, new,  and used.  The word                                                                    
     "current" is  ... a bad  word; there  is a new  car and                                                                    
     there is a used car.   And I thank you for listening to                                                                    
     me, and ...  anybody that wishes to  ask any questions,                                                                    
     I'll be glad to answer.                                                                                                    
                                                                                                                                
MS.  LYBERGER, in  response to  questions,  said that  Lyberger's                                                               
does offer  an "after market"  service contract.  She  added that                                                               
when   a  customer   buys  a   Canadian  vehicle   that  has   no                                                               
manufacturer's   warranty,  Lyberger's   gives  the   customer  a                                                               
"replacement"  warranty  for free.    She  noted that  there  are                                                               
several shops  in town that "do"  the warranty work, and  went on                                                               
to list  five such shops,  adding that there are  some franchised                                                               
dealers that  will also  honor the  after market  warranty though                                                               
one of those does not do so for 2003 models.                                                                                    
                                                                                                                                
Number 0283                                                                                                                     
                                                                                                                                
TERI PETRAM, Lyberger's Car and  Truck Sales, LLC, said that when                                                               
Lyberger's sells a vehicle that's  been imported from Canada, all                                                               
of the documents  are disclosed to the customer.   Also, whenever                                                               
Lyberger's  sells  any vehicle,  the  customer  is also  given  a                                                               
"Carfax"  report,  which  provides details  about  the  vehicle's                                                               
history.    She  opined  that  it is  ridiculous  to  think  that                                                               
Lyberger's would sell a vehicle  with a "rolled back" odometer or                                                               
a wrong  odometer reading.   And  if such a  vehicle did  come to                                                               
them,   she  added,   Lyberger's  wouldn't   sell  it;   instead,                                                               
Lyberger's would absorb the expense.                                                                                            
                                                                                                                                
MS. PETRAM noted  that used car dealers have to  purchase most of                                                               
their inventory from auctions because  there is no way they could                                                               
keep enough cars on the  lot, solely with trade-ins and purchases                                                               
through individuals,  to stay  in business.   To  illustrate this                                                               
point,  she  added  that Lyberger's  sells  100-some  vehicles  a                                                               
month.  Thus, Lyberger's must  supplement its inventory by buying                                                               
vehicles from  auctions, most  of which  acquire the  majority of                                                               
their  vehicles from  Canada.   She  remarked:   "We  want to  be                                                               
competitive  and  offer something  that  the  consumer wants,  so                                                               
we're  going  to  find  the  lowest  mileage  vehicles  that  are                                                               
available.   We personally don't  import these vehicles;  we have                                                               
nothing to do with the import  process, we just buy them from the                                                               
people that [import them]."                                                                                                     
                                                                                                                                
MS.  PETRAM  relayed  that  according   to  the  "General  Motors                                                               
Acceptance  Corporation,"  a warranty  is  free  and an  extended                                                               
service contract is  something the consumer pays for.   So on the                                                               
back of  the warranty  that Lyberger's gives  to the  customer to                                                               
replace the  manufacturer's warranty, it specifically  lists what                                                               
is not  covered on that  warranty.  In conclusion,  she suggested                                                               
that  the way  current  statute  and HB  272  have evolved,  they                                                               
appear  to  have  the  goal of  eliminating  any  competition  to                                                               
franchised dealers.                                                                                                             
                                                                                                                                
REPRESENTATIVE LYNN asked what  percentage of Lyberger's vehicles                                                               
are Canadian.                                                                                                                   
                                                                                                                                
MS.  PETRAM  offered  that approximately  50-60  percent  of  the                                                               
vehicles that Lyberger's sells are Canadian.                                                                                    
                                                                                                                                
TAPE 03-50, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON  determined  that  Lorri  Urban  from  the  North                                                               
American  Automobile  Trade  Association had  provided  testimony                                                               
during  the May  5  hearing on  HB 272,  and  indicated that  the                                                               
committee would  take testimony from  those that did  not testify                                                               
at that prior meeting.                                                                                                          
                                                                                                                                
Number 0045                                                                                                                     
                                                                                                                                
BRUCE MUSICK, Affordable Used Cars,  said that under HB 272, when                                                               
a new car is released, there  will be a period ranging between 17                                                               
and 24  months during which  that car can not  be sold as  a used                                                               
vehicle.  He  pointed out that the bill's  restrictions will also                                                               
apply to cars  that aren't Canadian, but won't apply  to used car                                                               
dealers  in the  Lower  48.   He  mentioned  that  many used  car                                                               
dealers in Alaska acquire inventory in the lower 48.                                                                            
                                                                                                                                
Number 0161                                                                                                                     
                                                                                                                                
DIANA PFEIFFER, President,  Alaska Automobile Dealers Association                                                               
(AADA);  President,  Alaska  Sales  and  Service,  expressed  her                                                               
support of HB 272.  On  the issue of odometer readings, she added                                                               
that  franchised  automobile  dealers   have  a  computer  system                                                               
connected  to  the manufacturer  that  allows  dealers to  verify                                                               
mileage.  She said she did  not believe that independent used car                                                               
dealers have access  to that information.  She  listed the issues                                                               
that others  have already spoken  to, and  relayed that a  lot of                                                               
people who  come into her  dealerships don't know how  to operate                                                               
their  vehicles.    She  said that  as  a  franchised  automobile                                                               
dealer,  her  firm invests  millions  of  dollars in  facilities,                                                               
training, special  tools and equipment,  and the  proper delivery                                                               
of  automobiles to  consumers.   She noted  that since  franchise                                                               
dealers have  direct communication  with manufacturers,  if there                                                               
are  safety issues  with [certain]  vehicles,  a "stop  delivery"                                                               
order or a recall  can be issued.  She offered  an example of one                                                               
such situation,  and said that  used car  dealers in her  area at                                                               
that  time were  attempting to  sell such  cars as  "newly used."                                                               
She offered  her belief that  Canadian titles do not  show liens.                                                               
In conclusion, she requested the committee's support of HB 272.                                                                 
                                                                                                                                
Number 0366                                                                                                                     
                                                                                                                                
RICHARD  HIATT,   General  Service  Manager,  Alaska   Sales  and                                                               
Service,  on the  issue of  how many  vehicles are  exported from                                                               
Canada,  suggested  that  in 1996  it  was  approximately  16,000                                                               
vehicles,  200,000 vehicles  in 2002,  and that  the practice  is                                                               
still  quite prevalent.   He  relayed  that many  people who  buy                                                               
"like new" cars from used car  dealers in the area come to Alaska                                                               
Sales and Service  in an effort to get a  better understanding of                                                               
how to  operate those vehicles.   He opined that those  who bring                                                               
Canadian cars into  Alaska for the purpose of  reselling them are                                                               
committing fraud.                                                                                                               
                                                                                                                                
Number 0494                                                                                                                     
                                                                                                                                
DARRELL  FRIESS,  Budget  Car  & Truck,  said  he  questions  Mr.                                                               
Hiatt's  assertion that  200,000 Canadian  vehicles are  exported                                                               
yearly.   He relayed  that he  opposes Section 1  of HB  272, and                                                               
opined  that there  is  a difference  between a  new  and a  used                                                               
vehicle.    He  offered  his  belief  that  current  law  already                                                               
stipulates that a  used vehicle is one that has  been titled.  He                                                               
also opined that  there should not be any  resale restrictions on                                                               
any vehicle  purchased at  what he  called a  recognized auction,                                                               
and suggested that HB 272 be amended to reflect that point.                                                                     
                                                                                                                                
Number 0567                                                                                                                     
                                                                                                                                
MARTEN MARTENSEN,  Continental Honda,  relayed that Honda  took a                                                               
very firm  stance on  imported Canadian  vehicles, and  that many                                                               
other  manufacturers  have  followed  suit.   He  explained  that                                                               
although  people who've  bought used  Canadian vehicles  at local                                                               
dealers have come  to his firm for warranty  work, Honda's stance                                                               
is that  it will  not provide  any kind  of assistance  for those                                                               
Canadian vehicles.   He opined that  even if a person  can get an                                                               
independent shop  to honor a  warranty on those  vehicles, he/she                                                               
is not getting  the same quality of work that  can be provided by                                                               
a franchised dealer.                                                                                                            
                                                                                                                                
CHAIR ANDERSON closed public testimony on HB 272.                                                                               
                                                                                                                                
Number 0686                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved  to report HB 272,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying zero fiscal note.                                                                                                  
                                                                                                                                
Number 0705                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG objected.   He  relayed that  when the                                                               
original legislation  passed, there was strong  opposition to any                                                               
consumer protection being  built into it, and opined  that HB 272                                                               
simply  continues in  that vein.   Lacking  consideration of  the                                                               
consumer in  HB 272, he said  he does not support  any continuing                                                               
restructuring of the relationship between auto dealers.                                                                         
                                                                                                                                
Number 0760                                                                                                                     
                                                                                                                                
A roll  call vote  was taken.   Representatives  Lynn, Dahlstrom,                                                               
Gatto,  Rokeberg,  Crawford,  and  Anderson  voted  in  favor  of                                                               
reporting  HB 272,  as amended,  from committee.   Representative                                                               
Guttenberg  voted  against  it.   Therefore,  CSHB  272(L&C)  was                                                               
reported from the House Labor  and Commerce Standing Committee by                                                               
a vote of 6-1.                                                                                                                  
                                                                                                                                
HB 305 - UNEMPLOYMENT COMPENSATION BENEFITS                                                                                   
                                                                                                                                
Number 0770                                                                                                                     
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be HOUSE  BILL NO. 305, "An  Act relating to the  calculation and                                                               
payment of unemployment compensation  benefits; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
CHAIR ANDERSON noted that the House Labor and Commerce Standing                                                                 
Committee is the sponsor of HB 305, and made reference the                                                                      
sponsor statement.                                                                                                              
                                                                                                                                
Number 0844                                                                                                                     
                                                                                                                                
GREG O'CLARAY, Commissioner, Department of Labor & Workforce                                                                    
Development (DLWD), said:                                                                                                       
                                                                                                                                
     This bill has been long  in the coming; ... both bodies                                                                    
     of the legislature  dealt with a similar  bill over the                                                                    
     last two years.   For reasons unbeknown to  most of us,                                                                    
     it  was not  acceptable  to folks  in the  construction                                                                    
     industry, on the employers side,  and it was hung up in                                                                    
     the   other  body,   first  in   [the  Senate   Finance                                                                    
     Committee]  and  then  in [the  Senate  Rules  Standing                                                                    
     Committee].   This is a  product, that we  bring before                                                                    
     you,  that's  ...  a  compromise  -  a  total  of  five                                                                    
     meetings     with     the     construction     industry                                                                    
     representatives, and other  employers were also invited                                                                    
     to the meetings. ... We  didn't have full participation                                                                    
     by all  of the employers,  but those that  are impacted                                                                    
     the most - the construction  industry - [were] involved                                                                    
     with organized labor, and this  is the compromise piece                                                                    
     of legislation.                                                                                                            
                                                                                                                                
     The only difference in the  bill that you passed before                                                                    
     and this  bill is  that the  effective dates  have been                                                                    
     moved forward  and the last  increment, they  split the                                                                    
     difference between  the original bill that  didn't pass                                                                    
     and this  one.   So instead  of the  top line  being as                                                                    
     high as  [it] was, this  will be  at ... $308.  ... The                                                                    
     net effect  of this bill  is that it helps  the economy                                                                    
     of Alaska  by putting more  money on the  street during                                                                    
     the off season when  [employees] are unemployed, and it                                                                    
     keeps skilled  workers in Alaska  instead of  having to                                                                    
     go  south to  look for  other  employment or  to go  to                                                                    
     places where  their costs  of living  are much  lower -                                                                    
     ... in many  cases, our skilled workers  are not coming                                                                    
     back to  Alaska.  And this  moves us from number  47 in                                                                    
     the  nation in  terms  of the  top  weekly benefit,  to                                                                    
     around 28th  or 29th.  ... The  first actual  impact on                                                                    
     employers  occurs  in the  year  2006,  when their  tax                                                                    
     rates will be impacted. ...                                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked whether  there is a  large surplus                                                               
in the account these funds are placed in.                                                                                       
                                                                                                                                
Number 0999                                                                                                                     
                                                                                                                                
PATRICK SHIER,  Employment Security  Tax, Division  of Employment                                                               
Security,  Department of  Labor &  Workforce Development  (DLWD),                                                               
replied that  the "UI Trust  Fund" is "self-balancing" and  has a                                                               
balance  of approximately  $220 million.   In  response to  other                                                               
questions, he  said that there  are 21 different  "rate classes,"                                                               
and  that employers  are assigned  to one  of those  rate classes                                                               
according to their "experience in prior years."  He added:                                                                      
                                                                                                                                
     The experience rating depends only  on the industry the                                                                    
     first year  you come to  the [DLWD]  and sign up  for a                                                                    
     brand new business where there  is no prior experience.                                                                    
     As  soon as  you  have four  complete  quarters in  the                                                                    
     rating  period,  then  it's   based  entirely  on  your                                                                    
     experience  as an  individual.   Or, if  you acquire  a                                                                    
     business ..., for rating purposes  you will inherit the                                                                    
     ... management practices that they  may have had in the                                                                    
     past.   And the good news  is, that goes away;  as your                                                                    
     management skills come to bear  on the bottom line, the                                                                    
     payroll would  be expected to  level out, and  as those                                                                    
     declines  in  payroll  become more  distant  ...  -  12                                                                    
     quarters is when they fall off  the edge of the world -                                                                    
     ... the current quarters  that you're going through now                                                                    
     exert more  influence on your  rate, and that  would be                                                                    
     ameliorated.                                                                                                               
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  he would  like information  on the                                                               
range of  rates that are charged  to businesses.  Referring  to a                                                               
handout provided  by the DLWD, he  asked if the tax  rate used on                                                               
one of the  pages is the average  tax rate and how a  tax rate is                                                               
calculated.                                                                                                                     
                                                                                                                                
MR.  SHIER pointed  out that  the information  being referred  to                                                               
talks  about the  "average employer  tax rate,"  adding that  the                                                               
lowest rate is  "1.0" and the highest is "5.9"  and that they are                                                               
calculated averages that includes the  employee portion.  He then                                                               
provided Representative Rokeberg  with a few more  details on the                                                               
highest and lowest rates.                                                                                                       
                                                                                                                                
REPRESENTATIVE GUTTENBERG said  he thought that 13  of the states                                                               
listed  in the  handout  have automatic  "escalators," and  asked                                                               
whether those  escalators have  been considered  when calculating                                                               
what Alaska's rank would be in 2006.                                                                                            
                                                                                                                                
COMMISSIONER O'CLARAY  offered his  belief that  those escalators                                                               
were considered,  and indicated that the  handout merely provides                                                               
an estimate of what Alaska's ranking  would be with passage of HB                                                               
305.                                                                                                                            
                                                                                                                                
Number 1361                                                                                                                     
                                                                                                                                
JOHN  DAVID   RAGAN  testified  in   favor  of  an   increase  in                                                               
unemployment   benefits,  adding   that  it   is  of   particular                                                               
importance to those  in the construction industry in  Alaska.  He                                                               
expressed dissatisfaction  that "labor"  bills are heard  last in                                                               
the committee, because this results  in the people who've come to                                                               
testify having to leave before getting a chance to speak.                                                                       
                                                                                                                                
MR.  RAGAN,  in  response  to   a  question,  said  that  in  the                                                               
construction  industry there  are times  when there  is a  lot of                                                               
work and  there are times when  there isn't any work;  thus a lot                                                               
of people depend on unemployment benefits.                                                                                      
                                                                                                                                
Number 1470                                                                                                                     
                                                                                                                                
RON PECK,  President, Alaska Travel Industry  Association (ATIA),                                                               
relayed some  details of the  tourism industry, said the  ATIA is                                                               
not opposed  to HB  305, and  asked that  a complete  analysis be                                                               
done on  the bill with  regard to how  it applies to  the tourism                                                               
industry before being moved from committee.                                                                                     
                                                                                                                                
Number 1508                                                                                                                     
                                                                                                                                
PAMELA  LaBOLLE,  President,  Alaska State  Chamber  of  Commerce                                                               
(ASCC),  said that  the ASCC  has  been very  involved with  this                                                               
issue the  last three  years, and  suggested that  the statistics                                                               
provided in the  past by the DLWD were misleading  because of the                                                               
way they  were presented.  She  noted that Alaska is  one of five                                                               
states that offers an additional  "dependent benefit," and opined                                                               
that if  one were to  calculate that additional benefit  into the                                                               
statistics  presented, Alaska  would  reach what  she called  the                                                               
"national goal  of the UI  program."  She referred  to statistics                                                               
provided two  years ago  and offered  some calculations  based on                                                               
those statistics.                                                                                                               
                                                                                                                                
MS.  LaBOLLE pointed  out that  although there  is a  zero fiscal                                                               
note because there is no cost  to the state for this legislation,                                                               
she has  not heard the  DLWD offer any information  regarding how                                                               
much the  proposed increases will  cost employers  and employees.                                                               
She predicted that  whatever the increase is,  employers will pay                                                               
for 80 percent of it and  employees will pay for the remaining 20                                                               
percent.   She  asked the  DLWD to  provide her  with information                                                               
regarding the cost  to employers and the cost  per employee based                                                               
on the  average tax rate.   She opined that employers  other than                                                               
those  in  the  construction  industry  ought  to  be  given  the                                                               
opportunity to  weigh in  on this issue,  and suggested  that the                                                               
bill  failed  in   the  past  because  those  in   favor  of  the                                                               
legislation refused to compromise on the increase amount.                                                                       
                                                                                                                                
CHAIR ANDERSON offered  his belief that it is  important for this                                                               
legislation to move forward.                                                                                                    
                                                                                                                                
MS.  LaBOLLE expressed  concern that  HB 305  would move  forward                                                               
without  the  committee   knowing  what  the  cost   will  be  to                                                               
employers.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  CRAWFORD   pointed  out  that  any   increase  in                                                               
employer costs would  not occur until 2006.  He  remarked that he                                                               
is  disappointed in  HB 305,  and  relayed that  although he  had                                                               
considered sponsoring  similar legislation, he'd opted  to forego                                                               
that idea because he'd hoped  that the task force which developed                                                               
HB 305  would have come  up with  "a fair and  equitable return."                                                               
He suggested that  he would support HB 305 if  it can get adopted                                                               
this year,  but if  it gets  delayed in the  process, he  will go                                                               
ahead and sponsor  legislation more to his liking.   He said that                                                               
he would like to see an  increase that allows people to reach the                                                               
national goal without the addition  of the dependant benefit.  He                                                               
added:                                                                                                                          
                                                                                                                                
     I  know that  we're losing  good, skilled  iron workers                                                                    
     because they  go down  to the Lower  48 and  they don't                                                                    
     come  back  because our  unemployment  is  so low  here                                                                    
     [that] they can't afford to  stay through the ... slack                                                                    
     times  in employment.   So  we've got  to do  something                                                                    
     about this, and it's gone on too long.                                                                                     
                                                                                                                                
Number 1881                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM moved to report  HB 305 out of committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note.                                                                                                                           
                                                                                                                                
Number 1888                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  objected.  He opined  that the committee                                                               
did  not  yet have  enough  information  regarding costs  to  the                                                               
employer.                                                                                                                       
                                                                                                                                
REPRESENTATIVE   GUTTENBERG   mentioned    that   although   he'd                                                               
considered  sponsoring   similar  legislation  that   would  have                                                               
provided for a bigger increase, he  too had opted to see what the                                                               
task force  developed.  He  offered that perhaps  the information                                                               
the  ASCC is  seeking was  presented at  the aforementioned  task                                                               
force  meetings,  but the  ASCC  chose  neither to  attend  those                                                               
meetings nor send someone to  represent its members.  Noting that                                                               
the  ASCC  consistently  talks  about  maintaining  a  competent,                                                               
qualified  workforce,  he pointed  out  that  having adequate  UI                                                               
benefits  is  one  small  step towards  retaining  that  kind  of                                                               
workforce -  it is one  small incentive for qualified  workers to                                                               
stay in Alaska during seasons when there is no work.                                                                            
                                                                                                                                
COMMISSIONER O'CLARAY  indicated that the DLWD  would provide the                                                               
information  requested  -  to  Ms.  LaBolle  on  Monday,  and  to                                                               
Representative  Rokeberg before  HB  305 is  heard  on the  House                                                               
floor.                                                                                                                          
                                                                                                                                
CHAIR ANDERSON  noted that committees  often move bills  out with                                                               
the  understanding that  information will  be forthcoming  during                                                               
the process.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  opined that  HB 305's next  committee of                                                               
referral  will not  have time  to adequately  address the  issues                                                               
that concern him,  and suggested that the  committee refrain from                                                               
moving the bill  until the requested information  is presented to                                                               
the committee.  He relayed that  he did not know who attended the                                                               
aforementioned task force meetings  or whether small business was                                                               
adequately represented.                                                                                                         
                                                                                                                                
CHAIR  ANDERSON announced  that  that information  would also  be                                                               
forthcoming.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  surmised that the bill's  next committee of                                                               
referral  will be  relying on  this committee's  recommendations,                                                               
and relayed  that he cannot  offer a recommendation at  this time                                                               
because of  a lack  of information.   He added  that he  would be                                                               
leaving  in order  to avoid  having  to vote  on a  bill that  he                                                               
doesn't want to see moved yet.                                                                                                  
                                                                                                                                
Number 2089                                                                                                                     
                                                                                                                                
A roll  call vote was  taken.  Representatives  Guttenberg, Lynn,                                                               
Dahlstrom, Crawford, and Anderson voted  in favor of reporting HB                                                               
305 from  committee.  Representative  Rokeberg voted  against it.                                                               
Therefore, HB 305 was reported  from the House Labor and Commerce                                                               
Standing Committee by a vote of 5-1.                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 2101                                                                                                                     
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:40 p.m.                                                                                                                       

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