Legislature(2005 - 2006)CAPITOL 17

01/26/2005 03:15 PM LABOR & COMMERCE


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Audio Topic
03:25:18 PM Start
03:33:59 PM [the Recording Begins Here]
04:07:31 PM HB81
04:33:36 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 46 WATER/SEWER/WASTE GRANTS TO UTILITIES TELECONFERENCED
Moved Out of Committee
*+ HB 35 EXTEND BD ARCHITECTS/ENGINEERS/SURVEYORS TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
= HB 81 CONTRACTOR LICENSE ENFORCEMENT
Moved CSHB 81(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        January 26, 2005                                                                                        
                           3:25 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Pete Kott                                                                                                        
Representative Gabrielle LeDoux                                                                                                 
Representative Bob Lynn                                                                                                         
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford (via teleconference)                                                                              
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 46                                                                                                               
"An Act  permitting grants to certain  regulated public utilities                                                               
for  water  quality enhancement  projects  and  water supply  and                                                               
wastewater systems."                                                                                                            
                                                                                                                                
     - MOVED HB 46 OUT OF COMMITTEE                                                                                             
                                                                                                                                
HOUSE BILL NO. 81                                                                                                               
"An  Act establishing  an administrative  fine and  procedure for                                                               
construction  contractors  in certain  circumstances;  increasing                                                               
the amount of a civil penalty  for persons acting in the capacity                                                               
of contractors  or home inspectors;  modifying the elements  of a                                                               
crime   involving   contractor   registration   and   residential                                                               
contractors;  and  exempting   the  administrative  hearings  for                                                               
imposing an administrative fine  on construction contractors from                                                               
the hearings  conducted by the office  of administrative hearings                                                               
in the Department of Administration."                                                                                           
                                                                                                                                
     - MOVED CSHB 81(L&C) OUT OF COMMITTEE                                                                                      
                                                                                                                                
HOUSE BILL NO. 35                                                                                                               
"An  Act extending  the termination  date of  the State  Board of                                                               
Registration for  Architects, Engineers, and Land  Surveyors; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB  46                                                                                                                  
SHORT TITLE: WATER/SEWER/WASTE GRANTS TO UTILITIES                                                                              
SPONSOR(S): REPRESENTATIVE(S) HARRIS, COGHILL, ROKEBERG                                                                         
                                                                                                                                
01/10/05       (H)       PREFILE RELEASED 12/30/04                                                                              
01/10/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/10/05       (H)       L&C, FIN                                                                                               
01/26/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB  81                                                                                                                  
SHORT TITLE: CONTRACTOR LICENSE ENFORCEMENT                                                                                     
SPONSOR(S): REPRESENTATIVE(S) ANDERSON                                                                                          
                                                                                                                                
01/19/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/05       (H)       L&C, JUD, FIN                                                                                          
01/21/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
01/21/05       (H)       Heard & Held                                                                                           
01/21/05       (H)       MINUTE(L&C)                                                                                            
01/26/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
TOM WRIGHT, Staff                                                                                                               
for Representative John Harris                                                                                                  
Juneau, Alaska                                                                                                                
POSITION STATEMENT: Testified in support of HB 46.                                                                              
                                                                                                                                
LORI BACKES, Special Assistant                                                                                                  
Mayor                                                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 46.                                                                              
                                                                                                                                
BENJAMIN BROWN, Legislative Liaison                                                                                             
Office of the Commissioner                                                                                                      
Department of Environmental Conservation (DEC)                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HB 46.                                                                              
                                                                                                                                
JIM STRANDBERG, Commissioner                                                                                                    
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 46.                                                                              
                                                                                                                                
                                                                                                                                
KARA MORIARTY, President,                                                                                                       
Greater Fairbanks Chamber of Commerce                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 46.                                                                              
                                                                                                                                
JOHN BITNEY Lobbyist,                                                                                                           
Alaska State Home Builders Association                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 81.                                                                              
                                                                                                                                
GREY MITCHEL, Director,                                                                                                         
Labor Standards and Safety                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HB 81.                                                                              
                                                                                                                                
DAVE OWENS, President                                                                                                           
Mat-Su Homebuilders Association                                                                                                 
Matanuska- Susinita, Alaska                                                                                                     
POSITION STATEMENT: Testified in support of HB 81.                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
[The   beginning  was   not  on   the  recording,   but  it   was                                                               
reconstructed from the committee secretary's log notes]                                                                         
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee   meeting   to   order    at   3:25:18   PM   (3:32:51)                                                             
Representatives Anderson, Kott,  LeDoux, Lynn, Rokeberg, Crawford                                                               
via teleconference, and  Guttenberg were all present  at the call                                                               
to order.                                                                                                                       
                                                                                                                                
HB  46-WATER/SEWER/WASTE GRANTS TO UTILITIES                                                                                
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be  HOUSE BILL  NO.  46,  "An Act  permitting  grants to  certain                                                               
regulated   public  utilities   for  water   quality  enhancement                                                               
projects and water supply and wastewater systems."                                                                              
                                                                                                                                
TOM WRIGHT,  staff for Representative  John Harris,  Alaska State                                                               
Legislature,  sponsor,  announced,  on behalf  of  Representative                                                               
Harris, that  this is a relatively  new bill which is  limited to                                                               
privately owned companies that are  economically regulated by the                                                               
Regulatory Commission of Alaska (RCA).                                                                                          
                                                                                                                                
CHAIR  ANDERSON said  that Bonnie  Williamson  also supports  the                                                               
bill.                                                                                                                           
                                                                                                                                
LORI  BACKES, Special  Assistant  to the  Mayor, Fairbanks,  said                                                               
that  she  was here  today  to  support HB  46.    She said  that                                                               
privately  held utilities  do not  have access  to certain  funds                                                               
that  public utilities  have.    This bill  levels  the field  by                                                               
making all funds available to all utility companies.                                                                            
                                                                                                                                
^[THE RECORDING BEGINS HERE]                                                                                                    
                                                                                                                                
BENJAMIN BROWN, Legislative Liaison,  Office of the Commissioner,                                                               
Department of  Environmental Conservation, described  the program                                                               
as one primarily  funded through state monies but  there are some                                                               
smaller  communities  that  are  funded by  federal  funds.  Only                                                               
municipalities are  currently eligible  right now. Over  the last                                                               
10 years, 36 local governments  have benefited from these grants.                                                               
There is  a local match  requirement that is scaled  depending on                                                               
the  population   of  the  community  because   the  smaller  the                                                               
community, the less it has to contribute.                                                                                       
                                                                                                                                
3:33:59 PM                                                                                                                    
                                                                                                                                
MR. BROWN explained that the  grants are awarded on a competitive                                                               
basis,  taking  into  account  public  health  and  environmental                                                               
impact of  the project, as well  as community capacity and  a few                                                               
other factors. It's a typical grant program.                                                                                    
                                                                                                                                
MR. BROWN emphasized that are  seven staff positions who run this                                                               
grant  program and  the  same staff  administer  the winter  loan                                                               
programs. This  bill is  a policy  decision that  the legislature                                                               
needs to make. Both the  prior speakers demonstrated the fairness                                                               
of  allowing  communities  who   don't  have  don't  have  public                                                               
utilities to benefit the way communities like Anchorage do.                                                                     
                                                                                                                                
MR. BROWN commented that the only  concern he had was that if the                                                               
bill is  passed as  written, a  third position  would have  to be                                                               
added.  If  everyone who  is  eligible  for  the grant  took  the                                                               
necessary steps to  be considered and subsequently  apply for the                                                               
grant it would  be too much work for the  current staff. However,                                                               
the  existing  staff  could  be  sufficient  if  the  eligibility                                                               
requirements were modified to reduce the workload.                                                                              
                                                                                                                                
3:36:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  if  Mr. Brown  could specify  the                                                               
amounts of the grants.                                                                                                          
                                                                                                                                
MR. BROWN answered absolutely.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked if this information  could go back                                                               
three years.                                                                                                                    
                                                                                                                                
MR.  BROWN affirmed  that  he would  be happy  to  make sure  the                                                               
fiscal  notes  of  the  last  three years  are  provided  to  the                                                               
committee members.                                                                                                              
                                                                                                                                
3:37:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG   recalled  that  a  few   years  ago,                                                               
legislation  that allowed  privately  owned  utilities to  obtain                                                               
loans was  passed. If the  list of these companies  was available                                                               
one could ascertain who was applying for grants as well.                                                                        
                                                                                                                                
MR BROWN affirmed  that he would make this list  part of the same                                                               
work request.                                                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked if  it is  correct that  there are                                                               
193 utilities  that qualify.  He then  asked if  there is  a list                                                               
that could be provided.                                                                                                         
                                                                                                                                
MR.  BROWN said  Mr.  Stranberg  from RCA  provided  the list  of                                                               
unregulated and regulated utilities.                                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG indicated  that  Mr.  Brown mentioned  a                                                               
modification of the  bill that might affect the  fiscal note, and                                                               
then went on the ask if he had any suggestions.                                                                                 
                                                                                                                                
MR. BROWN  explained that  as long as  there aren't  an excessive                                                               
amount of  people applying for  the grants, then the  fiscal note                                                               
will go down to zero.                                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG stated  that  the way  the finances  are                                                               
going, it probably will go to zero.                                                                                             
                                                                                                                                
REPRESENTATIVE GUTTENBERG observed that  in the same fiscal note,                                                               
DEC expects to be administering six grants a year.                                                                              
                                                                                                                                
MR. BROWN  stated that there  is a numerical  typographical error                                                               
in  the fiscal  note, and  therefore  a corrected  version as  it                                                               
comes out of this committee.                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX, looking  at page 2 of  the bill, indicated                                                               
that  she wanted  to  clarify that  the  private utilities  being                                                               
economically regulated  by RCA numbered  at around 15 or  20. She                                                               
continued by  asking why, according  to Mr. Brown, there  was 126                                                               
that would qualify for the grants.                                                                                              
                                                                                                                                
3:40:50 PM                                                                                                                    
                                                                                                                                
MR. BROWN  answered by  stating that  there were  two categories-                                                               
certificated  and   uncertificated.    An  entity   that  is  not                                                               
certificated could  become certificated  and not  be economically                                                               
regulated,  but it  could also  request that  it be  economically                                                               
regulated and  not be certified,  thereby making it  eligible for                                                               
this grant  program. There  are some hoops  to jump  through, but                                                               
there is  nothing wrong with  that. At the  end of the  day these                                                               
entities have  to agree  that they  want to  be regulated  by the                                                               
RCA.   The  incentive for  doing  this is  eligibility for  these                                                               
grant funds.                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  clarified that this  total of 126  represents the                                                               
most that can possibly be eligible.                                                                                             
                                                                                                                                
REPRESENTATIVE LEDOUX pointed out  that there are private utility                                                               
companies out there that are  not currently regulated by the RCA,                                                               
and  theoretically, she  asked, if  they wanted  to be  eligible,                                                               
could they ask to be regulated by the RCA.                                                                                      
                                                                                                                                
MR.   BROWN  clarified   that  such   entities  are   home  owner                                                               
associations and  trailer parks  and are not  in the  business of                                                               
selling  utilities  service  to  anyone  who  wants  to  buy  it.                                                               
Although these  entities have  a set level  of demands,  they can                                                               
request to be regulated.                                                                                                        
                                                                                                                                
JIM STRANDBERG, Commissioner, Regulatory  Commission of Alaska in                                                               
Anchorage,  said he  would discuss  very briefly,  the number  of                                                               
certificated and  economically regulated  utilities in  the state                                                               
because  this  might  help  provide   an  understanding  of  this                                                               
particular situation.                                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG   highlighted  that   private  utilities                                                               
currently  certified are  on  a  list that  is  in  the file.  He                                                               
mentioned  that   the  Trillium  Corporation  of   Wasilla  is  a                                                               
certified  sewer and  water utility  and is  associated with  the                                                               
Settlers Bay Development  of which his company is  a customer and                                                               
not  an owner  of the  Trillium  Corporation. He  ends by  firmly                                                               
stating that there is not a conflict of interest.                                                                               
                                                                                                                                
MR.  STRANDBERG, explained  that the  statute specifies  that the                                                               
RCA is  responsible for certificating, providing  the certificate                                                               
for  public convenience  for all  public  utilities. The  process                                                               
typically involves reviewing a utility as it evolves.                                                                           
                                                                                                                                
3:45:27 PM                                                                                                                    
                                                                                                                                
MR.  STRANDBERG  continued  by   stating  that  the  universe  of                                                               
utilities  is relatively  large.  The other  tasks  that the  RCA                                                               
performs  is for  a  subset  of that  large  group. These  groups                                                               
submit  cost information  to the  RCA which  sets a  rate it  can                                                               
charge for its services.                                                                                                        
MR. STRANDBERG noted  that this bill specifies  that any economic                                                               
activity  that is  regulated  by  the RCA,  is  eligible for  the                                                               
grants.                                                                                                                         
                                                                                                                                
MR. STRANDBERG  stated that  although the  RCA certifies  a large                                                               
number of utilities, currently,  it only economically regulates a                                                               
few utilities  in the state.  This occurs when the  RCA perceives                                                               
that the utility has become a monopoly.                                                                                         
                                                                                                                                
3:47:34 PM                                                                                                                    
                                                                                                                                
MR.  STRANDBERG  said  that  there   were  a  number  of  numbers                                                               
mentioned.  In  the fiscal  note,  there  were 193  non-municipal                                                               
utilities that could be eligible  for these grants. The question,                                                               
he  said, is  how many  of them  would actually  come in  for the                                                               
grants. He  then went on  to say that the  RCA has a  zero fiscal                                                               
note  on this  bill mainly  due to  the fact  that many  of these                                                               
utilities would come under economic regulation at a later date.                                                                 
                                                                                                                                
REPRESENTATIVE  GUTTENBERG mentioned  page 2  on the  fiscal note                                                               
provided  by  RCA  where the  witness  spoke  referenced  reduced                                                               
regulation programs, and  asked for an expansion  of the programs                                                               
description. When  this is implemented,  some utility  groups may                                                               
want to be regulated at a  higher level, he surmised. He ended by                                                               
asking Mr.  Strandberg if he  could talk about this  and describe                                                               
what is being done with the reduced regulation program.                                                                         
                                                                                                                                
MR. STRANDBERG answered  that the RCA has been  working for years                                                               
on this part  of the RCA's operation, which began,  he said, with                                                               
an audit action  item in 2000 that required us  to be more active                                                               
in utilities.  Since that  time, the RCA has provided alternative                                                               
certification programs  for small utilities. The  RCA is bringing                                                               
more utilities under this provisional certification program.                                                                    
                                                                                                                                
MR.  STRANDBERG  stated  that  additionally,  he  said  that  RCA                                                               
currently   has  an   open  regulation   docket  and   an  active                                                               
stakeholder   working  group   to   change  the   way  that   RCA                                                               
economically  regulate  to  make  it  more  affordable  and  more                                                               
effective.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  what  the  regulation break  up                                                               
point is.                                                                                                                       
                                                                                                                                
MR. STRANDBERG  stated that  is to  be determined.  Currently RCA                                                               
have assembled stake holders and are awaiting their analysis.                                                                   
                                                                                                                                
REPRESENTATIVE   ROKEBERG,  referring   back  to   Representative                                                               
Guttenberg's  statement,   stated  that  when  this   process  is                                                               
completed,  there is  a different  method  of regulating  smaller                                                               
utilities which are  less of a burden. He ends  by asking if this                                                               
is the objective.                                                                                                               
                                                                                                                                
MR. STRANDBERG  replied yes  and announced that  the goal  of his                                                               
agency was  to lessen  the cost  of regulation  and make  it more                                                               
effective. He then stated that whatever  the rule is that the RCA                                                               
develops will represent full economic  regulation but a different                                                               
set of rules will be configured for smaller utilities.                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG asked  if this included all  the class A,                                                               
B, and C water utilities.                                                                                                       
                                                                                                                                
MR.  STRANDBERG announced  that his  group spent  lot of  time on                                                               
this indulgence and all known small utilities were included.                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG took this  further by asking whether they                                                               
regulate both the A and B classes.                                                                                              
                                                                                                                                
MR.  STRANDBERG  stated that  this  includes  any utilities  that                                                               
provides service to 10 or more customers.                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if  there are still three different                                                               
categories of water utilities still.                                                                                            
                                                                                                                                
MR.  STRANDBERG answered  that  the  Department of  Environmental                                                               
Conservation has this  nomenclature and this has more  to do with                                                               
water quality. The  RCA has a different set  of definitions under                                                               
which it operates.                                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if  private utilities are regulated                                                               
if they are monopolies in their area.                                                                                           
                                                                                                                                
MR. STRANDBERG stated this is correct.                                                                                          
                                                                                                                                
3:55:26 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON closed public testimony.                                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as  to how  the  RCA  handles                                                               
grants and how this legislation affects rate setting.                                                                           
MR. STRANDBERG  answered that the  RCA has regulatory  tools, and                                                               
therefore  it has  the ability  to  not allow  a privately  owned                                                               
utility  to enrich  its  shareholders from  the  provision of  an                                                               
infrastructure grant like this. The  utility cannot earn a return                                                               
on the grant  and it cannot have the customer  pay back the money                                                               
gained by the grant contribution.                                                                                               
                                                                                                                                
KARA MORIARTY, President, Greater  Fairbanks Chamber of Commerce,                                                               
announced her support  for HB 46 and the idea  that all utilities                                                               
should be  on the  same level playing  field. Currently  the only                                                               
utilities that  are eligible  for these  grants are  public owned                                                               
utilities.  The  grants  are primarily  used  for  infrastructure                                                               
development and upgrades. She noted  that the shareholders cannot                                                               
receive returns  on investments. The ratepayers  and citizens are                                                               
the only ones who can receive benefits from the grants.                                                                         
                                                                                                                                
MS.  MORIARTY  then  went  on   to  say  that  all  utilities  in                                                               
Fairbanks,   Alaska  are   either  privately   owned  or   are  a                                                               
cooperative.  She  continued  by   stating  that  businesses  and                                                               
residents where are  at a disadvantage compared  to other Alaskan                                                               
residents.  The cost  of doing  business, she  said, is  great in                                                               
Fairbanks.  The  problem of  connection  to  major utility  lines                                                               
hampers  economical  development,  even downtown  near  the  city                                                               
center.     She  concluded  by   reiterating  that   private  and                                                               
cooperative utilities should have access to the grants.                                                                         
                                                                                                                                
CHAIR  ANDERSON, upon  determining  that no  one  else wanted  to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
4:01:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to report  HB 46 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes. There being no objection, it was so ordered.                                                                             
                                                                                                                                
HB  81-CONTRACTOR LICENSE ENFORCEMENT                                                                                         
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE BILL  NO. 81,  "An Act  establishing an  administrative                                                               
fine  and  procedure  for  construction  contractors  in  certain                                                               
circumstances;  increasing  the amount  of  a  civil penalty  for                                                               
persons   acting  in   the  capacity   of  contractors   or  home                                                               
inspectors;  modifying   the  elements   of  a   crime  involving                                                               
contractor   registration   and  residential   contractors;   and                                                               
exempting   the   administrative   hearings   for   imposing   an                                                               
administrative   fine  on   construction  contractors   from  the                                                               
hearings conducted  by the office  of administrative  hearings in                                                               
the Department of Administration."                                                                                              
                                                                                                                                
CHAIR  ANDERSON recalled  that at  a prior  hearing, there  was a                                                               
suggestion to delete sections referring  to home inspectors. This                                                               
is not  going to happen because  it would create a  title change.                                                               
However, he noted  that there is an amendment that  he would like                                                               
to have explained.                                                                                                              
                                                                                                                                
JOHN  BITNEY, Lobbyist,  Alaska State  Home Builders  Association                                                               
(ASHBA), said  that ASHBA is introducing  a conceptual amendment,                                                               
which he said was located on page  5, line 2 of [Version Y].  The                                                               
language on this page is in  response to the existing language in                                                               
owner/builder language in statute.                                                                                              
                                                                                                                                
MR. BITNEY  explained that the existing  statutes broadly exempts                                                               
owner/builders  from building  a  single  family multiplex  every                                                               
year.  The time limit is very  ill defined.  He recalled that the                                                               
testimony  talked  about  each  member  of  a  family  running  a                                                               
contract  business and  building several  buildings, not  to live                                                               
in,  but for  resale value.    The aforementioned  act, he  said,                                                               
violated the law.                                                                                                               
                                                                                                                                
CHAIR  ANDERSON provided  clarity by  stating that  a family  has                                                               
several children  who each build  homes and  they are able  to do                                                               
this under the stipulation of the statute.                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved that the committee  adopt CSHB 81,                                                               
Version 24-LSO144\Y,  Mischel, 1/26/05, as the  working document.                                                               
There being no objection, Version Y was before the committee.                                                                   
                                                                                                                                
4:07:31 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  asked if Mr.  Bitney could briefly  describe each                                                               
section of Version Y.                                                                                                           
                                                                                                                                
MR. BITNEY explained  that in Version Y, Section  1 addresses the                                                               
enforcement statutes.  Section 2 is  the heart of the bill, since                                                               
it deals  with the fines.   Section 3 takes the  existing penalty                                                               
and increases it  to the new penalty phase being  added.  Section                                                               
4  defines the  violation  and  Section 5  is  the  long list  of                                                               
exemptions.  Section 6, he said, is the conforming section.                                                                     
                                                                                                                                
MR.  BITNEY  continued by  stating  that  Sections  7 and  8  are                                                               
transitional sections that ensure this is not retroactive.                                                                      
                                                                                                                                
DAVE OWENS, Representative, Mat-Su Homebuilders Association,                                                                    
Matanuska- Susinita, answered yes and  that he gives full support                                                               
of this bill and agree with the previous speaker, Mr. Bitney.                                                                   
                                                                                                                                
4:11:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked whether there is  a quantifiable                                                               
number of  fines or complaints  that would illustrate  that there                                                               
is a problem.                                                                                                                   
                                                                                                                                
GREY MITCHEL, Division Director, Labor  Standards   and   Safety,                                                               
Department of Labor and Workforce  Development, answered that the                                                               
number of violations  range from 130 to 150.   There have been 85                                                               
violations in this fiscal year so far.                                                                                          
                                                                                                                                
CHAIR  ANDERSON clarified  that  Mr. Mitchel's  numbers refer  to                                                               
people  who  are not  authorized  or  licensed  to operate  as  a                                                               
contractor but are doing so.                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired  as to the level  of the current                                                               
sanction.                                                                                                                       
                                                                                                                                
MR.  MITCHEL  stated that  the  current  sanction is  a  criminal                                                               
penalty, a  misdemeanor.  Therefore,  the department  is required                                                               
to take the case to the  district attorney.  Since these are low-                                                               
level cases for the DA, it is difficult to pursue these cases.                                                                  
                                                                                                                                
CHAIR ANDERSON asked if it is a class B misdemeanor.                                                                            
                                                                                                                                
MR. MITCHEL  agreed and  said that  this was  correct:   "I think                                                               
that the current  criminal citation is being listed  in section 4                                                               
of the bill as it is in statute now".                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG  surmised then that  the goal is  to have                                                               
the civil  penalties and administrative  fines as a  tool, rather                                                               
than going through a criminal prosecution.                                                                                      
                                                                                                                                
MR. MITCHEL agreed and said this was correct.                                                                                   
                                                                                                                                
REPRESENTATIVE   ROKEBERG  chortled   that   an  offender   could                                                               
ostensibly   receive  a   injunction,   get   a  civil   penalty,                                                               
administratively fine  him, and get  a class B  misdemeanor case.                                                               
He then asked if there is a conflict of laws here.                                                                              
                                                                                                                                
REPRESENTATIVE KOTT agreed  that there may be a  problem with the                                                               
bill  if it  allows three  avenues  of prosecution  to exist.  He                                                               
asked  Mr. Mitchel  to produce  a scenario  in which  a violation                                                               
could  be  detected  and  no   fine  imposed.    Ostensibly,  the                                                               
inspector does  not have  to give  a fine and  the fine  could be                                                               
anything between $1  and $1,000.  He pointed out  that there is a                                                               
lot of wiggle room here.                                                                                                        
                                                                                                                                
MR. MITCHEL  posed a situation  in which someone has  been caught                                                               
with an  expired license.   In  such a  situation the  DLWD would                                                               
issue a  civil fine,  especially if the  individual comes  in and                                                               
shows  that  he has  been  reissued  a  current license  and  has                                                               
current bonding.  The department,  in such a case wouldn't pursue                                                               
a criminal prosecution.                                                                                                         
                                                                                                                                
REPRESENTATIVE KOTT indicated  that it sounded like  one could be                                                               
guilty of  noncompliance and not  be punished. He  then suggested                                                               
that the  level of the  fine could be  adjusted in cases  such as                                                               
these.   He  further stated  that there  is no  knowledge of  the                                                               
offender's  intention  and thus  there  is  the possibility  that                                                               
there could be felonious intent.                                                                                                
                                                                                                                                
CHAIR ANDERSON said that it always a dilemma.                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX  referred  to Section  5,  the  exemptions                                                               
section, paragraph  12, and asked  how the figure of  three years                                                               
was determined.                                                                                                                 
                                                                                                                                
4:18:14 PM                                                                                                                    
                                                                                                                                
JOHN   BITNEY,  Lobbyist,   Alaska  Home   Builders  Association,                                                               
explained that  the idea  to specify a  bright line  level amount                                                               
for enforcement.   The discussions thus far have  agreed upon the                                                               
minimum of two years and a maximum  of three years.  The idea was                                                               
that  it  had  to be  more  than  one  year.   This  enabled  the                                                               
department  to  truly  determine  that it  was  an  owner/builder                                                               
situation.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  LEDOUX inquired  as  to  when enforcement  action                                                               
would occur enforcement take place.   She offered an example of a                                                               
person  building a  home and  two  years later  selling the  same                                                               
home.    She then  asked  if  this  is  when the  department  got                                                               
involved.                                                                                                                       
                                                                                                                                
CHAIR  ANDERSON offered  that the  department  would be  involved                                                               
when there had been a violation detected.                                                                                       
                                                                                                                                
MR.  BITNEY related  his understanding  of the  applicability and                                                               
that this would be applied not  when one sells the home, but when                                                               
one begins to act like  a general contractor for the construction                                                               
of the next new home, not when the old home is sold.                                                                            
                                                                                                                                
CHAIR  ANDERSON stated  that Representative  LeDoux was  actually                                                               
trying to ask what would happen  if a owner/builder sold the home                                                               
after two  years, which would  be in violation of  the three-year                                                               
occupancy requirement.                                                                                                          
                                                                                                                                
4:22:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROKEBERG   stated   that   the   question   from                                                               
Representative  LeDoux   is  germane  in  terms   of  the  slight                                                               
ambiguity  that is  created  by inserting  this  clause into  the                                                               
document.   He  stated  that  we have  a  three-year standard  by                                                               
adopting the CS,  but we still retain a  one-year standard within                                                               
the same sentence.  He pointed  out that within the same sentence                                                               
there are three different tests of the bill's legitimacy.                                                                       
                                                                                                                                
CHAIR ANDERSON stated  that the recommendation could  be to tweak                                                               
page 5, line  6, so that it  is in parity with  page 5, beginning                                                               
of Section 12, lines 2-3.                                                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG   answered  that  it  is   a  matter  of                                                               
drafting.                                                                                                                       
                                                                                                                                
4:23:22 PM                                                                                                                    
                                                                                                                                
CHAIR   ANDERSON  asserted   that   he  wants   this  clean   and                                                               
unambiguous.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG pointed  out  that  if an  owner/builder                                                               
builds something,  occupies it,  and then builds  something else,                                                               
this legislation  disallows the  sale of  the prior  property. He                                                               
asserted that this constrains trade.                                                                                            
                                                                                                                                
CHAIR  ANDERSON declared  that the  only difficulty  he has  with                                                               
this  idea is  the possibility  of having  a commercial  building                                                               
versus a home and reconciling the two.                                                                                          
                                                                                                                                
REPRESENTATIVE  ROKEBERG  affirmed  that  the  owner/builder  can                                                               
reside in  both concurrently.   The  owner/builder would  have to                                                               
show  external  evidence  for  his   occupancy  in  one  or  both                                                               
residencies.                                                                                                                    
                                                                                                                                
CHAIR ANDERSON supposed there was the possibility of ambiguity.                                                                 
                                                                                                                                
REPRESENTATIVE   ROKEBERG   moved   that  the   committee   adopt                                                               
Conceptual Amendment  [1 inserting  language] such that  'you can                                                               
only privately build a house every three years' be added.                                                                       
                                                                                                                                
CHAIR ANDERSON  announced that this  suggested language  would be                                                               
added to page 5, lines 2-7, subsection 12.                                                                                      
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  asked   if  the   three  consecutive                                                               
calendar  years could  be  interpreted  as 14  months  or is  the                                                               
intent to have 36 months.                                                                                                       
                                                                                                                                
4:26:10 PM                                                                                                                    
                                                                                                                                
MR. BITNEY said  he thought that either way it's  saying the same                                                               
thing.                                                                                                                          
                                                                                                                                
CHAIR  ANDERSON  stated  that   Legislative  Legal  and  Research                                                               
Services could review it.                                                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as to  the  rationale  behind                                                               
selecting three consecutive years.                                                                                              
                                                                                                                                
CHAIR ANDERSON  related that the  legislative intent of  the bill                                                               
is to discourage builders from  acting like a private homebuilder                                                               
in order to fall undetected  within this requirement.  The intent                                                               
is to  keep them from building  homes and not occupying  them. It                                                               
is also  discourages the practice  of family  building activities                                                               
which also circumvents  the core of the bill.   Three years is an                                                               
arbitrary number and has no  judicial principal behind it, but is                                                               
long enough  to show proof  of residency and intentions  to build                                                               
and occupy.                                                                                                                     
                                                                                                                                
MR. BITNEY  agreed that three  years is long enough  to determine                                                               
occupancy,  which is  the  term being  used  by his  organization                                                               
since it really  gets to the heart of the  matter, and provides a                                                               
brighter line on which to judge cases.                                                                                          
                                                                                                                                
4:28:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  posed a situation in  which someone builds                                                               
his  own home,  and  then  sells it  after  two  years, and  then                                                               
doesn't build  another house.   She  asked if  that owner/builder                                                               
would be  liable if he held  off on building another  house right                                                               
away.                                                                                                                           
                                                                                                                                
CHAIR  ANDERSON  reiterated  that   the  owner  must  occupy  the                                                               
residence  for three  consecutive  years.   Once construction  is                                                               
completed, the  owner/builder must move  in and reside  there for                                                               
three years, or the contractor licensure is violated.                                                                           
                                                                                                                              
MR.  BITNEY  clarified  that  the language  speaks  to  when  the                                                               
owner/builder can start construction on the next new home.                                                                      
                                                                                                                                
REPRESENTATIVE LEDOUX  expressed concern in a  situation in which                                                               
someone  builds a  home and  for some  reason he  moves someplace                                                               
else.   Theoretically, such an  individual would be  in violation                                                               
of the law.  She asked if such a person could be prosecuted.                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  reiterated that  the intent is  not to                                                               
stop the  owner/builders who  build one home  every four  to five                                                               
years.  The  legislation attempts to catch those  people that are                                                               
trying to stay under the radar.                                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG suggested that  the test could be whether                                                               
the owner/builder is the bona fide owner/occupant.                                                                              
                                                                                                                                
4:33:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG went  on to say that  the committee could                                                               
even  talk about  restricting family  members.   The  legislation                                                               
could  be  worded in  such  a  way  that would  prohibit  various                                                               
members of a family from qualifying.                                                                                            
                                                                                                                                
CHAIR ANDERSON  said that although  he liked  what Representative                                                               
Rokeberg suggested  about making it  more definitive in  terms of                                                               
the differences, but  that expands the bill  enough in Conceptual                                                               
Amendment 1,  that it has  become a  concern.  He  suggested that                                                               
the legislation  as amended  by and  with the  stated legislative                                                               
intent be moved.                                                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG  expressed concern regarding  whether the                                                               
previous  motion provided  the drafter  with enough  flexibility.                                                               
Therefore, Representative Rokeberg  withdrew Conceptual Amendment                                                               
1.  There being no objection, it was so ordered.                                                                                
                                                                                                                                
REPRESENTATIVE   ROKEBERG   moved   that  the   committee   adopt                                                               
Conceptual Amendment 2, as follows:                                                                                             
                                                                                                                                
     The number  of building  units will be  consistent with                                                                    
     any  length of  prohibition  and additionally  consider                                                                    
     the builder and his bona fide  use of the property.  If                                                                    
     the person who builds the  building and the person is a                                                                    
     bona fide user of the building there will be no three-                                                                     
     year restriction.                                                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG  continued by  stating that  there cannot                                                               
be restrictions on  the movement and mobility of  people. We need                                                               
another  criteria  which  is  a   bona  fide  residency  and  the                                                               
restriction  of numbers  of  people within  a  family that  would                                                               
qualify for building.                                                                                                           
                                                                                                                                
MR.  BITNEY suggested  that the  language on  page 5,  lines 2-3,                                                               
which  read, 'occupies  the property  after construction  for not                                                             
less  than two  consecutive years',  would be  better within  the                                                             
limitation  on page  5, line  6.   This is  opposed to  having it                                                               
placed  at  the  beginning  of  the  paragraph.    This  is  more                                                               
contextual to the idea trying to be conveyed.                                                                                   
                                                                                                                                
CHAIR ANDERSON  noted that there  was no objection  to Conceptual                                                               
Amendment 2.  Therefore, Conceptual Amendment 2 was adopted.                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG moved  to  report CSHB  81, Version  24-                                                               
LSO144\Y,  Mischel, 1/26/05,  as amended,  out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, CSHB  81(L&C) was  reported from  the                                                               
House Labor and Commerce Standing Committee.                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:40 p.m.                                                                                                                       

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